Business Regulation

In the high volume, low margin wholesale model, increases in operating costs cannot easily be absorbed and can result in increased costs in the food and drink supply chain. FWD makes the case to the government and regulators for better regulation of businesses in this sector and for it to be necessary, effective and proportionate.

FWD members support the National Minimum Wage (NMW) although members are concerned about the wider impact of frequent above-inflation rises in NMW. We are concerned that the National Living Wage could severely restrict the profitability of our members, should the proposed target of over £9 by 2020 be pursued.


Our report, Delivering Employment, outlines the added cost to our sector, and explores how wholesale distributors would be forced to cut jobs and services to meet the rises.

FWD engages with the Low Pay Commission to look at how the lowest-paid can be fairly rewarded without imposing costs on employers that would ultimately result in a reduction of head count.

FWD believes that current Sunday trading regulations, which limit the number of hours larger stores can open, should be maintained. This will benefit our high streets and local communities.

On the horizon
Policy in the pipeline

National Living Wage

December 5: FWD’s submission and evidence to the Low Pay Commission’s recommendations for increased National Living Wage and National Minimum Wage rates to come into force from 1 April 2019, which were adopted by the Government, are substantially quoted in the LPC’s report which contain the analysis and evidence used to make these recommendations. 

The report states:

“The Federation of Wholesale Distributors (FWD) emphasised that wholesale is a sector particularly affected by the impact of the NLW; in 2015, around 30 per cent of its workers earned less than the £7.20 threshold before its introduction.

“The FWD told us that the introduction of the NLW has had negative employment effects in whole sale and distribution, though it acknowledged that other factors (automation and increasing ef ficiency) are contributing to this trend in the sector. Smaller firms in the sector were more likely to be affected, it said, with larger operators largely paying above the NLW.

“The FWD told us it thought the NLW had led to more investment training of low-paid staff, al though some businesses have had to cut back on benefits and incentives. 

“In wholesale, the FWD thought automation had increased and would continue to do so. It predict ed, though, that smaller operators would be less able to increase productivity through automation. 

“Supermarkets were cited by several sectors as limiting firms’ ability to raise prices – not only in retail, but food processing, textiles and wholesale businesses as well.

“The FWD called for [NLW] increases to be no higher than inflation to avoid negative consequences for employers and workers.”


Chancellor Philip Hammond’s October 29 Budget included a mix of tricks and treats for wholesalers:

Tax and duties

  • Fuel duty frozen for ninth consecutive year.
  • Duties on beer, cider, and spirits frozen for next year.
  • Duty on most wine and higher strength sparkling cider will rise by RPI inflation from 1 February 2019.
  • As announced at Autumn Budget 2017, the government will introduce a new duty band for still cider and perry from 6.9% to 7.5% alcohol by volume (abv), to target white ciders. This will be legislated for in Finance Bill 2018-19, and a rate of £50.71 per hectolitre will apply from 1 February 2019.
  • Cutting Business rates by one-third for retail properties with a rateable value below £51,000 for 2 years from April 2019.
  • Duty rates on all tobacco products will increase by two percentage points above RPI inflation until the end of this Parliament. Hand rolling tobacco will increase by an additional one percentage point. These changes will come into effect from 6pm on 29 October 2018.
  • To signal its intent to put an end to the illicit trade in all its forms, the government will act on the recommendations of the recent All Party Parliamentary Group report by supporting the creation of a UK-wide Anti-Illicit Trade Group.
  • As announced at Spring Statement 2018, the government will legislate in Finance Bill 2018-19 for a new duty rate for tobacco for heating. In these products processed tobacco is heated (but not burned like conventional tobacco) to produce, or flavour, vapour. This will be set at the same level as hand rolling tobacco and take effect on 1 July 2019


  • National Living Wage to be increased from £7.83 to £8.21 per hour from April
  • In 2019, the government will set out the LPC’s remit for the years beyond 2020. In the coming months, it will consult with the LPC and others on this new remit, and as it sets policy will take account of the potential impact on employment and economic growth
  • In the longer term, to support a sustainable transformation of high streets, a £675 million Future High Streets Fund, planning reform, a High Streets Task Force to support local leadership, and funding to strengthen community assets, including the restoration of historic buildings on high streets.


  • The Government will introduce a tax on the production and import of plastic packaging from April 2022. Subject to consultation, this tax will apply to plastic packaging which does not contain at least 30% recycled plastic, to transform financial incentives for manufacturers to produce more sustainable packaging

Skills and Apprenticeships

  • For small firms taking on apprenticeships the Government will halve the amount they have to contribute through the apprenticeship levy from 10% to 5%.


  • The Government will allocate £420 million to local authorities in 2018-19 to tackle potholes, repair damaged roads, and invest in keeping bridges open and safe.


National Living Wage

FWD recommended that the LPC should set wage rates which do not negatively impacting the labour market and should act conservatively when setting the NLW rate for 2019, to re ect reported declines in projections for median earnings and the likely impact of prevailing economic uncertainty on the economy. Rates should be increased by no more than in ation. Our submission stated:

Since April 2016, almost half (47%) of members surveyed said the NMW had increased their wage bill to a large extent. An additional 26% said it has increased but to a smaller extent. The majority of respondents also said it has reduced pro ts.

In addition to a signi cant increase in the wage bill, members surveyed said the other main impact was on wage differentials, signi cantly eroding the relative rate of pay members are able to offer, oftenpaying those with more senior jobs the same or just slightly more than workers with little responsibility or experience, making them less able to attract and retain staff.

Mitigating measures taken included not replacing staff once they have left, taking lower pro ts and absorbing the costs, and a reduction in staff employment bene ts such as discounts, bonuses and training.

79% of members said they are concerned by the 2019 target rate for the National Living Wage and 42% of these said it is a pressing issue for the business.

58% would like the NLW to be increased no more than the rate of in ation, while 21% asked for the NLWto be frozen. Regarding the other rates of the minimum wage, 68% of respondents asked for these rates tobe increased by no more than the rate of in ation and 21% said they should be increased by average wageearnings for 2019.

37% of members identified that younger workers are less productive and therefore additional trainingand investment is required.

Cash and digital payments in the new economy

A consultation on how digital payments could be supported, including looking at the cost to business, and the future of cash, to ensure that the ability to pay by cash is available for those who need it, whilst cracking down on those who use cash to evade tax and launder money.

Threshold for VAT registration

A further consultation on the threshold for registration for VAT has been published, looking at further simplification options, and in particular at why businesses choose not to grow beyond the current £85,000 threshold. The paper looks at three options, one a harmonised EU approach, one involving administrative changes and one that involves a smoothing of the cliff-edge currently experienced at the threshold.

Business rates

The Government announced that the next business rates revaluation will take place in 2021, one year earlier than previously planned. Subsequent revaluations will take place every three years. In practice thismeans that the revaluation process will begin from around April 2019 with rental value/business performance based on the financial year 2018-19.

Corporate tax and the digital economy

The Government stated that in the absence of an agreed international framework on digital taxation, “there is a need to consider interim measures such as revenue-based taxes”.


A proposal to support small businesses with the apprenticeship regime, with additional funding of about £80 million. Funding will additionally be made available to support businesses with the introduction of the new T-levels and the work placement element. Departmental funding allocations were also announced as part of the Brexit contingency fund, to allow changes to be put in place to get the UK prepared for leaving the EU.

More from the Chancellor’s Spring Statement