Election 2019: So what’s next for the challenges facing food and drink?

As the dust settles on what Boris Johnson called the “earthquake” result of the biggest Tory victory since the 1980s, the food and drink industry now finds itself facing a seismic year ahead, with Brexit set to dominate the agenda.

Having faced no less than three no-deal deadlines, the industry is now at the epicentre of a race to complete a trade deal with the EU by the end of 2020 – which industry leaders have described as “impossible”.

The new government has perhaps an even bigger challenge: to bring an end to the three years of paralysis which has gripped the industry in crippling uncertainty.

So what will happen next? And what does Johnson and his “one nation” Conservative party have to do to tackle the biggest challenges facing food and drink?

Brexit

The dreaded no-deal threat may have been lifted but the uncertainty facing the industry is not going anywhere fast – despite the big Tory majority meaning Johnson’s withdrawal deal is all systems go.

The PM plans to put the legislation back before parliament for a second reading next Friday, which will allow him to fulfil his pledge of the UK leaving Europe by the end of January.

But what of another Johnson promise: his pledge to secure a trade deal with the EU by the end of 2020? And his vow that there will be no extension for the transition agreement beyond that date?

Everything points now to a new seismic countdown, this time July 2020, the date by which the UK has to request any extension to the transition. The big question is whether Johnson can pull off another “miracle” or have to make another U-turn.

Can the UK really negotiate a trade deal with 27 EU countries in the next eight months? The FDF has described the 18-month transition period first negotiated by Theresa May as “ambitious”. It says Johnson’s time line is simply “impossible”.

The Tory manifesto promised “friendly co-operation” with the EU, but not when it comes to the EU’s treaties or EU law.

“There will be no political alignment,” it says. “We will keep the UK out of the single market, out of any form of customs union, and end the role of the European Court of Justice.”

Industry leaders have warned divergence from EU standards, on areas such as food safety, animal welfare, plant health checks and labelling, would not only torpedo the chances of the EU agreeing to a deal, but pose the threat of huge costs to UK exporters, who rely heavily on European trade.

The run-up to the election also saw huge controversy over Johnson’s pledge that there would be no trade barriers on the Irish Sea, with leaked documents suggesting there would indeed need to be checks, which the industry has warned could lead to extra costs and delays in the supply chain.

While the result in Northern Ireland means the DUP “no longer has Johnson by the short and curlies”, as Adrian Chiles nicely put it today, he will still face major opposition from the industry and Irish MPs over any plans which involve such barriers.

A trade deal with Trump

Jeremy Corbyn’s warning of “rat hair” in the food chain may have fallen on deaf ears, but the government faces a crucial period of negotiation beyond Europe, not least with US president Donald Trump.

It’s not just the NHS which is controversial in trade talks.

Academics at the University of Sussex suggested this week a trade arrangement with the US would likely require changes to UK domestic legislation such as food safety and regulation. Johnson may have to choose between “facilitating trade with the US and holding on to the UK’s fragile national identity”.

And it’s not just the US where Johnson has promised to negotiate new deals. He says that within three years the UK will negotiate free trade deals with the US, Australia and Japan, in talks that will, we are told, run in parallel with the Brexit negotiations.

“We feel more optimistic about the direction of the UK for the next 12 to 18 months than before the election,” said Jeff Grant, representative of the New Zealand meat sector.

“From our experience in New Zealand, if your government has a healthy majority, they tend to move quite quickly on reforms so I think we’re going to see quite a lot of change. From our perspective that’s fine… we think the more open the markets get in the UK and Europe the better.

“We would [expect to] see a more liberal attitude towards free trade agreements.”

However, many leading industry figures are as sceptical about the chances of Johnson securing international trade deals in such a short time as they are of him meeting the December 2020 deadline.

“All of the experts I have spoken to believe these are unrealistic timescales,” one leading source said today. “While they are good aspirations I do not believe we will be seeing these deals in that timescale.

“And of course no matter how much Boris Johnson talks about the opportunities of international deals, we must not forget that 80% of all food exports go to Europe. Europe will always be our greatest trading partner.”

Environment

The war on plastic has been one issue that hasn’t been knocked off the headlines by Brexit – yet we still know surprisingly little about where the new government stands on the issues.

Under Theresa May, Michael Gove and Chancellor Philip Hammond were seemingly trying to outdo each other on who could take up the mantle.

Gove committed the UK to an all-in deposit return system, whilst Hammond announced plans for a tax on single-use plastics.

Yet whilst Johnson’s government did include its environmental bill in the Queen’s Speech, it didn’t get a look-in in his single-track Brexit-focused campaign.

