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What role do taxes and regulation play in promoting better health?

The use of regulatory and fiscal policy tools in improving public health has long generated heated debate, and is rising up the agenda once more. This briefing aims to contribute to the debate, looking at how a range of policy levers might be used effectively to reduce consumption of tobacco and alcohol, and unhealthy consumption of food and drink, and ultimately improve people’s health.

Key messages

  • Unhealthy behaviours such as smoking, drinking excess alcohol and unhealthy diets are key drivers of poor health outcomes and have significant consequences for individuals, the NHS, the economy and society. Relying on individual responsibility alone is not enough to change behaviours; there needs to be a stronger focus on creating environments that support people to make healthier choices.

  • A range of social, economic and environmental factors mean that unhealthy behaviours often cluster in lower socio-economic groups, fuelling significant health inequalities. Given the magnitude of these inequalities, much more needs to be done if the government wants to improve the health of those with the worst outcomes.

  • Fiscal and regulatory policies are important tools for policy-makers to correct harmful market failures. They have a long history of being used to influence behaviour with a view to improving health and, in many cases (for example, measures to cut smoking and reduce the amount of sugar in soft drinks) have been very successful.

  • However, debate about these policy levers is often polarised, with some taking the view that fiscal and regulatory interventions are signs of a ‘nanny state’. Since 2010, government policy has tended to emphasise the role of individual responsibility and voluntary regulation, although in recent years there has been growing interest in taking a more robust approach, as demonstrated by the introduction of the Soft Drinks Industry Levy (also known as ‘the sugar tax’) in 2015.

  • There is evidence that fiscal and regulatory measures are more popular with the public than is often assumed. Public attitudes also change over time, and governments have a responsibility to shape public opinion where it is holding back health improvements. One successful example is the ban on smoking in public places in England, with public support for the ban increasing significantly over time.

  • An evidence-based approach is important to ensure that policies are designed to avoid unintended consequences and perverse incentives. This should include working with industry to understand commercial interests and consider voluntary approaches, although history suggests governments should also be wary of opposition from vested interests.

  • Policy-makers need to consider the combination of policies they implement and move away from isolated, single actions towards cross-government and cross-sector approaches. Examples include considering a tax on high fat or sugar products alongside other interventions such as subsidising healthier alternatives (eg, fruit and vegetables).

  • The United Kingdom (UK) is an outlier in terms of the relative lack of autonomy and powers granted to local government. Policy-makers should explore the case for giving local government further fiscal and regulatory freedoms to enable them to tackle the specific health challenges their populations face.

  • Overall, there is scope for a bolder approach to using regulation and fiscal policy to improve health. This could play a key role in creating a more supportive environment for people to change unhealthy behaviours, for services to address mounting health challenges at a population level, and for the government to tackle widening health inequalities.

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