Restricting promotions of food and drink high in fat, sugar, or salt: consultation analysis

7. Exemptions to restrictions (Qs 17-21)

7.1. The consultation paper acknowledged that the food business landscape is diverse and as such the restrictions would need to apply to a wide range of contexts, but that it may prove more challenging for some businesses to comply than others. The consultation therefore sought views on a number of specific exemptions, (i) the proposal to exempt specialist businesses that mainly sell one type of food product category from location restrictions, (ii) in the event that exemptions are extended beyond specialist businesses, whether number of employees and/or floor space should be used to determine eligibility for exemption from location restrictions; (iii) if number of employees is used to determine eligibility, what size of business should be exempt; (iv) if floor space is used to determine eligibility, what size of business should be exempt; (v) whether any other types of exemptions should apply.

Exemptions from location restrictions

Specialist business exemption

7.2. The consultation paper proposed to exempt specialist businesses with a limited product range (such as chocolatiers and sweet shops) from location restrictions on the basis that such businesses would not be able to avoid locating HFSS products in the locations subject to restrictions. Restrictions on price promotions would still apply (in-store and online).

7.3. The consultation paper noted that the UK Government regulations for England include an exemption from location restrictions for specialist retailers that sell one type of food product category.

Question 17: Do you agree with our proposal to exempt specialist businesses that mainly sell one type of food product category, such as chocolatiers and sweet shops, from location restrictions?

Overview

7.4. Non-industry (71%) and individual (68%) respondents tended to support the proposal to exempt specialist businesses. Industry respondents also tended to support the exemption, taking into account both the number that agreed with the exemption (46%) but also those that selected 'don't know' or did not select a tick box but expressed a desire for alignment with restrictions in England or noted the exemption was reasonable. The tick box responses are shown in Table 7.1.

Table 7.1 Whether to exempt specialist businesses from location restrictions

Answer	Organisations				Individuals
	Industry		Non-industry
	n	%	n	%	n	%
Yes	19	46%	22	71%	26	68%
No	0	0%	2	7%	8	21%
Don't know	4	10%	0	0%	4	11%
Not answered	18	44%	7	23%	0	0%
Total	41	100%	31	101%	38	101%

Agreement with the specialist business exemption

7.5. Non-industry respondents that explained their reasons for agreement tended to indicate that it would not be reasonable or practical for specialist businesses to implement location restrictions, although many of these flagged the importance of price promotion restrictions still applying to specialist businesses. A number of non-industry and individual respondents highlighted that purchases at these types of businesses are more purposeful; people visit with the intention to buy HFSS products and therefore are not unduly tempted to make additional purchases based on the location of items. Some individual respondents agreed with the exemption on the basis of their general disagreement with any restrictions.

7.6. Industry respondents indicated two main reasons for supporting the exemption – that they supported alignment with the restrictions in England (which the exemption would align with) (particularly manufacturers), or that it would not be reasonable or practical for specialist businesses to implement location restrictions (particularly industry representative bodies).

7.7. Other points raised, each by one industry respondent, included:

• A need to consider widening the exemption to other hospitality businesses that have a limited range of products; and to widen the exemption to other small businesses to prevent unfairness between e.g. small convenience stores and large specialist shops.
• That the definition of 'specialist retailer' should include gift/souvenir products sold in airports;
• That there is a need for a clear definition of 'mainly sell'; and 'specialist'.

Disagreement with the specialist business exemption

7.8. There was very little direct disagreement with the exemption. The most common reason was a view that consistency across businesses was needed for the approach to be effective. Other points included:

• The exemption should apply to specialist shops that were independent businesses, but not to national or multi-national businesses; (individual)
• An exemption specifically for specialist retailers was not fair to businesses selling a more diverse range of products, but that specialist businesses may reasonably be captured in an exemption for small businesses; (retailer)
• The exemption should apply to locally produced products but not to shops selling well known commercial brands; (individual)
• Concern about the logic of exempting businesses that focus all their attention on HFSS products. (individual)

Small business exemption (from location restrictions)

7.9. Recognising that smaller businesses may have limited scope to comply with location restrictions, the consultation paper sought views on using number of employees and/or floor space as a basis for determining which businesses would be eligible for an exemption from location restrictions.

7.10. The consultation paper noted that UK Government regulations for restrictions in England include an exemption by number of employees from location restrictions and volume price restrictions. They also include an exemption by floor space from location restrictions.

