“The consequences of not having a robust supply chain would, in my opinion, have disastrous consequences for the industry,” argues Gauselmann UK’s GM Sascha Blodau. The case he outlines is compelling; the solutions he proposes – a reduction in MGD to 5 percent and the application of a 5 percent VAT rate – could be a life saver for a vital sector.
SASCHA BLODAU GENERAL MANAGER GAUSELMANN UK
Gauselmann UK is a fully integrated business with both consumer facing and b2b brands, two sectors that have received significantly different levels of government assistance.
After a period that has seen demand for product plummet, manufacturers and suppliers – by dint of being deemed outside of the retail, hospitality and leisure sector – have found themselves without access to much of the support schemes afforded to their shuttered customer base, but very importantly facing the full impact of lockdown.
The fact that the supply chain has been overlooked is a fundamental gap in the government’s support for the industry and to start addressing these inequalities I believe the Retail, Leisure and Hospitality Rates Relief Schemes should also be applied to non-retail premises such as depots and warehouses.
We are all part of an interconnected entertainment industry and to remain relevant to what are demanding and discerning consumers we must have access to a pipeline of innovative product.
The consequences of not having a robust supply chain would, in my opinion, have disastrous consequences for the industry during what will be a critical time for everyone involved in the sector and helping to drive the economic recovery.
Suppliers must also have a healthy customer-base and one which has the resource and the ability to invest in new products and services.
One key area that we have included as part of our submission to the Chancellor ahead of his March budget is a reduction of Machine Games Duty to 5 percent, a level which is in line with the reduction in the rate of VAT.
As with VAT, a reduction in MGD would significantly improve cash flow and allow for greater reinvestment in the business at a time when it will be most needed.
Although not aimed directly at manufacturers and distributors, a reduction in MGD would benefit all links in the chain from machine manufacturing and component suppliers through to transport and logistics companies.
From a company perspective a reduction in MGD would allow Gauselmann UK to proceed with our reinvestment programme with greater confidence and ensure that we keep revenues circulating through our wider supply chain.
We have calculated that if rates were dropped to 5 percent for both MGD and VAT for a six- month period the loss in receipts to the Exchequer would total £32.5 million, a sum that would be dwarfed by the wider benefit to operators, the extended supply chain and by extension fed back to the government courtesy of increased tax receipts.
It is also worth considering the benefit to those operating pubs, who themselves pay MGD on any liable gaming machines that they operate. At a time when the hospitality industry has been unable to trade at a reasonable tempo for the best part of six months, further tax efficiencies will prove a vital boost to a sector that supports hundreds of thousands of jobs across the UK.
Another important issue for government to consider is that when it relaxes trading restrictions, the go live date will not be the same across all sectors of the industry.
Supply companies will suffer a time lag between consumer-facing businesses opening and the demand for product kicking in. I think I can speak for every business involved in the supply chain when I say that the biggest source of help will be when the government feels that it’s able to open up AGC’s, Pubs and Bingo Clubs and in the process get the wheels of commerce turning once again.”