Trade reacts to Chancellor’s Budget
As a result of the Chancellor’s Spring budget and the Red Book’s publication, AIMS has written to Food and Farming Minister, Mark Spencer MP, asking for immediate action so that their members can help contribute fully to the Government’s desired economic growth.
AIMS’s marketing and communications manager Tony Goodger said: “We were disappointed to read, on page 8 of the Red Book, which accompanies the budget statement that the Government “will ensure that the UK labour market has access to skills and talent from abroad where needed”, but as part of their measures to help ease immediate labour supply pressures, they “will accept the Migration Advisory Committee’s (MAC) interim recommendations to add five construction occupations to the Shortage Occupation List (SOL) initially, ahead of its wider SOL review concluding in autumn 2023.”
He continued: “Given that the previous MAC recommendation in September 2020 was to list butchers as a shortage occupation, a recommendation which was subsequently blocked by the Home Office, we will be asking that same easement for construction be granted to meat and poultry processors to help ease the immediate labour supply pressures that members are facing and to enable them to contribute to the country’s drive for economic growth.
“We welcome the news that the Government will also review the SOL more regularly, based on recommendations from the MAC, so that the legal migration system is quicker and more responsive to the needs of businesses and the economy but suggest that over the last two and a half years, since the last rejected MAC recommendation, that the labour supply issue has worsened for our members.”
Wider food industry reaction
Other trade organisations, representing the wider food industry had mixed reactions to The Chancellor’s statement.
Chief Executive of the Food and Drink Federation Karen Betts said: “He has delivered important support to consumers through maintaining the energy price guarantee at £2,500 and through his commitment to continue to help bring down inflation.
“From a food and drink business point of view, it’s good to see the announcement of full expensing – this is a welcome boost to businesses investing in technology across our sector, and supports increased productivity. We also welcome the decision to extend the current climate change agreements for two years. This provides certainty for businesses as they invest in energy efficiencies, and time to design a smart replacement scheme.
“Likewise, the measures announced to encourage people back into work are timely, but with vacancies in food and drink manufacturing double the national average, our sector needs more help, for example hands-on apprenticeship support for SMEs, to ensure labour shortages aren’t a drag on growth nor a risk to the resilience of the UK’s food and drink supply chain. It’s disappointing too that the Chancellor passed up the opportunity to reform the Apprenticeship Levy, which would have enabled companies in our sector to use levy funds in more flexible ways to help ensure they have the right workforce they need to succeed.
“It’s also vital the Chancellor ensures our sector’s future resilience is supported through good regulation, which creates investment opportunities and jobs. Here we need government to match our industry’s ambition to reform recycling for everyday plastics and packaging. Current government plans for the introduction of Extended Producer Responsibility and a Deposit Return Scheme fall a long way short of international standards, and do not dovetail with the troubled Plastics Packaging Tax. If they are not careful, government action is about to force avoidable additional costs onto consumers right at the time we’re all working to bring down inflation.”
Cold Chain Federation chief executive Shane Brennan was pleased about the decision to extend the Climate Change Agreement scheme: “The cold storage Climate Change Agreement has been very successful in incentivising businesses in our industry to invest in energy efficiency, and the result has been a decade of significant energy efficiency progress in cold stores as well as important tax savings for the industry. Many operators now need to advance to more complex measures to make further energy efficiency improvements, while at the same time they are dealing with the cost impact of the energy crisis. The continuation of a successful Climate Change Agreement scheme is vital in supporting the investment needed to maintain momentum towards a net zero cold chain despite the challenging economic environment.
“We have been calling for the Climate Change Agreement scheme to be extended past 2025 and the consultation launched today is a really positive step towards that. We will be studying the details of the proposed extension and engaging with Cold Chain Federation members to help ensure the scheme continues to provide strong incentives and supports investment in energy efficiency for cold storage facilities.”
Not out of the woods yet says PTF
PTF director general Rod Addy added: “The details of the Chancellor’s Spring Budget statement were overshadowed by Office of Budget Responsibility predictions of a steep fall in inflation across the rest of this year. This is good news for the food industry and the wider economy. News that the UK could avoid a technical recession will also bolster business certainty and encourage investment, as will the regional investment announced across the UK.
“The Government still has a mountain to climb to address the labour crisis. On the surface, childcare support measures and the new Returnership Apprenticeship scheme for the over 50s make it easier for more parents and older recruits to fill labour gaps in the food industry. The £400m plan to increase the availability of mental health and musculoskeletal resources and greater aid for disabled jobseekers will also assist employers to find and retain workers. However, these measures barely scratch the surface of a huge issue and while this challenge remains, productivity will be held back.
“Sustained support for consumers on energy bills for the next three months will be welcome. But OBR still predicts real household disposable income per person to fall by 6% over the next two financial years – the largest two-year fall in living standards since records began in the 1950s.
“It’s also worth remembering that economic benefits will take a while to filter through to consumers and producers. While wholesale energy costs are in decline, they are still at record high levels. And while food inflation may have peaked, it will likely prove slower to reverse than general inflation, particularly while supply chain disruption remains as a result of war in Europe and post-Brexit barriers to trade.
“Overall, these announcements are more upbeat than expected in some ways, but, set as they are in the context of global economic and supply side crises, do not signal the UK food sector is out of the woods yet.”