Mid Devon State of the District Report

Posted on 27th January, 2019

Mid Devon District Council – Annual State of the District Debate 24 January 2019

Linda Middleton Jones , Secretary to Business Forum Mid Devon

Most people don’t know trade agreements need an increase in paperwork. Need to prove origin, for everything included in the end product. So Brexit will lead to more bureaucracy.

Two camps in industry: prevaricators and hedgers. Prevaricators – waiting;  Hedgers – relocating to EU

Reduction in Moody’s status, so already more expensive to borrow money. IMF have issued a warning about this. No deal – money more expensive to acquire. Unrest. Stockpiling means that companies will be low on working capital. How long will supplies last if there is a siege. In Europe there is some sentiment of xenophobia towards the British.

In future all goods leaving and entering will need paperwork, customs checks and clearance. For people in Devon this means price increases across the board: oranges, olive oil, sherry. Tourism could be affected. Hospitality. Jobs on Farms. Manufacturers will find price increases and delays. EU customers may choose a different supplier. Price increases means increased costs and reduced demand for companies. This will result in job losses. There will be no .eu emails for UK companies, so will have to start SEO from scratch. International driving licenses if we want to go to Europe.

SWOT – what can we do?

Peripherality – we are a long way from London, a lovely area to live. This is a USP, not a barrier. We can make something of it. Tourism – can be at the forefront. Reduction in migrant workers, opportunity for locals, including older person re-engagement. Message to locals is – local companies affects how we live our lives. Talk to supply chain. Make EU customers feel valued. Invest in technology, teaching skills in export. Only 150,000 companies have ever sold to the EU.

Charles Baughan – Westerways Sausages

Pork sausage manufacturer. Modbury in the South Hams. Uniform has union jack. Wants to tell us about his concerns about Brexit. Is food and drink important to the West Country? – yes it is. It’s about 17% of all employment. There are about 2,500 small companies like Westerways with an average of about 30 employees, and about £2.5-3 million annual turnover.

Here in the UK we import about 55% of the pork we consume. Westerways only uses fresh British pork. Farmers are the custodians of the area we live, our USP, our community. Is Westerways affected by Brexit? Yes – because about 80,000 tonnes of pork comes into the UK every month, predominantly from Denmark, Holland, Spain. There will be issues with Brexit with time sensitive delays. 4,000 lorries per month bring pork into the UK. 43% are time-sensitive, which is fresh, not frozen. The market is going to experience extreme fluctuations if we have an issue on 29th March. Westerways is an experienced exporter, has supply certificates, traceability to the farms, NFU ensures one of the best systemised approach to agriculture in the world. But price is a factor of supply and demand. Hypothetically a pack of sausages in Mole Valley Farmers might go from £2.50 to £5.00. Might be an issue for UK consumers. Westway might have to sit on his hands and wait for it to settle down, concentrate on business in China, or Europe or elsewhere. They are doing their diligence, and are not unduly worried, but they are concerned there aren’t many experts discussing this. Let down by parliament who should have been thinking about this, rather than kicking the can down the road and worrying about what the public thinks of them.

Andrew Butler, Devon Advisor for the NFU

From a farmer’s point of view. NFU represents farms across the Mid Devon and rest of England and Wales. Farmers make up 1.5% of population. Why should general public be worried about the impact of Brexit on farming. Might be vegetarian but still eat. Price we pay is important to us. Outside towns landscape is almost entirely looked after by farmers. If farming is in the doldrums, our landscape changes, changing our leisure and tourism opportunities. 8-900 farms in Devon spend money, Crediton Milling, Mole Valley in Cullompton and the local vets. Money stays in the local economy gets spent on shops and pubs. We can argue what a good Brexit means, but we need to see something that works for industry, because otherwise consumers won’t see that in local market, economy, landscape. Since the referendum NFU and business have been looking for clarity. We don’t have it. There’s no short-term expectation of clarity politically. That’s not good for business, including farming. Needs to plan, change and adapt. Farming economy is entwined in the EU more than any other. We have had the CAP for 40 years, regulation that comes out of that. We have to disentangle ourselves, and we don’t know what that’s going to look like. 62% self sufficient in food. 70% of our agriculture exports go to the EU. Free and frictionless trade with the EU is a pre-requisite, from day one. Labour is key for the sector, not just on the farm but more so in the supply chain. Abattoir 80-90% non UK labour. Vets are 70% non-UK. Anything that puts that at risk threatens our food chain. Impact of disruption would be seen at Morrisons, Tesco etc. NFU has been very public about catastrophic impact of no-deal Brexit. Could put us into a trade embargo. WTO terms with EU would put tariffs on our imports, e.g. pork and dairy. Tariffs would be 25-75%. About 1/3 of our lamb goes to EU. Prices would rise in the retail sector. You might think that farmers would be better off with higher prices, but this would lead to inflation, which would cause the government to unilaterally lower our tariffs. Imports would reduce the prices and would cruxify the farming sector. Farms losing income, going out of business. Work continues unabated with politicians to avoid a no deal Brexit. NFU is optimistic sector can flourish into the future: good products, high levels of welfare, traceability, environmental protection. Good basis for UK consumers and export. The agricultural bill going through parliament affects agriculture for the next generation- not only impacting farmers, but also consumers of food, and the landscape. Really key we avoid a no deal situation. Neil Parish is being helpful. If we get a good deal farmer can continue to push out a high-quality product, employ people and contribute strongly to the local economy.

