In a report on the impact of Brexit on the sector, the Business, Energy & Industrial Strategy Committee said it had to remain competitive once the UK withdraws from the EU. It said a lack of a free trade agreement with the EU would impact businesses as well as consumers.
According to the report, the processed food and drink sector contributes £28.8 billion to the UK economy and directly employs 400,000 people, including many EU nationals. As a result, the UK government needed to strike an immigration deal with the EU which allowed the food and drink sector to access EU labour.
The MPs also said that the government should work with the sector to address its skills gaps and ensure that it was attractive to UK workers as a career choice.
George Campbell of Pinsent Masons, the law firm behind Out-Law.com, who specialises in commercial contracts in the food and drinks sector, said immigration was a key challenge which had to be addressed in the run-up to withdrawal.
"Brexit is a major concern for businesses in the food and drink sector. The EU represents a key export market for the food and drink sector and a key source of labour as well,” Campbell said.
“The challenge of getting labour in to support the food and drink sector is a real one. If there's a significant reduction in immigration that will impact this sector significantly,” Campbell said.
The committee said there was an “over-reliance” on the EU as a trading partner for the food and drink sector, with 60% of exports going to EU markets.
If the government was unable to secure a trade agreement with the EU, the food and drink sector would “undeniably suffer from reverting to WTO tariffs”, the MPs said.
“Should the UK lower or remove its tariffs on imports in the future, the consequences for British farming could be extremely damaging and the positive impact on prices for goods to households is likely to be very limited,” the committee added.
It said any extra bureaucracy at the border with the UK would also adversely affect the sector, with the UK-Ireland border an area of particular concern.
The committee also recommended that the UK should continue its membership of the European Food Safety Authority after Brexit, and keep regulation aligned with the EU.
The report noted that the changes to immigration, regulation and trade would have a particular impact on small and medium enterprises which formed a large part of the sector and could struggle to adapt to the new environment.
“We're hearing from the sector that what they're looking for is clarity and the one thing they're not seeing at the moment is clarity. The food and drink sector will welcome anything that encourages the government to achieve clarity as to outcome and timings as soon as possible,” said Campbell.
The select committee’s conclusions reflect concerns raised during the inquiry stage by industry bodies, which warned that a ‘no-deal’ scenario was unacceptable.