Cut VAT on fuel to get Britain moving, says Moto chief

Ken McMeikan knows how to get his point across to politicians. While running high street chain Greggs in 2012, he made George Osborne scrap his plans for a ‘pasty tax’ on hot takeaway goods by climbing a stepladder outside Downing Street dressed as a baker and blasting his opposition to the policy through a megaphone. 

Now running Moto Hospitality, Britain’s biggest chain of motorway service stations, McMeikan is positioning himself as the champion of hard-up drivers, demanding cheaper fuel prices to help get the economy moving again. 

This weekend, the former Tesco and Sainsbury’s executive has cut the price of fuel by 8p per litre at five Moto petrol stations to bring prices in line with the average at local petrol stations and better compete with supermarkets. 

Action: Moto boss Ken McMeikan on the forecourt of one of his  service stations on the M5

Action: Moto boss Ken McMeikan on the forecourt of one of his  service stations on the M5

At the first trial sites, which include Lancaster services on the M6 and Frankley near Birmingham on the M5, unleaded now costs 111.9p a litre and diesel costs 117.9p. 

McMeikan says this is just 5p more than the average price at supermarkets, where analysts say fuel is sold at negligible profit margins to tempt people to spend in stores, and means squeezed customers can save more than £4 filling their tanks. McMeikan says: ‘Covid-19 has been a worrying time; we know people are fearful about their own financial position, and we are trying to help them make their money go as far as possible.’ 

Moto sells more than half a billion litres of fuel each year through its 58 service stations, whose petrol forecourts are mostly run as franchises from oil giant BP. McMeikan hopes to roll out the price cuts across Moto’s entire estate if this three-month trial proves a success. 

To escalate his campaign, this weekend he has written to Chancellor Rishi Sunak putting forward the case for a 15 per cent cut in VAT on fuel to help motorists as they set off for staycations or return to offices. ‘As people are travelling more and getting out to see family and friends after months of being locked away, it would be helpful if for a period of time there was relief from the Government on fuel,’ he says. 

McMeikan calls Sunak’s move earlier this month to cut VAT on food and non-alcoholic drinks by 15 per cent until January ‘the right thing to do’ to support consumers. 

From last Wednesday, he passed on the full saving to customers by cutting prices across all the brands Moto operates through franchises, including Greggs, M&S Food, Burger King and Costa Coffee. ‘We want to be supporting the consumer here and passing the cut on entirely to the customer,’ he says. 

McMeikan left school in Dumfries, Scotland, aged 16 and says he ‘grew up fast’ learning ‘life skills’ in the Royal Navy. He turned 17 on board the frigate HMS Diomede on the way out to the Falklands conflict in 1982, where he was a junior electronic warfare operator. 

After leaving the Royal Navy, he rose through the ranks at Tesco and was then poached by Sainsbury’s boss Justin King to help lead its much-lauded three-year turnaround. At the time, Sainsbury’s was losing market share to Tesco and morale was at rock bottom, but over three years it increased sales by £2.5billion. McMeikan says: ‘I feel I’ve had some life experiences that have helped prepare me for the challenges of coronavirus, that would be very fair to say.’ 

Food for thought: Ken McMeikan protesting in 2012

Food for thought: Ken McMeikan protesting in 2012

Moto is majority owned by USS, the universities pension fund giant, and posted earnings of £106.7million in 2019. In usual times, the interest payments on its £685million debt owed to bondholders is ‘very manageable’, says McMeikan, since Moto is a ‘stable, cash-generative business’. 

But the lockdown from March 20, which emptied motorways bar HGV drivers and key workers, sent sales falling 90 per cent and forced McMeikan to secure £50million emergency financing. USS provided ‘a sizeable amount’ of the credit, with the rest coming from a syndicate of Moto’s banks. McMeikan says USS has been ‘very supportive’ – even though last year’s £47million dividend split with Moto’s minority owner, an investment fund run by private equity giant CVC, has been axed this year for obvious reasons. 

Looking back at the bleakest days of the lockdown, McMeikan says: ‘If trade had continued at 90 per cent down, there would have come a point when our cash would have run out.’ 

But he says Moto has not yet accessed its emergency credit facility, even though sales are still down 40 per cent year on year and the company is this month making 50 compulsory redundancies. 

Last week, 1,600 of its 5,200 staff were still on furlough. McMeikan hopes to keep the majority in work once the job retention scheme ends in October, providing sales continue to pick up. 

Last week, motorway traffic was still down 25 per cent compared to normal levels, with fewer people travelling in each car. ‘We are encouraged by the traffic – that’s a significant improvement from where we were,’ says McMeikan, amid suggestions vehicle use was down to as little as 20 per cent at the peak of the crisis. ‘But we’ve only just started to see some bus and coach companies operating again.’ 

Looking past the crisis, Moto will create 120 jobs by opening its first new service station for 12 years at Rugby early next year, and has applied for planning permission for five more sites including Watford, Ripon and Basingstoke. 

McMeikan is also ‘pushing hard’ to get permission from the Government to advertise fuel prices at the side of the motorway. Following talks with Highways England and the Department for Transport, he hopes to have the first sign advertising Moto’s new prices in place from September. As Britain heads into the sharpest recession for decades, relief on fuel from the Government would be a welcome break. 

‘Rishi Sunak is to be applauded for making extraordinary decisions in extraordinary times,’ McMeikan says. ‘I would be even more of a fan if he considers a VAT reduction on fuel.’

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source: dailymail.co.uk