Darren Bevan, Gregory Distribution

Darren is a business unit director. Devon / SW business with a network that covers the whole of the UK, with 26 key sites, established 1919, centenary year. Started by Archibald Gregory hauling coal from haulage station in North Devon to the wool factory. They have the first truck Archibald bought, the first one his son bought in the 1950s, and the first one John (3rd generation) bought in the 1990s.  Joint venture with Hayton Coulthard (racing driver’s family business) in Scotland and acquired Craibs in Aberdeen. Today as a business, when John took over the were £2m / year business and now £250m. 2,600 employees 1000 vehicle, 1400 trailers. Diverse business: milk collection, south west water. Brexit issues: they don’t cover the continent, Europe. They are pleased they’re not involved in that. However most of their trucks costing £22m per year, are manufactured in the continent. Their costs have gone up in the past 3 years. 13% movement in exchange rate has meant a 13% increase in vehicles and parts. Also if fuel goes up 1p that’s £6,000 per week increase in costs. If there’s a hard Brexit, 11-16% additional cost of vehicles and parts. There’s a driver shortage for LGV and they have a lot of European drivers. The average age is 53, and they are doing a lot to counter it with training of “white van man and woman”, apprentice scheme. Their own average is age 47. Risk to supply chains at borders. Customers’ supply chains e.g. fruit juice would have an impact on their business. They are already seeing stockpiling. Lots of enquiries about warehousing for stockpiling for Brexit. They have done well out of it in the past 2 years, but it’s not sustainable growth. Workers from EU countries – Gregory don’t want them to go back. One warehouse in the sW is 70% east European. They are building an action plan to retain their workforce. They know EU citizens have to register, and they are supporting them as they are worried. Temperament and morale is not a great situation. They are working hard with their HR team on how ot manage that because they are proud of their multicultural sites. They had 52 different languages spoken in one depot. 622 drivers employed. Only 3.25% are female, and they are working on that. Concerned about affect on costs as a business.

Questions:

Q1 – Just over 51.4% voted for Brexit. We are only 60 odd days away from it. Is there even one good thing that’s going to happen on 29 March.

Chair : Mid Devon 51.3% of those who voted were Leave.
Linda: certainty is the only thing she’s looking for. Applauds that we are talking about facts rather than emotions. There will be tough times, and we are a resilient nation, opportunities (unspecified). She cannot say that things are going to be rosy. She is concerned.

Charles can only think of one benefit. The Belgians have African swine flu, and we are on an island so we have an advantage in pork export

Darren; is certain they will still be in business and people will still be going to work and there will be some opportunities and also some negatives, that’s life, we are where we are, and the sooner we get used to it, change is good, and not you go first, follow us.

Andrew – we don’t know what March 29 is going to look like, so we don’t know. Once we have clarity business can move on. Common Agricultural Policy has had to fit all the member states, agriculture bills is just for the UK and in some respects just England so that could give us some positives, but we won’t know what that looks like for another year now.

Q2 – has anyone on the panel thought through the longer term implications of staying in the EU and Euro that’s going over a precipice

Q3 – Lloyd Maunders used to export 5,000 lambs per week, do we see the benefits of tourism since they will charge us but we won’t charge, 100 mile limit back for fisheries, improvement with obesity with less food available

Andrew – all uncertain. All suppositions. Without clarity businesses and consumers can’t plan. Most business know the answer they would like, once we have an answer we will hopefully see a bounce. NFU wants to see a deal that allow us to continue free trade and free movement. Once the situation is clarified we can start to negotiate, which is the hard bit.

