Outlining his eighth budget, chancellor George Osborne has announced he is to levy a sugar tax on the soft drinks industry. However, the food and drink sector has expressed its disappointment over the decision, and criticised the singling out of soft drinks as simply absurd.

"Doing the right thing for the next generation is what this government and this budget is about," Osborne explains, "no matter how difficult and how controversial. One of the biggest contributors to childhood obesity is sugary drinks."

Recognising the progress industry has already made, Osborne did praise a selec few companies and retailers for their efforts so far, including Robinsons for its recent removal of added sugar from cordials and squashes.

"Let me give credit wher credit is due," he says. "Many in the soft drinks industry recognise there is a problem and have started to reformulate their products. Industry can act, and with the right incentives Im sure it will."

"I am not prepared to look back at my time here in this parliament, doing this job, and say to my childrens generation, ‘Im sorry, we knew there was a problem with sugary drinks, we knew it caused disease, but we ducked the difficult decisions and we did nothing’," he comments. "So today I can announce that we will introduce a new sugar levy on the soft drinks industry."

Responding to the announcement, both the Food and Drink Federation (FDF) and the British Soft Drinks Association (BSDA) were quick to express their disappointment over the decision.

Ian Wright, director general of the FDF, says, "We are extremely disappointed by todays announcement of a new tax on some of the UKs most successful and innovative companies. For nearly a year we have waited for an holistic strategy to tackle obesity. What we’ve got today, instead, is a piece of political theatre.

"The imposition of this tax will, sadly, result in less innovation and product reformulation, and for some manufacturers is certain to cost jobs. Nor will it make a difference to obesity. Many of those singled out today by the chancellor have been at the forefront of efforts to provide consumers with healthy choices. The industry will now ask whether such efforts are still affordable."

BSDA director general Gavin Partington adds, "We are extremely disappointed by the governments decision to hit the only category in the food and drink sector which has consistently reduced sugar intake in recent years – down 13.6% since 2012.

"We are the only category with an ambitious plan for the years ahead – in 2015 we agreed a calorie reduction goal of 20% by 2020. By contrast, sugar and calorie intake from all other major take home food categories is increasing – which makes the targeting of soft drinks simply absurd."

Explaining how the tax will work, Osborne says, "It will be levied on the companies, it will be introduced in two years time to give companies plenty of space to change their product makes. It will be assessed on the volume of the sugar sweetened drinks they produce or import.

"There will be two bands: one for total sugar content above 5g per 100ml; a second higher band for the most sugary drinks with more than 8g per 100ml. Pure fruit juices and milk based drinks will be excluded and well ensure the smallest producers are kept out of scope.

"We will, of course, consult on implementation.

"We[re introducing the levy on the industry, which means they can reduce the sugar content of their products, as many already do; it means they can promote low sugar or no sugar brands, as many already are; they can take these perfectly reasonable steps to help with childrens health.

"Of course, some may choose to pass the price onto consumers and that will be their decision, and this would have an impact on consumption too."

The estimated £520 million that this levy will raise will be used to further funding for primary school sports, the chancellor announced.

"We understand that tax affects behavior," he says, "so lets tax the things we want to reduce, not the things we want to encourage."