How Truss and Kwarteng may still help wholesalers – Bielby
As new Prime Minister Liz Truss and Chancellor Kwasi Kwarteng get to work trying to tame a volatile economy, FWD Chief Executive James Bielby says there’s plenty the new government can do that will impact wholesalers
A new Prime Minister, a new Chancellor and an eagerness to suggest this is a brand-new administration that has nothing at all to do with the previous Conservative regimes that have governed us for the past 12 years. That’s the message that new brooms Liz Truss and Kwasi Kwarteng are pushing, with a radical policy agenda that offers both hope and concern for us in the food and drink wholesale sector.
A few weeks before Truss’s coronation we asked Conservative MPs to pass on to her a Manifesto for Wholesale. The manifesto was a list of immediate actions we recommended she should take to preserve not only the profitability FWD’s wholesaler members, but the continuity of supply to sectors that are feeling the economic pinch most acutely, such as hospitality and public sector catering.
We called for a reduction in fuel duty, a VAT cut for hospitality, extra funding for school, hospital and prison contracts, access to international labour to fill gaps in the supply chain, and for some of the more onerous legislation about to be inflicted on wholesalers to be scrapped or delayed.
Here we are, a few weeks into the Truss era and we’re ready to claim at least partial victory on three of those five counts.
Fuel duty may not have been cut yet (although alcohol duty, also crucial to our trade, has been frozen), but the support announced for businesses energy bills does achieve the same aim of capping the cost of doing business to some extent. It’s a short-term fix however, enough perhaps to help wholesalers plan for the winter and Christmas, but they need to be looking further ahead than that.
The PM tantalised us with a mention of continued support for ‘vulnerable industries’ after the initial six-month period and singled out hospitality as an example. If our customer base is considered vulnerable, then the chain that keeps them supplied needs equal support.
Also promising is the suggestion the government will look at expanding the Shortage Occupation list, which would make it easier and more attractive for foreign workers to move to the UK.
The food supply chain lost 20% of its workforce due to a combination of Covid and Brexit, and a cautious reopening of that door to a wider cohort has always been a blindingly obvious solution. After all, Brexit was about having immigration levels which meet our labour needs, not stopping it altogether.
Thirdly, there’s the expected relaxation of legislation, perhaps the most predictable move from this libertarian and free-market loving PM. Allowing people to make decisions for themselves, particularly around their health, has the advantage of removing costly compliance for wholesalers and their customers.
There will be few complaints in the trade if the HFSS regulations get put on ice, other than the obvious one, that it could have been announced sooner. Tax cuts for business in the form of planned corporation rate hikes and existing National Insurance rate rises being reversed are welcome as well.
It’s not all upside though. If the Deposit Return Scheme gets scrapped in three nations, but goes ahead in Scotland, the fallout might will be worse than if all schemes had been implemented. With sustainability so high on the business agenda and in light of the investment going into net zero, you wonder how many wholesalers would be upset if targets in this arena get pushed back a little.
It’s important to point out that these victories are set against the backdrop of inflationary pressures as the cost of doing business continues to rise. Domestic energy costs and rising interest rates will sap spending until well into next year, and those public sector contracts where there’s no obvious recognition yet from government that food distributors can only operate at a loss for a limited time, continue to be a concern.
Particularly in school meal provision, an area where it’s impossible to imagine anyone objecting to a healthy, nutritional and filling lunch for the children of the least well-off families, there’s currently little sign of a will to implement the essential increase funding.
That’s something we’ll be pressing on in the coming weeks, along with seeking inclusion in the next phase of support paying the bills of this high-energy, highly important and yes, potentially vulnerable industry.chancellor Government James Bielby Kwasi Kwarteng Liz Truss Prime Minister wholesaler