Question 18: If exemptions are extended beyond our proposal to exempt specialist businesses that mainly sell one type of food product category, should exemptions be applied on the basis of:

• Number of employees
• Floor space
• Other (please specify)

Overview

7.11. Non-industry respondents tended to disagree with the additional exemptions explored in the consultation primarily due to concern that allowing exemptions would reduce the overall impact of the restrictions. Individuals tended to be split between agreement (primarily due to opposing the restrictions) and disagreement (for the same reason as non-industry respondents). Industry respondents tended to support the exemptions either due to a preference for alignment with England or a view that it would not be practical for smaller businesses to comply. Very few respondents suggested 'other' ways of calculating a small business exemption.

7.12. It should be noted that it was not always clear whether respondents had made the distinction between price promotion and location restrictions and that the exemption being explored in the consultation paper is only proposed to apply to location restrictions.

Number of employees

7.13. Views were mixed as to whether using number of employees is an appropriate basis for an exemption to location restrictions. Non-industry respondents tended to disagree (42%), although 45% did not provided a definitive answer. Individuals were split between disagreement (47%) and agreement (37%). While industry respondents appeared to be quite mixed between agreement (34%) and disagreement (20%), there was an overall preference for the exemption when also taking into account the number that selected 'don't know' or that did not select a tick box but expressed a preference for alignment with England. Table 7.2 displays the tick box responses.

Table 7.2 Whether to use number of employees as a basis for exemption

Answer	Organisations				Individuals
	Industry		Non-industry
	n	%	n	%	n	%
Yes	14	34%	4	13%	14	37%
No	8	20%	13	42%	18	47%
Don't know	2	5%	5	16%	6	16%
Not answered	17	42%	9	29%	0	0%
Total	41	101%	31	100%	38	100%

Floor space

7.14. Views were also mixed as to whether using floor space is an appropriate basis for exemption. Non-industry respondents tended to disagree (36%) although 55% did not provide a clear view on the issue. Individuals were mixed with disagreement (53%) a little higher than agreement (37%). Industry respondents were in favour of the exemption when taking into account those that agreed (54%) and those that selected 'don't know' or did not select a tick box but expressed a preference for alignment with England. Table 7.3 displays the tick box responses.

Table 7.3 Whether to use floor space as a basis for exemption

Answer	Organisations				Individuals
	Industry		Non-industry
	n	%	n	%	n	%
Yes	22	54%	3	10%	14	37%
No	3	7%	11	36%	20	53%
Don't know	3	7%	7	23%	4	11%
Not answered	13	32%	10	32%	0	0%
Total	41	100%	31	101%	38	101%

Other

7.15. As Table 7.4 shows, very low numbers of respondents indicated they thought there was an 'other' approach that should be used to determine exemption.

Table 7.4 Whether to use an 'other' basis for exemption

Answer	Organisations				Individuals
	Industry		Non-industry
	n	%	n	%	n	%
Yes	2	5%	2	7%	9	24%
No	2	5%	5	16%	13	34%
Don't know	7	17%	5	16%	8	21%
Not answered	30	73%	19	61%	8	21%
Total	41	100%	31	100%	38	100%

Agreement with the approaches

7.16. Some of the respondents that agreed with applying exemptions on the basis of employee number and/or floor space (particularly individuals) did so on the basis that they did not agree with restrictions for any type of business.

7.17. Specific reasons for supporting these approaches included:

• The consistency they offered with exemptions in England (particularly among industry respondents);
• That they offer a sensible way of differentiating between large commercial settings and smaller businesses that may have more limited ability to apply the restrictions and may therefore be more adversely affected by their introduction.

7.18. Other points raised were:

• For the 'number of employee' exemption to be used, it would need to relate to the number of employee hours, otherwise businesses with a large number of part time employees could be disadvantaged; (individual)
• In respect of number of employees there should be alignment with the Sunday Trading Act. (manufacturer)

The issue of symbol groups^[12]

7.19. Two industry respondents noted strong concerns about eligibility rules that may apply to the exemptions if they are introduced. Specifically, they were concerned that where a small independent business partners with a larger group (for example to source stock) any metrics for calculating whether the exemption applies (such as number of employees) should not include those belonging to the larger group.

7.20. Conversely one third sector respondent suggested small retailers should be exempt where it would not be practical to implement the requirements without causing difficulty to the running of the business; but not when they are connected to franchises that can support them to implement the requirements.

Disagreement with the approaches

7.21. The majority of respondents that offered a reason for disagreeing with number of employees and/or floor space being used did so on the basis that they did not agree with further exemptions being applied (particularly non-industry organisations and individuals). The main reasons expressed for this were:

• To ensure restrictions would have the maximum effect;
• To create a 'level playing field' and avoid loopholes.

7.22. A few respondents disagreed with using number of employees but agreed with using floor space, however no clear reasons were provided.

