Food and drink wholesalers express deep concern over budget impact

Some of the prominent food and drink wholesalers have written to the Prime Minister to express deep concern about the impact of the recent budget, which threatens the long-term sustainability of the UK’s food and drink supply chain

Coordinated by the Federation of Wholesale Distributors (FWD), the letter highlights that the National Living Wage increase will add an estimated £110 million in direct wage costs, while the increase in employer National Insurance will add additional costs of £31 million a year to an already embattled sector.

FWD warned that the budget will compound spiralling costs and undermine the wholesale sector – at a time when it should be encouraged to play a pivotal role in driving growth. The viability of regional food distributors is now also threatened, while there is additional pressure on the sector’s ability to fulfil public sector contracts to schools, care homes, prisons and hospitals with nutritious food.

The letter also highlights concerns about reforms to business rates which threaten to plunge hard-working wholesalers into paying a higher multiplier on properties with a rateable value of £500,000 and above.

While the rationale behind this change may be to tax the warehouses of online giants, it is essential to ensure there is a way of differentiating them from business-to-business food and drink wholesalers who were not the intended targets of this change and play a vital role in feeding the nation.

Commenting on the letter’s publication, FWD Chief Executive James Bielby said, “Our members contribute significantly to the UK economy, with annual revenues reaching £36 billion. They also directly employ 60,000 people and add an impressive £3 billion of gross value to the UK economy each year.

"The scale of our sector’s contribution highlights its significance in powering the government’s mission to kickstart economic growth – which we wholeheartedly support.

“However, the tax increases announced in the budget will have the opposite effect, compounding spiralling costs and undermining our critical sector. I would welcome the opportunity to meet with the government to discuss our concerns so that we may identify solutions to mitigate the damaging impact the budget’s measures will have on the critical supply of high-quality food and drink across our country.”

Bestway Wholesale Managing Director Dawood Pervez said, “The planned increase in employer National Insurance contributions alongside the National Living Wage increases will wipe off 10 per cent of our profitability, significantly hindering our ability to reinvest in jobs and the wider supply chain.

"At a time when many wholesalers are already faced with rising prices, these added costs will cause further inflation across the board and will not drive economic growth in our sector or country as a whole.”