A new dawn, a new day…
The removal of Messrs., Gove, Rees-Mogg, Truss et al from any form of power is a good thing given their collective self-centredness, incompetence, and exceptionally poor track record. They deserved the good electoral kicking they got and are replaced by the likes of Starmer, Raynor and Reeves; will the new kids on the block be a better version of what they replaced for the UK food system?
At first base it is hard to believe that they could be any worse but that thought should be perhaps held for a while. To be fair, the tone, focus and pace of the attack from first base of the new regime has been a good one, Starmer looking serious to the tasks ahead. That said, early noise and blame upon the prior regime is one thing, a better delivery is quite another.
Starting from the top, improved thinking and stability will be welcomed by all in the UK food system after a tortuous period of British politics when the rotation of Ministers and policy inaction was a chronic failing. Looking at how many previously senior civil servants became Labour MPs may suggest, for the wrong reasons it should be said, that there may be more policy alignment and harmony in government, the key question then being the policy. That all said, there is a chronic incapability in the UK civil service, which if it is not addressed will stymie any regime.
Rachel Reeves, a welcome first lady Chancellor of the Exchequer, will reveal her Budget in the autumn 2024 and as an ex-Bank of England official may have a sound understanding of the workings of the financial system and the wider agencies. That said, the performance of the Bank of England has also been far from glorious in recent times and it would not be unhelpful for her to replace her incumbent Governor in short order, Andy Haldane would be an inspired replacement.
Budgetary policy is likely to be quite tight, Starmer has spoken of no return to austerity, Reeves to working within present national debt to GDP plans, all of which means no cuts to the aggregate public budget and the need for tax rises. Some of the latter have been signalled but do not amount to much, so the big question is will wealth be taxed to a higher level, those seeking to exit their firms may have cause for concern? As for monetary policy, firms with indebtedness will welcome the probable easing back of UK base rates in Q3 CY24, probably resting by 2026 in the 3.0-4.0% range.
Labour, with its trade union allegiances and funding, can be expected to be more friendly to workers, albeit whether this means more hours worked in time remains to be seen; the robustness of the labour market has been a blessing of the past decade, it could be a big worry in the next as capital replacement moves on, AI takes hold, and less flexibility emerges; farming and the food & beverage sectors are big utilisers of temporary labour, which may have to come to terms with the like of the end of zero hour contracts.
What Labour does around skills, health and well-being will also be important. If waiting lists do notably contract over say 3-5Y, will that notably raise the pool of domestic labour, and what does this mean for labour prices (wages), unemployment, and the benefits bill; hence, my worry. Additionally, Labour has spoken to a long overdue reform of the British planning regime, and 1.5m new homes by mid-2029, which means massive building in 2027/28. Who is going to build such homes, who is going to live in them, what will that means for house prices and the rental markets?
More parochially for the UK food system, Labour is retaining the present DEFRA structure, which to me means that the potential for the biggest industrial system in these Isles will be missed; I continue to see merit in a Minister of the Food System, reporting to the Prime/Deputy Prime Minister and coordinating a 10-15Y policy programme. The good news of that the new DEFRA Minister has prioritised food security.., the bad news is that environmental/water matters make up the other five departmental priorities, not that such matters are not important, it is just that food policy does not emerge in its entirety, for example a long-term soil strategy alongside digitisation to optimise the production of food in the UK.
DEFRA is devoid of food talent, never mind food policy, the person replacing the dangerous and useless David Kennedy as policy director general is Emily Miles, ex-head of the Food Standards Agency. We congratulate on her appointment and wish her well, she cannot be worse than her predecessor but will she be any better? We do expect Labour to be more interventionalist in the food, diet and well-being debate, with Henry Dimbleby featuring upfront and central. Labour in Wales has already announced a consultation on HFSS (high fat, sugar, & salt) products, and by 2029 anticipate a slew of regulations around advertisement, positioning, promotion and may be even pricing/taxation in these areas.
Not fulfilling the immense potential of the UK food system will be an ironic own goal for a government that speaks of the need for growth, a return to the times of industrial policy and the role that the food industry can play in the sustainability, health and well-being agendas.
So, now it is time for the industry to seek to engage with the new regime and constructively respect its agenda to work to the national interest around the evolution of a food system that fulfils its strategic – safe and secure food – requirements whilst also generating the retained profit from farm to fork to necessarily invest. With a more interventionalist state, so higher costs in all probability, society will also have to come to terms with the need to pay more for its food if the public goods are to emerge. Without such give, expect capital to fly from the industry.
I wish Starmer et al well, as their progress should be mirrored in the food system, but do so with eyes wide open, set against the relief of the ridding of the last lot.
In this evolving economy and industrial system, Coriolis is a force for positive change in the places that can be seen. If you wish to explore self-improvement, greater efficiency and productivity, and so the cost and cash flow benefits, give Mark Dudley a shout.
Dr Clive Black
Senior Advisor
July 2024
