Supplementary memorandum submitted by the Food and Drink Federation (SFS 29a)

 

Introduction

 

This supplementary note is provided by the Food and Drink Federation in response to issues raised at its oral evidence to the Committee on 25 February 2009. It covers three areas:

1. regulatory burdens and the quality of and basis for policy-making;

2. the importance of science and research and development; and

3. consumer information.

 

Regulatory burdens and government policy-making

 

Food and drink is the largest manufacturing sector in the UK - with around 7,000 enterprises generating total turnover of £72.6 bn and employing around 440,000 people. FDF members feel strongly that the Government should do more to recognise the importance of a thriving food and drink manufacturing sector to the success of the UK economy.

 

This was a key theme to emerge from a survey of senior representatives of FDF members carried out by Professor Bruce Traill of the University of Reading in 2007. The survey found that industry leaders felt they receive limited support from Government. Worse, they fear that our sector is all too often made a scapegoat by policy makers who fail to appreciate the positive role it plays in the overall economy. This tendency is felt to be much more pronounced than in other countries, notably the US, where our members believe industry and Government work more closely as a partnership.

 

A Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis of the industry based on Professor Traill's survey of FDF members identifies regulatory issues as the biggest perceived threat to the future competitiveness of the sector. Companies cite key areas of concern as being: over-regulation and inconsistency across government; premature legislation; legislation that is not science-based and a perception (rightly or wrongly) that EU legislation is over-enforced in the UK compared with other Member States.

 

The regulatory climate is of particular concern to smaller and medium sized food and drink producers, which make up the bulk of manufacturers in the UK by number. A separate survey carried out on our behalf by ADAS confirmed how worried SMEs were about both the cost of staying on top of ever-changing legislation and ensuring they remained fully compliant with the myriad of rules and regulations affecting our sector.

 

In particular, the smaller companies in our membership feel strongly that the plethora of UK-specific employment and social policies introduced in recent years have impacted on our competitive position. In a food market that is increasingly operating on an EU basis, this puts UK producers at a competitive disadvantage to their European counterparts.

 

Legislative burdens, non-evidence-based interventions and regulatory creep impact every aspect of our members' businesses, and ultimately can undermine the UK's attractiveness as a place in which to invest in manufacturing capacity.

 

The following examples highlight some of our concerns:

 

· Food and drink colourings: Late last year, the UK Government and the Food Standards Agency ordered a 'voluntary' ban on the use of certain artificial food and drink colourings. Their decision was based on the findings of a single UK study that has been widely criticised and, indeed, the findings of which have been rejected by the European competent authorities. UK producers must now comply with this 'voluntary' ban - which is at odds with the prevailing EU regulations and which does not apply to food, drink or alcoholic beverages imported from Europe (where these colours continue to be legally approved). On a related point, there is genuine disquiet among food and drink producers that no Government Department or agency has been prepared to defend the positive role that food additives and ingredients play in the development of products that respond to consumer and/or societal concerns. For example, sweeteners provide one solution to a key public health concern (obesity). These ingredients undergo stringent testing to ensure their safety and, yet, are routinely attacked - without negative statements ever being countered by clear advice for consumers from 'official' UK bodies.

 

· Nutrient profiling: The UK's current restrictions on TV advertising are underpinned by the use of a nutrient profiling model developed by the FSA that has now been widely criticised for being based on bad science. The model was even described by the then Public Health Minister Caroline Flint as being the 'best we could get'. We don't think that is a good enough basis for restricting companies' legitimate freedom to operate. In addition, despite assurances to the contrary, we have always feared the model would be extended to areas outside broadcasting as a simplistic way of identifying 'good' and 'bad' foods. These fears proved well-founded last year when the Welsh Assembly Government - against the advice of the FSA - announced new guidelines for healthy vending in Welsh hospitals - based, in part, on the nutrient profiling model. Thanks to these guidelines, a wide range of products including sugar-free drinks, cereal bars and even cheese and tomato sandwiches are all deemed 'unhealthy' and banned from vending machines.

 

· Trans-fats: In October 2007 the Health Secretary called for a ban on trans-fats and asked the FSA to undertake a review in light of action in Denmark and New York City to impose mandatory restrictions on these types of fats. The clear implication was that he felt similar action was necessary in the UK causing immediate reputational damage to the industry. In the event following its review of the evidence, the FSA's Board recommended to UK health ministers in December 2007 that mandatory restrictions were not necessary since voluntary measures by the industry had 'reduced artificial trans fat levels in food and UK average dietary intakes dramatically' which is 'lower than the most restrictive controls introduced by Denmark'.

 

· 'Voluntary' Agreements: our sector is subject to a myriad of 'voluntary' agreements, targets and best practice guidance. For instance: we understand that the Food Standards Agency is planning shortly to introduce sector-specific 'voluntary' targets for saturated fat and sugar reductions in food and drinks - that will set unrealistic deadlines (in some cases as early as 2010), appear to be based on limited or no evidence, or scientific rationale, and take no account of the commercial pressures facing producers in the current economic downturn.

