Chancellor Rishi Sunak this week delivered a Budget of £30bn worth of spending commitments – including £12bn of emergency cash pumped into the economy to help the country cope with the coronavirus threat.

Sunak is banking on the giveaway Budget boosting economic activity and consumer spending, but t The specific measures were rather more mixed for the grocery industry– with some pockets of relief, but swathes of the industry facing higher tax burdens at a time of unprecedented economic pressures.

  • The Chancellor provided welcome relief to smaller retailers on businesses rates. He announced the abolition of the entire tax for retailers with a rateable value of less than £51k as well as potential cash grants of £3k per business.

    Association of Convenience Stores chief executive CEO James Lowman said: “We strongly welcome the Chancellor’s actions to reduce the burden of business rates in the short term… “The £3,000 grant will be of great benefit to over 18,000 of the smallest convenience stores who mostly trade in rural and isolated areas, helping them to continue providing an essential service to their local communities,” said ACS CEO James Lowman.
  • However, there were no business rates changes for larger retailers, with yet another ‘fundamental review’ of the system announced to be concluded in the autumn. British Retail Consortium chief exec CEO Helen Dickinson “This Budget does little for larger retailers – offering a string of cost increases with no respite in the short term… The Chancellor has shown he is capable of making bold decisions, this will be critical to the upcoming review of the broken business rate system.”
  • Fuel duty will be frozen again, in a boost to forecourt operators. However, tax breaks on ‘red diesel’ will be ended in 2022 – reversing what Sunak called a £2.4bn tax break for pollution. Agriculture and fishing will be exempt, but the measures will be a blow for haulage businesses and food producers and retailers who use it that use red diesel in refrigerated vehicles and will see their fuel bills rise substantially.

    “Removing access to red diesel for cold chain hauliers adds £150m of costs to the businesses we rely on to keep our food safe, Two years is not enough time for businesses to make the changes to their fleet.” said Cold Chain Federation CEO Shane Brennan.
  • A plastic tax will be introduced in April 2022, levied at £200 per tonne of plastic made from less than 30% recycled materials. Sunak said the tax would increase the use of recycled plastic in packaging by 40%, “equal to carbon savings of nearly 200,000 tonnes”.

    The BRC’s Dickson raised concerns the measures would “effectively be a tax on many goods including food as the use of plastic packaging is currently unavoidable in some circumstances due to food safety legislation and the lack of alternatives”.
  • Alcohol producers and sellers will raise a glass to the freezing of duty on spirits, beers and wines. The government will continue to lobby against US tariffs on scotch imports and will spend £1m to promote Scottish food and drink exports.

    Scotch Whisky Association CEO Karen Betts said: “We welcome the fact that excise duty on spirits has been frozen for nearly three years… However, our industry needs continued support, through the upcoming review of UK alcohol taxation and while our exports remain subject to US tariffs.”
  • A new remit for the Low Pay Commission will be given to set the national minimum wage at two thirds of median earnings – potentially hiking it up to £10.50 an hour by 2024.
  • Now the UK has left the EU, the ‘tampon tax’ will be abolished, with no VAT on women’s sanitary products.

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