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Food manufacturers urge budget energy changes

By Dan Colombini , 20-Mar-2012
Last updated on 22-Mar-2012 at 10:52 GMT

Food firms have called on the chancellor to change energy and emissions policies
Food firms have called on the chancellor to change energy and emissions policies

Food and drink manufacturers have urged Chancellor George Osborne to change government policy on energy and emissions or risk contributing to industry price rises of up to 40%.

Firms have expressed concern that the impact of rising energy costs, driven by the EU Emissions Trading Scheme (ETS), could severely impact their ability to remain competitive in the future.

Melanie Leech, director general of the Food and Drink Federation (FDF), said: “In the Budget we hope for greater clarity around future energy and emissions policies which we hope will enable better business and investment planning.

“Without policy change, we estimate that our sector could face price rises of up to 40% from the combined effects of carbon price support and the EU ETS, which would clearly impact substantially on our ability to fund low carbon technologies for the future.”

Squeezed

Her thoughts were supported by Chilled Foods Association secretary general Kaarin Goodburn. She called on Osborne to tackle rising fuel costs in a bid to prevent firms from being squeezed.

She told FoodManufacture.co.uk: “We will be looking for extra leeway on fuel costs, including gas and electricity for business users.

“Everyone is being absolutely squeezed at the moment and price increases are not being passed on. So we would be grateful if this problem could be made easier for our members. We will also be looking forward to hearing more on the climate change agreement of course.”

In what will be Osborne’s third budget speech, firm’s also stressed the need for increased access to finance for small business and increased R&D tax credits.

This will afford many manufactures the opportunity to expand and utilise opportunities in foreign markets, according to the FDF.

Credit easing plans

We will hope to hear about the Chancellor’s credit easing plans as well as the promotion of alternative sources of finance to the traditional banks,” Leech said.

R&D is vital for to the growth of our industry, however many of our members, in particular small to medium-sized businesses (SMEs), tell us that they find the current arrangement on R&D tax credits complicated and difficult to access.

“Many of our competitors overseas also offer significantly higher rates of relief despite the planned increases to the SME scheme in April 2012, and so we hope that these issues are addressed tomorrow.”

Leech also said that if many firms were to compete internationally for further investment, the government would have to amend the current capital allowance regime. She described this as “a major barrier to investment in manufacturing in the UK.”

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