That’s all from us today on the budget
17:00
Check out our further coverage of the budget’s impact on grocery and its supply chain:
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Labour’s budget gamble leaves businesses scrambling for cash
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The budget proves food manufacturing has no government backing
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Alcohol industry rages with duty set to go up in line with inflation
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Convenience stores to bear £666m in extra costs from today’s budget
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Your reactions to the new government’s £40bn tax-raising budget
Rishi Sunak is responding to the budget
14:07
He says “they have fiddled the figures and raised tax to record levels.”
He rejects claims the UK economy is in a mess, arguing inflation is back to its 2% target, there is low unemployment, and Labour inherited the fastest growing economy in the G7.
“Survey after survey has shown business confidence plummeting,” says Sunak.
Last week, the Confederation of British Industry said its measure of optimism among manufacturing firms fell at the fastest pace in two years, while the preliminary S&P Global Flash Composite Purchasing Managers’ Index for October said confidence was at its lowest level since November 2023.
A statement from food security minister Daniel Zeichner:
14:00
“This Government will commit to the largest ever budget directed at sustainable food production and nature’s recovery in our country’s history, enabling us to keep momentum on the path to a more resilient and sustainable farming sector.
“ELM schemes will remain at the centre of our offer for farmers and nature, with the Sustainable Farming Incentive, Countryside Stewardship Higher Tier and Landscape Recovery all continuing.”
Looks like chancellor has confirmed Business rates reform from 2026 with a permanent lower tax rate for hospitality paid for by higher tax rate on online business premises. That should reduce all bills. However, current reliefs while extended are reduced to 40%
— Kate Nicholls OBE (@UKHospKate) October 30, 2024
Business rate relief
13:36
Labour will provide 40% relief on business rates in 2025-26 up to a maximum discount of £110k per business.
The current 75% discount is due to expire in April 2025.
This will still mean that many businesses will see their business rates nearly double from their current rate.
Tougher on crime
13:30
Reeves says there will be extra funding to “to crack down on the organised crime that targets retailers”.
Shops across the country are reporting two thefts a minute to police amid a growing shoplifting epidemic, according to official figures out this week.
Breakfast clubs
13:26
The government is tripling investment in breakfast clubs for low-income pupils, says Reeves.
Around 12% of state schools in England already offer a taxpayer-subsidised breakfast club but Labour promised in its manifesto to introduce free breakfast clubs in all primary schools in England.
Pop up, pint down
13:14
The soft drinks industry levy will increase by the CPI every year to keep up with inflation.
This will raise an extra £1bn by the year 2029, says Reeves.
Most alcohols’ duty will go up with RPI except for those served on draught which will see duty cut by 1.7%.
“This will mean a penny off a pint in the pub,” says Reeves.
Tobacco duty to rise as expected by RPI + 2%
— Martin Lewis (@MartinSLewis) October 30, 2024
Flat rate duty on all vaping liquid from 2026
Sugar tax to be increased on soft drinks and to rise with CPI#Budget
Capital gains tax
13:12
Reeves says capital gains tax is going up, with the 10% rate increased to 18% and the higher rate increased from 20% to 24%.
This will affect numerous food and drink owners looking to sell their business from now on.
National Insurance contributions
13:10
As expected, employers National Insurance contribution will be increased by 1.2% to 15%.
The threshold employers start paying the tax will also fall from £9,100 to £5,000.
This will rake in over £20bn but is hugely unpopular among businesses.
Fuel duty frozen
13:06
Fuel duty will be frozen next year, reversing a decision by the Conservative government.
Reeves said the planned rise would mean fuel became 7p per litre more expensive.
Minimum wages
13:01
Reeves reiterates the National Living Wage for people aged 21 or older will rise by 6.7% from £11.44 an hour to £12.21 from next April.
The minimum wage for 18–20-year-olds will rise from £8.60 to £10.
These are in line with the Low Pay Commission which recommends minimum wage rates.
This was confirmed by the government yesterday, and will force many supermarkets to up their basic rate.
Rachel Reeves confirms this budget will raise taxes by £40bn
12:49
Though not unexpected, Reeves’ announcement of a £40bn hike in taxes is about £5bn more than many predicted.
We’ll bring you the updates on where those rises will come from as soon as possible.
Reeves says inflation is forecast to average 2.5% this year, and 2.6% next year, according to the Office for Budget Responsibility (OBR).
The OBR predicts it will finally come down to the Bank of England’s 2% target in 2029.
Labour’s first Budget in 14 years is underway…
12:35
It’s expected to feature large tax hikes to cover the billions of pounds worth of holes the government said it discovered when it took office.
Chancellor Rachel Reeves is expected to hold to Labour’s manifesto commitment not to increase VAT or income tax, however there are likely to be hikes to capital gains tax and employers’ National Insurance contributions, among others.
Sunak’s last PMQs
12:12
It’s all very jovial at the moment for Rishi Sunak’s last PMQs as Tory leader. Sunak has asked Keir Starmer to embrace “his inner tech bro” and support emerging tech businesses. The Budget is to follow.
Investing in sustainable agriculture
11:12
Rachel Reeves must give money to farmers to help them transition towards more sustainable agriculture, according to Sarah Bradbury, CEO of IGD.
Writing in the Grocer yesterday, Bradbury said this would improve food security, address the climate crisis, and give a boost to the entire UK economy.
“Food is the one sector that can simultaneously deliver on economic growth, sustainability and public health. No other has the power to deliver such benefits, whilst also offering employment in every region of the UK,” she said.
But according to reports in the Guardian last month, England’s nature-friendly farming budget could be cut by up to £100m. That could mean at least 239,000 fewer hectares of nature-friendly farmland, according to RSPB.
Capital gains rises
11:01
Rumours of changes to capital gains tax is also playing on the minds of food and drink companies, with dealmakers telling The Grocer that a number of deals were pushed through in recent months to avoid a bigger tax bill.
Yesterday, Rude Health announced its sale to Finland’s Oddlygood, with co-founder Camilla Barnard noting the deal was likely done just in time.
Both Camilla and her ex-husband and co-founder, Nick Barnard, are expected to make a seven-figure sum each from the sale, having previously owned just over 50% of the business.
What other costs could be on their way?
10:57
There’s been a lot of talk this week about a rise in National Insurance contributions for employers in what would likely be the single largest revenue raiser from today’s budget.
It is likely to go up by between one and two percentage points from its present level of 13.8% and, alongside lowering the threshold for when employers start paying the tax, could raise about £20bn.
That’s not massively popular inside businesses, with M&S CEO Stuart Machin arguing this week that any tax hikes on companies would be “a short-term, easy fix” but would inhibit the UK’s long-term growth plans.
He argued National Insurance was a “tax on workers” who would pay through its impact on job opportunities.
Welcome to our coverage of the first budget of the new government
10:50
We got our first bit of confirmed action yesterday when Chancellor Rachel Reeves confirmed the minimum wage for over-21s would go up to £12.21 an hour in April.
That will be an extra £1,400 per year for each eligible full-time employee.
Industry groups are already warning the rise will add further pressure to struggling businesses.
Kate Nicholls, CEO of UKHospitality, said businesses would be approaching the budget with “even more trepidation” after the announcement.
But unions insist it’s all very affordable. “Every time the minimum wage goes up there are some voices who predict this will drive up unemployment. Every time they are wrong,” said TUC general secretary Paul Nowak.
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