“We haven’t really seen how the Johnson government responds to environmental issues,” says one leading industry source.

“Now they have more breathing space one imagines they will begin to engage more and will be looking for radical, popularist policies.”

With the SNP in contrast ploughing ahead with its environmental agenda, including plans for a DRS to be up and running by 2021, Johnson will be keen not to be seen outdone by his Scottish counterpart.

“In Scotland the criticism has been that the timescale is too fast,” says the source “In Westminster the criticism has been that it’s far too slow.”

That could all change in the months to come.

Health

The NHS, second perhaps to Brexit, may have dominated the election campaign but the issue of public health and the war on obesity got very little airtime.

That won’t last, and the traditional blitz of stories on health didn’t even wait until January. Calls this week for new calorie labelling on products are likely to be the prelude to an avalanche of demands, especially as after Brexit the UK will have greater freedom to set its own labelling regulations.

Perhaps the biggest unknown, however, is where the new PM stands on the industry role in the obesity crisis, and what it will mean for landmark strategies such as the Childhood Obesity Plan, including the voluntary reformulation programme and proposed clampdowns on promotions and HFSS advertising.

There are also growing calls for an extension of the sugar tax from soft drinks to other categories, such as biscuits and confectionery as well as sugary milk-based drinks.

In the Tory election contest, Johnson spoke out about “stealth sin taxes”. Yet as mayor of London he was one of the first to trial such taxes on his own staff.

Brexit has meant the war on obesity taking a back seat, but as the new government looks for popular and progressive policies – and with its onus on a “one nation” government which is not just for the rich – it surely will not be long before the nation’s diet is back on the agenda.

Workforce

The worst fears that followed the referendum may not have come to pass, but the issue of what the UK’s departure will mean for an industry hugely reliant on an international workforce remains a big one.

The Migration Advisory Committee will report next year on the government’s way forward, with the Tories promising a “firmer and fairer” Australian-style points-based immigration system and a “high-wage, high-skill, low-tax economy”, including further National Living Wage rises.

“The challenges we face will be further exacerbated if our future immigration system doesn’t allow businesses to access the workers they need,” the FDF said in its manifesto.

“Over a quarter of our workforce are EU nationals, operating at all skill levels. Net workforce growth in food and drink since 2012 has been driven by EU nationals.”

“All the signals are that it’s more relaxed about immigration than we had feared after the referendum,” said an industry source. “The noises coming out about the new deal are that they are being more imaginative and that Boris will not listen to those immigration hard-liners.”

Food, however, did not get a mention in the Tories’ workforce plans as one of the “world-leading” sectors it will champion, unlike architecture, engineering, accountancy, IT, digital services, law and the creative arts.

Scotland

Divergence from Scotland on areas such as health and the environment is as nothing compared to what SNP leader Nicola Sturgeon would like for the year to come.

For companies already facing huge uncertainty over Brexit, the prospect of a second Scottish independence referendum is another huge factor coming out of the election.

With the SNP wiping the floor with its opponents, increasing its number of MPs by 13 to 48, a clash over the future of the Union is a certainty.

“In Scotland there is an additional level of uncertainty for businesses already facing the issues of Brexit,” says a source. “One thing is certain: Nicola Sturgeon will ask for another independence referendum. What we don’t know is what Boris is going to say.”

And whilst the Tories pulled off amazing gains in parts of Wales, the story was very different in Northern Ireland, source of so much of the uncertainty for the industry over Brexit, where the nationalists seized the balance of power from unionists, raising the prospect of renewed calls for a united Ireland.

The DUP, which held the balance of power after the last election, even had the Swinsonesque indignity of seeing its Westminster leader Nigel Dodds lose his seat to Sinn Féin, after 18 years as MP for Belfast North.

Food policy

Food and drink was at the heart of the general election in many ways, not least because of Brexit, from fears over food shortages to the Irish border controversy.

But how much serious debate was there in the campaign about the issues, and about food’s place at the table?

“The brutal truth is that the election was about two issues, Brexit – and not even the nuances of Brexit, but a simple ‘is it good or bad’ – and the NHS,” says a source

“Food policies just didn’t get a look-in at all.”

Yet it’s not just the huge questions over what Brexit means for UK retailers, suppliers and farmers that will be on the agenda for Boris as he renews his stay at Number 10.

Next year the government will publish its first food strategy in 75 years, with a report by Leon founder Henry Dimbleby.

The industry is also hoping Johnson accelerates the work of the Food and Drink Sector Council, so far a huge damp squib.

As with so many issues of late, it will be hoping above all for greater strategic leadership and much more certainty about where the industry stands in the mind of this new government.