Innovation charity Nesta wants new health targets and big fines for retailers. Can its plan really cut obesity while avoiding costs?

When supermarket leaders called on David Cameron’s government to introduce mandatory targets on sugar reduction in 2015, saying voluntary measures were failing, the FDF threatened legal action, claiming they would be “illegal and unenforceable”.

A voluntary approach to dealing with health has since endured in Westminster policy under the Tories, despite soaring obesity levels.

However, last week Nesta, the influential innovation charity that took over the nudge unit set up by Cameron’s cabinet more than a decade ago, published new calls for ministers to set mandatory targets on health for supermarkets, with hefty fines of up to 1% of turnover for failing to hit them.

So could this be the model that paves the way for a radical new approach on health, or is shifting the onus onto supermarkets merely a recipe for another row with the industry?

Nesta points to the failure of policy efforts by successive governments, which have seen obesity rates double since the 1990s, with three in five people in the UK now overweight or obese.

It demands “more ambitious policies” to incentivise businesses to prioritise health, and says moves supermarkets have already made in reporting on health, in response to pressure from the likes of investor group ShareAction (a body it helps to fund), present a ready made foundation on which to build.

snacks aisle hfss health unhealthy

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With 10 of the 11 largest retailers in the UK already setting their own health targets, Nesta says supermarkets are ideally placed to demand reformulation in the supply chain, delist unhealthy brands, favour price promotions for healthier products and shift ad spend towards non-HFSS products.

Former CMA boss Daniel Gordon, one of the report authors, argues the moves could avoid significant costs to supermarkets and consumers, and says that set against the very large benefits of reducing obesity there is a “compelling case” for the policy.

Nesta’s proposal would also see a major new role for the FSA, which it recommends should be put in charge of monitoring the annual targets, rather than the DH or the OHID.

It hails the unlikely model of GSCOP as inspiration for the teeth behind its proposed targets, suggesting the government mirrors its powers to fine retailers up to 1% of their turnover for failing to hit them, though it stresses there should be a lenient approach to begin with, including allowing supermarkets until 2030 for the scheme to become mandatory.

Nesta’s report includes analysis of 36 million transactions from 30,000 households, using Kantar sales figures. It argues relatively small changes to the health make-up of the average basket could achieve a significant reduction in obesity levels, with the calorie intake reduction required by people with excess weight equivalent to a single milk chocolate biscuit a day.

Nesta argues that no foods would be “demonised”, while the recommendations explicitly avoid placing any additional constraints on supermarkets’ sales processes or behaviours, instead suggesting the monitoring of end results or outcomes.

How would Nesta’s mandatory targets work?

  • Policy to apply to 11 largest grocery retailers who sell more than 90% of food consumed in the home
  • Targets based on the overall healthiness score of baskets needed under the nutrient profiling model
  • Target to reduce calorie consumption among those most at risk of obesity harms by 80 kcal a day per person
  • Supermarkets would face GSCOP-style fines of up to 1% of their annual turnover for failing to hit targets
  • Targets to start as non-mandatory, allowing retailers until 2030 to adapt to the approach

Source: Nesta report, February 2024

junk food on tv hfss

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Mandatory or not?

The idea of leaving it down to industry to decide how it hits the targets sits in stark contrast, for example, to the Scottish government’s plans for a clampdown on HFSS deals, which also launched last week, with its impact assessment admitting it would reduce overall sales.

“Previous voluntary approaches have failed to generate significant industry action because they lacked a strong incentive for industry-wide compliance,” says a Nesta spokesman. “Given the highly competitive nature of the retail sector, it is hard for even the most progressive businesses to take ambitious action if their competitors do not. This risk is mitigated by a mandatory approach which requires all businesses to participate. It creates the level playing field industry has been asking for.”

But supermarket leaders warn a system that only targets retailers is far from playing fair.

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“Yet again we see a report focused on action by the supermarkets – ignoring the other major food players, as well as the consumers themselves,” says BRC director of food and sustainability Andrew Opie.

“Instead of this piecemeal approach to tackling obesity, we need wholesale change, and if necessary the introduction of regulation to ensure that everyone is playing their part.”

Another retail source adds: “We desperately need a new obesity strategy and will only make progress by putting the whole food market in scope.

“Nesta’s proposals fall down because they put supermarkets in the front line, forgetting the fact that supermarkets have been reformulating for years, whereas the nearest most brands have got is making their chocolate bars smaller.”

“If you are going to regulate, regulate everyone.”

Poundland HFSS

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Nesta itself admits that in isolation its proposed system of targets won’t work. While it argues retailer targets will have some impact on driving shifts in manufacturer behaviour, it concedes it would not be enough to encourage the level of action needed.

Nesta’s report also stresses mandatory targets for retailers should “not be unduly burdensome for industry, nor detrimental to its bottom line”. Elsewhere it argues the government should consider measures including “the introduction of new salt, sugar or category-specific taxes” on top of the soft drinks sugar levy – the main exception to the Tory government’s non-interventionist policy.

While calling for “subtle shifts in existing retailer practices,” rather than “micromanaging businesses,” the report also says ministers should consider making the existing government targets on sugar and calorie reduction mandatory.

That would potentially leave suppliers facing fines for tens of thousands of products that are currently failing to hit targets, even though Nesta says taxes are often passed through to the consumer.

There is also the question of how to tackle the out-of-home sector. Nesta says it is working on “the most comprehensive set of data yet” to help underpin proposed targets for the sector, but they will not materialise until later this year.

fizzy drinks soda pop coke pepsi soft drinks aisle supermarket shopper sugar hfss

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Some fear the conciliatory language in Nesta’s report towards the industry is a “Trojan horse” approach and that its proposals are similar to those of Henry Dimbleby, whose National Food Strategy suggested a raft of taxes to “break the junk food cycle”.

However, Nesta claims its system of targets would have a “significantly larger” impact on obesity than any other policy proposal in the area.

“We think this is the most viable option politically and economically,” says the spokesman. “It creates significant public health benefits and carries limited risk of increased consumer prices, which is imperative in the current cost of living crisis.

“We think the policy is also feasible for industry. We recognise the crucial role retailers play in the nation’s health and think this policy will incentivise them to work with us to improve the healthiness of food consumed without placing an excessive burden on them. They have set their own targets in the past but this will help to incentivise consistency and meaningful action.”

Nesta wants whoever is PM after the general election to bring forward primary legislation within the first 100 days of government to back its plans. That timeframe would certainly require the sort of interventionist approach that has been non-existent in public health policy for a decade and more.