Budget 2021: food and drink industry has its say

Alcohol industry

Karen Betts, CEO, Scotch Whisky Association: 

“By freezing duty, the Chancellor has given welcome relief to all distillers, specifically in Scotland where 92% of all UK spirits are produced or bottled. It’s confirmation that the UK government wants to support one of Scotland’s most important industries and will take action to protect jobs, investment and exports, and to bolster the recovery in hospitality and tourism.

“But the UK government must go further if it’s to meet its promise to ensure the tax system is supporting scotch whisky. Despite the duty freeze, spirits are still taxed more than beer, wine and cider and we will now want to scrutinise the reform proposals announced by the Chancellor today. At first glance, it appears that scotch whisky will continue to be put at a competitive disadvantage against beer and cider through the tax system, rather being allowed to compete on a level playing field.”

 

Food and drink industry

Ian Wright, CEO, Food & Drink Federation:

“Food and drink manufacturers – and the farm to fork supply chain – will applaud the moves made by the Chancellor in the direction of a higher skilled, more productive UK economy. As the UK’s largest manufacturing sector, with a footprint in every constituency, food and drink is ideally placed to contribute. For many of our manufacturers and producers there was welcome news – the 50% cut in business rates for hospitality, the simplification of alcohol duty and the additional support for R&D. On the latter we will campaign hard to ensure it is fairly shared out so that it creates step change in how smaller food and drink businesses innovate.

“We support the government’s Plan for Growth – but its success should be judged on whether it delivers the skilled people that we so desperately need. Today’s Budget does little to address the labour shortages which grip the nation. It was also worryingly short on action to tackle rising inflation. Given the pressures they are facing, many manufacturers will simply have no choice but continue to pass costs down the chain.”

Retailers

John Webber, head of business rates, commercial property consultants Colliers:

“After delaying his response four times in the last year, the Chancellor has yet again missed a golden opportunity to reassure businesses and to instigate the fundamental reforms campaigned for and needed – particularly for the beleaguered retail sector.

“There were some positive announcements today but overall, the Chancellor’s measures were underwhelming. The Chancellor has made it clear he is determined to continue to raise £25bn from this tax and as a result his proposals only tinker with the system. The measures suggested will not have a major impact on saving the high street in the longer term.

“While we support more frequent valuations, already mooted in the summer, we would prefer to see annual revaluations – so that rates are a closer reflection of current rental values. We also need to see what caveats the government has introduced alongside its proposals. If the government, as mooted, imposes a duty on rate payers to supply detailed information to the VOA about their properties on an annual basis for these valuations, this will provide considerable paperwork and an extra administrative burden on businesses.”

 

Helen Dickinson, CEO, British Retail Consortium:

“Today, the Chancellor spoke of a new age of optimism, but retailers will struggle to share his confidence after a Budget that does not do enough to reduce the burden of costs bearing down on our shops, our high streets and our communities.  

“This budget is a missed opportunity for retail and the three million people who work in the industry, and it prevents retail from maximising its contribution to the government’s levelling up agenda.

“It’s a mixed bag of announcements from the Chancellor which falls far short of the truly fundamental reform that is needed and was promised in the government’s 2019 manifesto.

“With firms still stuck on property valuations from 2015, the move to a three-year revaluation cycle, supported by a properly funded VOA, is welcome and is a clear acknowledgement that rates have fallen well out of kilter with the wider property market. The freeze in the multiplier is positive, though the evidence is clear that the current rate – over 50% in England – is already far too high.

“We also welcome the property investment relief and green investment relief, both of which the BRC has called for, which will provide some support for much needed investment in green technology and property improvements.

“While the government’s 50% bridging relief for 2022/23 may prove to be beneficial for the smallest businesses, it will do little to support the businesses that pay two thirds of retail business rates and employ 1.5 million people. With no reduction in the burden, this will lead to the unnecessary loss of shops and jobs and fails to incentivise investment in all parts of the country. This is bad news for every member of the public who wants a vibrant high street in their local community, with retail at its heart.”

 

Convenience industry

James Lowman, CEO, Association of Convenience Stores:

“It was great to see the Chancellor announce action to incentivise investment through the business rates system, something we have been calling for in our discussions with ministers for many years. The 50% relief on 2022/23 business rates is a significant step towards our recommendation for a full exemption for premises under £51,000 rateable value. While these measures are welcome in the short term, they must be supported by long-term reform of the business rates system that ensures that retailers can focus on driving growth, efficiency and productivity. Convenience stores have kept Britain going through the pandemic and are at the heart of our recovery and future growth.

“On one hand, the Chancellor is implementing reform of duty rates to make the system simpler, but on the other, the new ‘draught relief’ will make the system more confusing. As the line between on-trade and off-trade becomes increasingly blurred, duty should be applied at the highest point of the supply chain. We urge the government to focus on tackling the billions of pounds worth of non-duty paid alcohol that is damaging responsible retail businesses and the communities that they serve.”

“The increase in the national living wage to £9.50 is in line with the established policy of this rate equalling two-thirds of median earnings by 2024. This will bring a pay rise for many of the 392,000 people working in local shops, but significantly increase the costs of those running these stores, who are working longer and longer hours to keep their businesses afloat. We now need to see an Employment Bill to tackle the burgeoning shadow labour market based on avoiding paying the national living wage and other costs, using gig economy practices to undercut the flexible and secure work offered by local shops.”

 

Wholesalers

James Bielby, CEO, Federation of Wholesale Distributors:

“The 50% business rates discount for retail, hospitality and leisure is to be welcomed but this discount must also apply to the food and drink supply chain which supplies our vital public sector infrastructure in this country and that has received comparatively very little help from the government throughout the pandemic.

