The last two years have been an unprecedented series of political events in the UK which few would have predicted at the start of 2015. Two general elections, a referendum result which will radically change the UK, a Conservative majority Government, the election of a far left Labour leader, and now a Conservative minority Government lurching from one crisis to the next. And that’s not even mentioning Donald Trump. By the time you read this who knows what will have happened next?
As an upshot all of these changes the pace of regulation in the UK has been slowed down, not least because the Government is focused almost exclusively on working out the terms of the UK’s European Union exit. Nevertheless 2018 promises some changes which will affect wholesalers’ ability to serve their customers. At FWD our role is to defend and protect our members’ business interests against those political, policy and regulatory threats, and be a credible voice at the centre of any debate.
Let’s have a look at some of these and assess what the impacts will be.
Cliff edge or soft landing? We are a year closer to March 2019 but still a long way from knowing what our market will look like then. Wholesalers share the same concerns as the rest of the food distribution chain: how changes to our trading relationship with the EU will affect flow of goods through our ports and the Irish border; what will happen to the 20% of the wholesale workforce who are EU nationals; and, longer term, what changes in food regulations can we expect. FWD regularly meets officials of DexEU, Defra and HMRC to ensure the interests of our sector are taken into account as we head for the exit door.
NATIONAL LIVING WAGE
Many FWD members already offer more than the statutory minimum to their lowest-paid colleagues, and as an industry we fully support the concept of NLW and the Government’s aspiration for the NLW to reach 60% of median earnings for the over 25s by 2020. However, it’s not the destination that concerns us so much as the journey taken. For wholesalers who work on the slimmest of margins, the combination of food price rises, a weak pound and above-inflation increases in employee remuneration could have the opposite effect to the one intended. Threats to profitability and productivity may shift investment away from employing and training staff and into technology solutions that don’t create the jobs or the tax income the Government expects. FWD and its members work closely with the Low Pay Commission to ensure that the rate of rises in NLW is manageable for our sector.
Since the Government nudged them two years ago with the threat of the Soft Drinks Levy, manufacturers have risen to the challenge of reformulating the higher-sugar products and offering healthier alternatives. Our concern is that a levy on products sold in the UK automatically makes products sourced abroad cheaper, and threaten to cut UK wholesalers out of the chain. We are working with HMRC to ensure soft drinks don’t become the next product of choice for criminal wholesalers as the availability of duty-avoided alcohol becomes less. FWD is part the HM Treasury Industry working group looking at a smooth introduction of the Soft Drinks Levy.
With sugar now firmly in the firing line in the battle against obesity, we are working closely with Public Health England, the Department of Health and the Mayor of London’s Office to look at how we can tackle the problem in partnership in both retail and out of home.
The introduction of the Alcohol Wholesalers Registration Scheme in April 2017, a scheme devised and championed by FWD, provided a framework for stemming the tide of illicit beers, wines and spirits into the market. It has proved successful so far but is only as good as the enforcement of the scheme. It’s our job to keep HMRC on the case to prevent the fraudsters creeping back in.
As Scotland and Wales move towards establishing a minimum unit price for alcohol, we can expect Westminster to be watching carefully. MUP is a regulated and enforceable way to stop supermarkets selling alcohol products at irresponsible prices which distort the market. It would also raise the price of very strong lagers and ciders via regulation, rather than a partial voluntary approach.
Residents of the UK’s cities deserve clear air, but they deserve fresh food too. Resolving these two demands will be a challenge for us this year. London has already added the T-charge to the Congestion charge, and has brought forward the introduction of the Ultra Low Emission Zone, which will effectively ban older diesel vehicles for the city centre, to April 2019. For distributors who have invested heavily in their delivery fleets, premature obsolescence of heavy vehicles is not an attractive prospect. With other cities likely to follow suit, we need to find a balance that allows shops and restaurants in urban areas to receive the deliveries they need at a price their customers will be willing to pay.
In times of economic turbulence the supply chain for high value goods, especially tobacco, becomes increasingly attractive to criminals. Its weakest points are loading and unloading, particularly at cash and carries and at retailers’ premises. FWD is instructed by its members to collate incidents and encourage greater Police and Government resources to be put into preventing and prosecuting crimes against wholesalers and their customers. We sit on the Home Office retail crime steering group, chaired by a Home Office minister, representing the issues faced by the distribution channel at that high-level group.
We throw away too many plastic bottles. Increasing the effectiveness of recycling them is a no-brainer, but the way we do that is the key. The Deposit Return Scheme coming to the UK may be effective but it has to be economically feasible too. Some of the proposals would place an enormous burden on wholesalers and retailers, including capital expenditure on equipment. FWD will represent the interests of members as this issue develops.
In representing wholesale on these and many other issues FWD works closely with Ministers, officials and MPs via Westminster meetings, Parliamentary Questions, consultation responses and membership of high-level ministerial committees. Our programme of MP depot visits, working with those who have a personal, constituency or portfolio interest in wholesale issues continues to be great success. Our annual Parliamentary reception showcases the work wholesale is doing to create high-skilled sustainable jobs for the future and recognizes individual apprentices and trainees through an award presentation.
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