FWD members send stark message to new Prime Minister

Food and drink wholesalers have laid out a five-point manifesto for the incoming Prime Minister which will support food distribution in the UK and boost the wider economy.

The actions include an immediate cut in fuel duty and a return to the 12.5% VAT rate for hospitality businesses.

In a letter to candidates Rishi Sunak and Liz Truss ahead of the appointment of a new Prime Minister on 5 September, FWD has told the Conservative Party leadership candidates that its members have been disproportionately affected by the Covid-19 pandemic, labour shortages and the Ukraine war, which have resulted in a huge increase in the costs of doing business.

Wholesalers that provide food to schools, prisons and care homes, as well as shops, restaurants and pubs say rising wages, commodity prices and energy costs are combining with consumers’ falling disposable income to create a credible challenge to the food distribution supply chain.

They are asking the next Prime Minister to adopt five actions that will protect food prices and availability in these exceptional trading circumstances:

• Cut fuel duty by 15p per litre
• Scrap or delay forthcoming policies which would drive up food prices
• Allocate more funding towards public sector food budgets
• Use new border controls to provide sufficient labour for food production and distribution
• Return to the 12.5% VAT rate for hospitality

“Ensuring a robust, safe, varied and competitive food distribution network has to be among the new Prime Minister’s first priorities,” said FWD Chief Executive James Bielby.

“Costs are going to continue rising, and be passed on to the public, unless the Government intervenes immediately. Our manifesto proposes several actions that would limit those rises, and keep prices affordable in shops, restaurants and public sector contracts.”

The letter has also been sent to all Conservative MPs with a request that they forward it to the leadership candidates.

What are wholesalers asking for in the manfisesto?

1. Cut fuel duty by 15p per litre to reduce the cost of doing business and inflation

This is one of the most effective tools the new government could use to reduce inflation. The dramatic increase in fuel prices is multiplied and passed on throughout the supply chain and onto consumers, driving up prices and inflationary pressures.

A move to cut fuel duty by 15p per litre would bring the UK in line with Germany, France, The Netherlands, Ireland and others across Europe who have responded to spiralling petrol prices. This would result in a concrete, immediate reduction on the cost of living and contribute across the wider economy.

2. Introduce a moratorium on outstanding policies which are driving up food price inflation

The introduction of policies to limit harmful eating and environmental practices are welcome and supported by FWD and many within the sector. However, there is a time and place to introduce dramatic policy changes which alter the relationship between the state and business to introduce new compliance burdens, and the time is not now, especially given the costs associated with introducing these policies.

A moratorium should be introduced for invasive policies such as HFSS restrictions and ecotaxes such as Deposit Return Scheme and Extended Producer Responsibility. This will also provide ample time for Government to get the design of the policies and schemes right for the longer time.

3. Allocate greater funding towards public sector food budgets

FWD welcomes the ambition of the Food Strategy White Paper, and the Government Buying Standards for Food and Catering Services. The vision of healthy, nutritious and British produced catering for public sector is no less than our members would welcome. However these ambitions are entirely unrealistic in the face of public sector food budgets which have not been accurately adjusted to account for inflation over the course of a decade.

Rather than being able to supply UK produced food and drink, finer and more nutritious ingredients, the sector is having to import more food rather than sourcing it locally and restructure menus to contain less expensive (and therefore less healthy and nutritious) provisions to be supplied on a more regular basis.

By introducing a greater amount of ring-fenced funding for public sector food, the knock-on effects throughout the agri-food sector and wider economy would be profound.

4. Utilise control over our borders to ensure there is enough labour to support with domestic food production and distribution

The shortages of labour witnessed throughout 2021, most notably resulting in HGV driver shortages, and in 2022 with shortages of pickers and processors is causing major and unnecessary disruption to the food and drink supply chain

The UK must think about post-Brexit labour planning in a new way. We should be in control of immigration without having a closed door policy. Skills vital for our economy should be prioritised and in this instance agri-food workers are essential for keeping shelves stocked, and plates full.

The new Government should consider practical changes to end the post-Brexit boom and bust cycles of labour shortages through tweaks to the shortage occupation list, coupled with domestic skills training. This will provide short, medium and long term solutions to labour issues.

5. Re-establish the 12.5% VAT rate for hospitality to alleviate cost of living and encourage participation in the economy to stave off threats of recession

Companies are doing everything they can to limit price rises for consumers but amid rising ingredient, fuel and energy inputs stopping these price increases is challenging. Reintroducing a 12.5% VAT rate will not only help to lower costs of products in the out of home setting, but will spur on demand at a time when consumers may be inclined to protect their budgets, providing vital support for thousands of small, local, community businesses.

FWD Government James Bielby Liz Truss Prime Minister Rishi Sunak Wholesalers