Election 2015

Food manufacturers mull Conservative victory

By Michael Stones contact

- Last updated on GMT

David Cameron aims to reclaim the mantle of One-nation leadership
David Cameron aims to reclaim the mantle of One-nation leadership

Related tags: Drink industry, Liberal democrats, David cameron, Eu

Food and drink manufacturers are pondering the impact of the Conservatives’ election success, as David Cameron prepares to form his second government as Prime Minister.

In a surprise result, the Conservatives won 331 seats in the House of Commons, representing a small majority. Labour and the Liberal Democrats both suffered stunning reverses. Labour lost all but one seat in Scotland to the Scottish Nationalist Party (SNP) and Lib Dem leader Nick Clegg described his party’s  losses as “cruel and punishing”.

Julian Wild, head of food team at Rollits solicitors, said the food and drink industry would welcome the stability the Conservative’s victory would bring. “I think that the food companies will be pleased that we are in for a period of stability,”​ Wild told FoodManufacture.co.uk.

‘What business hates most’

“What business hates most of all is uncertainty and if we had a hung parliament and considerable uncertainty that would have been bad for business. The overall message is that the economy has clearly been improving strongly and that’s good for business.”

One impact of the outcome would be a rewewed focus on food and drink industry mergers and acquisitions (M&A), he predicted. “I would sense that there’s more confidence in the food and drink sector. I’m, very active in mergers and acquisitions and there has been more M&A activity recently, since before six or seven years ago when we were in a recession. There’s going to be more activity and that comes with a stable economy.”

While Cameron was committed to a referendum on EU membership, his party's majority in the Commons would prevent that happening any time soon, predicted Wild. “It’s going to be for Mr Cameron to try to achieve as much as he can achieve at the end of that referendum – he needs to push for the best for the UK. I would say that there’s a strong support for remaining in the European Union.”​ 

Food industry impact

  • More stability?
  • More mergers and acquisitions
  • EU membership referendum
  • Second Scottish referendum?
  • Renewed focus on food and public health?

The SNP's stunning gains – virtually wiping out Labour north of the border – would lead to renewed pressure for a Scottish referendum but that “isn’ t something that going to happen straight away”.

Terry Jones, director general of the Provisional Trade Federation, said: “Thankfully, the Conservative manifesto recognises the importance of the sector and on the face of it we expect it to be business as usual. However despite the clear direction of travel in some policy areas, a number of important questions remain unanswered.

Impending European referendum

“Aside from the uncertainty that an impending European referendum poses, food companies want to know what's next for public health policy and whether any food plan will really seek to unlock the potential of the downstream industry or merely stop at the farm gate.”

Jones also questioned whether the former government's laissez faire approach to food and drink exports, particularly dairy, would continue. The industry will want to engage with the new ministerial teams, embed the importance of the industry with new MPs and maintain the momentum on policy work that was set in train before the election, he added.

Terry Scuoler, boss of EEF, the manufacturers’ organisation, highlighted the key importance of EU membership. “The biggest threat to our long-term economic well-being, however, remains the prospect of leaving the EU. Mr Cameron will be under pressure to call a referendum as soon as possible, possibly bringing it to next year.

“The new administration must move quickly and campaign on the back of a strong and positive case for Britain’s continued membership. Any drift or dithering on this issue will mean uncertainty for British businesses, which would be very unhelpful for the long term prospects of the economy.”

Read below more industry reaction to the election result plus political leaders' views.

Meanwhile, here's how the food industry responded to the news​ on social networking site Twitter.

  • Additional reporting by Nicholas Robinson and Rod Addy.

What others said:

Clive Black​, Shore Capital: “I sense that the industry will share the surprise of the Election outcome. On balance, respecting a broad church of views, continuity may be a blessing as a first reaction; so no major change in business policy. Furthermore, with a higher score than other parties on economic management, there may be a moderate boost to business confidence that there a clear win brings. Against this, there will be uncertainty surrounding the pending EU referendum and what that means for the economy, the value of sterling and monetary policy. Indeed, for the agriculture and primary production industries, the future of Britain in the EU is a quite enormous issue where industry leaders and policymakers need to start focusing their minds.” 

Ian Wright, ​Food and Drink Federation (FDF), director general: “With thriving exports, huge creativity and diversity among our members, FDF will bang the drum louder than ever before to ensure that the sector's contribution to the country is recognised and resourced sufficiently. Accounting for 15.7% of the total manufacturing sector by turnover and employing around 400,000 people across the UK, the food and drink industry is a national asset. As the voice of the largest manufacturing sector – food and drink, FDF has a long history of constructive partnership with UK governments. Given its economic contribution, which includes £21.5bn of gross value added to the national economy each year, we will continue to work to unlock shared value for the sector, society and the economy.”

Lise Madsen​, Honeyrose Bakery, md: “I am disappointed because I feel conservatives are subject to too much lobbying and I don’t think that’s a good thing. The shame of this nation is zero-hour contracts. I have never had the desire to employ anybody on a zero hour contract. It’s a travesty and I suspect another Tory government will not do anything about this. The Tories are not the party of the underdog, so I do fear for my workers and fear they will need support. The rich will just get richer. There is more to life than just having a strong economy. You need to have happy people and I don’t think that’s what’s going to be ahead of us.”

Duncan Swift​, Moore Stephens partner and head of the food advisory group: “Is this a good result for the food industry? Yes – it’s a good result for business generally. The Lib Dems had a lot of input into getting the Groceries Supply Code of Practice [GSCOP] and the Groceries Code Adjudicator ​[GCA] in place in the first place. There are various factions in the Conservative party that would look to see the GSCOP and GCA as targets to be challenged​ [to cut ‘red tape’]. There’s another faction that would look to see her powers increased, notably David Cameron. Whether that’s delivered in practice would be one to watch.”

Steve Crossley​, Bright Blue Foods: “If you go back to four or five years ago, the retail landscape has changed quite dramatically and competition has got even fiercer. Do I see the shopper having more money to spend in the next four or five years? No. Do I think the economic climate is best managed by a Conservative government? Yes. They have done a pretty good job over the last few years. I think for business it’s a good decision.”

Anonymous​: “All small businesses like to see consistency. For entrepreneurs and small business this looks to be good news. Opportunities to borrow and invest will continue with confidence and small business taxation will continue at current levels.”

What politicians said:

  • David Cameron​, Conservative leader: “In short, I want my party, and I hope a government I would like to lead, to reclaim a mantle that we should never have lost – the mantle of One Nation, One United Kingdom. That is how I will govern if I am fortunate enough to form a government in the coming days."
  • Ed Miliband​, Labour leader: “Clearly, this has been a very disappointing and difficult night for the Labour Party.​”
  • Nick Clegg​, Liberal Democrat leader: “It is painfully clear this has become a cruel and punishing night for the Liberal Democrats.”
  • Paddy Ashdown​, former Liberal Democrat leader: “If that ​[exit poll] result is right, I will eat my hat.”
  • Alex Salmond​, former Scottish Nationalist Party leader: “The Scottish lion has roared this morning across the country and can no longer be ignored in Westminster.”

Related topics: Dairy, Dairy-based ingredients

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