The grocery industry has reacted to the Autumn budget.
The Food and Drink Federation called for the Chancellor to give food manufacturers targeted energy support in today’s Budget, putting them on a par with other manufacturing sectors, however this has not been announced.
Recent ONS figures show food inflation steady at 1.3% in September, while fuel and transport costs pushed overall inflation to 3.5%. But the FDF expects food inflation to reach 3.9% by December and peak at 6.4% in July 2027, as manufacturers renew contracts at higher costs.
Rob Sinclair, CEO at food tech firm Point74, said: “Food manufacturers went into this Budget wanting the same help with energy bills that other manufacturers receive, and they’ve come away without it. Food and drink is the UK’s biggest manufacturing sector, yet the industry has been left out of the help other manufacturers already get.
“It takes energy to make everything on the shelf. So, when energy bills go up, the cost of making everything goes up at the same time. Until now, manufacturers have kept prices down by quietly trimming a few pence from each product in ways you’d never notice. But they’ve done most of what they can.
“That’s why food prices have held steady even as overall inflation has picked up, but this is unlikely to last. As contracts renew at higher costs, food inflation is forecast to climb from 1.3% today to 6.4% by next July. Allowing food manufacturers to benefit from energy support, on the same terms as other industries, is the simplest way to keep costs down on a weekly shop.”
James Walton, Chief Economist at IGD, comments: “Today’s Budget comes against a challenging economic landscape, with the OBR downgrading next year’s GDP growth forecast. Against this backdrop, the Budget will provide some targeted relief for households, rather than a substantial easing of pressure across the food and drink industry. Business rate changes could help eligible smaller operators and tariff cuts may reduce selected sourcing costs. On the other hand, higher living wages will add to payroll costs, meaning impacts will vary by business. For an industry facing flat volumes and incredibly tight margins, these measures do not fundamentally change the ongoing pressures businesses face.
“Support for shoppers offers some breathing space but is likely to help protect grocery spending, rather than deliver a significant boost to demand. Households remain under pressure and any true relief feels far off.”
Gareth Anderson, Head of Business Management at Allica Bank, comments: “The Budget’s announcement to extend the 5p fuel duty cut until July 2027 is good news for logistics businesses already facing high operating costs. Fuel is a significant expense for many operators, and extending the cut will help ease some of the pressure on margins.
“However, businesses need more than short-term relief. Established logistics firms keep supply chains moving but need manageable costs and access to finance to invest. This matters for the wider economy, as so many businesses depend on them.”
Claire Williams, Partner & Head of UK and European Industrial Research at Knight Frank, comments: “With a further freeze on fuel duty, it was a Budget to keep the lorries moving, but offered little to stop the other costs piling up behind them.
“The continued freeze on fuel duty will be welcomed. But for all the talk of growth, the I&L sector’s core cost pressures went largely untouched. The minimum wage rose a further 4%, and UK manufacturers and logistics operators still pay among the highest energy costs of any major economy, while international competitors enjoy materially cheaper power. The British Industrial Competitiveness Scheme’s 25% electricity discount will be welcomed by manufacturers, but tight eligibility criteria, covering what firms produce and how much energy they use, will limit the number able to benefit, and the logistics sector won’t qualify at all.
“Buried in the detail, though, is a genuine long-term opportunity for the industrial sector: devolution. With business rates to be retained locally in full by the end of the decade, and a share of income tax receipts from 2028, local authorities finally have a fiscal incentive to champion industrial and logistics development rather than merely tolerate it. If regions see the tax benefit of permitting new facilities, planning policy may shift accordingly. That, more than anything announced on the day, could prove the real catalyst for the sector’s next phase of growth.”
Following today’s Autumn Budget announcement that the National Living Wage and National Minimum Wage will rise by 3.9%, Luke Cheetham, Founder and CEO of uRisk Safety Services, is calling for a targeted employer National Insurance rebate to help small businesses manage recruitment costs and take on additional staff.
Cheetham argues that the cost of hiring goes beyond salaries, with employer National Insurance, pension contributions and training all adding to the financial commitment for small businesses. He is calling for a temporary rebate for businesses that create additional roles, helping them invest in growth rather than delay recruitment.
“I’d like the Government to introduce a temporary employer National Insurance rebate for small businesses that take on additional employees, rather than relying on general tax reductions to encourage recruitment. The rebate could apply for the first 12 months of a new employee’s employment, be claimed through the existing payroll system and be limited to genuinely additional roles. That would direct support towards businesses that are deciding to grow their workforce,” comments Cheetham.