Linda – no other country has ever tried to withdraw from a customs union as we are doing. So that point underlines the complexity of what’s going on. No other border has attempted a technological entry and departure point. The aim is to start trade deals on our own account, we’ve heard about chickens in hydrochloric acid. But goes back to our resilience, and that the electorate chose to leave.

Q4 – has employed two Polish builders this week 27-35, both are going back before 29th because of fall in pound, uncertainty, children’s schooling. Any indication in the panel’s business of how many are going to be leaving before the deadline?

Darren – it’s a concern and they are looking to avoid. Have not seen a lot, but it’s a worry if clarity remains evasive. Colleagues in Northern Ireland have lost a lot of workers to Southern Ireland where they are paid in Euros. It’s about doing right by their people, because they are great people and we don’t want to lose them.

Andrew is going to interview staff and ask about circumstances and see what they can do to help them. 9 am Friday – cooks breakfast for the staff. To show the MD cares. Whether from Eastern Europe doing a damned good job, look bac to Polish fighter pilots in WW2 and nothing has changed.

Q4 – is there a plan for reintroduction of the agricultural marketing board, which was a farmers’ cooperative which took products to the consumer. Disbanded because it was considered a monopoly e.g. 13m litres of milk delivered at its peak. Milk is difficult to take to market.

Andrew: None of the political parties of fans of the prospects. Thatcher did for the milk marketing board back in the day. Competitions and mergers department sees monopolies as bad for the consumer. It would need to be done as a farm cooperatives model, and it would depend what our relationship with Europe was and whether aligned on a regulatory basis.

Darren: 70% of their business was with the milk marketing board in the 1970s, but thinks very unlikely it will start again.

Q5 – at June 2016, were staff aware of likely impact, and subsequently anecdotally does panel think that staff may have changed their mind?

Linda – staff have international expertise. They had a what if discussion. Have not been surprised, other than by the longevity of the negotiation. She also informed other businesses she deals with at the time. People made emotional choices.

Andrew – as a trade organisation, they were one of the few to do independent impact studies. They published to all of the members. Democratic decision was to recommend remain, but they didn’t campaign. Anecdotally not many have changed their minds. Some made decisions based on the recommendations, others in spite of them.

Charles – was worried about Brexit, didn’t share worries with staff, not sure if should have done

Darren – didn’t and doesn’t think it would have been right to do so. Some have changed their minds and some haven’t. Speaks to a lot of MDs and discusses Brexit at every meeting. Nobody knows. Just uncertaintly. It’s about being positive and looking for the opportunities and we will be OK.

Q6 – Andrew mentioned “a good deal” what is that? Presumably not Theresa May’s since they want freedom of labour and customs union. What about subsidies.

Withdrawal agreement is the short term fix, and then we can plan for long term. In the short-term freedom of movement and customs union is retained. In the long-term immigration bill is going through, visas etc. They can work with that if they can get access to the staff they need from wherever, that suits the sector. What language they speak or how far they come is not a concern. It won’t be as free as it is now, but as free as possible is what they are looking for.

300m Euros subsidy, government has committed spend for the life of this parliament. Beyond that all bets are off. It’s not about pounds from government, it’s about how the sector is supported. If it can be supported, increase import substitution, every opportunity to increase productivity. Some stability except under a no-deal.

Q7 – public services?

Andrew : We have aligned ourselves with trade associations, sees it as simple as possible, will be able to continue as they are potentially with some added costs.

Linda – for government to continue spending money in public services must have healthy economy, cannot be done witout people in jobs which then flow through to local authorities. That will ensure Cannot see an increase in NHS funds when we are in disarray as a country economically.

Stephen (Mid Devon) – no different from panellists, directly employs over 500 people as MDDC. No social care as district council but as senior officers across the geography working through the Brexit opportunities group – strategic opportunities. Leave policy decisions to politicians. Fight what’s in front of them. Duty has drifted towards resilience aspect. Local authorities simply don’t have the resource capacity they used to and could have mobilised troops all hands to pump. Now if redirects resources, will have to turn off parts of the business. It’s no different from any other business, same with social care, it’s about people and making sure prepared for the very short term.

Q8 – how widely is keeping morale with EU employees being done?

Darren – working up a plan as we speak. Will start asking other businesses. A lot of people have roots here, so at a time when they may be feeling unwanted it’s a matter of making people feel wanted.

