Food industry gives budget a mixed reception

By Mike Stones

- Last updated on GMT

Related tags Investment Chancellor

The budget drew a mixed reception from the food industry
The budget drew a mixed reception from the food industry
Food industry organisations have given a mixed reception to chancellor George Osborne’s budget – praising the new employer allowance but criticising lack of help for smaller firms and the retention of VAT on hot foods.

The Food and Drink Federation (FDF) said many of the measures outlined in the budget would support the vision shared with the government to grow the sector by 20% by 2020.

The new employer allowance will significantly lower the National Insurance bills of small- to medium-sized enterprises (SMEs), said FDF director general Melanie Leech. And it would give those businesses “greater certainty when considering whether to invest in growth”.

Also, the announcement of a further cut in corporation tax and the cancellation of the rise in fuel duty planned for September will be welcomed across the industry, she said.

The chancellor’s decision to boost research and development tax credit to 10% will help to encourage innovation. But the scheme remained “complex and inaccessible”​, she said.

“FDF will continue to argue for more flexibility in the definitions of innovation and the way they are applied so that these businesses can accelerate their growth while playing a full part in improving public health and reducing their impacts on the environment.”

The National Farmers Union (NFU) welcomed the cut to National Insurance bills and scrapping fuel duty.

Fuel duty

“The cancellation of the fuel duty rise​ in September will help businesses across the economy, including the food and farming industries, that have been struggling to absorb rising fuel costs,”​ said NFU president Peter Kendall.

He also praised the chancellor’s help for brewers. “I’m pleased to see the government doing all it can to help the beer industry,” ​said Kendall. “In abolishing the beer tax escalator, the chancellor’s demonstrated the huge importance of the beer industry to our rural economy; every one job in brewing supports a further job in agriculture.”

The NFU also welcomed the government’s pledge to commit more than £1.6bn during the next 10 years to its Industrial Strategy. The investment included £500M for sectors where the UK has a comparative global advantage, including agricultural technology. The aim is boost sustainable agricultural production at home and overseas.

But Kendall regretted the lack of encouragement for investment. “Last year’s autumn statement contained the welcome announcement on the annual investment allowance, and this is already encouraging plant and machinery expenditure in agriculture,” ​he said. “Today’s budget failed to deliver equivalent measures for farm buildings and infrastructure. It is capital investment that is the real trigger for meeting the long-term challenge of food security.”


The British Poultry Council (BPC) welcomed recognition for the role of apprenticeships but was disappointed at the chancellor’s failure to lift VAT on hot foodstuffs.

BPC head of external relations Caroline Leroux said: “Last week we delivered a petition to the Treasury with over 50,000 signatures against the measure, which has had a major impact on sales of rotisserie chicken. This ‘hot VAT tax’ is not raising huge sums for the Treasury but is having a major impact on hard-pressed families and British producers across the country.”

Siemens Industry UK and Ireland complained about the lack of investment in infrastructure. Its md Juergen Maier said:  “It was welcome news that borrowing appears under control, but with growth forecasts revised downwards, I was hoping for some more of the underspend to be invested in infrastructure projects. The chancellor’s account of our infrastructure was seen through rose tinted spectacles and actually much more is needed to support energy and transport.”

The British Retail Consortium (BRC) wanted to see more help for retailers. “The support that was secured for customers wasn't matched by direct help for high street businesses,” ​said BRC director general Helen Dickinson.

“Economic growth is the key to deficit reduction. This was the chancellor’s opportunity to maximise retailers’ contribution to re-establishing growth by keeping more money in customers’ pockets and leaving retailers with more money they can invest.

"He's done well for hard-pressed households but could have done more to help retail businesses to help him deliver jobs and growth.”

A snapshot reaction to the budget – in key quotes – is available here​.

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