Flour Milling Sector

Lord Vaizey of Didcot Excerpts

Thursday 12th February 2026 Grand Committee

[Lord Vaizey of Didcot (Con)]

My Lords, I am grateful to have the opportunity to take part in today’s debate. As the noble Lord, Lord Rooker, to whom I offer my profound thanks for putting the UK flour-milling sector on the agenda of the House of Lords. As he well knows, I always try to take part in his debates because we share a birthday, 5 June, and I know this because for years his birthday appeared in the Times and mine did not. The other person with whom I share a birthday is my noble friend Lord Dundee, who I regret cannot be with us today. This is a debate where 50% of the Peers taking part share the same birthday, which is fairly unique. I turn to the subject at hand.

I know a bit about flour mills and what they mean to the communities they serve because for 14 years I was lucky enough to be the Member of Parliament for Wantage, which has a flour mill. It was called Wessex Mill and sat on, amazingly enough, Mill Street, barely 200 metres from the market square. It was owned by the Munsey family who had been milling grain there for more than a century, five generations in all, using local wheat from neighbouring farms. It printed the names of its supplying farmers on the back of every bag of flour, which I always thought was a lovely touch. In 2022, Wessex Mill sadly closed. The flour had not got worse, and demand had not fallen. In fact, it had won Great Taste awards. What happened, of course, was that energy prices increased five-fold almost overnight, wheat costs were soaring, and the capital required to upgrade ageing machinery was simply beyond reach.

Happily, the story has more than one chapter. The Wessex Mill brand was taken on by Michael and Clare Marriage, and relocated to Hungerford in Berkshire, where it now employs around 130 people drawn from local communities of the North Wessex Downs. It still sources its grain from local farmers, many of them long-standing suppliers, and still prints the farmers’ names and the grain variety on every bag. The flour reaches customers across the country, including through local food networks such as Shropshire’s Own, a delivery service connecting rural communities in the Marches with quality British produce.

I am pleased to tell noble Lords that at the old Mill Street site a new enterprise has sprung up, the Oxford Flour Mill. It was incorporated in January 2023, just weeks after the Wessex operation ceased, and is once again milling locally sourced wheat from the same premises. So, the site in the town where King Alfred was born is where grain has been ground for more than 900 years, and it is milling again. The building has outlasted its trouble, even if the original business could not. I mention all this because the Wantage story illustrates something important about the flour milling sector as a whole, that it is resilient, resourceful and woven into the life of the communities it serves, but it illustrates that there is some fragility. One sharp rise in energy costs was enough to close a mill that had survived two world wars.

The figures for the national industry are genuinely impressive. According to UK Flour Millers’ economic impact report published last January, this is a sector that generates £2.2 billion in annual turnover, contributes some £770 million in total value added to the economy, supports more than 9,000 jobs and pays taxes, directly and indirectly, of roughly £270 million a year—all of that from just 51 mills. The productivity numbers are worth dwelling on. At £141,000 of gross value added per employee, flour milling outperforms manufacturing, construction and the economy as a whole.

The milling industry has invested £250 million in the past decade, including in eight brand new mills. These are serious, modern and capital-intensive operations. An important point is that 80% to 85% of the wheat that British millers use is grown domestically, as the noble Lord, Lord Rooker, pointed out. In a good harvest year, that amounts to some 4 million tonnes, roughly one-third of the entire arable crop. The result, as the noble Lord pointed out, is that we are essentially self-sufficient in flour. Some 12 million loaves of bread reach British consumers every day, and flour goes into roughly one-third of all supermarket products beyond that. More British households buy bread than use the internet, which, rather like the noble Lord, Lord Katz, is a statistic I confess I was not expecting to find.

Flour is the single largest contributor, as again the noble Lord, Lord Rooker, pointed out, to the nation’s iron intake. It beats red meat and provides about one-third of our daily fibre and calcium. It is also highly sustainable. For every tonne of wheat, 78% becomes flour and 22% becomes animal feed. In a world where supply chains from the Black Sea to the Suez Canal can be disrupted overnight, a domestic industry that feeds virtually every household in the country is worth paying attention to.

The Question by the noble Lord, Lord Rooker, asks what assessment the Government have made of the economic impact of this sector. Let me suggest to the Minister six areas where the Government could make a difference. The good news for the Minister is that they will not cost him a penny.

