Venture capital tax breaks, apprenticeships and fuel duty have emerged as key flashpoints in a Budget ministers say makes “fair and necessary choices” to cut the cost of living, strengthen public services and get borrowing down, while keeping investment at historic highs. But while the government talks of “relentlessly pursuing growth”, business leaders warn of funding gaps, weaker incentives to save and missed opportunities on long‑term productivity.
Venture capital: “Buy now while stocks last”
Alex Davies, CEO of Wealth Club, the UK’s largest broker of VCTs, said: “In the Budget the Chancellor announced that she would be reforming the UK’s venture capital schemes, allowing the Enterprise Investment Scheme and Venture Capital Trusts to invest more money in more mature businesses. That was straight off the Venture Capital Trust Association wish list.”
He warned that “hidden in the Budget documents” is a cut in income tax relief on VCTs from 30 per cent to 20 per cent from April 2026, and added: “We’ve seen the effect of cutting income tax relief on VCTs before, funds raised by VCTs fell 65% year on year. 2026/27 will be no different, with smaller companies facing a drought in funding in the years ahead.” Looking ahead, he expects “a bumper one for VCT investment”, saying investors will “pile in before the end of year deadline” and that “it really will be a case of ‘buy now while stocks last’”, even if this “might not achieve the Chancellor’s goal of ‘incentivising funds to seek out higher returns’” and instead becomes “a great case study in behavioural economics.”
Apprenticeships: “Greater freedom to hire, grow and get on”
On skills, the Budget makes apprenticeship courses free for under 25s in small and medium sized firms, with ministers pitching this as part of a wider push to “unleash talent and opportunity” and tackle high youth unemployment. Lisa Galley, Head of Business Banking at The Co operative Bank, said: “Today’s Budget gives our small and growing business customers a valuable opportunity to help young people into work. Making apprenticeship courses free for under 25s takes the pressure off SME owners who want to bring in fresh talent, but worry about the cost.”
She said skills shortages have been “holding many of our customers back” and argued that the change “gives them greater freedom to hire, grow and get on with running their business.” The measure sits alongside a broader Youth Guarantee and Growth and Skills Levy, which the Treasury says will ensure young people can “earn or learn” while helping employers fill hard to staff roles.
Fuel duty and EVs: “Some relief” but weaker incentives
Fuel duty policy remains central to the government’s cost of living pitch, with the temporary 5p cut extended until the end of August 2026 and rates then “gradually returning” to pre cut levels by March 2027. Andrew Thurston, Customs Duty Senior Manager at MHA, said: “The Chancellor has confirmed that the temporary 5p reduction in Fuel Duty will be extended for a further five months, maintaining the rate at 52.95p per litre until September 2026. While the extension is likely to be welcomed by many, the long standing freeze on fuel duty rates, first introduced in 2011, means consumers continue to feel the impact of tax increases.”
He noted “new legislation designed to ensure these reductions are passed on to consumers, including the introduction of a new ‘Fuel Finder’ system”, which “will allow drivers to compare real time fuel prices and report petrol stations that fail to comply.” But he also warned that “the revised electric vehicle mileage rates reduce some of the financial incentives for switching to EVs” at a time when “the upfront costs of purchasing an EV remain significant” and fuel prices have been “relatively stable, currently averaging around £1.36 per litre for petrol”, offering “some relief” to households and businesses managing everyday expenses.
Food and drink: “More on growth” and pensions warning
In food and drink, the government stresses its focus on “investment, productivity and growth” as the “best medium term protection” against high food prices, but industry leaders say the Budget does not go far enough. Karen Betts, Chief Executive of the Food and Drink Federation, said: “We recognise the Chancellor had difficult decisions to make given the challenging fiscal situation. But we would have liked to see more in this Budget on growth. Investment in productivity and growth in our sector is the best medium term protection against the UK’s persistently high rates of food inflation, and it preserves jobs and boosts skills.”
She argued “there’s much more government and industry can do together now” and called for “an adequate share of government R&D funding”, “stable regulation”, and for food and drink not to be “overlooked in support for energy intensive industries”, adding that “where regulation needs to change, government must ensure meaningful consultation with business, as there was on the Soft Drinks Industry Levy, but which we need to see on the Nutrient Profile Model too.” On pensions, she warned: “Food and drink manufacturing employs half a million people in communities across the UK and, as responsible employers, we want to ensure our colleagues are rewarded properly. However, we’re concerned that the changes to salary sacrifice for pension contributions will discourage people from adequately saving for their retirement, creating further costs for the State down the line.”
Healthier products and packaging: “Listened to industry”
Betts welcomed moves on the Soft Drinks Industry Levy, saying: “We’re pleased the government has listened to industry. The new proposals take into account the costly and technically complex work that companies have to do to bring healthier products to market, and go some way to protecting the investment companies are making to help people follow healthier diets. Drinks manufacturers will continue conversations with government to ensure we have the right conditions to keep investing in healthier product innovation in the UK, even while the rate of food inflation continues to run so high.” She added that “government support and partnership to ensure industry has the R&D investment it needs for healthier product development would help food and drink companies move further and faster.”
On packaging, she said: “It’s good news the government has committed to legislating for mass balance accounting in this Finance Bill. This means that companies using mechanically or chemically recycled plastic will no longer have to pay as much in the plastic packaging tax. It’s also welcome that government will formally consult on the future of the costly, volatile and outdated Packaging Waste Recovery Notes system, and on ensuring councils run efficient, cost controlled recycling services. To drive real change and value, it’s good to see government again acknowledging the key role of producers in leading the EPR scheme, through a Producer Responsibility Organisation.”