“While we welcome steps to reduce alcohol duties, creating a distinction between the on and off trade is a harmful way of doing so. It will create costly administrative burdens for our members and risk an increase in alcohol duty fraud. We would urge the government to rethink this approach.

“The shortage of HGV drivers has been a significant challenge for wholesalers. We welcome the steps announced by the Chancellor today to mitigate the impact of the shortage. However, these measures are no substitute for placing HGV drivers on the shortage occupation list, providing access to a greater pool of labour.

“While our members support the NLW in providing a minimum wage standard, we have concerns regarding the forthcoming increase during a time of major economic upheaval. The Covid-19 pandemic and Brexit have seriously impacted wholesalers’ revenues and disrupted the growth of their businesses. Further costs will detrimentally impact the sector. Looking ahead, there should not be a fixed target to achieve 66% of medium earnings, the government must and should consider the economic impact such decisions will have on the sector and the wider economy.

 

Hauliers

Rod McKenzie, MD for policy and public affairs, Road Haulage Association:

“These are very welcome measures for the UK’s hard-pressed haulage industry already battling chronic driver shortages and other substantial challenges to maintaining the efficiency of the nation’s supply chain.

“This is a major victory for our demands that truckers need better facilities. Somewhere safe to park with good toilet and washing facilities is vital. It is crucial that Government continues to work with the industry to improve conditions as this will also act as an encouragement to potential truck drivers, particularly women.”

 

Analysts

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown:

“A cut to alcohol tax is always a morale booster in a Budget, so multiple cuts, including planned duty hikes are worth raising a glass to. Axing the prosecco premium will make it more affordable to crack open the bubbly. The draught relief also offers a welcome boost for pubs and drinkers, cutting the price of a pint by 3p. Unfortunately, it comes on the back of warnings that pressure on pubs from rising prices and rising wages will force them to increase their booze prices, so even after this cut, drinkers could pay more.

“Cancelling the fuel duty rise was the only sensible move after the price of petrol hit a record high of 142.94p on Sunday. Duty already makes up 57.95 pence of the cost, and VAT another 23.69p, so it would have been incredibly difficult to justify hiking tax on fuel further at the moment. Unfortunately, for motorists this isn’t going to cut the cost of filling up, just avoids making life even harder overnight.”

 

Lisa Hooker, consumer markets leader, PwC:

“Retail and hospitality businesses had high expectations from this Autumn Budget but, while the Chancellor has delivered in some areas, businesses have been kept waiting in others.

“The 50% business rates relief for small businesses will be welcome. For larger ones, reliefs for property improvements and green investments, and the freezing of the business rates multiplier in 2022/23, will be seen as a start. However, more fundamental reform of business rates will have to wait until the consultation on online sales tax has been completed, although the latter will be dependent on what OECD members including the UK agree. 

“While the Chancellor promised little new directly for the high street, helping museums, galleries and theatres thrive via tax reliefs will help draw more visitors to towns and cities. And pubs will be cheering the reduction in draft beer tax, which will also help shift the balance of power between the on-trade and grocery retailers, and compensate partly for the impact of lockdowns. More widely, frozen alcohol duties, reduced tax on cider and prosecco and small brewers relief will benefit entrepreneurial businesses and drinkers alike.

“The 6.5% increase in national living wage, while good news for the consumer, will add to the inflationary cost pressures for retailers, in particular on the many smaller businesses that haven’t already implemented above national living wage pay scales. Investment in retraining, upskilling and numeracy are welcome, but will not relieve immediate labour shortages. 

“Retailers’ most immediate challenge will be on delivering Christmas. Measures to help recruit more HGV drivers, to freeze vehicle excise duty and HGV road user levy, and to improve conditions through roadside facilities, are all welcome but unlikely to ease the immediate shortages.

“Aside from the headline-grabbing duty reductions in petrol and alcohol, there was little else to cheer for most consumers, although the Chancellor has supported those most in need with the increase in national living wage and the reduction in Universal Credit taper. However, if inflation exceeds the 4% predicted, this could quickly undo any increased spending power.”

 

Charities

The Food Foundation:

“It is worrying that the government has not chosen to extend eligibility for the [Holiday Activities and Food Programme], or to expand the number of children that are eligible for free school meals and Healthy Start vouchers. There are still far too many children not benefiting from the safety net that these targeted schemes should be providing. Nearly 50% of children experiencing food insecurity in England are still not eligible for free school meals or holiday clubs. A basic level of adequate, nutritious food for the most at-risk children is not a big ask, and would help ensure that spending on education goes further by helping disadvantaged children learn better and protecting their long-term health.” 

 

Lindsay Boswell, CEO, FareShare:

“Two million tonnes of food is wasted on farms and in factories every year. Food waste on this scale is, quite frankly, an environmental scandal, so we’re deeply disappointed today’s budget doesn’t include a pledge to continue and extend lifeline Defra funding to tackle food waste.

“For the relatively modest sum of £5m p.a. British farmers and food producers would have been able rescue 53m meals’ worth of fresh, nutritious food, and get it to frontline charities instead. Now that good quality, edible food is at risk of being wasted – ploughed back into fields or thrown into biogas digesters.

“Food waste within the supply chain accounts for 6% of UK emissions, so if we are to achieve our Net Zero ambitions then tackling food waste must be an urgent priority. We’re extremely grateful for the support we’ve received on this issue from MPs on both sides of the house. In the weeks and months after COP, we urge government to work with us and with the food industry, to ensure farmers and food producers are no longer penalised for doing the right thing with their surplus food – so we can save good food from waste and get it on to people’s plates.”