Coalition urged to deliver policies to kickstart growth

A stone’s throw from where George Osborne will deliver his Autumn Statement next Tuesday, industry leaders this week took up residence in Westminster to call for a change in direction from the government.

Representing some 7,000 companies, £73bn in turnover and an estimated £20bn added value to the UK, the showcase by the Food and Drink Federation was a timely reminder of the worth of one of the few sectors to have been relatively resilient in an economy otherwise seemingly dominated by bad news.

As well as treating them to some fine food, the FDF used the event to launch a withering attack on ministers for failing to provide an effective growth strategy for the sector.

It has added its voice to a growing number of trade bodies and leading companies all worried that unless action is taken to kickstart growth, the industry could become gripped by the sort of economic malaise that has hit so many other sectors.

Grocery retailers and food and drink suppliers may have avoided the worst of the economic crisis until now, but financial experts are widely predicting turbulent times ahead in the UK.

A new year credit crunch on bank lending and continued cut-throat competition among supermarkets with its sapping impact on the supply chain are just two of the big concerns.

Industry leaders appear united in the belief that the government has not been doing enough to support what is, despite these pressures, one of the most buoyant sectors in the economy.

“There’s no push coming from the government and somehow we need to change that,” says Jim Moseley, managing director of General Mills and FDF president, who led its call to action at a press conference this week.

“It’s not all been hollow talk from the government. I think there are some departments that are engaged and there is a drive for a resurgence of UK manufacturing. But I don’t feel some departments, like Defra or the DH, are looking at us as being one of the main industries to rebalance the economy.”

Giants demand action
It’s not just the FDF demanding action. Some of the biggest companies in the world have been involved in separate talks aimed at getting a change in direction from Westminster.

The Policy Issues Council of the IGD, which includes executives from giants such as Tesco, Asda, Procter & Gamble and Kraft, has been discussing plans for the industry to work with the Treasury on specific measures to aid industry growth.

The Grocer understands its initial proposals include a call for the government to work with the industry on a plan to improve rail links to help them take trucks off the road.

The council also wants Defra to issues clearer guidance for local authorities on waste collection.

Retailers and suppliers find the vagueness of the waste strategy exasperating, it claims, adding that the postcode lottery of services has hit sustainability drives.

“There’s a feeling the government isn’t completely in tune with the reality of business,” says the UK boss of one of the world’s leading fmcg companies, who has been involved in the discussions but asked not to be named.

“It’s been so consumed by deficit reduction, it has not done enough to provide policies for growth. We know what it’s like on the front line and so, perhaps even more, do the retailers. The idea is that we can feed in to the Treasury and help the government come up with ideas for growth. We are not seeking things that are unobtainable or unrealistic and I think there is willingness from the government to reach out and help.”

But some fear such proposals are simply tinkering around the edges. The British Retail Consortium is demanding “bold” and “urgent” action from the Chancellor, starting next week.

It is calling on the government to abandon its planned increase in fuel duty in 2012, ensure increases in business rates are kept significantly below the 5.6% level of RPI and for the coalition to make good on previous promises to slash the avalanche of red tape seen by many as strangling businesses.

The Association of Convenience stores this week threw its weight behind a similar call for rates relaxation.

“There’s a growing momentum in the industry and a sense that the government must do more,” says Stephen Robertson, BRC director general, who points out there are already 23,000 fewer full-time jobs in the retail sector this autumn compared with the same period last year. But can retailers or suppliers, however powerful, really hope to bring about significant changes to government economic policy?

FDF director-general Melanie Leech says the aim of its campaign is not necessarily to obtain huge injections of central investment but for more joined-up thinking in strategy. “That’s something we think is missing. That joined-up focus,” she says.

The FDF has appointed leading accountants Grant Thornton to approach suppliers and manufacturers across the UK to collate their views on what needs to be done, with the results of the project due to be released next month.

Moseley, in the meantime, cites a quote from a former New Zealand Americas Cup team as a possible mantra by which the government should help the food and drink industry through the stormy waters ahead. “If it doesn’t make the boat go faster, don’t do it.”

Conversely, if it does make the boat go faster, make sure you do it… and quickly.