Wholesale businesses need the government to commit to stability and provide clarity over the mid-term direction of policy, the FWD has said following the Chancellor’s Monday announcement in which he ditched almost all of the tax cuts announced in the mini-budget three weeks ago.
The FWD had original greeted then chancellor Kwasi Kwarteng’s mini-budget with cautious optimism three weeks ago, after it addressed several major issues such as food price inflation and the energy crisis
“The past month of Government back and forth over tax policy has been majorly disruptive for food and drink wholesalers already facing a number of challenges including food price inflation, energy price rises, and labour shortages,” said FWD chief executive James Bielby. “Forecasts will now need to be torn up and updated, and businesses will be reassessing hundreds of variables as we approach the Christmas peak.”
The FWD has commented on the following changes:
Energy Price Guarantee – The Chancellor’s confirmation that the energy price guarantee will end in April 2023 leaves many questions unanswered, and many wholesalers vulnerable in the new year. Urgent clarity is needed on how vital aspects of the UK economy such as the food and drink supply chain can be protected through energy support to ensure that food remains affordable, healthy and of a high quality.
Reversal of the Alcohol Duty Freeze – Instead of encouraging people to participate in the UK’s hospitality sector, this policy u-turn will make enjoying alcohol in foodservice settings more expensive and less attractive for consumers during a cost-of-living crisis. Inflationary increases will be passed through the supply chain with hard pressed consumers ultimately footing the bill.
Read more: FWD greets mini-budget with cautious optimism
Continuing with reformed IR35 – As a sector already suffering with labour shortages, the plans to review previous IR35 changes were welcome. This move may compound labour shortage issues, and we would urge the government to work with Defra to understand which gaps in the labour market need to be plugged and to expedite new measures for these gaps to filled.
Personal taxes – Government spending should support the right people, organisations and places. The end of poorly targeted tax breaks are welcome and the money saved should be used to support those who need it most. Workers in the food and drink supply chain will see the end of the national insurance tax rise, but will no longer benefit from the 19% income tax cut. We hope measures which support workers in this vital sector can be considered in the fiscal plan on 31st October.