FWD responds to budget

The Federation of Wholesale Distributors (FWD) welcomes several measures that support growth in the economy while highlighting concerns over an estimated £110m in direct wage costs to the sector

Responding to the budget statement, FWD Chief Executive James Bielby said:

“The increase in National Living Wage and Employers National Insurance contributions will add an estimated £110 million in direct wage costs to the wholesale sector, a critical link in the UK’s food and drink supply chain. Furthermore, the lack of clarity on business rates reform means that wholesalers operating large physical premises remain disproportionately impacted by high rates. Without meaningful reform and a set timeline, these businesses will continue to shoulder a heavier burden than those in sectors with minimal property overhead.

“We are pleased to see a number of positive steps in today’s budget that will bolster the wholesale sector. The freeze on fuel duty for another year is a welcome relief for wholesalers facing rising costs, allowing for greater stability in our operations.

“We also commend the government’s commitment to increasing support to combat retail crime, which is essential for protecting wholesalers, but we must ensure that wholesalers are included within this to ensure a safe environment for all businesses in the supply chain.

“Over the coming weeks, we look forward to working closely with the government to ensure that our members, who are central to driving economic growth, are given the support they need within an uncertain economic climate.”

Increase in Employer National Insurance contributions

“The planned increase in employer National Insurance contributions will significantly impact food and drink wholesalers who are already facing mounting operational costs. With the Employer National Insurance contribution rate rising from 13.8% to 15.8%, this change represents an additional £30.9 million in yearly NI costs for the sector. This increase adds financial pressure on businesses striving to support their workforce while maintaining competitive pricing in a challenging market. We urge the government to set out what support will be provided to wholesalers, particularly the many small businesses that are the lifeblood of the country, to ensure they can continue to invest in their people and operations without compromising their viability.”

Increasing minimum wage by 6%

“The 6% increase in the National Minimum Wage reflects the need to support workers amid rising living costs, and we remain committed to providing fair wages across our sector. However, this along with changes to Employer National Insurance contributions, the new rates add an estimated £110 million in direct wage costs to our sector. At a time we should be incentivising businesses to turbocharge economic growth across the economy, almost a quarter of our members may now be forced to reduce investment in other critical areas of their business. Balancing fair pay with the need for growth and reinvestment is challenging, particularly with rising costs across the board.”

Fuel duty freeze

“We welcome the decision to freeze fuel duty for another year, which provides much-needed relief for wholesalers who rely on transportation to deliver goods. This freeze will help mitigate some of the financial pressures facing the sector, allowing businesses to manage costs more effectively. It is crucial that the government continues to support the supply chain, ensuring that the wholesale sector can operate sustainably and contribute to economic growth.”

Business rates reform

“Reforming the outdated business rates system is long overdue, and it is essential that any new system provides meaningful support to wholesalers, who are the lifeblood of the nation’s food and drink supply. The new model must avoid penalising businesses that own and manage wholesale premises, ensuring they are not unfairly burdened compared to other sectors. We look forward to making representations to the government’s consultation to ensure that any new system is fit for purpose and genuinely levels the playing field, supporting the sustainability of high-street and wholesale businesses alike.”

Alcohol duty increase from 1 February 2025

“Delaying the alcohol duty increase until February 2025 provides wholesalers some time to prepare. However, the rise will still present substantial challenges in terms of adjusting prices, managing stock, and maintaining supply chain stability. We encourage the government to collaborate with wholesalers to ensure the transition is smooth and that unintended consequences, such as increased costs and disruptions, are minimised.”

Retention of full capital expensing

“We strongly welcome the government’s decision to retain full capital expensing, which is vital for encouraging investment in the food and drink wholesale sector. This measure will enable businesses to invest in essential infrastructure and technology, ultimately enhancing productivity and sustainability. However, it is crucial that the government provides clear guidance on the implementation of this policy to ensure that wholesalers can fully benefit from it. Continued investment in our sector will not only support job creation but also bolster the UK economy as a whole.”

Capping the headline rate of corporation tax at 25%

“We support the government’s proposal to cap the headline rate of corporation tax at 25% for the duration of this Parliament, as this move will provide much-needed stability and predictability for businesses operating in the UK. Maintaining this rate will allow companies, particularly in the food and drink wholesale sector, to reinvest in their operations, create jobs, and drive economic growth. However, this policy must be accompanied by measures that foster a competitive business environment, ensuring that the UK remains an attractive destination for investment and innovation.”

Retail crime support

“We welcome the government’s increased support to combat retail crime and the commitment to clamp down on organised crime. While these measures are crucial in protecting the retail sector, it is essential that the same level of attention and resources is extended to wholesalers. The wholesale sector plays a vital role in the supply chain, and any rise in retail crime not only impacts our members directly but also has broader implications for the economy and society. We look forward to working with the government to ensure that wholesalers are included in this support to help create a safer environment for businesses and communities alike.”

Increase in tobacco tax

“We support the government’s commitment to improving public health through increased tobacco taxes, which can play a crucial role in reducing smoking rates. However, the implementation of such measures must be carefully considered to ensure it works for wholesalers as well. A tax increase should not drive consumers towards illicit markets, which could undermine the goals of the health agenda and create further challenges for legitimate businesses.”

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