BUDGET REACTION


The briefcase has been shut once again. But what do you think?


DailyMailOnline: “George Osborne is theMarieAntoinette of Whitehall.With himit’s a case of let themeat cold pasties.” Meanwhile, bakery chain


Greggswas quick to denounce the arrangement. They said in a statement: “We do not believe that our freshly baked savoury products should be subject toVAT andwe will bemaking strong representation to theGovernment regarding the proposed changes.” The chain in fact is already


seeing the negativity of such plans. Since the announcement, the high street baker has seen its shares dip by 5.37 per cent, which has equated to £30million being wiped off its value. There’s now, at the time of going to press, talk of Greggs and other chainsmobilising angry pasty fans to stage a retaliation against the Government, whilst the baker also continues to state how damaging the VAT plans could be to its empire, its staff and the “hard-working” people that frequent their outlets. Indeed, the National


“Like hot takeaway food, alcohol and cigarettes are seen bymost to be the things to enjoy whilst the country continues to struggle. Surely more tax on these products is going to eventually turn people away? Yes, thismay be good for our nation’s health, butwhat about themoney these sectors contribute to our economy,which, so I’ve heard, is faultering and is relying on GDP growth to not completely fail?”


Association ofMaster Bakers (NAMB) says that they are taking action,withMike Holling, Chairman, saying: “We have until 4thMay tomake the Government see howthis price increasewill affect ordinary people and how unmanageable the implementation of the taxwill be; concentrating as it does on the relative ‘hotness’ of the product in comparison to the ambient temperature in the baker’s shop. “The Association believe the


proposal is ill conceived and poorly thought through,making it open tomis-interpretation. Itwill be confusing for both bakery staff and consumerswhowill see it as an unfair tax. “Ifwe are to halt this


unpalatable tax,whichwill affect themajority of craft bakers, it is essential thatwe create a united front to deliver a clear, precise and comprehensive argument to the Treasury and in order to do this, and fully represent ourmembers interests, theNAMB is preparing a serious and potentially legal challenge to the proposal.” Mr Osborne, however,


continues to say that he believes the rules allowsimplification of the tax systems aswell as putting all outlets that sell hot food on the same footing as fast food chains. The adding of VAT to hot takeaway foodwill be taking place in October.


WHAT IF IWAS AROCK STAR? Well I wouldn’t be telling you about the Budget. But,more importantly, I would be very angry about the increase in alcohol and cigarette duty. Alcohol duty rates are to


increase by two per cent above inflation, whilst cigarettes are to increase by five per cent (also above inflation).Whilst these two sectors are used to being the ones who feel the biggest force of the Budget, some are starting to question whether this is too far. Like hot takeaway food, alcohol and cigarettes are seen bymost to be the things to enjoy in life whilst the country continues to struggle in the economic downturn. Surelymore tax on these products is just going to eventually turn people away? Yes, thismay be good for our nation’s health, but what about the huge amount ofmoney these sectors contribute to our economy, which, apparently, is faltering, and is relying on GDP growth to not completely fail? In reaction to the increase in


cigarette duty, Simon Clark, director of Forest, the pro- smoking group, said: "This is a smugglers' charter. "More andmore consumerswill


turn to the blackmarket or buy their tobacco abroad. "The elderly, the lowpaid and


the unemployedwill be hit the hardest but this is an attack on all law-abiding smokerswho support Britain's retailers by purchasing their cigarettes at home. "The only people celebrating


this decisionwill be criminal gangs and tobacco control lobbyists." Meanwhile, in reaction to the


changes in alcohol duty, treatment groups have said that the increase in pricewill not deter thosewho are addicted to alcohol, and instead theGovernment needs to focus on the treatment of those who suffer fromalcoholism. AlastairMorden, a specialist in


alcohol and drug addiction, said: “If the UKGovernment is going to raise alcohol prices it also needs to provide support to the addicts that will remain undeterred. “The negative impactwill be


more on the families and dependants of addicts rather than the addicts themselves.”


FINALLY SOME GOODNEWS? Some “better” news did rear its head during the Budget however,


and thatwas the setting of some achievable recycling targets. So while the FMCG industry continues to improve its eco credentials,making lesswaste and using less packaging, it’s good to see that the Government is recognising that and helping things along. InMr Osborne’s newtargets,


plastic recycling targets are to increase by five per cent per year, meaning an increase from32 per cent this year to 57 per cent by 2017; aluminiumrecycling is to increase by three per cent year on year,meaning that 55 per cent of aluminiumwill be recycled by 2017 and overall packagingwill increase by one per cent each year,meaning a change from74 per cent this year to 79 per cent by 2017. However, paper and wood recycling rates are to remain unchanged, as the Government is reportedly happy with the current rates of recycling. These recycling targets have


mainly beenmetwith positive responses,with Caroline Spelman MP, Defra and Closed Loop Recycling's Chris Dowpraising the announcement. However, there is still insistence that the targets alonewill not be useful, and instead, the PRN and PERN systems also need reformation. Echoing the fifty fifty opinion of


these targets, Rick Hindley, executive director of Alupro (the AluminiumPackaging and Recycling Organisation), said: “Alupro fully supports the setting of aspirational targets but because there is still uncertainty concerning the removal of aluminiumincluded in composite packaging fromwaste arising figures,we strongly recommend that the targets set until 2017 are reviewed in 2014. “Thiswill help Government


ensure targets remain challenging, achievable and alignedwith industry objectives tomaximise recycling performance.”


So nevermind changes to income tax or thewithdrawal ofChild Benefit, itwas the pastiesmaking the biggest noise.Andmaybe that’swhat happens in an economic downturn? The consuming public seek comfort in what they enjoywhen times are tough, and tomake that comfort more expensive does seema bit mean. It’s likeOsborne is being our mean parent, saying: “Nomore pasties for you today, dear.”


FMCGNews.co.uk | FMCG News | 13


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