As if the horrified reactions to last month’s talk of mandatory price caps in Scotland weren’t warning enough, then it seems the madness is catching, as Whitehall now appears to be flirting with the same controversial idea.
Although yesterday’s proposals to cap the price of everyday supermarket staples and essential food items such as bread, milk and eggs would be “voluntary” in England, they risk dragging the UK down a path from which it would be hard for the industry to return.
Retailers and politicians alike were quick to condemn SNP leader John Swinney’s shock suggestion, calling it unworkable. They were right.
Which makes it all the more baffling that the concept is being revisited by Westminster. It’s not exactly exactly what the government is thinking, but from here, it looks less like policy and more like panic.
Rumours began circulating early yesterday morning that Westminster might be preparing to mirror the SNP’s plan – which, incidentally, was widely seen as a canny move to weaponising food prices as it set the party against the UK government, positioning it as the champion of hard-pressed shoppers taking on “greedy” supermarkets (while potentially laying the groundwork for a renewed push on independence).
Few would have expected Keir Starmer to flirt with a similar approach just weeks later. But as one source put it: “desperate times call for desperate measures.”
Apparently the call came from No 10 itself, with Starmer asking supermarket bosses to consider capping the prices of products such as milk, eggs and bread, to help protect shoppers faced with an inflation surge caused by the war in the Middle East. It’s a big ask.
Striking a hard bargain
The difference between Starmer’s intervention and the original Holyrood plans is that any UK price caps would be voluntary – effectively a you-scratch-my-back, I’ll-scratch-yours arrangement. In return for supermarkets holding down prices, the government would delay costly incoming changes to nutrient profiling (NPM) rules, as well as imminent packaging regulations.
Yet the shock move follows weeks in which industry talk has centred on the government’s failure to do enough to help retailers manage the mounting cost pressures heading their way.
A senior source likened ministers to spectators on a beach, marvelling at the waters receding, completely oblivious to the tsunami about to hit.
In that sense, at least, yesterday’s developments suggest a growing recognition of just how serious the situation has become. They have finally realised that more needs to be done, with further measures on fuel prices and other interventions expected in the coming days.
However, that still doesn’t explain how the government has landed on a proposal that not only flies in the face of the basic economics of UK supermarkets, but also ignores the long list of measures the industry has actually been calling for.
Chancellor Rachel Reeves met with many of the same supermarket leaders that were called upon yesterday to come to the government’s aid, way back on 1 April. We have had to wait until now to get the joke.
In the meantime, ministers have fobbed off, and in some cases simply ignored, repeated industry calls for action on energy prices, while doing little to engage seriously on easing the growing regulatory burden facing businesses.
Preposterous proposals
FDF CEO Karen Betts hit the nail on the head yesterday, when she told the Efra Committee that ministers had shown a “chronic lack of prioritisation” as food business juggled to keep down prices with huge EU realignment costs and plastic taxes.
It’s little wonder that supermarket bosses were aghast at yesterday’s proposals.
M&S boss Stuart Machin was the first to speak out publicly, slamming the proposals as “preposterous” and urging the government to understand businesses better. Others have swiftly followed.
Yet the response from Westminster suggests a government that remains tone-deaf to the warnings of the very people running the food industry, and still convinced it knows best.
Today, Reeves, clearly determined to be seen finally taking action on food prices, poured salt into the wounds. In an opinion piece in The Times, she warned she would act against businesses exploiting the crisis to “make a quick buck” off hard-working families.
The Chancellor did not explicitly point the finger at retailers. But she will know such hyperbole risks whipping up the same hostility towards so-called “fat cat” supermarkets that we saw during the CMA’s ill-fated investigations into alleged profiteering from the cost of living crisis. Reeves also says she will be “going further on clamping down on price gouging” and giving regulators new powers to “name and shame” the companies responsible.
But the unanimous feeling in the food industry today is that the shame should be reserved for government tactics.
There is, at least, one small chink of light. By announcing this idea, the government has finally forced a serious conversation about how to shield consumers from inflation.
The hope now is that the debate can move beyond performative politics and towards interventions that might actually make a difference.
As one industry source put it: “Once the dust settles, the question is whether the government can move into a more constructive space on domestic policy pressures. If it genuinely wants to help on prices, it needs to engage with the proposals already on the table. Price caps are not one of them.”
Targeted support for those who need it most would be a good place to start. Price caps will not fix that problem.
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