FWD responds to new Chancellor’s plans
Jeremy Hunt, the brand new Chancellor, has announced a dramatic u-turn on PM Liz Truss’s tax cuts which will significantly impact the wholesale sector
James Bielby, Chief Executive, FWD, responds: “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.
“Forecasts will now need to be torn up and updated, and businesses will be reassessing hundreds of variables as we approach the Christmas peak. What businesses need is the government to commit to stability and to provide clarity over the mid-term direction of policy.”
Announcements on Monday 17 October revealed several policy changes that will have repercussions for the wholesale sector. These include the basic rate of income tax remaining at 20p indefinitely, rather than being reduced to 19p.
“Government spending should support the right people, organisations and places,” said Bielby. “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 31 October.”
Hunt also announced a reversal on 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.”
Hunt confirmed that the cap on energy prices charged to households will continue but is only guaranteed until April next year before being reviewed.
“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.
The government will also continue with the 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.”
energy Federation of Wholesale Distributors Government James Bielby Jeremy Hunt Liz Truss tax