 

The EU regulatory process

 

The Food Matters report identified the growing influence of the EU on the regulatory landscape. In our experience, the EU regulatory process is subject to lengthy political negotiation that does not always result in legislation that is easy to use. This means it is vital that the UK Government engages in Europe in a way that helps shape sensible policies and that it works with industry from the earliest possible stage of the process to agree priorities and identify potential risks to UK industry's competitiveness. The recent example of legislation banning a wide range of crop protection products and pesticides is a timely reminder of what can happen if effective engagement does not happen early enough.

 

2. Innovation, research and development

 

Adding value through R&D, technology and sophisticated marketing are current strengths of our sector:

· food and drink manufacturers invest around £300m a year on R&D;

· in a typical year, 8,000 new products will be launched in the UK - making us one of the most innovative markets in the world; and

· top-performing food companies can expect around 15% of growth to come from innovation.

 

Maintaining our competitive position relies on ensuring that global companies continue to invest in the UK - given that the top 5% of companies account for 75% of our sector's GVA. Just as important is their ability to offer the best people a challenging and rewarding career path. However, in recent years, student interest in food-related science based subjects has dropped significantly (illustrated by a marked drop in applications to relevant courses). The provision of relevant courses in the right location is vital, but we see both the supply of relevant courses and marketing of these courses in decline.

 

There is a significant risk that there will be insufficient food scientists and food technologists to promote the future growth of the food and drink manufacturing sector. Research carried out last year by Improve, our sector skills council, suggests that up to 25% of food science/food technology posts were vacant; this equates to 2,360 positions being unfilled at any time. So DBERR initiatives such as Manufacturing Insight and Manufacturing Futures are critical to the future health of the food chain and ultimately to our food security.

 

We are working in partnership with Improve to follow through on a number of solutions identified to address the issues faced in the sector for food science and technology. Workshops to facilitate action, including identification in provision gaps, careers advice enhancement and marketing of the sector are being developed.

 

Our industry has a good track record of investing in its people - recognising the importance of investing in this valuable resource to remain competitive and effective. We estimate that our 20 biggest members are now providing around three million training hours each year at a cost of around £8m, for instance.

 

3. Consumer information

 

There is understandable interest in discussing how companies should present information that highlights the 'sustainable performance' of their products.

 

Our members have a good track record of providing relevant information for consumers in an easy-to-digest format, usually in the form of an accreditation mark on packs. The increasing popularity of products carrying the Fairtrade or Rainforest Alliance brands are good examples of how our industry has embraced important aspects of the sustainable sourcing debate and taken them into the mainstream. Similarly the success of the LEAF Marque, Red Tractor logo and the Freedom Foods scheme are further signs of how consumers are able to identify products that address specific concerns about particular aspects of the food production system.

The growth in the organic food market is, of course, addressing another important consumer need - although, in this case, the simple use of organic branding on packs (backed up by an appropriate accreditation mark) is conveying some complex lifestyle choices.

 

More recently, the spotlight has turned onto carbon measurement and labelling. FDF has been at the heart of work led by the British Standards Institute, Defra and Carbon Trust to develop a single UK methodology for measuring carbon footprints across whole supply chains. The BSI's Publicly Available Standard (PAS 2050) was published in October 2008 and we support its development as an important tool for driving CO2 hotspots out of the food chain.

 

PAS 2050 may also provide the sort of standardised data that will be necessary if we are to communicate effectively with consumers on the issue of carbon reduction. Work is now underway to evaluate how best to provide such complex information (particularly to help people make comparisons between different products) - and whether that should be done online, at the point of purchase or on pack.

 

As other sustainability issues come to the fore - such as the provenance of ingredients or the use of air transportation - there is always a danger that packs will become overloaded with information and cluttered with logos. Given the complexities of all the economic, environmental and social issues that underpin our current understanding of sustainability, it is debatable whether it will be possible to develop a single labelling system that is able to capture the nuances of all these issues simultaneously and present that in a meaningful way (and it is worth remembering that there are other pressures on food businesses to provide information on-pack e.g. related to health issues).

 

The types of schemes outlined above are all currently provided on a voluntary basis. Producers listen to their consumers in deciding what is required and how that information should be presented. Today, we tend to see logos on packs; in future, we are likely to see more in-depth information appearing online as the debates and the issues that interest consumers become equally more detailed and complex.

 

We also suspect that efforts to create regulatory responses to this debate are fraught with danger - not least because such solutions would need to be negotiated at an EU level, which does not always result in the best regulation. For instance, we remain concerned at efforts to extend the EU Eco-label scheme to cover food and drink products, which would introduce the concept of a simplistic pass/fail approach that is not suited to our sector.

 

March 2009