Speciality Food April 2024

6 @specialityfood Chancellor Jeremy Hunt set out the government’s 2024 Budget on 6th March, including a cut to National Insurance, and a freeze of the alcohol duty, but no change to the planned hike in business rates. The Office for Budget Responsibility forecasts that inflation will fall below 2% in the comingmonths. “This will provide some relief to small, independent food businesses who have been particularly struggling with rising costs,” said Emma Jones, founder of small business support platform and membership community Enterprise Nation. However, she believes the Budget was a missed opportunity. “This was a budget for a general election, not for small business growth.” Here’s how others in the food, farming, retail and hospitality sectors responded to the headline figures. SMALL BUSINESSES STILL FACE SERIOUS ISSUES Two positive announcements for small businesses were the decisions to raise the threshold at which theymust register to pay VAT from £85,000 to £90,000 fromApril, and to cut self-employed National Insurance contributions. Tina McKenzie, policy chair at the Federation of Small Businesses (FSB), welcomed these and a package of other measures for small business owners, including commitments to make progress on the HMRC administrative burden and on the national roll-out of the Business Energy Advice Service, as well as extending the Recovery Loan Scheme under a new name: the Growth Guarantee Scheme. “That said, many of those running businesses face serious challenges – not least through rapid hikes in labour and input costs – andmany will have understandably hoped that there would be more measures announced that would help ease the tough decisions small employers are having to make day-in day-out to keep their businesses going,” Tina said. In particular, Tina said the Employment Allowance should have been uprated to keep pace with the National Living Wage, andmore help with rising costs would have been welcome. Enterprise Nation’s Emma added that the new British ISA is an “innovative step that could boost investment in UK businesses and assets” and the 2% cut in National Insurance announced for April would put more money back into the pockets of working people and the self-employed. "But more direct action is needed to tackle the key issues holding back small businesses,” she continued. “Late payment remains a major crisis, withmany businesses struggling with poor cash flow as a result of being paid late. “Founders have unrealised potential to sell, export, hire and innovate, but they need a rallying cry to inspire them. The Budget did not provide that,” Emma said. CHANCELLOR DOESN’T SHARE AMBITION’ OF RETAIL SECTOR Helen Dickinson, chief executive of the British Retail Consortium (BRC), agreed that the retail sector, which employs three million people, is making strides towards a more positive future, but she added, “It seems the Chancellor does not share in our ambition, and the Budget will do nothing to deliver a better future for retailers and their customers.” The BRC had called for the government to “fix the problemwith business rates” as they had set out to do in their electionmanifesto. Now, Helen said the lack of action will cost the retail industry £470m extra every year. “How can a whopping 6.7% tax rise in April be justified, when the Chancellor himself is saying inflation is forecast to be nearer 2%?” What’s more, while the Chancellor said burglaries and violent crime had halved in the retail sector, Helen said this “simply doesn’t tally with the experience of thousands of those working in retail. The number of incidents of violence and abuse rose to 1,300 per day in 2022/23 from 870 the year before, according to the BRC. “The Protection of Workers Act in Scotland already provides additional protection to retail workers, so why should our hardworking colleagues south of the border be offered less protection?” Helen asked. And with retailers facing billions in additional costs as a result of new government policies – from higher business rates to the deposit return scheme – Helen said this will feed into prices. “Government must consider the cumulative impact of introducing all these policies, and more, in such a short space of time, or else risk a second wave of inflation impacting households.” Like retailers, restaurants, cafes and other hospitality businesses are dealing with high costs, inflation and the cost-of-living crisis, and Kate Nicholls, chief executive of UKHospitality, agrees that the increases to business rates in April will only contribute to inflation, as businesses will be forced to pass these costs on to consumers. Kate said the government needs to take a different approach and “bear down on the never-ending rising costs” that are forcing businesses to shut. “The National Insurance cut earlier this year was intended to boost disposable income to generate growth and didn’t have an impact. A different result can’t be expected this time around,” she said. 'OUR COUNTRY NEEDS A STRONG FOOD AND DRINK SECTOR' Food and Drink Federation (FDF) CEO Karen Betts agreed that the difficult environment is having an impact on food producers too, with Spring Budget 2024: Food and retail sectors react What do the Chancellor’s latest announcements mean for food, retail and farming businesses? Speciality Food finds out the costs of recent turbulence being “illustrated in stark terms by a steep fall in investment in food and drink manufacturing, which declined by a third last year compared to 2019. “Our country needs a strong food and drink sector –which underpins our food security, as well as hundreds of thousands of jobs and forward- looking science and innovation. For this we need joined-up, constructive government policies to shore up our strength and to create the conditions for investment. This was in short supply in this Budget.” Instead, Karen said, the sector is being held back by a “muddle of poor regulation”, such as ‘Not for EU’ labelling, which she predicts “will have a chilling effect on investment and exports while tying UK food labelling once again to EU rules.” DRINKS SECTOR WELCOMES FREEZE TO ALCOHOL DUTY In another spot of good news, the Chancellor chose to freeze alcohol duty until February 2025, andMiles Beale, chief executive of the Wine and Spirit Trade Association (WSTA), said the sector was “relieved”. “Sixmonths ago, alcohol duty was subjected to the largest increase in almost 50 years. Those tax increases fuelled inflation and had a negative impact on sales, which in turn has seen Treasury lose around £600 million in alcohol revenue. We are pleased that government has now recognised that duty hikes are bad for businesses, bad for consumers and bad for the exchequer.” He added that the pattern for raising alcohol duty at both the Spring Budget and Autumn Statement is “very unsettling” for the industry, and a once-a-year announcement would give businesses more certainty. “Freezing, or even better cutting, alcohol duty supports British businesses like mine and boosts revenue,” added Karl Mason, founder of Masons of Yorkshire Gin. However, wine businesses will still be faced with “complex and costly changes” to the way wine is taxed from 1st February, 2025. “The changes to taxing wine have been described as ‘un-administrable’ and ‘sheer lunacy’ by our members,” the WSTA’s Mike said, adding that scrapping the easement for wine duty will see price increases for 75% of red wines sold in UK. “It’s going to be a very costlymistake,” he added.