Budget 2020: Industry reacts

Chancellor Rishi Sunak delivered his first Budget this week, with spending plans for the year including a £30bn package to boost the country’s economy in the midst of the Coronavirus outbreak.

Here are some of the key takeaways for the food and drink industry:

Business rates
The Chancellor promised that retail, leisure and hospitality businesses with a rateable value of less than £51,000 will be exempt from the tax this year, to relieve the pressure of the Coronavirus. SMEs eligible for small business relief can also benefit from a £3,000 cash grant; the equivalent of a £2m injection into 700,000 businesses. A review of the business rates is set to take place later in the year.

NFU President Minette Batters said, “Finally, we recognise the government’s commitments to helping small businesses with the impacts of the Coronavirus. The commitment to cover statutory sick pay costs, providing business rates relief for many small businesses and mobilising banks lending for SMEs will help to provide resilience and support cash flow in these difficult circumstances.”

While it’s good news for many small independent retailers, there is still concern with the lack of relief for larger retailers.

Helen Dickinson OBE, chief executive of the British Retail Consortium, commented, “All of us benefit from a diversity of retailers, both big and small, in our local communities. This budget does little for larger retailers – offering a string of cost increases with no respite in the short term. However, on the upcoming review, the Chancellor has clearly listened to the retail industry and we welcome his recognition that the overall burden of business rates must fall.”

Momin Hayee, director and business rates lead at KPMG UK, added,“Today’s Budget revealed a welcome doubling of the 50% relief scheme to all eligible businesses with properties of rateable values less than £51,000 and an improved £5,000 relief for pubs. While this will help a large number of businesses and will certainly help businesses with smaller footprints and relatively low rent locations, it represents less than a 5% reduction in the overall business rates burden.

“Although the extension of relief will be most welcome, it is only for one year with no real relief for the squeezed middle, who are largely backbone occupiers of high streets across the country.

“The next fundamental review of business rates, to be updated in the Autumn statement, as well as the forthcoming consultation on transition arrangements in England, will be what really shapes the business rates environment for the medium term.”

Plastic tax
A new plastic tax will come into force in April 2022, which will apply to plastic that is either manufactured in the UK or imported that contains less than 30% recycled plastic.

Helen Dickinson said, “The industry is committed to reducing the levels of plastic, however the scale of the challenge is huge. Sadly, the plastics tax would effectively be a tax on many goods including food as the use of plastic packaging is currently unavoidable in some circumstances due to food safety legislation and the lack of alternatives. Instead, the Government should push for more responsible packaging through the Extended Producer Responsibility scheme, whereby the money raised would be invested in our limited recycling infrastructure.”

Red Diesel
Tax breaks on red diesel will come to an end for the majority of sectors, with the exception of rail operators and the agricultural industry, to the relief of British farmers.

NFU President Minette Batters said: “The most significant decision today for British farmers is the announcement to retain the relief on red diesel. This is absolutely crucial and we are pleased to see the Chancellor has acknowledged our concerns. Red diesel is the primary fuel to run the majority of agricultural machinery and it is incredibly important for the farm businesses that produce the nation’s high quality and affordable food.”