Members of the Federation of Wholesale Distributors (FWD) have written to the prime minister to express concern about the impact of the most recent Budget.
The letter said the Budget threatens the long-term sustainability of the UK’s food and drink supply chain.
Signed by Booker Group, Bestway Wholesale, AF Blakemore and Unitas Wholesale, as well as others, the letter states that the National Living Wage increase will add an estimated £110m a year in direct wage costs for the sector, while the increase in Employer’s National Insurance will add additional costs of £31m a year.
The letter continued 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.
It added that there is extra pressure on the sector’s ability to fulfil public contracts, supplying schools, care homes and more with food.
FWD members reportedly generate annual revenues of £36bn, contribute £3bn in gross value to the UK economy each year, and employ 60,000 people.
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Dawood Pervez managing director at Bestway Wholesale, said the increase in Employer National Insurance contributions, alongside the National Living Wage increases, will wipe “10% off of our profitability, significantly hindering our ability to reinvest in jobs and the wider supply chain”.
He continued: “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.”
Andrew Selley, CEO of Bidcorp UK, said that it is “hard to have a positive outlook”.
“For the government to say ‘invest, invest, invest’, whilst costing businesses £25bn in NI changes is ludicrous,” he continued. “Two-thirds of our suppliers and customers are SMEs and many will struggle to survive these tax hikes on top of the minimum wage increase and Employment Rights Bill.”
Coral Rose, CEO of Fairway Foodservice, said: “As wholesalers in supplying the foodservice sector we are particularly concerned about the impacts on our customers, and the real risk that these measures will lead to reduced spend, less jobs and ultimately fewer businesses and therefore less consumer choice. Wholesalers serving schools, hospitals and care homes will struggle to fulfil these vital public sector catering contracts, impacting hugely on vulnerable people.”
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