Companies sell products for money - shocker

Some fatuous new research reveals nothing

On Saturday, the Guardian reported…

Firms are earning £52.7bn a year from UK sales of tobacco, junk food and excessive alcohol, and their consumption is contributing to Britain’s rising tide of illness, a report says.

The figures prompted a coalition of health, medical and children’s organisations to demand an urgent crackdown on “the irresponsible behaviour of health-harming industries”.

Why would these figures prompt anything? Surely everybody is aware that firms which produce tobacco, alcohol and ‘junk food’ sell them for money. Where is the scandal?

The report in question was published today. It was written by two public health registrars affiliated with Action on Smoking and Health, “with oversight from” the Deputy Chief Executive of Action on Smoking and Health, the Chief Executive of the Institute of Alcohol Studies (AKA the UK Temperance Alliance) and the Director of the Obesity Health Alliance. A further 13 people and two organisations are credited with being on the steering group. Apparently none of them knows the difference between revenue and profit and none of them understands that the money spent on a product goes through a chain of manufacturers, wholesalers and retailers before it gets to the end user.

The report spends most of its time lying about external costs, whining about “health-harming industries” and lobbying for nanny state policies, but page 14 has the supposedly newsworthy bit. The conflation of profit and revenue is immediately apparent.

No doubt these products are quite profitable but there is no way of telling from this data how much profit is made from “health-harming levels” of tobacco, alcohol and food. All we see is “industry revenue”, with the implication that the tobacco industry gets £7.34 billion, the alcohol industry gets £11.16 billion, etc.

Unless you believe that your corner shop is part of the tobacco industry and your local restaurant is part of the alcohol industry, this is nonsense. The data doesn’t show how much firms are ‘earning’ or ‘making’. It just shows how much people are spending.

The discerning reader will notice that they would be spending a lot less if it wasn’t for the government and its sin taxes. 71% of the money spent on tobacco goes to the Treasury! Nearly half the money spent on booze goes to the Treasury! This is the real story. HMRC makes twice as much from alcohol taxes than the “industry” supposedly “makes” from people drinking above the guidelines (which are fraudulent anyway).

Perhaps conscious that this is a bit of an Achilles’ heel in their report, the authors try to play down the massive tax bill.

Businesses will say that the £28.8bn in tax revenue from this harmful expenditure is not something that the Treasury can afford to lose. But the truth is that £9.2bn of this tax revenue (almost a third) is VAT which would also be applied to most of the products and services that consumers would switch their spending to if they were not spending it on health-harming products.

This isn’t true. A lot of the VAT is VAT on tobacco and alcohol duty. When you buy a pack of cigarettes you don’t just pay £8 (or whatever it is) in tobacco duty. You pay £1.60 (20%) on the £8 = £9.60. You pay tax on the tax. Same with alcohol duty. You wouldn’t be doing this if you spent the money on theatre tickets or whatever it is these godawful puritans think you should be spending your money on. And if you spent the money on books and vegetables, you wouldn’t be paying VAT at all.

Furthermore, foods prepared at home and takeaways are zero rated for VAT so there would be an additional benefit to the Treasury if consumers were to spend their money in other ways.

Takeaways are not zero rated for VAT. They have to charge the full 20% (with some exceptions - remember the pasty tax controversy?). The kind of takeaways these people have in mind - kebabs, pizzas, burgers - definitely have 20% VAT applied. You’d think the authors of this report would know that. Maybe public health registrars are not the best people to be writing about tax after all?

As for “foods prepared at home”, I thought they wanted people to prepare food at home. Isn’t that what the ultra-processed scare is all about? Now they want people to buy ready meals so HMRC gets the VAT? Seriously?!

The remaining excise revenue is dwarfed by the wider costs to public finances and the economy from these harmful products.

This is a lie for reasons I’m bored of explaining but you can read about here if you’re interested. Suffice to say, they will keep flogging the ‘drain on the NHS’ angle for as long as people are dumb enough to believe it. The report goes on to provide some new estimates of how much “health-harming industries” cost society by allowing people to drink, smoke and eat so much that they become unemployable. They don’t look credible but closer analysis is impossible because they don’t show their workings.

On a related note, the Observer published yet another anti-semaglutide article yesterday. The story is that Novo Nordisk, the maker of the weight loss jab Wegovy, suggested to the government that they target people who are “on the tipping point of employability where obesity is the driver to leaving the labour market”. The idea is that the government would get the most bang for its buck by dishing out the jabs to people who would be in work if they weren’t so fat.

This doesn’t seem unreasonable but, for some reason, the Observer considers it to be outrageous and rang up Simon Capewell - a thick-as-mince ‘public health’ seat-filler who rails against the Coca-Cola Christmas truck - for a fiery denouncement:

Prof Simon Capewell, a public health policy expert and emeritus professor at Liverpool University, said the comments by Novo Nordisk executives were “shocking and “absolutely unethical”. He added: “They suggest targeting people in the interests of the state, for economic reasons, rather than prioritising the person’s own interests and health.”

Hang on a minute. The primary justification used by the likes of Capewell to portray obesity as a ‘public health’ issue when it isn’t is the supposed cost to the government. Their whole point is that it is “in the interests of the state, for economic reasons” to get people to lose weight.

“Targeting people in the interests of the state” is a pretty good description of how modern ‘public health’ with its collectivist mentality operates. Now Capewell is saying more or less the opposite. Now he thinks it is more important to respect how people live their lives than it is to make them economically useful. I tend to agree, but is a bit of a turnaround for him.

On the face of it, this is totally inconsistent, but only if you assume that the ‘public health’ movement is about health. If you bear in mind that Novo Nordisk is a profit-making business, it all starts to make sense.