Spending Review: The food industry’s response

As one of the most challenging years in recent memory for the food and farming industries draws to a close, chancellor Rishi Sunak’s Spending Review has offered a mixed bag for the coming year.

Ian Wright, chief executive of the Food and Drink Federation, said the announcements made would be “broadly welcomed” by the food and drink industry. In particular, he said the chancellor’s investment in upskilling the workforce “will provide much needed additional support to those younger people who have been hardest hit by the pandemic”.

Ian added that he hoped further commitment to research and development would “deliver long-term benefits for food and drink manufacturers across the country”, and looked forward to seeing how the introduction of the Shared Prosperity Fund would be used to boost the food and drink sectors in Wales and Scotland.

“Bitter blow” for Welsh farmers
Meanwhile, NFU president Minette Batters said the spending review presented a “mixed picture” for farmers and growers. “For farmers in England, it is good news that the government has confirmed its manifesto pledge to maintain existing levels of farm support.

“However, Welsh farmers appear to be facing a significant funding gap of £95 million, compared to existing EU funding. This is unacceptable and clearly not consistent with the government’s levelling up agenda,” Minette said.

John Davies, president of NFU Cymru, described the shortfall as “a bitter blow for Welsh farmers at what is a critical and extremely uncertain time for our industry”.

“In the build up to the EU Referendum and thereafter, we have been consistently told that funding for Welsh farming would be maintained and protected following our departure from the EU,” John said. “Any reduction in funding puts at risk the unparalleled contribution that Welsh farming makes to society in Wales, being the cornerstone of the multi-billion pound Welsh food and drink supply chain.”

Elsewhere, Minette identified opportunities for farmers in the spending review. Infrastructure investment could be an important source of funding for farmers to drive green economic recovery, continue their transition to net zero and “cement their place as world leaders in climate-friendly food production,” she said.

“For this to happen, it’s crucial that these funding schemes, such as the Shared Prosperity Fund, are easily accessible for farm businesses,” Minette added.

Recovery will “hinge on” small business success
While essential food shops were able to stay open throughout any lockdown periods this year, less fortunate non-essential retailers have lost out on £8bn in sales in the last month alone, the British Retail Consortium (BRC) said.

Hospitality businesses, including many in the food and drink sector, are “being hit hardest by the crisis,” added UKHospitality chief executive Kate Nicholls, but “it is also the sector which could lead the recovery of the economy if given the chance,” she said.

“We can only deliver the growth that the Treasury desperately needs if we survive the winter. If hospitality does not get the support it needs right now, businesses will fold and jobs will be lost,” Kate said, calling for a solution on rents and an extension to the VAT cut and the business rates holiday.

The BRC was “encouraged” by plans to consider options for further business rates relief. “A return to full business rates liability in April would be impossible for some firms to meet and freezing the multiplier in 2021/22 does not solve this problem,” said chief executive Helen Dickinson.

For small businesses, however, the Spending Review was a “missed opportunity,” according to Federation of Small Businesses (FSB) national chairman Mike Cherry.

“The economic forecasts outlined today are stark,” he said. “Our hopes of recovery will hinge on the success of small businesses. We need to see far more from this government where reducing tax on enterprise, facilitating start-ups and bringing down operating and employment costs are concerned.

“We will at least need to see meaningful action to spur business and job creation by the time the furlough scheme is reviewed in January,” Mike added.

The FSB welcomed commitments to the new Shared Prosperity Fund, infrastructure bank, and the £4 billion Levelling Up Fund that will invest in local infrastructure. “We’ve always said that replacing EU funding for business support would be critical as we move to a new relationship with Europe, and our recommendations have been taken on board.

“It’s vital that – as these new initiatives are rolled out – small firms are brought into the supply chains of capital expenditure projects and paid on time,” he added.

Retail and farm groups alike welcomed efforts to boost rural broadband and support local areas, but despite a broadly positive response to the Spending Review, some are already looking forward to how the government can support these industries further in the Spring Budget. “A pro-business Budget [in the spring] will not just be important, but essential,” said Mike Cherry.