Ministers must resist calls to pause important health and environmental regulations and reduce the cost burden on businesses in other ways, says Nick Hughes.
The appointment of a new prime minister – and cabinet – brings a fresh opportunity for organisations to push their own particular agenda. Sure enough, no sooner had Liz Truss been named prime minister last week than the tweets, statements and letters from business groups and NGOs started flowing.
From food and drink industry groups in particular one theme was consistent: the cost of living crisis engulfing the UK requires action to reduce the ‘burden’ of regulation on businesses that already exists or is coming down the track.
Addressing Liz Truss directly, Food and Drink Federation chief executive Karen Betts said: “You’ve long championed our industry and know the challenges we face – from soaring energy and ingredient prices, to unnecessary red tape and labour shortages.” Betts went on to urge new Defra secretary of state Ranil Jayawardena to have “a laser focus on regulation” in his new role.
Miles Beale, chief executive of the Wine and Spirit Trade Association, said the new PM “needs to ensure the alcohol duty review reduces red tape”; while UKHospitality chief executive Kate Nicholls called for a “deferral of all environmental levies”.
Nicholls told the latest Footprint40 podcast she believes the government has not struck the right balance between regulating to achieve its environmental goals and leaving it to businesses and the market, both before and during recent crises. Although Nicholls said those within the sector were not pushing back against the ultimate “ambition” and “objective” of “where we need to get to” on sustainability, where the industry is not aligned is over the “timeframe” and “cost”; she called for a complete moratorium on new regulations which have a cost to businesses for two years. “I do think we need to have a complete reset and rethink now that we’re into this economic crisis on top of the covid crisis,” Nicholls said on the podcast.
It’s hard not to be sympathetic towards calls for the cost burden on businesses to be relaxed at a time when many are being pushed to the brink of bankruptcy.
Certainly, the argument from Nicholls and other food industry representatives that additional costs will simply be passed on to the end consumer carries weight at a time when inflation is in double digits and households are struggling to make ends meet. Moreover, leaders of trade bodies shouldn’t be criticised for doing their jobs and representing the best interests of their members as they see them. And there’s a good chance that calls to pause or axe regulations find a receptive audience in “ideological cutter” Truss.
But new ministers should resist being pressured into ditching or delaying regulations that can deliver clear social and environmental benefits – and make sense economically in the medium- to long-term.
Take three specific examples: a ban on promotions of products high in fat, sugar or salt by location and volume – aspects of which have already been postponed by a year – was deemed necessary because evidence shows the current retail promotional environment makes it harder for families to make healthier choices when shopping (incidentally, evidence also shows promotions increase consumer spending by encouraging people to buy more than they intended which runs contrary to industry claims that banning them will increase costs to consumers). Lest we forget that while the profit from selling unhealthy foods is privatised the bill is picked up by the taxpayer – the cost to the NHS of treating overweight and obesity-related conditions is estimated at £5.1bn a year.
On packaging, extended producer responsibility (EPR) is designed to force those responsible for producing hard to recycle waste to take greater responsibility and foot the bill – and conversely incentivise businesses to reduce waste and shift to reuse systems.
A deposit return scheme (DRS) for England, meanwhile, is considered an important step towards a more circular economy by increasing the supply of recycled materials (which are currently in short supply) that will in turn help businesses meet their own packaging – and in particular plastics – commitments. Incorporating more recycled content also reduces greenhouse gas emissions.
Yes, businesses need financial support to deal with the soaring costs of energy, ingredients and labour that are largely beyond their control. But there are ways of doing so without undermining long-term health and environmental goals. The government has already intervened in the energy market to cap prices. It could additionally use the tax system as a vehicle for helping businesses by reducing VAT or business rates; or it could offer businesses covid-style grants or loans.
It’s important to note too that calls to axe red tape do not reflect the view of all businesses. Witness the decision by some supermarkets to proceed with the ban on volume promotions (such as BOGOFs) from October this year despite the UK government’s decision to delay it. Coca-Cola, meanwhile, has said publicly it is committed to supporting a well-designed DRS scheme that could improve recovery and recycling rates.
To my mind Food Ethics Council executive director Dan Crossley puts it best when he says: “If we think of sustainability as an optional extra, as a cost that we can cut in hard times, then our thinking is all wrong and we won’t get anywhere. We should treat sustainability as an investment that will reap rewards over time and is a central part of strategy; what’s more we should always compare sustainable approaches with the cost of inaction. Unsustainable approaches are unaffordable.”
Ultimately, businesses can minimise costs associated with promotions bans or plastic packaging taxes simply by selling healthier, more sustainable products. Kicking the can down the road might work for some in the short-term but in the long-term we all end up poorer.
The latest Footprint40 podcast with special guest Kate Nicholls is available to listen to here.