Bulletin: Workforce tipping point

UK food system nearing a workforce tipping point

A new IGD report warns the UK food and drink sector is approaching a structural workforce emergency that risks becoming a national issue without urgent, collective action. With around one million young people currently not in employment, education or training (NEET), the industry faces a growing skills and labour gap alongside a large pool of untapped potential.

Key findings:

• Labour and skills shortages are long‑term and structural, not cyclical

• Workforce pressures have so far been absorbed by the sector, keeping impacts largely hidden

• The industry is nearing a tipping point, risking availability, service, and cost pressures

• Engaging young people is critical to building a resilient, future‑fit workforce

IGD is calling for coordinated action across business, government, and education to unlock youth opportunity and strengthen the talent pipeline.

View the free report here.

What to look for in the Spring Statement

The Spring Statement on 3 March is expected to prioritise stability over surprise, with limited scope for new policy action. Delivered early alongside the OBR’s Economic & Fiscal Outlook, it will focus on reinforcing fiscal credibility.

Key points to watch:

• Few, if any, new fiscal announcements

• Close alignment with cautious OBR forecasts

• Economy in stabilisation, not recovery

• Weak growth and fragile consumer confidence

• Easing inflation offset by rising cost pressures from labour reforms, business rates, and the National Living Wage

For food and grocery, the economic baseline matters more than headline measures.

Read our latest article What to look for in the Spring Statement.

Government refreshes farm funding through SFI and ELM grants

The Government has announced a refreshed Sustainable Farming Incentive (SFI) and a new round of Environmental Land Management (ELM) capital grants, as part of a wider £345m funding package.

The streamlined SFI reduces actions from 102 to 71, introduces a £100k annual cap with small farms targeted in the first window to ensure a fairer distribution, and opens in June and September 2026. In parallel, a new £225m round of ELM capital grants will open in July, supporting productivity, resilience, and environmental outcomes across farming.

See our latest article, Is the SFI 2026 a cause for hope or uncertainty?

US tariffs: what has changed and what it means for UK food

Following a US Supreme Court ruling that struck down earlier emergency based tariffs, the President has announced a new 15% global tariff using an alternative trade law. This replaces the previous framework and will apply to most UK exports to the US, including food and drink, for an initial 150-day period.

While some sector‑specific tariffs remain unchanged, the move re‑introduces uncertainty for UK food exporters, particularly those exposed to US demand, pricing pressure, and currency risk. The decision revives trade friction at a time when supply chains remain fragile, and cost pressures elevated.

IGD opinion

The US is not the biggest export market for UK food and drink producers – the EU is bigger. In 2024, food and drink exports to the US were about £2.5bn, with about half of that being spirits. The US therefore made up about 11% of UK exports.

The overall impact of the new US policy may be limited, but it will be focused on a small number of businesses, especially in Scotland – these may be hit hard.

Clearly, tariffs are back as a live risk. Even if temporary, a 15% levy raises costs and uncertainty for UK food exporters. Businesses should plan for disruption, not assume stability, and stress‑test exposure to US trade shocks.

A growing NEET timebomb

Nearly one in eight young people are currently outside the labour market. According to new ONS data, 957,000 people aged 16-24 years were “NEET” (i.e. not in Employment, Education or Training) at the end of 2025, equivalent to 12.8% of this age group.

Men and women are equally likely to be NEET, but there are important differences beneath the headline. Men are more likely to be unemployed (i.e. not working but looking for work) while women are more likely to be economically inactive (i.e. not working and not looking for work).

IGD opinion

The number of NEETS peaked in the recession just after the Credit Crunch, fell steadily until the arrival of Covid, and has since begun to creep up again. However, the data may be measuring two different trends.

At the height of the recession, most NEETS were unemployed. Before and after that period, the majority have been economically inactive and therefore outside the job market altogether.

This suggests the core issue is not simply the availability of jobs, but barriers to entering or engaging with work. Multiple forces are likely at play, and they differ by individual. The Keep Britain Working report suggests that illness is a key factor, while Risk Factors For Being NEET suggests a more complex set of issues.  

Whatever the causes, a persistently high number of NEETs creates significant social pressure and risks becoming an economic and fiscal timebomb.

Food businesses are well placed to ease the path into work. IGD’s new report, Food and Drink Workforce – A Quiet Crisis Building, explores the challenge in detail and sets out how the sector can play a role.

Energy price cap cut offers limited household relief

Ofgem has confirmed the energy price cap will fall by 7% from April, reducing the typical annual dual‑fuel bill to £1,641, around £117 lower than the current level. The cut reflects easing wholesale prices and government decisions to shift policy costs off bills (e.g. ending funding for the Energy Company Obligation scheme, as well as removing 75% of costs for the Renewables Obligation scheme from domestic bills.  

IGD opinion

Note that the energy price cap is levied on a price-per-energy-unit basis, not per-household, so the actual effect varies by usage. Whilst this change will be welcomed, bills remain well above pre‑crisis levels and any benefit is also likely to be offset by other rising household costs from April, including higher council tax, water bills and changes to wages and benefits, limiting the impact on consumer spending. For food and grocery businesses, lower energy costs may ease pressure on household budgets but are unlikely to materially lift demand in the near term.