A profound disconnect has emerged between government regulatory assessments and the economic realities of the UK food sector.

New research from Oxford Economics reveals a hidden multi-million-pound economic impact stemming from the Department of Health and Social Care’s (DHSC) proposed changes to the nutrient profiling model (NPM).

The findings outline a scenario where policy implementation costs could be up to 50 times higher for UK manufacturers than official estimates, creating severe operational strain while highlighting deep uncertainty around real-world health benefits.

The NPM serves as the health score given to food and drink to decide whether products are subject to advertising and promotion restrictions. While the government’s Impact Assessment calculated the administrative and formulation burden at just £53 per product, Oxford Economics’ report calculates that “proposed changes to the NPM will cost food and drink manufacturers £2,812 per product.”

This significant gap reflects an underestimation of the time required to interpret and implement these new, complex changes across company product ranges, alongside additional costs such as updating IT systems to reflect the different requirements of the revised NPM.

The analysis exposes highly unrealistic assumptions embedded within official frameworks. For instance, the government’s assessment assumes that each manufacturer requires just 8.2 hours in total to familiarise themselves with the regulatory changes. In reality, this “assumes that one production manager at a head office reads and reviews a 10,000 word document once and then shares this knowledge with technicians in just 90 minutes.” Furthermore, surveyed food manufacturers face losing “£10m each on average in sunk investment costs spent developing healthier products to support existing regulations,” because many of these items will now be re-classified as ‘less healthy’ under the proposals.

Compounding these hurdles is a volatile macroeconomic environment. While the government assumes that none of the business costs will be passed on to consumers, the industry is already under significant strain due to wider regulatory pressures. Because manufacturers have very limited ability to absorb further costs, the Food and Drink Federation (FDF) predicts that food inflation could reach 9-10%.

Beyond the financial hit, the proposals risk reducing choice for consumers. The research reveals that the government has significantly underestimated the number of products impacted, predicting a 40% increase in products barred from promotion — nearly double the government’s estimate of 22%.

Everyday staples and healthier alternatives alike, ranging from high fibre breakfast cereals and fruit yogurts to lower sugar cakes and lower salt crisps, would fail the proposed NPM. Consequently, surveyed manufacturers expect to delist more than 1 in 10 of their products, which risks reducing the availability of accessible options that support healthier choices.

The analytical report also highlights a “significant lack of certainty around the policy’s real-world impact on calorie consumption.” The DHSC’s estimated calorie reductions for promotion restrictions rely on a highly volatile range, assuming sales of ‘less healthy’ products will reduce by anywhere between 16% and 90%.

Kate Halliwell, chief scientific officer at the FDF, stated: “This analysis shows DHSC has significantly underestimated both the cost and impact of its proposals on food manufacturers, while relying on limited evidence to support its health claims.”

She added: “At a time when food businesses are already under intense cost pressure, these proposals will add further strain on the sector and, perversely, risk removing from shop shelves many of the products that help consumers make healthier choices. We urge government to work with industry on a more proportionate approach that protects consumer access to healthier options while promoting healthier diets.”

Alex Stewart, associate director at Oxford Economics, echoed these concerns: “Our analysis of the government’s impact assessment suggests costs to businesses are being significantly underestimated, while the health impacts are unclear. This reinforces the importance of post-implementation evaluation of existing policies and gathering further proof points, such as those from our analysis, to inform the final impact assessment.”

Rather than proceeding with the overhaul, the FDF is calling on the government to rethink its plans and instead bring forward mandatory reporting of healthier food sales across the whole food sector to measure progress transparently.