Food & Drink Wholesale UK responds to budget

Among some areas of concern, a positive outcome on business rates was welcomed for the sector, its customers and communities

BUSINESS RATES

James Bielby, Chief Executive of Food & Drink Wholesale (FWD), said: “FWD and our members have campaigned tirelessly over the past year, to ensure the Chancellor understood the real-world impact of pulling food and drink wholesalers into the higher business rates multiplier – and the knock-on effect this would have on food price inflation across independent retail, hospitality, and vital public sector settings.

“Today, we welcome the Chancellor’s decision to reverse plans to exempt the major supermarkets from this cost. We were clear with HM Treasury that such a move would have been dangerously anti-competitive and would have placed wholesalers – and the customers who rely on us – at a significant disadvantage. We are pleased that Ministers listened and recognised the strength of the evidence we put forward.

“We also welcome confirmation that the higher multiplier will now be 2.8p, rather than the 10p initially suggested. Combined with the £3.2bn Transitional Relief scheme, this will help cap increases for those wholesalers facing the largest rises in their rates bills.

“This is a better outcome for our sector, our customers, and the communities we support every day. And it shows what we can achieve when wholesalers speak with one voice.”

FUEL DUTY

“We welcome the extension of the 5p fuel duty cut for a further five months, which provides short-term relief for wholesalers. However, the planned staged reversal, 1p in September 2026, 2p in December, and 2p in March 2027, will inevitably increase costs for our sector. While we recognise the need for fiscal balance, these changes must be managed carefully to avoid destabilising supply chains. We urge the Government to engage with wholesalers on transitional support and ensure that the shift to RPI uprating from April 2027 does not undermine business viability.”

NATIONAL MINIMUM WAGE

“We support fair pay for workers and recognise the need to keep pace with the cost of living. However, an 8.5% increase in the National Minimum Wage, on top of other rising costs, will add significant pressure to wholesalers, particularly SMEs. The Government must balance wage growth with policies that support business investment and job creation, or risk stifling the very growth the economy needs.”

SOFT DRINKS INDUSTRY LEVY EXTENSION

“The decision to lower the sugar threshold from 5g to 4.5g per 100ml and remove exemptions for milk-based and milk substitute drinks will significantly widen the scope of the levy. While we support measures to improve public health, these changes will increase costs for wholesalers and retailers, with knock-on effects for consumers. We urge the Government to work closely with the sector during consultation to ensure implementation is practical and proportionate, avoiding unintended consequences such as price inflation or reduced product choice.”

ELECTRIC VEHICLE EXCISE DUTY

“The introduction of a mileage-based Excise Duty for electric and plug-in hybrid vehicles from April 2028 adds a new cost layer for businesses investing in greener fleets. While we understand the need to maintain revenue as fuel duty declines, this measure risks slowing the transition to low-emission transport. The commitment to charge EVs at half the petrol and diesel rate is welcome, but clarity on implementation and compliance will be critical. We urge the Government to ensure this policy supports sustainability goals and does not penalise businesses striving to decarbonise their operations.”

TOBACCO DUTY RATES

“The sharp increase in tobacco duty by RPI + 2 percentage points from today, plus a one-off £2.20 rise per 100 cigarettes or 50g of tobacco from October 2026, will add significant cost pressures for wholesalers. While we support public health objectives, these changes risk driving consumers towards illicit markets, undermining both health goals and legitimate businesses. We urge the Government to work with the sector to ensure enforcement is robust and that wholesalers are not disproportionately burdened.”

ALCOHOL DUTY RATES

“Alcohol duty rising in line with RPI from February 2026 will further squeeze margins for wholesalers already facing rising costs across the board. While uprating Small Producer Relief is welcome, the Government must recognise that these increases will ripple through the supply chain. We call for clear guidance and engagement to avoid unintended consequences for businesses and consumers.”

 

Bielby concluded by saying: “FWD will continue to work closely with Government to ensure the wholesale channel remains competitive, resilient, and recognised for the critical role it plays in the UK’s food system.”

alcohol duty budget business rates electric vehicle fuel Government James Bielby National Minimum Wage Soft Drinks Industry Levy tobacco