'Other' ways of calculating a small business exemption

7.23. Very few respondents suggested other approaches. Suggested criteria included the types of products sold (i.e. specialist shops) and financial metrics such as turnover, income or profit. One industry representative body suggested there should be an exemption for hospitality businesses that mainly sell HFSS foods on the basis that customers will have already chosen to purchase those products when entering.

Number of employees exemption

7.24. The consultation also sought views on the specific number of employees that the exemption from location restrictions should be based upon and offered a number of different options. The consultation paper indicated that the 'micro and small businesses (fewer than 50 employees)' option would be consistent with exemptions set out in the UK Government regulations for England.

Question 19: If you agreed in question 18 that businesses should be exempt from location restrictions based on number of employees, what size of business should be exempt?

Overview

7.25. Specific responses to the question were relatively low and the vast majority of respondents that did not select a tick box answer did not provide a comment/view. Industry respondents indicated a preference for the exemption to be applied to businesses with fewer than 50 employees when taking in to account the number that selected that option (32%) and also those that selected 'other' or did not select a tick box but expressed a preference for alignment with England. Non-industry respondents showed no preference for a number of employees that should be exempt. A high proportion of individual respondents did not express a view on the number of employees; but of the specific options explored they showed a slight preference for exempting businesses with fewer than 10 employees (18%) but with no clear view why. Table 7.5 displays the tick box responses.

Table 7.5 The size of business, by number of employees, that should be exempt

Answer	Organisations				Individuals
	Industry		Non-industry
	n	%	n	%	n	%
All businesses in scope of restrictions (i.e. no exemptions based on employee number)	2	5%	1	3%	11	29%
All in scope except businesses with fewer than 10 employees (micro)	0	0%	2	7%	7	18%
All in scope except businesses with fewer than 50 employees (small and micro)	13	32%	0	0%	3	8%
All in scope except businesses with fewer than 250 employees (medium, small and micro)	1	2%	0	0%	1	3%
Other	5	12%	5	16%	5	13%
Not answered	20	49%	23	74%	11	29%
Total	41	100%	31	100%	38	100%

Support for exempting businesses with fewer than 10 employees

7.26. Relatively little commentary was provided in respect of support for this answer option. One individual suggested only the smallest businesses should be exempt as larger businesses will already be more profitable. One public sector respondent felt that enabling the survival of the smallest businesses would not adversely impact on the health goals of the overall approach. One 'other' organisation respondent suggested a need for the Government to work with exempted small businesses to encourage them to reduce promotions of unhealthy products.

Support for exempting businesses with fewer than 50 employees

7.27. The most prevalent view expressed in support of exempting businesses with fewer than 50 employees was that this option would align with the proposed exemption to restrictions in England (particularly manufacturers).

7.28. A small number of industry respondents also indicated small businesses would not reasonably be able to comply with the restrictions.

Support for exempting businesses with fewer than 250 employees

7.29. While this option did not receive much support, the views expressed were:

• Despite overall disagreement with restrictions if they are implemented, small businesses should be exempt; (individual)
• Restrictions should not apply to the out of home sector, but if they do, this option would protect independent hospitality businesses from the costs associated with the proposals. (industry representative body)

'Other' approaches

7.30. Respondents that indicated 'other' did not propose an alternative number of employees.

Calculating the number of employees

7.31. Specific thoughts on how the number of employees would be calculated (each from one respondent) included:

• The approach should be based on how many employees each individual 'shop' has, not the size of the businesses as a whole; (out of home provider)
• Only employees at production and point of sales areas should be included in the number of employees calculation, not those involved in delivery and logistics; (individual)
• The approach of using employee number would need to be clearly defined; if 'global' employee numbers were used, this would need to ensure companies cannot use tactics (such as 'shell' companies^[13]) to avoid the restrictions. (manufacturer)

Floor space exemption

7.32. The consultation sought views on the specific size of business in terms of floor space that the exemption from location restrictions should be based upon and offered a number of different options. The consultation paper noted that the option for businesses with a floor space 'less than 186 square metres (2,000 square feet)' would be consistent with the UK Government regulations for an exemption to location restrictions in England.

Question 20: If you agreed in question 18 that businesses should be exempt from location restrictions based on floor space, what size of business should be exempt?

Overview

7.33. Specific responses to the question were relatively low and the vast majority of respondents that did not select a tick box answer did not provide a comment/view. Industry respondents indicated a preference for the exemption to be applied to businesses less than 186 square metres when taking in to account the number that selected that option (34%) but also those that selected 'other' or did not select a tick box but expressed a preference for alignment with England. Non-industry respondents showed no preference. A high proportion of individual respondents did not express a view on floor space; but of the specific options explored they showed a level of preference for exempting businesses less than 93 square metres (26%). The tick box responses are shown in Table 7.6.

