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Retail

UK Spring Budget – The Retail And Food & Beverage Industry Response

By Steve Wynne-Jones
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UK Spring Budget – The Retail And Food & Beverage Industry Response

UK Chancellor of the Exchequer Jeremy Hunt has unveiled the government's strategy to stimulate economic growth in a Spring Budget statement. The proposed measures include a reduction in National Insurance rates, the elimination of the non-domiciled tax status, a decrease in the higher rate of property capital gains tax, and various other initiatives.

Alcohol duty will be frozen at its current level for another year, while Hunt also confirmed that a tax on vaping products would be introduced in 2026.

Here's how retail, food and beverage industry associations reacted to the announcement:

Helen Dickinson, British Retail Consortium

“When shops we love shut down, when jobs we need are absent, and when investment we benefit from is lost, it’s our lives and our communities which lose out. Retail employs three million people and invests over £17 billion annually, yet the industry’s ambition to deliver a net zero, digitally transformed future with higher skilled, better paid jobs means its potential goes so much further.

"It seems the Chancellor does not share in our ambition, and today’s Budget will do nothing to deliver a better future for retailers and their customers.

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“The cost of living crisis has taken a toll on businesses and households. Consumer confidence remains low and retail sales volumes in 2023 were the lowest in four years. Yet the Chancellor has done little to promote growth and investment, instead hindering it with the business rates rise in April. This has consequences for jobs and local communities everywhere – from the smallest villages to the biggest cities.

“The cut to national insurance might go some way to supporting households impacted by the high cost of living. However, unless Government addresses the government imposed cost increases, we may yet see the spectre of higher inflation return, limiting the benefits to households of lower national insurance.”

Karen Betts, Food and Drink Federation

“It’s great to see the Chancellor’s acknowledgement of the impact of inflation on households with his cut to National Insurance. In parallel, the food and drink manufacturing sector continues to keep prices as low as possible, conscious that many families’ budgets are now close to breaking point.

“But the costs of recent turbulence to our sector are real, and are 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.

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"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, our sector is still held back by a muddle of poor regulation – the latest example of which is ‘Not for EU’ labelling, which will have a chilling effect on investment and exports while tying UK food labelling once again to EU rules.”

James Lowman, Association of Convenience Stores

“The National Insurance cut and increase in child benefit thresholds will help the 400,000+ people working in the convenience sector and encourage more people into work, relieving pressure on an incredibly tight labour market. We heard nothing from the Chancellor today on the future path of the National Living Wage, which we urge clarity on as soon as possible to help convenience retailers prepare for expected rates in 2025 and beyond.

“Retailers are trying to prepare for multiple changes to the regulation and taxation of the vaping category: a ban on disposables expected to come into effect in April 2025, a variety of as-yet undrafted regulations on the siting and marketing of products, and now the introduction of duty on vape sales from 2026.

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"We will work with the government to try and make these various measures coherent and effective, but retailers will be feeling confused about the purpose and implementation of these regulations. Responsible retailers will also be concerned at the advantage given to illicit importers and sellers of vapes who will not pay excise duty, over legitimate businesses who will apply this tax to the price of vapes.”

Glyn Roberts, Retail NI

“Overall, there are a number of positives for Northern Ireland in this Budget. Retail NI had been lobbying for the Long-Term Plan for Towns to extend to Northern Ireland and it is very welcome that Derry and Coleraine are set to benefit from this fund.

“Raising the VAT registration to £90k, freezing the fuel duty and extending the UK Recovery Loan Scheme are all welcome announcements for our members.

“We will be seeking more detail from the Government on the £150 million Enhanced Investment Zone proposal and how it will focus on areas of Northern Ireland that have had historical underinvestment.”

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Miles Beale, Wine and Spirit Trade Association

“The wine and spirit sector will be relieved that the Chancellor has spared them a further duty hike. This will help to keep price rises down for consumers for a period. Six months 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.

“The announcement that the freeze will last only until February is also a source of irritation for businesses. The recent pattern of raising alcohol duty at the Spring Budget and the Autumn statement is very unsettling for the industry. We need to go back to one announcement a year to give businesses certainty.”

Mark Kent, Scotch Whisky Association

“The industry welcomes the Chancellor’s recognition of the benefits of continuing the duty freezes beyond August this year. That decision supports the Scotch Whisky industry, will incentivise investment and, as with previous cuts and freezes, boost Treasury revenue. With cost pressures hurting our bars and pubs, not to mention hard pressed consumers, the Treasury has provided some much-needed certainty and stability for the year ahead.

“Despite this freeze, Scotch Whisky is still put at a disadvantage by the duty system, based on a fundamental misunderstanding of how people consume alcohol and modern drinking trends. With today’s freeze cider is still taxed four times less than a spirit like Scotch Whisky and responsible consumers who enjoy a Scotch are paying too much tax compared with a beer or cider.

"Looking ahead, we will continue to work with the UK Government to ensure that our tax system is supporting the long-term success and prosperity of our iconic homegrown sectors such as Scotch Whisky, so that Scotch and other high-quality spirits are not put at a competitive disadvantage in the UK and other markets around the world.”

UK Vaping Industry Association

"There must be an echo! Chancellor Jeremy Hunt has today revealed the government will be undertaking yet another consultation on vaping – this time looking at the implementation of a new duty on vaping products, set to be introduced in 2026.

"Over the past year, the government has announced and/or held four separate consultations impacting the vape industry, which cover areas including Disposable Vapes, Flavours, Packaging, WEEE Regulations, Point of Sale Display [and] Tax.

"Sadly, today’s announcement brings yet more uncertainty for the sector and businesses are once again in the dark about the future of the industry and how their livelihoods will be impacted." [Comments made via Twitter]

Tom Bradshaw, National Farmers Union

“Agricultural businesses are facing a challenging economic backdrop, with input costs at persistently high levels and at least a 50% reduction in direct farm payment support due this year.

“The announcement on the abolition of the Furnished Housing Letting regime is a significant concern as it’s an important source of diversification for farm businesses which underpins resilience. We will be looking to engage further with Treasury on this announcement.

“We welcome the government backing the NFU’s call for the extension of APR to land in Environmental Land Management schemes as it will remove a barrier of entry for a number of farm businesses and give farmers more choice about how to use their land. But the extension of this beyond ELMs may have an adverse impact on food production and farm tenancies and we will work with Treasury to assess those implications.”

“Where some of the headline announcements, such as an extension to agricultural property relief and a reduction of National Insurance for the self-employed, could offer some benefits to agricultural businesses, the Chancellor has missed an opportunity to deliver resilience for food producers."

Tom Clougherty, Institute of Economic Affairs

“Today’s Budget tax cuts will provide some relief from the rising cost of living, but ultimately won’t do much to revive the stagnating economy that lies behind most of our current woes.

“There is a strong fairness argument for the National Insurance reduction, which will partially offset the impact of frozen tax thresholds. And the long-term ambition to abolish National Insurance and simplify the way we tax earnings is a very welcome one – even if it doesn’t seem likely to come to fruition.

“There’s no getting away from the fact that raising living standards in the long run depends on generating faster economic growth. And that means prioritising tax reforms with genuine pro-growth impact, fixing our broken planning system so that we can build more of everything, and accepting that we need to couple spending restraint with major reforms to public services."

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