The Budget for food manufacturers – in quotes

23-Mar-2012 - Last updated on 23-Mar-2012 at 12:11 GMT

Missed Budget opportunity? Cutting diesel duty by 2.5p per litre would have created an extra 175,000 jobs with no loss of revenue to the Exchequer, claimed the Freight Transport Association

As pundits continue to pick through the fine print of Chancellor George Osborne’s Budget, we capture the implications for food and drink manufacturers in key quotes. There’s a a summary box too, listing the main points for food and drink firms.

Melanie Leech, director of the Food and Drink Federation: “At best this budget is a mixed bag on energy. We had hoped for greater clarity around future energy and emissions policies to enable better business and investment planning.”

Simon Chapman, chief economist of the Freight Transport Association: “The Chancellor has squandered a very real opportunity to support UK industry, jobs and economic recovery, by his Budget policy on fuel duty. Independent research has shown that a cut in diesel duty of 2.5p per litre would have created an additional 175,000 jobs with no loss of revenue to the Exchequer.

“But, by contrast, the fuel duty increase of 3p per litre scheduled for August will increase the average cost of lorry operation by around £1,200 per vehicle per year – all on top of other price rises which are inevitable as a consequence of the current and anticipated increases in the world price of oil.”

Phil Orford, chief executive, the Forum of Private Business: “We saw nothing on reducing the mounting burden of business rates or fuel duty via cuts and a real stabiliser to regulate prices at the pump.”

George Osborne, Chancellor: “At present, soft drinks and sports drinks are charged VAT; sports nutrition drinks are not. Hot takeaway food on high streets has been charged VAT for more than 20 years; but some new hot takeaway products in supermarkets are not. We're publishing our plans today to remove loopholes and anomalies, but we keep the broad exemptions on food, children's clothes, printed books and newspapers.”

Grocery think-tank IGD:“The debate on what should and shouldn’t be zero rated is raging again. It is possible, but unlikely, that some items might have VAT removed in this review. The concern for the food and drink sector is that zero ratings will be gradually chipped away year by year.”

Accountancy firm Grant Thornton:“Following a recent European Court of Justice judgement, the Treasury has come under increasing pressure as various taxpayers have submitted substantial claims for VAT overpaid on the supply of hot take-away food. While the Chancellor has announced a consultation, his intention is to ensure that all hot food, with the exception of freshly baked bread, is taxed at the standard rate of 20%.”

Lorraine Parkin, head of indirect tax at Grant Thornton: “The trend of today's Budget was to increase indirect taxes rather than reduce any of them. Given the Government's health agenda, it was perhaps not surprising that, despite industry hopes, the Chancellor chose not to remove the duty escalator on alcohol. The general trend was further reflected in the above inflation addition of Excise Duty to cigarettes.”

John Reed, chairman British Poultry Council:“The government’s continued emphasis on supporting regional economic growth is welcome. Poultry farming is an integral and long-standing part of rural business, providing employment to local people and we want to see our communities grow and prosper. This requires government support, not least in ensuring a planning system which is swift, stable and pro-growth.

"The Chancellor’s pledge to kick-start a sector-based review of regulation among small businesses in food manufacturing is recognition of the importance of the sector and the challenges it faces. Following this initiative and the recent review of faming regulation, we are waiting for government action that reinforces the contribution British poultry producers are making to feeding the nation.”

Stephen Tetlow, chief executive the Institution of Mechanical Engineers: “With British manufacturing growing by less than 1% in the past year we are still sorely lacking a bold, ambitious industrial strategy to rebalance our economy. This Budget contains some helpful measures but it’s a vision we need, not this piecemeal approach. We’re hearing the right notes, but no tune. Some measures announced today deserve to be welcomed. Patent and R&D tax credits will help our most innovative industries …”

To read more industry reaction, click here.

The Budget at a glance

Plans to simplify the Carbon Reduction Commitment.
Decision not to apply carbon price support charges to fuels used for Combined Heat and Power.
Decision to remove the associated Climate Change Levy (CCL) exemption certificates.
Proposed review of regulation of small businesses.
Plans to invest in non-bank finance schemes and the new National Loan Guarantee Scheme.
On research and development tax credits, a change from a deduction to an above the line tax credit.
Acceleration of the rate at which corporation tax will be reduced.
VAT charged on sports nutrition drinks and some hot takeaway products in supermarkets.
Freeze on vehicle excise duty levels for commercial vehicles.
Temporary lifting of Sunday trading restrictions during the Olympics.
New investment in broadband including ultra-fast speeds for 10 big cities with potential e-commerce benefits.
State pension age to be linked to life expectancy.