Soft drinks bosses and health campaigners have called on the government to extend its controversial sugar tax to cover milk-based drinks such as children’s milkshakes.

The British Soft Drinks Association (BSDA) said it was “fundamentally unfair” for the government to target soft drinks, including sweetened water, while under the plans mooted by former Chancellor George Osborne, any drink with 75% of milk or more would be excluded from the levy.

In its response to the Treasury consultation on implementation of the levy, which ends this week, the BSDA claimed children at risk of obesity where more likely to be over-indulging in products such as milkshakes than fizzy soft drinks.

“We believe that as a fundamental principle there should be an equality of treatment between water-based and milk-based soft drinks,” said the BSDA, which has been spearheading calls for the government to scrap the tax.

“Differentiating between the two in terms of added sugar is an irrational application of artificial standards to create an economic disadvantage,” it added.

The BSDA cited research from Kantar Worldpanel indicating that households with children account for 40.1% of all households buying milkshakes vs 25.6% of total soft drinks.

“This indicates that it is the most skewed sector in all of the soft drinks market towards households with children,” it said. “Given the demographics of consumption on many milk-based products being focused towards a younger audience it seems perverse that added-sugar products will be exempt. The marketing and branding of these products reinforces this view. This proposal runs contrary to government intentions on the measure being focused on childhood obesity and gives a tax advantage to products often higher in sugar.”

The Children’s Food Campaign also called for the government to close the “loophole”.

“The majority of flavoured milks on the market contain 90% milk, according to The Grocer’s Dairymen,” it said in its evidence. “But many of these have total sugar content in excess of the 5g per 100g threshold for the levy. Of that sugar some will be from the lactose, but the remainder will be added sugar.”

It called on the government to change the plans so that only milk drinks with under 5% added sugar were exempt.

“We are concerned that by excluding almost all dairy drinks from the levy, this incentive and public push for manufacturers to reduce the sugar in their products and/or bring out no-sugar versions would be significantly reduced. Consequently, this growing section of the soft drinks market - worth £147m in take-home sales, according to The Grocer Dairymen, and one aimed at children’s consumption - would not see the same focus on sugar reduction as other sections, and would miss out on the chance to benefit further from people switching to it from products subject to the levy.”

However, in its evidence, Dairy UK strongly backed the case for milk drinks to be exempt from the tax. It said: “Milk is a natural source of protein, calcium, potassium, phosphorus, iodine, riboflavin and vitamin B12. Milk and dairy products are an important part of a healthy balanced diet and are included in UK and worldwide dietary guidelines. For this reason, we agree with the proposal to exclude milk-based drinks from the scope of the levy.”

It added: “We also agree with the 75% threshold and do not call for this to be lowered further, as it is important that milk-based drinks reflect the nutrient-richness of milk. We believe that milk-based drinks with a minimum 75% milk content would still provide significant amounts of much needed essential vitamins and minerals to younger age group.”

One senior supplier source said he was “very surprised” that the BSDA had called for an extension of the tax to cover more products. “The fact is that this is an ill thought out tax which should be opposed by the industry rather than be extended even further.”

  • This story was updated on 13 October 2016