Food industry investment tops budget wish list

19-Mar-2014 - Last updated on 19-Mar-2014 at 11:15 GMT

Cash in hand: George Osborne tweeted this photograph this morning with the message: 'Today I will deliver a Budget for a resilient economy – starting with a resilient pound coin'

Support for investment and help to boost exports and cut energy costs are three topics topping the food and drink industry’s wish list from chancellor George Osborne’s Budget, to be delivered later today (March 19).

The Food and Drink Federation (FDF) called on Osborne to rethink energy costs and support firms looking to export to secure future economic growth. Terry Jones, FDF director of communication, said: “We are more and more concerned about the impact of increasing energy prices on food and drink manufacturing businesses.

“These rises will clearly impact substantially on our ability to fund low carbon technologies and on our target to grow exports in highly competitive global markets.”

Food and drink manufacturers could face energy price rises of up to 30% by 2020 from the combined effects of the EU’s Energy Trading System and carbon price support impacts, electricity market reform support costs and renewable energy costs, Jones added.

Lagging behind peer nations

Despite improvements in exports, the UK is still lagging behind peer nations – such as France, Germany, Italy and Ireland – and more needs to be done to help it catch up, he said. “We must benchmark ourselves against these campaigns and ensure we are able to match their efforts. We therefore call on government to commit to the same level of support for food and drink exports as peer nations.”

Jones said there was a huge opportunity to drive growth, as only one-in-10 small and medium-sized enterprises in the food and drink sector targets export.

Innovation into new research and development (R&D) were essential to ensuring the future growth and competitiveness of the UK food industry, the FDF added. Support for (R&D) investment should be available to the food and drink manufacturing sector at a similar level to that for European competitors, it claimed.

The need for investment to help grow British food production and protect against volatile weather was highlighted in an open letter to Osborne from new National Farmers Union president Meurig Raymond.

“The rural economy is worth £211bn a year, driving local growth and contributes significantly to the wider economy which is why we would urge the government to consider our recommendations to boost investment in agriculture and close the growing gap between domestic production and consumption,” said Raymond.

Help energy costs

John Cridland, director general of the Confederation of British Industry, also wrote a letter to Osborne proposing the introduction of a capital allowance for new facilities and an energy package which encouraged investment and helped firms struggling with high energy costs.

The British Retail Consortium (BRC) said unlocking the UK’s energy efficiency potential would make businesses more efficient and support future growth through more investment and jobs.

Helen Dickinson, director general of the BRC, said: “The policy measures we are suggesting, together with the contribution that retail can itself make, will ensure that this industry remains at the centre of the UK economy. In our Budget submission we include considerations around business rates, ways to cut red tape, ideas for improving international trade, a proposal for a platform for better energy and carbon efficiency and reflections on the national minimum wage and skills.”

John Allan, national chairman, Federation of Small Businesses, called on the government to create the right environment to help small firms grow and for a fundamental reform of the National Minimum Wage.

“The focus now needs to be on addressing fundamental structural issues. Getting more competition and transparency in key sectors such as energy and financial services will greatly help small firms,” he said.

Small firms

“While the chancellor has a number of important fiscal choices to make, such a move is attractive as it would boost take-home pay for low income households, increase incentives to work for the unemployed and ensure small firms remain competitive.”

The Scotch Whisky Association (SWA) appealed to the chancellor to freeze duty on whisky. It has urged the Osborne to ditch the automatic annual increase in duty on wines and spirits.

Introduced in 2008, the alcohol duty escalator rises by inflation plus 2% each year. It was cancelled for beer in last year’s budget but remains in place for whisky.

In the past, the Treasury claimed 90% of Scotch whisky was exported and, therefore, unaffected by UK duty. But the SWA argues UK Scotch sales have slumped since the escalator was introduced.

Leading economist Professor Ethan Kapstein also called on Osborne to use the budget to help firms invest.

Meanwhile Osborne tweeted a photograph of the new pound coin this morning with the message: “Today I will deliver a Budget for a resilient economy – starting with a resilient pound coin.”

Watch out for more Budget news and reaction later today on FoodManufacture.co.uk.

Food industry wishlist