New modelling from Nesta, coinciding with World Obesity Day, shows that a targeted tax on foods high in saturated fat, salt and sugar could drive reformulation, cut obesity and raise billions of pounds to invest in children’s health, strengthening the case for bold government action to create a healthier food system.

Today, on World Obesity Day, the spotlight is once again on the growing toll that unhealthy food and increasing obesity are having on people across the UK. Rates of overweight and obesity have risen sharply in recent years, with more children and adults living with food-related ill health, including heart disease, type 2 diabetes and some cancers. Without stronger action to improve the food environment, these trends are set to worsen, placing avoidable pressure on families, communities and the NHS.

New research, however, suggests that a well-designed tax on unhealthy foods could be one of the most effective tools available to improve the nation’s diet, reduce obesity and generate funding to tackle food-related inequalities.

Published by Nesta, a member of the Recipe for Change coalition, the modelling explores what would happen if a tax were applied to products that score poorly under the UK’s Nutrient Profiling Model (NPM) - those high in fat, salt and sugar. Rather than relying on individuals to make healthier choices in an environment saturated with unhealthy options, the analysis focuses on how financial incentives can encourage food companies to change what they produce in the first place.

This important research adds to a growing body of evidence on the impact of taxes and shows how smart, well-designed fiscal policies can shift the whole system towards better health outcomes.

Drawing on lessons from the UK’s Soft Drinks Industry Levy and international examples, Nesta’s report discusses the following key findings:

Firstly, taxes drive reformulation. Faced with a clear financial incentive, manufacturers are likely to reduce levels of sugar, salt and fat to avoid or lower the levy. This approach improves the nutritional quality of food across the board, meaning healthier options become the default. This keeps the responsibility on companies to improve their food, rather than shoppers needing to change their behaviour. As seen with soft drinks, this kind of change can happen quickly and at scale.

Secondly, the health benefits could be substantial. The policy is projected to lower overall calorie consumption and lead to meaningful reductions in overweight and obesity (16-19% over 5 years in their central scenario). Over time, this would help prevent food-related ill health such as type 2 diabetes, heart disease and some cancers, easing pressure on health services and improving quality of life.

Thirdly, the levy could raise significant revenue for government, potentially £1.6 billion a year. Crucially, this funding could be reinvested to support children’s health, improve access to affordable nutritious food, and tackle food-related inequalities. In this way, the policy offers multiple benefits: better health outcomes alongside resources to support those who need it most.

These findings add to previous modelling carried out for the National Food Strategy, which also concluded that an industry-wide tax on sugar and salt could drive reformulation at scale and deliver significant public health benefits. The latest research fills a gap by modelling a more targeted tax which would reduce the impact on staple or core foods; an NPM-based tax would apply only to specific categories of unhealthy, pre-packaged, non-staple food bought to be consumed at home.

As a Recipe for Change coalition member, Nesta’s work strengthens the case for bold, mandatory measures that reshape the food system, rather than relying on voluntary action from industry alone. The findings show that taxes can help businesses go further and faster to deliver public health change at the scale and pace required.

Barbara Crowther, from Recipe for Change, says:

“We urgently need a healthier food system. To achieve this, we require policies that shift the incentives in our system towards healthier food.

“We know that mandatory reformulation works, and that taxes can play a key role in driving this at scale and pace, as we've seen with SDIL.

“This powerful new research adds to the wealth of international evidence that taxes work, and should be considered alongside the important NHS 10 Year Plan commitments already made. Moreover, to support the affordability of healthy food, any revenue that is raised from taxes can help to support children’s health and programmes that reduce food-related inequalities and support other government goals.”