The government has shown a “chronic lack of prioritisation” in helping food companies ward off a wave of inflation due to the war in Iran, MPs were told today.
Giving evidence to the Environment, Food and Rural Affairs (Efra) Committee today, FDF CEO Karen Betts said calls for ministers to step in to help the sector cope with soaring energy costs had fallen on deaf ears.
Meanwhile she said companies were facing 450 amendments to food rules due to the UK’s realignment with the EU, under the SPS measures being brought in with a deadline for next summer, which she said should have been given at least two years to put through.
Betts warned that with oil prices set to feed through into food prices, companies, especially SMEs, had been left with “nowhere to go” to avoid putting up prices, repeating her warning that by Christmas food inflation could reach 10%.
The FDF boss told the committee there were “live” conversations between the FDF, the government and Ofgem amid concerns that SMEs in particular will face huge difficulties in “hedging” their energy when contracts come up for renewal.
“Government policy needs to be properly prioritised when it comes to the things the government wants us to do,” Betts said.
“At the moment there is a chronic lack of prioritisation on the government’s part.”
“We are working our way through a huge SPS exercise, we’ve got massive recycling and packaging reforms going through, and at the same time the government is saying: would you mind keeping your prices down?”
As well as calls for intervention to help with energy costs, The Grocer understands talks have focused on pausing collection of the UK Plastic Packaging Tax (PPT) for suppliers and retailers. The tax came into force in April 2022, with proposals that ministers would agree to pause collection this year and next.
It’s understood the move would cost the Treasury around £560m.
However, with calls for the government to tackle the £2bn burden of taxation on plastics, also including the extended producer responsibility (EPR) tax which came into force last year, it is not thought any breakthrough is imminent.
Meanwhile Betts said there were already some signs of retailers resisting cost price increases, with smaller suppliers in particular likely to face the biggest pushback from supermarkets.
“We have had a few of our smaller companies saying they are having difficulties getting cost price rises through,” Betts said.
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