Autumn Budget: Government accused of failing to provide clarity for food and drink businesses
Chancellor Jeremy Hunt delivered his Autumn Budget today with a raft of tax rises and some support for businesses. During the budget he confirmed that the UK was already in recession and said that getting inflation down was a focus of the Government.
He announced that over 600,000 people on Universal Credit to have to meet with a work coach in a bid to get more into the workforce and better-paid jobs. The National Living Wage is also set to rise by 9.7% from April to an hourly rate of £10.42.
Hunt also announced a £13.6bn package of support for business rates payers in England. To protect businesses from rising inflation the multiplier will be frozen in 2023-24 while relief for 230,000 businesses in retail, hospitality and leisure sectors was also increased from 50% to 75% next year.
The Chancellor of the Exchequer Jeremy Hunt said: “There is a global energy crisis, a global inflation crisis and a global economic crisis. But today with this plan for stability, growth and public services, we will face into the storm. We do so today with British resilience and British compassion.
“Because of the difficult decisions we take in our plan, we strengthen our public finances, bring down inflation and protect jobs.:
Industry response to the Government plans was swift.
The British Frozen Food Federation (BFFF) called the Autumn Statement “disappointing” for businesses in the frozen food industry.
“Despite representations made to ministers by the BFFF and other bodies, the decision made by the government not to extend energy support for businesses past the end of March means that skyrocketing costs in the frozen food industry will be passed on to customers in supermarkets, exacerbating the ongoing cost of living crisis,” said chief executive, Rupert Ashby.
Food security
“Today’s statement has provided no reassurance that the government is serious about backing British businesses and, importantly, shows a disregard for food security. Rising costs for frozen food businesses make it harder to ensure affordable food is readily available for families at what is already a difficult time when household budgets are squeezed. “
Ashby said the government must continue to keep the policies announced under close review over the next few months, and ministers need to understand that if businesses in the frozen food industry are not properly supported, families across the country will have to choose between “heating and eating.”
The Food and Drink Federation chief executive Karen Betts said it recognised the difficult range of issues the Chancellor had to deal with in the Autumn Statement.
"While there was positive news on tariff suspensions, something we have long called for, food and drink manufacturers would have liked to have seen more measures to help our industry deal with the powerful inflationary pressures we are facing," she said.
“With food and drink inflation now standing at 16.4% and energy costs now accounting for a quarter of food and drink businesses’ operating costs, our sector would have liked to have seen more clarity on future energy support, a plan for working with business to tackle labour shortages, commitments to improve the implementation of the EU trade deal, and regulatory reforms to reduce costs to businesses and to help our sector weather the inflationary crisis while protecting consumers as far as possible from price rises.”
The Association of Independent Meat Supplier (AIMs) said that it welcomed the statement that economic stability and growth were central to the statement it was of note that he also recognised the country’s ‘incredible strengths’ in areas such as manufacturing.
“For meat and poultry businesses to thrive they need certainly and we would have liked to have heard about a needs-based approach to migrant labour, at least in the short term,” said Tony Goofger, head of marketing at AIMS.
“However, we do welcome the announcement that over 600,000 more people on universal credit people to meet with work coach "so they can get the support they need to increase their work hours or earnings” and trust that this will also include training needs such as expanding the lifetime skills guarantee to include courses such as level 3 butchery and the promotion of the Food & Drink Careers Passport”
He also highlighted that unless consumer confidence is strengthened and domestic cost pressures are eased “we are likely to see areas of the economy such as out of home dining continue to struggle”.
PTF director general Rod Addy said: “The Chancellor has a delicate balancing act to perform to keep the UK economy on an even keel. The rises in benefits and pensions will mean vulnerable sectors of the society will be better off than they would otherwise have been. However, the elephant in the room remains how short-term support will be to offset soaring energy bills for businesses and consumers.
He added: “Many of the beneficial measures announced will be undercut by an average rise of 20% in domestic energy bills next year due to a scaling back of the Energy Price Guarantee. Knowing this, consumers will continue to rein in spending at a time of record grocery inflation, which will hit the whole food chain.
“Trade associations continue to stress to Government the importance of keeping costs low after support ends in April 2023, as significant rises in bills could be the last straw for food businesses with commodity costs across the board still climbing.”
The National Farmers' Union (NFU) welcomed the investment investment in research and development and the roll out of gigabit broadband technology to rural communities.
"While we await further clarity, these commitments would enable Britain’s farmers to be more productive and efficient, while continuing to produce sustainable food and achieve ambitious net zero goals," NFU President Minette Batters said.
“Like other businesses, it’s rocketing costs for energy - central to producing our food – as well as huge hikes in feed, and fertiliser, which is putting Britain’s farmers and growers under the most intense pressure. We expect an announcement on future support for businesses before Christmas and it is vital this new targeted approach for business beyond next April includes UK food production and the food supply chain."
The drinks sector welcomed news that alcohol duty rates will be deferred but said there was further lack of clarity.
Emma McClarkin chief executive of the British Beer and Pub Association said: “The failure to provide any further relief for our industry today will hit pubs, breweries and their customers extremely hard this winter, and will have a devastating, lasting impact on communities across the country
“Without lower beer duty or detail on whether energy costs will dramatically increase early next year, pub and brewers will still be forced to continue to make incredibly difficult decisions.”
Lack of clarity
The trade group for independent brewers said the Autumn Statement's 'lack of clarity' on beer duty 'adds to the uncertainty' for brewing sector
“They say that no news can be good news and today we see that the Chancellor is yet to make a decision on beer duty, or whether it will increase in line with RPI. However, this lack of clarity adds to the uncertainty facing the sector as independent breweries battle significant energy increases, supply issues and a cost of living crisis,” said Richard Naisby, SIBA acting chairman
“While the extension of the retail, hospitality and leisure business rate relief support to 75% is welcome, once again small breweries are likely to miss out on this support even though they are at the heart of the hospitality sector. Previously the Government introduced the Additional Relief Fund (CARF) for those businesses, like breweries, that missed out on support and its disappointing this has not been repeated today.”
Miles Beale, chief executive of the Wine and Spirit Trade Association, said: “There is nothing to welcome or comment on following today’s Autumn Statement. We have no further information other than that the Chancellor has not yet decided by how much, or when, alcohol duty will be increased.
"We will continue to ask to meet with Treasury ministers as a matter of urgency. We want to see support for businesses in our sector, including as small and as few increases to duty as possible in 2023. And to ensure that changes to the UK alcohol taxation system are fairer, simpler and are delivered with less red tape.”
Chief executive of the Scotch Whisky Association Mark Kent said: “We welcome HM Treasury’s clarification that any decision on alcohol duty rates will be deferred.
“Over the next few months, we look forward to working with the Chancellor who was true to his word and listened to the industry over the past month as we made the case for reinstatement of the duty freeze. Previous freezes have consistently delivered more revenue for the Exchequer, and have enabled the industry to invest in our supply chain, create jobs, support hospitality – boosting the UK economy.”
Meanwhile the Federation of Small Businesses (FSB) said the Budget was high on stealth-creation and low on wealth-creation, piling more pressure on the UK’s 5.5 million small businesses
National chair of the FSB Martin McTague, said: “While tackling inflation is essential, so are measures to create conditions for prosperity, growth and support enterprise. Today is a missed opportunity to avoid further economic slowdown.
“Small businesses, which account for more than 16m jobs in the UK, were already facing an acute cost of doing business crisis through soaring costs, falling revenues, shrinking availability of affordable finance, and a rise in invoices being paid late.
“On top of all that, they now face even higher taxes, cuts to innovation, and a recipe for a longer and deeper recession.”