Table 7.6 The size of business, by floor space, that should be exempt

Answer	Organisations				Individuals
	Industry		Non-industry
	n	%	n	%	n	%
Less than 93 square metres (1000 square feet)	0	0%	1	3%	10	26%
Less than 186 square metres (2000 square feet)	14	34%	0	0%	0	0%
Less than 279 square metres (3000 square feet)	5	12%	0	0%	2	5%
Other	6	15%	3	10%	11	29%
Not answered	16	39%	27	87%	15	40%
Total	41	100%	31	100%	38	100%

Support for exempting businesses less than 93 square metres (1000 sq ft)

7.34. The very small number of respondents who provided an explanation felt that this would allow an exemption while enabling the restrictions to have a large impact. One 'other' organisation respondent suggested the Government should still encourage exempt businesses to reduce the number of HFSS products they sell and promote healthier products.

Support for exempting businesses less than 186 square metres (2000 sq ft)

7.35. The most prevalent view expressed by those that explained their answer was that this option would align with the exemption to location restrictions in England (particularly manufacturers).

Support for exempting businesses less than 279 square metres (3000 sq ft)

7.36. Two industry representative bodies noted that there is an accepted definition within the industry that a convenience store is typically under 3000 square feet, Therefore their view was this option should be the basis of the calculation in order to encompass convenience stores, as they are already facing a number of challenges to their viability and would be the most likely to be adversely affected by the introduction of the restrictions. Similarly, one retailer suggested that 186 square metres should be the 'absolute' minimum, but they believed 279 square metres would be more appropriate given that this size has already been used in Scotland to distinguish between smaller and larger shops.

7.37. Another industry representative body noted the important role convenience stores play in providing local services to the community (such as Post Office, cash facilities and bill payment). One manufacturer suggested that 279 square metres was the size beneath which it would be difficult to comply with restrictions.

'Other' approaches

7.38. Some respondents reiterated their general view that there should be no restrictions at all (particularly individuals) or that it was not within their expertise to answer. Specific suggestions (each by one respondent) included:

• Out of home should be out of scope of restrictions because of the limited floor space they have for queuing, checkout and to display products given that the majority of floor space is used for seating areas. The respondent felt an exemption for the out of home sector would be clearer than trying to identify an appropriate floor space threshold (out of home provider);
• There should not be a general exemption for small stores but they should have different location restrictions to larger businesses, based on the 'workable' floor space (retailer).

7.39. One public sector respondent commented that it would be too complicated to enforce the restrictions based on size and businesses would find ways to keep within thresholds set to qualify for an exemption.

Calculating the floor space

7.40. Two respondents noted that the calculation should not include all floor space but should focus on the area where food is sold. In the context of hospitality one of the two respondents indicated the calculation should exclude floor space for cooking and seating. In the context of retail the other respondent suggested the calculation should exclude floor space for other (non-food) products and services (such as Post Office facilities). In respect of Post Offices specifically the respondent felt that restrictions could put them under strain if the commercial viability of the store they are located within was undermined by the restrictions.

Other types of exemptions

Question 21: Are there any other types of exemptions that should apply?

Overview

7.41. Very few respondents indicated other types of exemptions that should apply. The vast majority of those that selected 'don't know' or did not select a tick box, did not provide a comment/view. Table 7.7 displays the results.

Table 7.7 Whether any other types of exemptions should apply

Answer	Organisations				Individuals
	Industry		Non-industry
	n	%	n	%	n	%
Yes	5	12%	1	3%	5	13%
No	11	27%	13	42%	12	32%
Don't know	8	20%	9	29%	16	42%
Not answered	17	42%	8	26%	5	13%
Total	41	101%	31	100%	38	100%

Other exemptions

7.42. Beyond exemptions already mentioned elsewhere, a few additional suggestions were made here (each by one respondent):

• Advertising of company names even where that company produces HFSS products (although it should be noted the consultation paper did not state any intention to restrict the promotion of company names); (manufacturer)
• Point-of-sale advertising of HFSS products online (to be consistent with physical stores) for example, once a customer has navigated to the location for a particular HFSS product, sponsored banners should be allowed to draw attention to products; (manufacturer)
• Consideration should be given to an exemption for shops which are remote (in terms of their proximity to other shops) - the respondent demonstrated concern for businesses that may be more economically vulnerable. (individual)

Disagreement with other exemptions

7.43. The main reasons given for disagreement with other exemptions were the view that no further exemptions should be permitted (particularly non-industry respondents) or that exemptions should align with those in England (particularly industry respondents).