Industry has mixed reaction to 2012 budget

By Rick Pendrous

- Last updated on GMT

Industry has mixed reaction to 2012 budget
Food and drink manufacturers have given Chancellor George Osborne's budget a mixed response. However, given his need to focus on reducing the deficit, the overall view was that it was relatively business friendly.

Across the business community, Osborne's decision on corporation tax reduction was well received. But, like his other measures, the industry felt it amounted to a "mixed bag"​ for the sector.

The Food and Drink Federation (FDF)'s director general Melanie Leech said: "We are pleased that the Chancellor has accelerated the rate at which corporation tax will be reduced. We are, however, disappointed to see no change to the main Capital Allowances scheme, which is a major barrier to investment in UK manufacturing."

Leech expressed similar mixed views about what the budget offered on energy. "We had hoped for greater clarity around future energy and emissions policies to enable better business and investment planning,"​ said Leech. "Although plans to simplify the Carbon Reduction Commitment (CRC) are welcome, it is regrettable that the Chancellor did not go further and scrap it altogether."

She added: "Furthermore, the positive effect of not applying carbon price support charges to fuels used for combined heat and power is offset by the decision to remove the associated Climate Change Levy exemption certificates. And continuing with the doubling of the carbon price support charge itself will hit many food manufacturers hard in difficult trading conditions".

However, Leech welcomed the proposed review of regulation of small businesses and the plans to deregulate employment law.

"The cumulative burden of over 160 employment regulations is having a negative impact on sustainable growth and jobs,"​ she said. "This action could move us much closer to developing a more flexible UK labour market and accelerating growth in the industry."

She welcomed the research and development (R&D) tax credits deduction to an above-the-line tax credit. "We hope the Chancellor's commitment to increase funding for the scheme will broaden its reach and enable more firms to increase R&D investment, thus driving innovation in the industry."

The Chancellor's plans to invest in non-bank finance schemes, as well as the new National Loan Guarantee Scheme, were also welcomed as a measure that would help small- and medium-sized enterprises get better access to much needed finance.

One group that was definitely unhappy, however, was the Freight Transport Association (FTA), which condemned Osborne's failure to abandon fuel duty increase. It said the decision would cause the industry to suffer even higher fuel bills and operational costs at a time when the world price of oil stands at a four-year high.

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