We’re waiting, Chancellor
Wait and see was how the mini budget was trailed prior to today. And, wait and see is how it’s turning out post-budget announcement.
Chancellor Kwasi Kwarteng has unveiled the biggest package of tax cuts in 50 years, as he hailed a “new era” for the UK economy.
Mr Kwarteng says a major change of direction was needed to kick start economic growth (to 2.5%) as high tax rates “damage Britain’s competitiveness”, reducing the incentive to work and for businesses to invest.
The Chancellor announced next year’s increase in corporation tax from 19% to 25% will be cancelled, stating it will put £19bn a year back into the economy, which companies will be able to use to “reinvest, create jobs, raise wages, or pay dividends which support our pensions”.
The measures are welcome but whether what we’ve received is the stimulus for growth is open to debate.
There is still plenty of work to do.
Operational concerns
One area that needs addressing is the number of unfilled jobs in the UK, with fewer people in work than before the pandemic.
The Government needs to produce an ambitious plan to improve skills and help people back to work as cutting taxes alone won’t work. As I heard at the British Frozen Food Federation conference this week, the UK has seen the biggest drop in its employment rate of the major G7 economies, driven by an exodus of over-50s and people with long-term sickness from the workforce. Most concerning is that productivity growth has stalled at levels far below many comparator countries.
Rupert Ashby, CEO of the British Frozen Food Federation, says many challenges remain even though he welcomes any action that reduces costs. The federation head said he would like to see action to ease labour movement regulations, permanently suspend proposed checks on EU goods entering the UK and the reintroduction of the red diesel rebate for auxiliary engines used to power transport food refrigeration units.
“We will be actively engaging ministers and officials and asking them to engage directly with the industry to ensure they understand the pressure our members are under,” Ashby adds.
Philip Linardos, co-founder and CEO of ShelfNow, Europe’s first intelligent B2B online marketplace says he welcomes the introduction of the Energy Bill Relief Scheme, which will offer some support for smaller businesses who are set to be disproportionately affected by the ongoing energy crisis. He also welcomes the freeze in corporation tax at the current time as this will reduce the burden on already overstretched SMEs that are struggling with margins.
“It is, however, disappointing to see no pledge made to reform fuel duty as this would benefit both our food & beverage producer and buyer partners by reducing product fulfilment costs and ultimately reducing costs for consumers too,” Linardos states. “We would also welcome an immediate overhaul of business rates to support our struggling high street partners and we would urge the government to reconsider this over the coming weeks and months.”
The FDF chief executive Karen Betts says industry welcomes the range of measures – from the cancellation of the planned rise in corporation tax to a higher annual investment allowance and the creation of new investment zones.
“The Chancellor’s proposals will help our sector to focus on growth, investment and competitiveness, and to stimulate opportunities at food and drink manufacturing sites in every town, city, region and nation of the UK,” she notes.
In conclusion, she says if these measures are combined with the simplification of regulation in the sector, or deregulation where that’s needed, then the “change in the direction of economic policy will create real opportunities”.
“It’s not yet clear to us if the government will be willing to look at some of the costly and burdensome regulation in our sector with a genuinely critical and deregulatory eye,” Betts adds, however.
Your audience awaits
It’s only fair to give the new Chancellor the benefit of any doubt. As Tony Danker, CBI director-general, says, it is a “turning point for our economy”, before adding that today is “day one of a new UK growth approach”. If Kwasi Kwarteng gets it right, and his judgement is spot on, then he could get Britain’s economy moving again.
Today’s announcement is not perfect – it’s just the beginning. The Chancellor has signalled more proposals to come this Autumn and these will be vital to sustain momentum on growth. Over the next few weeks, we will be looking for the Government to set out more of its approach. So, for now, the waiting continues.
- Rodney Jack, editor, Food & Drink Technology.
Keep in touch via email: [email protected] Twitter: @foodanddrinktec or LinkedIn: Food & Drink Technology magazine.
