Government inaction risks local businesses
Imagine your family firm – set up by your grandfather, built up by your mother and now your responsibility to hand on as a legacy to your children – is on the verge of collapse.
Your customers have been on the phone, desperately sorry they can’t pay last month’s invoice for stock they’ve already received. Your suppliers have done all they can to help out, taking back stock and extending credit. You’ve seen cash reserves which would have gone into expanding the business and creating jobs in your hometown dwindle to nothing and be replaced by loans that will take years to repay on a wholesaler’s slim margins.
Perhaps you’ve had to tell friends and colleagues – remotely, of course, not face to face – that they no longer have an income. You might even have sat the family down and explained how remortgaging or even selling the house might be enough to keep the business afloat until your school and hospitality customers reopen. Or it might not.
Imagine all that and then imagine the government says it has taken a thorough look at your circumstances and decided there’s no need for it to offer even a fraction of the financial assistance it gave to your hospitality customers, who are closed, and the supermarkets, who are recording record profits.
We all feel the pain some of our regional foodservice and on-trade wholesalers are going through and as the trade association in those discussions with government we challenge ourselves every day to find more we can do to prevent business failures and further redundancies.
Yes, there is more we can do, but we need to do it together.
And ‘together’ includes our partners in supply, as the diversity of food distibution is at stake here. The favouritism the government has shown to supermarkets raises questions about the long-term choice in your routes to market.
First we need to understand where we are and what’s going on in the heads of the people within the Treasury who we need to influence. Let’s immediately dispel the lasting belief they don’t understand wholesale or the contribution it makes to the economy as a whole and to regional food supply to essential services like care homes and hospitals.
Since March 2020 we’ve been in constant contact with Defra, the sponsoring department for food distribution, with a dedicated Head of Wholesale created within its food team, regular phone conversations with Secretary of State George Eustice and meetings between our members and the head of the food team. These officials have gone into bat for us time and time again within the Treasury, taking our case to very highest levels of influence.
Meanwhile we’ve sought the assistance of backbench MPs, often contacted by FWD members in their constituency and asked them to put pressure on the Treasury through parliamentary questions. This led to a clearly impressed Rishi Sunak jokingly complaining of a ‘co-ordinated assault’ under questioning from both sides of the House.
Our members have contributed reams of data on their businesses to Defra surveys in November, December and January – and here’s where we hit the stops.
A few days ago, Treasury Minister John Glen told the House the Treasury is in regular discussion with Defra and they are assessing the systemic risks to the food supply chain of the fulfilment of those public sector contracts to schools, hospitals and prisons. He concluded: “At the moment there is no threat to those supply chains.”
Days earlier, Food Minister Victoria Prentis told the EFRA committee that while she was aware wholesalers don’t feel they have been included in the HM Treasury support schemes, “it is probably too early to talk about financial compensation.”
While we reel from the shock of learning that after ten months of sudden lockdowns, no assistance with surplus stock, none of the direct grant or business rates relief offered elsewhere and the arbitrary decision to hand free-school meal delivery to supermarkets it is ‘too early’ to consider assistance, we have to be honest with ourselves.
The information our members have supplied to Defra does not back up our contention that vital services like care homes, schools and hospitals will be left without supply if their local wholesaler goes bust.
It’s this failure of food supply, that government, under siege from every corner of every industry that thinks it is being similarly overlooked, regards as its baseline for action. That’s why it’s poured billions into keeping supermarkets shelves full and reassuring the public that whatever Covid and Brexit throw at us, no one will go hungry.
What our data submissions suggest, unfortunately, is that with the over-capacity in foodservice due to hospitality being out of action, there will be one or more specialist distributor standing by to pick up supply to a care home or hospital if their regular wholesaler fails.
So we have to make the case again, and stronger. That means going back to our wholesaler members for a forensic examination of supply ‘heat maps’ and competitor sets. We need to show there are areas of the country where an individual wholesaler cannot be allowed to fail, because even one day of non-supply to a vital service for vulnerable people would be a national scandal.
Defra does not want this to happen, and does not want a single FWD member to go out of business.
But that’s a very different aspiration from the blanket financial support we’ve asked for thus far. Their focus now is on individual, local threats to supply and ours needs to go that way too.
That puts the onus on our members to stand up and shout if they believe their closure would leave vulnerable people hungry and be prepared to prove it.coronavirus covid-19 Foodservice FWD hospitality James Bielby wholesaler