Chancellor Rachel Reeves’ Spring Statement promised the British public would be £500 better off by the end of this parliament, with government’s ‘landmark’ planning reforms to bring in a £6.8 billion boost to the economy.
Plans were also announced to train 60,000 young people to ‘get Britain building’, with a £625 million package to boost skills in the construction sector.
However, there was no mention of the UK’s food and drink industry in today’s statement, or the issues facing firms that were a result of government action – the increase in National Insurance, Inheritance Tax hikes etc.
Rupert Ashby, chief executive of the British Frozen Food Federation (BFFF), raised concerns about the pace in which costs were rising, with wage increases continuing to outstrip inflation – partly due to a string of minimum wage increases. The forthcoming National Insurance hike would only serve to exacerbate matters.
“While the chancellor points to a changed world that has led to a lack of growth, BFFF members across both retail foodservice are in fact being thwarted in their ambitions to grow by measures announced in the last budget, as the effects of that start to bite in the coming weeks,” said Ashby.
Unable to cover costs
“A retail member that manufactures its own products says that the increase in NI will cost them over £2 million which will come straight off the bottom line, a cost increase which it won’t be possible for the business to cover.”
This latest round of tax hikes come in on the back of Extended Producer Responsibility charges on packaging, inflationary charges and the general rise in ingredients costs. One BFFF member is now looking at new levels of automation and have implemented a complete freeze on headcount and budget increases for the foreseeable future in order to cope.
“Another member which manufactures products for foodservice, and a workforce of 246 people, has seen the effects of the increase in National Insurance costs and National living wage add around £260,000 to their costs this year,” Ashby continued.
“Couple this with suppliers forecasting increases in costs, the business has no alternative other than to increase pricing. They have also reduced their workforce and halted recruitment.
“Both of these businesses are keen to invest in growth, but it is proving impossible in the current circumstances.
End of sustainable farming
James Gilboy, managing partner of the Downlands Estate and an investor and director of The Ethical Butcher, argued the government’s recent policies and absence of support in today’s budget will contribute to a reduction in farmers farming sustainably.
“If the government don’t do something significant to help farmers continue to do their job and put food on the table for their families, it’s going to be a very dark time for UK food production,” said Gilboy.
He claimed the policies laid out by the chancellor in the Spring Statement will negatively affect businesses striving to adopt regenerative farming practices, discouraging them from embracing this approach and pushing them toward more intensive farming methods.
“Farmers who practice regenerative farming do so out of passion, not economic pressure,” Gilboy added. This style of farming hasn’t emerged from market demand – there’s no economic drive behind it. People are genuinely committed to what they’re doing.
“However, policies that impose financial burdens on farmers will only discourage them from pursuing more sustainable farming methods. The removal of the Sustainable Farming Incentive sends a clear message to UK farmers that sustainability doesn’t matter.
“It’s a dark day for the environment and the countryside, which farmers across the UK work tirelessly to protect and sustain.”
Hospitality woes
The government’s Spring Statement also offered no relief to the hospitality sector. Energy and sustainability consultancy Advantage Utilities urged businesses to take proactive action with cost saving measures to counter rises in taxes across the industry.
Dr James Crosby-Wrigley, head of sustainability at Advantage Utilities, said: “The challenging fundamentals facing hospitality businesses aren’t changing anytime soon.
“Commercial energy prices remain a large source of expenditure and it’s imperative businesses look at what is in their control when it comes to their operations and processes.”
Advantage suggested measures such as advanced energy monitoring, conducting regular audit to identify inefficiencies in equipment and flexible purchasing of energy as ways to mitigating costs.
“Our message to hospitality businesses after this Spring Statement is clear: achieving cost-efficient operations remains key to safeguarding against an uncertain future,” Crosby-Wrigley added.
“Businesses have a prime opportunity to reduce costs through smarter energy solutions such as advanced monitoring solutions, solar PV, voltage optimisation, and flexible energy purchases, leading to better protection of their bottom line while fostering long-term sustainability.”
‘Between a rock and a hard place’
Provision Trade Federation director general Rod Addy said: “Industry recognises that government is between a rock and a hard place in terms of the public purse and is having to make difficult decisions about priorities.
“We are, however, concerned that the food chain, and therefore food security, is being jeopardised by the cumulative costs falling on businesses from import/export charges, packaging waste fees and national insurance costs among other things.
“We are keen to work jointly with government on solutions that further the growth agenda.”
