Spring Budget 2024: Focus on Food and Beverage

As a proud sponsor of the Wine Garden of England it was pleasing to see that Jeremy Hunt has frozen alcohol duty from 1 August 2024 to February 2025. This will help keep prices down for the consumer in an era of increasing costs, although it shouldn’t be forgotten that there was a large increase in alcohol duty six months ago. It is disappointing that the freeze is only for a short period, as this does not encourage confidence or stability. Ironically such freezes in the past have actually resulted in more revenues for the treasury, as increases tend to reduce sales and therefore overall duty, so it doesn’t seem to have been a difficult decision for the Chancellor to have made. The National Insurance cuts may help workers in the sector, with labour shortages continuing to be an issue. Although without further tax cuts or incentives for people on lower incomes to work, I suspect the impact on individuals and encouraging people back into the labour market will be limited.

Unfortunately there was little else in the Budget to encourage further investment in the sector which has continued to decline. This was one of the things the sector had called for prior to the Budget, in particular an incentivised investment scheme to help with food security and sustainability, along with improvements for apprenticeships and grants to encourage technology in the sector, such as the use of robotics.

The Office for Budget Responsibility’s forecast that inflation will fall below 2% in the coming months will be welcome, if it materialises, as the sector has continued to battle with rising costs of materials and labour.

It was interesting to see the CEO of Food and Drink Federation calling for joined-up, constructive Government policies to shore up the sectors strength and to create the conditions for investment. Instead she commented that the sector is being held back by a “muddle of poor regulation”. We see this impact through the advice our Customs and Duty team are providing to our client base to help them navigate through the increasing regulation.

In 2024, there will be £427 million of government funding to support investment in agricultural productivity and innovation. The Government is also providing £75 million to Internal Drainage Boards to bolster investment in water and flood management assets to protect agricultural land from the impact of floods and storms. However, there seems to be little comment from the farming sector regarding this suggesting it has been met with a subdued response and the devil will be in the detail, but this could help the sector and the country’s wider food security.