British notes

Source: Getty Images

The baking industry has reacted largely positively to chancellor Rishi Sunak’s budget, which was unveiled on 3 March 2021.

An extension to the furlough scheme to September, additional support for work placements and a tapered rise in corporation tax were among the measures announced.

Here’s what some of the key bakery players had to say:

Gordon Polson, chief executive, Federation of Bakers, said:

We welcome the government’s plans to offer businesses lower VAT rates and business rates relief, as well as recovery loans and grants. We also commend the decision to extend the furlough scheme to the end of September, as all of these measures will play a vital role in getting the hospitality and food service sectors back up and running again.

We also appreciate that there will be a tapered rise in corporation tax, meaning that only businesses with profits over £250,000 will pay the new higher rate. This will be beneficial to many within the industry.

I expect that late summer and autumn will be a crucial period, as hopefully vaccinations will have been rolled out and we will start to see food service and hospitality opening up fully again.

Karen Dear, director of operations, Craft Bakers Association (CBA), said:

The CBA welcomes the news of an additional £126m for work placements and training for 16–24-year-olds. It is also good news for bakery owners that employers who hire a new apprentice will now receive £3,000 per new hire, compared to £1,500 under the old scheme. High quality apprenticeships are an excellent foundation for a career in craft bakery and we hope these new initiatives will enable more people to enter the profession via this route.

Many of our members will also benefit from the business rates ‘holiday’ until the end of June and the VAT cut to five per cent for hospitality businesses until September.

The extension of furlough arrangements until the end of September and the changes to the national living wage will affect CBA members and their employees.

Alasdair Smith, chief executive, Scottish Bakers, said:

The chancellor’s confirmation that the furlough scheme will continue until at least September will hearten many of our members who have remained open through the pandemic, despite tough trading conditions resulting in many members accessing the furlough scheme to this day. But we need to continue to push for our members, all essential food retailers, to be able to focus on the future and on growth.

For this to happen, the Scottish government must lay out a clear timeline for lockdown restrictions to ease and to continue to support businesses sectors like our own who will need help to get back on their feet. One way of doing this is to ease the takeaway ruling allowing bakers who sell predominately on-the-go food to safely allow customers back into their stores.

We also want to see the hospitality sector opening safely as soon as possible, to help those members who have seen their business decimated by the closure of this vital section of the economy.

Longer term the focus must be on skills and training to bring people into skilled sectors like our own and to train them in both food production and onward management skills to develop businesses long into the future. With a mix of realistic short and longer term measures from our government, bakers stand ready to play their part in building back the economy of Scotland and delivering us our daily bread.

Paul Baker, co-founder, St Pierre Groupe, said:

The past 13 months have challenged all of us and I don’t think anyone envies the role of Rishi Sunak today. That said, I am encouraged to see more bespoke support for an industry which has not wavered despite the challenges thrown at it.

Additional pressure has been put on supermarkets to feed the nation and the hospitality sector has been left in tatters. So, to see special measures announced for the hospitality sector, in particular, will provide a glimmer of hope for many UK businesses. The restauranteurs of this country were responsible for £24bn revenue in 2019, boosting other industries such as tourism and leisure – it’s great to see a government acknowledging their contribution and working to protect them.

The extension of VAT reduction is a lifeline. Cut Tourism VAT Campaign warned that VAT rate reverting to 20% in April would mean the loss of 310,000 more jobs in hospitality and tourism, so it’s a relief to many to hear VAT will remain at 5%. The gradual return to 20% over 12 months will also take the pressure off.

Hospitality operators have been well supported with an extension to the holiday on business rates. Last year, that holiday negated the economic impact of the virus by £10.13bn, money that many operators would struggle to find – especially whilst they’re unable to open up again until later in the year.

My only criticism of this is the gradual increase from June. Despite the roadmap, businesses have a lot of lost time to make up for and whilst it displays confidence in a return to ‘normal’ from June, many businesses will still struggle to manage even the proposed third of the business rate after spending more than a year unable to operate.

Ian Wright CBE, chief executive, Food & Drink Federation, said:

Food and drink manufacturers will welcome today’s budget. The chancellor’s announcement struck the right balance between supporting recovery and acknowledging the difficult choices that have to be made to restore the country’s finances. Food and drink businesses supplying the hospitality and food service sectors will welcome the extension of the furlough scheme. However, we have concerns that support tapers too soon and should be kept under review.

As the UK’s largest manufacturing sector, we welcome the news that the Bank of England and the chancellor are doubling incentive payments for businesses hiring apprenticeships. However, increased flexibility of the apprenticeship levy would enable the system to work for the wider food and drink supply chain, particularly SMEs, and must be considered in relation to any new incentives.

The chancellor rightly expressed his firm intention not to increase the cost of living and has recognised the importance of encouraging investment as the key driver of recovery. He should therefore review proposed regulatory changes that will increase food prices.