Truss fails to abate fears over impact of the National Living Wage

Horticultural industry representatives were left "disappointed" by Defra secretary Elizabeth Truss's address to last week's NFU conference in Birmingham, in which she avoided committing to any of the measures proposed by the NFU to mitigate the impact on horticulture of the National Living Wage (NLW), due to be introduced in a month's time.

Truss: Defra secretary of state addressed industry delegates at the NFU’s conference in Birmingham last  - image: HWweek
Truss: Defra secretary of state addressed industry delegates at the NFU’s conference in Birmingham last - image: HWweek

NFU horticulture board vice-chair Ali Capper told Truss the NLW "has the potential to ruin the industry". She added: "We have had just nine months' notice of this. It will mean a seven per cent increase each year in growers' labour costs. We have some robust asks, including for no National Insurance contributions on seasonal wages and the reintroduction of a seasonal student workers' scheme. Will the secretary of state support these?"

But Truss said: "I recognise that there are issues with horticulture. It is a success story and I am keen to help. Our aim is to improve the tax allowances for tax spreading and for a reduction in corporation tax, and to bring in more skills as part of the solution."

NFU president Meurig Raymond responded: "Most horticulture businesses aren't incorporated so won't benefit from corporation tax cuts." He earlier told the conference: "The NLW may be an admirable principle, but it's been introduced without proper consultation, without clear explanation and by politicians who have no understanding of how it's going to devastate Britain's fruit and vegetable growers, leaving many unprofitable in as little as three years." Addressing Truss, Raymond said: "We have a list of ways the Government can reduce the impact on growers and we expect you to take these on board."

Capper later explained in the conference's horticulture breakout session: "This isn't a low-paid sector but it needs to remain competitive. From April we will be the second most expensive country to pick and handle produce in the EU, and we didn't even know it was coming. What Liz Truss is proposing doesn't touch the sides of the problem."

While under-25s remain outside NLW provisions, Capper pointed out: "Since the abolition of the Seasonal Agricultural Workers Scheme, 70 per cent of harvest labour is over 25 years old." She added: "Everywhere in the developed world has migrant labour in some form. There isn't an automatic system we can turn to - robotic picking is at best 10 years away - and even if there was, we would need to be profitable to invest in it, and we will lose that in one fell swoop. "

Board member and potato grower Tim Papworth said: "It won't affect potatoes as much, as the industry has already taken on mechanisation and technology."

Explaining the NFU's "asks" of the Government over the issue, Capper said higher wages constitute a "stealth tax" in the form of additional National Insurance contributions. The reintroduction of a student seasonal labour scheme, meanwhile, "would take us back to a more sustainable position and arguably increase productivity and innovation", she said.

The NFU is also seeking a postponement of the NLW target level of 60 per cent of median earnings from 2020 to beyond the current parliament. "It's a long list - there are no single fixes but one or two could make a real difference," said Capper. She expressed optimism that continued lobbying could still achieve this, telling growers: "If you haven't met your MP, please do so. It's more effective than a letter. Those we have met were supportive."

Board member and soft-fruit grower Anthony Snell said: "For soft-fruit growing, over 60 per cent of the cost is labour." On the related issue of worker pensions, he added: "It's ridiculous for seasonal workers to have pensions. But we have been allowed a three-month probationary period on this, covering the expensive training and induction period. It takes 12 weeks for a soft-fruit picker to get up to speed."

NFU horticultural board chair Guy Poskitt said: "I was disappointed with Liz Truss's presentation on issues like the NLW." He added that retailers "are very much consumer-led and consumers hate to think of workers being paid low wages. The current race to the bottom can't go on forever."

The union's chief horticulture and potatoes adviser Chris Hartfield warned: "There may be businesses who still don't realise the implications of this. The penalties (for underpaying staff) are tens of thousands of pounds. The Gangmasters Licensing Authority may look for such breaches and if your workforce is all under 25 that may be seen as discrimination."

Three pillars - NFU horticultural board chair explains growth plan

NFU horticultural board chair Guy Poskitt (pictured) explained the three "pillars" of the board’s growth plan to conference delegates. "Pillar one is our Healthy Harvest campaign, making clear our need for chemicals. As carrot growers, we can get seeds dressed with some chemicals in Germany but not here."

On the industry competitiveness pillar, he said: "I am a great believer in the AHDB. We have to compete with other nations and the race is never-ending."

Covering the supply chain, he highlighted unresolved issues outlined in the NFU’s Catalyst Revisited report published in November. "After Aldi’s signing of our Fruit & Veg Pledge, discussions are ongoing with other major retailers," he said. Most are on board with what we want to do, and one or two are close to signing."

But he added: "The big retailers have made a simple process complicated and now they need to simplify it again. What we do isn’t rocket science. We don’t need a man from Tesco round every day."

On Tesco’s proposed Sustainable Farming Group for potatoes, Poskitt added: "They have had two years and we are still waiting to see the contracts."

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