Linda – institutes and chambers can play a big part in getting this data. If companies are doing best practice and pass to local networks, rotary etc. it behoves all of us to pass the information around

Q9 Anthea: Given we now know overspending, advertising corrupted outcome of referendum, and since the outcome is clearly not what people voted for, should we be given the opportunity for a people’s vote?

Andrew: NFU has office in Brussels, member of Copa Cogeca (Committee of Professional Agricultural Organisations) – pressure being put on – yes! Key market. Is that pressure enough to override other considerations, probably not. Brexit is a political situation, not an economic one. Re. people’s vote they would have a view on what was in it. At present they only have a view on the deal vs no deal.

Charles : Pressure on EU to give us a better deal – like herding cats. Can’t see they would give us any attention.

Linda – why would they? Poland is biggest net recipient, recognises value of us belonging. Why as a block would they want to make it easy for us? Terrorism, security, aviation – things they want to keep talking to us about. Respectable, reliable, quality nation – being a bit ornery in their eyes. Was in Geneva, without exception all ministers and people there talking about policy etc.  All see that Britain would have a dip, but would rebound and take place on world stage.
Darren – Would Scania etc. pressuring to get a deal with Britain? Probably. NZ has lots of referendums, majority was to change flag. Next one was here are 4 choices for new flag,

No deal should not be on the ballot- ¼ of people thing it means stay as we are. Q should be The Deal, vs Remain. That’s democratic, go with the result as long as the Russians haven’t paid for it. A lot of people here are thinking as Europeans rather than as Britons.

Audience vote:
May’s deal – 3?
No deal – none?
Renegotiation – 3?
Majority of hands for remain

Q10 did the panel think we ever we ever stand a good chance of getting a good deal

Darren – you always have a chance, but anyone is business knows negotiation is hard and that was a hard negotiation, so tough to do

Linda – would like to think that a UK is a match for 27 countries

Charles – difficult situation, complications of NI border, Scotland and Wales, nightmare, agrees with Darren

Andrew – nobody ever expected to have all the benefits of being in and being out. Spoke to EU minister for agriculture before referendum EU didn’t want us to go, and if we wanted to go we would bear the consequences.

Q11 – much was made about immigration in referendum, have panellists given up on recruiting British born staff

Charles – has taken very active steps, business in centre of Newton Abbott. Has been around schools, talks to them at 16 after GCSEs, got people in on work experience, 2 days ago group from NACC. Has brought some results 3 lads 18 have joined, natural English speaking, get on well with other members of staff. Important to cherish staff, important to learn those skills, look under lots of different stones bring into our organisations and put ladders in front of them that allow them to make progress professionally and financially.

Darren – have not given up, 80-100 apprenticeships per year. Trying to get into younger ages, dying industry if don’t have the people to load the trucks. A lot of senior management have come through that route.

Andrew – seasonal workers, shortage of 20,000 was pre-Brexit, because UK at full employment combined with jobs people don’t like to do that much. If businesses can’t get workers product will rot in the field or won’t be planted. Stuff about mechanisation and robots, but there’s no robot designed yet that can pick strawberries. Lucky as sector as have pilot for replacement of seasonal workers. 2,600 companies have tender from Home Office for migrant workers that hope will be rolled out.

Q12 – Switzerland trades frictionlessly, can’t we?

Charles – no it doesn’t. He exports to Switzerland, it is problematic. Switzerland have been negotiating for 14 years and have no deal.

Q13 – a lot of people voted because of lack of infrastructure in roads promise

Andrew – Cornwall funded roads, still voted out

Q14 – some people voted because they wanted to see less regulation, bonfire of the red tape. Is less regulation going to help?

Linda – choices are keep standards so we can trade with the EU, or drop standards so we can compete with the rest of the world. Government is compiling a list of what we can do. The risk if we drop standards is that we become uncompetitive in Europe. However, Brexit does give us choice.

Q15 – how much as planning for Brexit cost MDDC?

Stephen – when normally asked this by members, budget wise it’s just officer time which does carry a cost. Probably have diverted what would be normal continuity, so tough to say, but undoubtedly have sat in Brexit focussed issue.

Leader – has to decide on what subject of the state of the district debate would be. Little did we know we would still not know. Good panellists. Comments have been made about would people have voted one way or another had they known the facts. The facts or propaganda put out by both sides was incorrect. 1) we have not been able to verify that the money saved is going to the promised services 2) we didn’t have Armageddon. Negotiations have not gone as expected. Majority of public would have expected us to know, and uncertainty is disappointed. Politicians have to decide quickly, decision has to be made in the best interests of the country.


Written by DfE supporter: Elizabeth Pole

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