allmanhall digests the UK budget: What are the implications for food security and food prices?

3. Business rates relief for retail, hospitality and foodservice sectors

On a more positive note, the budget provides a 40% relief on business rates for the retail, hospitality and foodservice sectors for the fiscal year 2025-26. It is capped at £110,000 per business, with the relief expected to provide temporary financial respite for foodservice businesses. The business rates relief could indirectly help stabilise food prices, particularly in the restaurant and hospitality sector, offering a short-term cushion that may help some foodservice businesses to temporarily weather rising costs.

The effect on product prices may be limited, however, as relief does not directly address the costs of food production or distribution.

4. Inheritance tax on farmland and family owned farms

Previously, family-owned farms benefited from inheritance tax exemptions, allowing the smooth transfer of farm assets between generations. This new and controversial tax measure raises concerns about the future of family farms and domestic food production. If smaller farms cannot afford to operate there may be greater consolidation in the agricultural sector, favouring large-scale farms or corporate ownership and threatening both diversity and biodiversity.

Fewer family farms could potentially increase the UK’s reliance on imports and impacting food security. With global food markets subject to price volatility and supply chain disruptions, increased reliance on imports could also make UK food prices more vulnerable.

5. Energy profits levy and impact on food production

The budget also extends the Energy Profits Levy, increasing it until March 2030 to 38%. Whilst this tax targets oil and gas companies, it may also especially impact businesses that are energy intensive.

With energy costs forming a significant portion of food production and distribution expenses, a continued rise in energy prices could lead to further increases in food prices, most notably for items that require extensive processing or refrigeration, such as dairy, meat, and frozen foods.

Rising energy prices due to this levy could trickle down as food producers and distributors increase their prices to cover higher energy expenses.

6. Food security and the importance of domestic production

The budget’s policies underscore the critical importance of balancing short-term revenue generation with long-term food security.

Global supply chains are increasingly subject to disruptions - a strong domestic food production capacity is essential for long-term food security.

The inheritance tax on farms, rising employment costs, and energy prices could weaken the resilience of the UK’s food production sector, potentially jeopardising food security.

The UK Budget 2024 contains both challenges and opportunities for the food sector with effects of these policies likely be felt in the form of higher food prices in the coming years. This comes at a time when there are already pressures and uncertainty. 

The new inheritance tax on farms threatens the sustainability of family-owned farms, raising questions about the long-term impact on domestic food production and security. Initiatives like business rates relief provide a much-needed cushion for some businesses, whilst rising labour and operational costs present significant obstacles.

For the government, achieving a balanced approach to support businesses, safeguard food security, and protect against excessive price increases will be essential. The choices made today will play a pivotal role in shaping the future of food security and affordability for all.

allmanhall.co.uk

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