First, there is the issue of land use. The single greatest long-term threat to domestic flour production is the loss of productive agricultural land. Millers depend on British wheat farmers. These farmers face competition from alternative uses of their land: solar farms, housing and biodiversity schemes. All are of course perfectly worthy in their own right, but if too much of our best arable land goes under solar panels, we shall find ourselves importing the wheat that we currently grow. This is particularly acute for organic millers. Wessex Mill, which I mentioned a moment ago, is a certified organic processor. It tells me that Britain currently imports a significant proportion of its organic grain, which seems absurd when we have the land and expertise to grow it here. Greater government encouragement for organic arable production would reduce those imports and strengthen the domestic supply chain.

There is a point here, by the way, on transparency. Organic grain must, by law, be free of genetically modified organisms. As precision-bred organisms enter the wheat supply, organic millers will need to be able to identify which grain is which. If the Government do not require clear labelling of all PBO wheat, millers face a considerable burden of additional testing, the cost of which will inevitably be passed on to consumers. Clarity on labelling would be a simple and inexpensive step. More broadly, the Government’s food strategy for England, published last July, sets out high-level outcomes, but does not, as far as I can tell, contain a clear commitment to protecting the most productive arable land for food production. I would be grateful if the Minister could say whether the forthcoming implementation plan will address this issue.

Secondly, on trade, Turkey is the world’s largest flour exporter, accounting for roughly one-fifth of global trade. Its milling industry is heavily subsidised, and 76% of the wheat it mills for export is sourced from Russia. I will let noble Lords reflect on the implications of that. Any change to tariff arrangements in a new free-trade agreement with Turkey could potentially have serious consequences for British millers. All the industry asks is that its interests are properly considered at the negotiating table, and that flour is not quietly sacrificed as a concession in pursuit of other objectives.

Thirdly, there is the issue of energy. This is what forced the closure of the Wantage mill, and it worries every miller in the country. Mills operate 24 hours a day, seven days a week. The industry has reduced its energy consumption by nearly 10% over the past 15 years, and that is commendable, but it is exposed to energy price volatility. The existing support through the energy intensive industries scheme and the climate change levy discount is welcome and must continue. Withdrawing it as the energy transition proceeds would simply make Britain more dependent on imported flour milled in countries with considerably less impressive environmental standards.

Fourthly, on research, the flour milling industry has invested collectively in R&D since the 1920s. I suspect that is longer than most government departments can claim. It works with plant breeders, farmers, and research institutions on everything from new wheat varieties to food safety, but the tax environment for R&D has become, to put it charitably, complex. If the Government are serious about growth, the R&D tax regime needs to be stable, accessible and designed for industries that actually do applied research. I appreciate that many of the points I am making apply to many different industries, but I want to highlight the impact of policy on the flour milling industry.

Fifthly, there is the apprenticeship levy. Flour millers pay into it, but they cannot use those funds to support the specialist training their workforce requires. UK Flour Millers runs an advanced milling diploma and examination system, exactly the sort of high-quality, industry-specific training we should be encouraging, yet the levy system does not recognise it. There are 30 apprentices currently in training across milling businesses. That number should be higher, and it would be higher if the rules could accommodate it. I look forward to the Minister commenting on that.

Sixthly and—I know the Minister will appreciate the following word—finally, I will just raise the issue of inheritance tax. I know it is a vexed issue, but a large proportion of flour mills in this country are family-owned businesses. The recent changes to agricultural property relief will directly affect their capacity to invest for the long term. A family miller contemplating a multi-million pound investment in new plant needs to plan across generations. If the tax treatment of the business makes that planning uncertain, the investment will go elsewhere, or it will simply not happen. I appreciate that this is a broader issue than flour milling alone, but it is keenly felt in a sector where family ownership is often the norm.

I am conscious that a debate about flour milling may not set the pulses racing like one on artificial intelligence or social media, but I gently point out that artificial intelligence cannot as yet make a loaf of bread and social media has never provided 20% of the nation’s daily energy and protein intake. Flour milling does both, every single day. The Government do not need to do anything dramatic: they just need to protect productive farmland, take care of the trade deals, keep maintaining energy support, make the R&D tax credits stable, tweak the apprenticeship levy and think carefully about the impact of inheritance tax changes on family businesses. I hope the Minister takes these recommendations in the spirit in which they are made. They are six practical steps for an industry that has nourished this country for centuries and deserves government support to continue to do so.