“For a specialist safety business like uRisk, the cost of recruitment doesn’t end with the salary. New employees need training and time working alongside experienced colleagues before they can take on assessments and client responsibilities independently. Once you factor in employer National Insurance, pension contributions and training, bringing someone into the business is a substantial commitment.”
“I recently paid a six-figure Corporation Tax bill and a five-figure VAT bill. Now, I’m not suggesting businesses should be exempt from tax, but I do think the Government should do more to help viable small businesses turn their ambition to grow into actual recruitment. A targeted rebate would reduce the cost of taking that first step.”
“I’d also want the Government to publish the cost of the scheme and track how many additional jobs it supports. The aim should be to help businesses recruit people they might otherwise have delayed hiring, not to subsidise jobs that would have existed anyway.”
The UK Vaping Industry Association (UKVIA) has warned that the Government risks creating a two-tier vaping retail landscape following today’s Budget announcement that vape shops in England will be stripped of key business rates reliefs from April 2027.
The trade association says the decision could leave independent specialist vape retailers facing substantial new financial pressures while neighbouring convenience stores, newsagents and other general retailers selling the same products could continue to qualify for relief, potentially paying no business rates at all.
The UKVIA has also raised serious concerns that the Government has failed to provide a clear definition of what constitutes a vape shop, leaving considerable uncertainty over which businesses will be affected.
The Budget confirmed that vape shops in England will lose eligibility for both Small Business Rates Relief (SBRR) and the reduced Retail, Hospitality and Leisure (RHL) business rates multipliers from April 2027.
This comes as the Government is increasing the threshold for 100% Small Business Rates Relief from £12,000 to £18,000 for qualifying retail, hospitality and leisure premises, taking an estimated 70,000 additional high street businesses out of paying business rates altogether.
John Dunne, Director General of the UKVIA, said: “The Government risks creating a deeply unfair, two-tier vaping retail market in which responsible specialist retailers are financially penalised while other businesses selling exactly the same products continue to benefit from business rates relief.
“This means a specialist vape retailer now faces a substantial new business rates bill while the convenience store next door, selling exactly the same vaping products, could pay no rates at all.
“How that can possibly be considered fair or proportionate and how it supports the Government’s ambition to create a smoke-free country are beyond me.
“To make matters worse, the Government has still not provided a clear definition of what constitutes a vape shop for the purposes of these changes.
“Without clear and consistent criteria, there is a very real risk that responsible specialist retailers will be placed at a significant competitive disadvantage compared with other businesses selling the same products.
“The Government needs to explain urgently how it intends to distinguish between these retailers and justify why they should be treated differently.”
The announcement represents a further financial setback for the vaping industry, coming just four weeks after the introduction of Vaping Products Duty at £2.20 per 10ml on 1 October.
Dunne continued: “Today’s announcement represents another damaging blow to legitimate vape retailers who are already dealing with rising operating costs and an increasingly challenging regulatory environment.
“For some smaller independent vape shops, losing Small Business Rates Relief combined with the impact of vaping duty, could threaten the viability of businesses that provide local jobs, support high streets and help adult smokers move away from cigarettes.
“What makes this decision even harder to understand is its relatively modest benefit to the public finances.
“According to the Treasury’s own figures, removing business rates reliefs from vape shops and adult gaming centres combined is expected to raise just £10 million a year.
“We seriously question whether this relatively small financial gain is proportionate to the potential damage to legitimate businesses, local jobs and the Government’s own public health objectives.”
The UKVIA has consistently called for tougher action against rogue retailers, illegal vaping products and underage sales, including the introduction of a comprehensive retail licensing scheme, stronger enforcement and substantial penalties for businesses breaking the law.
Dunne added: “We fully support action against irresponsible retailers and the illicit vaping market. However, there is a fundamental difference between cracking down on businesses that break the law and imposing additional financial burdens on legitimate businesses that operate responsibly. The Government should recognise and support that contribution rather than introduce measures that could undermine it.
“We are also concerned that the cumulative impact of increased taxation and rising costs could make legal vaping products less affordable and legitimate retailers less viable, potentially pushing more consumers towards the illicit market.
“The UKVIA is calling on the Treasury to urgently clarify the definition of a vape shop, explain how the new rules will apply to different types of retailers and engage with the industry before the changes take effect in April 2027.
“If the Government is serious about supporting our high streets and achieving its smoke-free ambitions, it needs policies that are fair, consistent and proportionate, rather than measures that risk penalising the very businesses helping smokers to quit.”
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