2015 Budget

Food industry responds to 2015 Budget

Osborne announced plans to abolish National Insurance contributions for those aged under 21

The 2015 Budget has provoked a mixed reaction from the food industry, with beer, cider and whisky producers celebrating duty cuts, while others are calling for more specific food industry support.

Here, FoodManufacture.co.uk presents a range of reactions from across the trade.

Ash Amirahmadi, head of milk and member services at Arla:

“Our farmer owners will be encouraged to hear the Chancellor announce the government’s plans to help them manage periods of price volatility by increasing the period over which they can average their profits for income tax from two to five years from April 2016. 

“As the UK’s largest dairy and farmer-owned cooperative, we are acutely aware of the impact market volatility can have on our farmers, in addition to the wider dairy industry. 

“We look forward to continuing to work with the government to create a sustainable and competitive long-term future for the dairy industry.”

National Farmers Union president Meurig Raymond

“We are very pleased that Mr Osborne said that he had listened to the arguments by the National Farmers Union (NFU) and will allow farmers to average their incomes over five years. As he mentioned in his speech, farmers are increasingly facing a volatile marketplace and this will enable them to manage the impacts of this. 

“News that the annual investment allowance will be addressed in his Autumn Statement is also welcome. As he mentions, £25,000 is not an acceptable level which would encourage on-farm investment and we will await further announcements with interest. 

“The NFU also believes the changes to the ISA system will allow more flexibility in accessing funds without losing the benefits of tax relief; and that our members who supply the drinks industry will also welcome a cut in alcohol duty for cider, beer and spirits.”

Jim Moseley, interim director general, Food and Drink Federation

“The drop in corporation tax, promise of increased investment funding and support for British farmers will be supported by food and drink manufacturers large and small.

“The doubling of UK Trade & Industry export support targeting the flourishing Chinese market is a positive move but FDF would like to see more backing for exporting food and drink companies to bring us into line with our European neighbours.

“Increased funding for Innovate UK is a positive move, but access remains a major barrier. Simplification of the innovation funding landscape to ease access would be beneficial, not least for small and medium-sized firms who make up 96.5% of UK food and drink manufacturing.

“Plans announced to make research and development (R&D) tax credits easier to access are certainly a step in the right direction.

Plans to abolish National Insurance for under-21s this April and young apprentices next April are welcome. FDF is calling on the government to go further and extend this to adult apprenticeships which are most needed in the UK’s largest manufacturing sector – food and drink.

“FDF has committed to increasing higher level technical apprenticeships in this high-tech, world leading industry sector by 20% by 2017. FDF will continue to work with government and partners to evolve the apprenticeship model so that it meets the needs of our sector and workforce.

“Measures announced yesterday to put apprenticeship funding in the hands of employers via ‘apprenticeship vouchers’ are a welcome move from the Chancellor [George Osborne].”

John Allan, national chairman, Federation of Small Businesses

“Continuing to freeze fuel duty will be welcomed by small firms still struggling with the cost of fuel at the pump.”
R&D tax credits are an important way of incentivising business R&D investment, but as we have consistently argued many smaller businesses simply find them too difficult to claim.

“The announcement of well-publicised standalone guidance, backed by advance assurance of claims which we have strongly advocated, should make it much easier for small businesses to apply and drive further investment by innovative companies.”

Ben Halford, ceo, composite processing equipment manufacturer Surface Generation:

“There are not enough skilled engineers in the UK and now 15% of our workforce is made up of people from other countries. The government should relax immigration laws to make it easier to hire the right staff from outside of the EU irrespective of election pressures.

“Every year, the UK faces a shortfall of over 81,000 people with engineering skills in the workforce and this is threatening the country’s economic recovery.”

Vasudev Majumdar, associate director, Grant Thornton UK Food & Beverage:

“Great Britain’s fast growing segment of microbreweries will welcome the Chancellor’s announcement of reducing the duty on beer along with the freezing of the petrol duty.

“While there has been a round of cheer from the alcoholic drinks industry, we were also hoping to see the Chancellor encourage the soft drinks majors to innovate and come up with new ideas to reduce the sugar content in soft drinks.”

The Wine & Spirit Trade Association:

“We are delighted the government has taken action to address the UK’s excessive spirit duty rates. This small drop in duty will result in a big cheer for the UK’s 24M spirit consumers.

“We campaigned for a cut in duty across all products and are disappointed that the UK’s 30M wine consumers did not receive a duty cut too. We would also have like to see greater support for the burgeoning English wine sector. But freezing wine duty is an improvement and a first step towards supporting wine businesses looking to invest in the UK, create jobs and back British pubs.”

Helen Dickinson, director general, British Retail Consortium

“Increasing UKTI’s resources to double the support for British exporters to China is a positive step forward. UK retailer’s brands are much in demand in China and our retail industry’s exports provide a great opportunity for the UK economy.”

Carl Hasty, director SmartCurrencyBusiness.com

“Trade with China dominated the chancellor’s coverage of exports in his 2015 Budget. He promised to double UK Trade and Investment (UKTI) resources to support exports to China, and posed the reminder that the UK is the first Western country to seek to become a founding member of the Asian Infrastructure Bank in Beijing.

“I would have liked to hear further detail about how the chancellor expects to achieve the government’s target of £1 trillion UK exports by 2020. It is encouraging that the government aims to encourage exports to areas outside of the beleaguered Eurozone, which is currently still the UK’s largest exports market. China is in the process of opening its doors, and is an exciting market to consider. However, although all currencies are subject to national and global uncertainties and risk, China’s currency is less predictable, given that it is in the process of moving towards a free-floating currency. Without the right guidance, companies could see significant currency losses given unfavourable exchange rates.

“Seen this way, it could be said to be risky to place all of our eggs in one basket if the government is to focus pumping new resources into opening up China to UK exporters. It would seem prudent to spread or extend resources to help UK businesses export to a wider range of overseas markets, so that UK exporters can make the most of other markets in addition to China and the Eurozone.”

Terry Scuoler, chief executive of manufacturers’ organisation EEF

“The chancellor gets three cheers from manufacturers for the measures he included to boost exporters. His decision to bring forward compensation for industries facing vast and uncompetitive energy costs, such as steel makers, is also welcome but the full package needs to be put in place as soon as possible. In addition he has committed to a stable and competitive tax regime, which we wholeheartedly support.”

For more on the 2015 Budget, click here.

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