Drapers Fashion Retail Manifesto: EU trade, freight costs and an audit framework

Mick Cheema, general manager at Basic Premier, Leicester

We need a policy where if a UK retailer purchases clothing from a UK manufacturer they should be able to claim back 20% VAT on sales [to encourage local manufacturing]. That price of 20% puts us in more of a competitive posture with countries like Turkey or Morocco, and cheaper in certain cases.

HMRC will gain back what they lose through VAT refunds as UK manufacturers will employ more people, contribute to more corporation tax, more domestic rates and more national insurance. 

When supermarkets purchase milk from an accredited supplier they can claim a certain amount of VAT back and [the supermarkets] can pass that onto the dairy farm [via future purchases]. This should be applied to clothing, but should only be applied to accredited UK manufacturers, audited by reputable organisations like Fast Forward.

Tony Evans, managing director at Jacobson Group, Rossendale, Lancashire

The number one thing I’m hoping for is that someone looks at the Free Trade Agreement with the EU. There are so many anomalies in regard to it being very expensive for brands to try and trade both with wholesale customers in Europe and with direct to consumer.

I think both the Tories and Labour are scared of the “B” word because they think Brexit is all done and dusted, but the reality is that it has had had huge impact on UK GDP and they’re not being honest with us about it.

Secondly, I’d like the economic situation to improve. One issue as an importer is spiralling sea freight rates, which have doubled, or even tripled, in the last 2-3 weeks. Shipping lines are blaming global events such as the Houthis in the Red Sea, which does have some effect, but Western governments are not taking shipping lines into account with regard to imports.

We can’t force them to, but [shipping lines] don’t seem to have any competition. There is a very small number of global shipping lines which control the cost [of shipping]. This is passed on to the consumer and is likely to cause inflation later in the year. 

The increase in minimum wages is on one hand a good thing, but it’s piling pressure on retail and wholesale business. There’s going to be a tipping point where they start to look at their overhead base and think, “Can I afford these staff? Do I need them?”.

Ultimately, How does the government grow the economy? In simplistic terms, everyone should benefit and feel better off. So much about this business is about confidence. Fashion is a “want” rather than a “need” spend, so when people feel better they are more likely spend on “luxury” items. Clothing and footwear shouldn’t be a luxury, but when people feel under the pump they are less inclined to spend on such items.

Andrew Pace, director at Panda Sourcing, Washington, Tyne and Wear

I’d like to see something done about the high street. There could be some more investment made, like easy-in, easy-out leases and pressuring landlords rather than high streets stagnating. It sounds strange to say as I don’t supply independents, but we need more independents on the high street, as they can become bigger companies later on. The government needs to help with rent and rates to promote entrepreneurship.

Everything has been set up for export, even though we’re an importing country. There’s a lot of smoke and mirrors in freight; shipping lines are complaining about the fuel costs due to not being able to go through the Red Sea so have to go around Africa, but that means they’re not paying the Egyptian government to go through the Red Sea, which isn’t mentioned. 

If the cost of freight goes up, inflation goes up. It’s all very well announcing a fall in inflation rates, but that’s all going to go up again because freight is going up like crazy.

We need stability in the country. If the UK has a strong government then it means that outside countries have confidence in us, which means the pound is stronger and goods are cheaper. Exporters want the pound to be weak, but a strong pound helps to bring inflation down. The government wants to promote “Made in England” which is fine, but the bulk of products in this country are imported, and importers get a bad rap.

Sunny Patel, director at Meesha Group, Leicester

Top of the list should be a regulatory framework that is clear and supportive for ethical practices. There needs to be a rule of thumb for people that are allowed to manufacture, so that not everyone can throw their hat into the ring. In other words, a level playing field needs to be achieved via fair competition, labour rights, environmental standards and an ethical audit framework.

Currently there are 15 types of audits. We need one [industry-wide] audit from the government. You can’t have several audits with different systems and different standards. Some audit standards aren’t even within the same framework. 

Trade and exports are poor. We want our government to explore what opportunities there are within the EU. There’s not enough visibility in terms of what is going on inside the EU so we need insight from the government or government bodies to alert us to export opportunities across the EU.

There also needs to be more support for sustainability initiatives. We run a 75,000 sq ft facility, which uses an immense amount of electricity. I’d like to see some support in terms of grants for sustainable energy and initiatives.

Mark Hollis, CEO of Shani Group, London

There are so many issues off the back of Brexit, so I’d like to see a European solution to trade. It takes so much more time to get [exports] through with paperwork now. We need an open trading arrangement with the EU.

Generally, some stability would be an improvement. We’ve had no stability for the past five years for trade. There have been so many curveballs like Covid, interest rates, the war in Ukraine, business rates on the high street affect consumer buying power. These are all anti-business. Nothing in the last five years has had a benefit for business.

If you look at the trading arrangement with China, they can bring goods back cheaper, so now we’re competing with the likes of Shein and Temu taking away our ability to trade. The government needs to find ways to keep us alive with all the hurdles we have to jump over.

There’s a whirlwind of positivity around a new government after 14 years under the Conservatives, but it’s all the same. If you tax businesses and those at the top end, unemployment will increase as businesses will cut overheads. 

Santoshan Sangha, managing director at Sweats and Tees, Leicester

The government needs to levy a surcharge on cheap imports. A levy should be imposed to cut the practice, especially with regards to the environment.

The UK should follow the French model [which is] putting tax on individual fast fashion items [A proposal to add a €5 levy to consumers for each fast fashion item bought was approved by the French National Assembly in April 2024] . Not only is throwaway fashion bad for the environment, but it’s also bad for manufacturers here. We’re a dumping ground and there has to be some sort of sensibility. The government needs to keep the economy going but we have to protect ourselves.

We only manufacture in UK and we do everything on one site. Fortunately, we aren’t in direct competition with fast fashion ecommerce businesses with what we offer. However, we used to run a vertical operation, and if we were working as before our sales would be 80% down. There’s no way you can survive that.