The government’s move to persuade supermarkets to cap food prices has “opened the door” for Scotland’s plans for mandatory measures to get past Westminster, sources have warned.
Amid huge pushback this week, there were reports today that Westminster is in retreat from the move after it emerged No 10 had approached supermarkets to consider capping the prices of a raft of products, including bread, milk eggs and other essentials.
However, food industry leaders told The Grocer a major consequence of the move had been to make the Scottish plan, which stunned retailers when it was unveiled before the recent elections, more likely to materialise.
“It has changed the equation,” one leading source told The Grocer, when asked about the consequences of the approach.
“Before this week I would have said that the UK government would never allow this, but it’s become clear that there might be a bit of equivocation and its obvious there have been conversations which increase the likelihood of this legislation.”
There is speculation that the Scottish government would face a protracted court challenge from retailers if it presses ahead with the plans. Swinney said this week he was taking action to help people “struggling to afford a very basic shop” and that he had a “public health responsibility” to keep a lid on prices.
Ewan MacDonald-Russell, deputy head of the Scottish Retail Consortium, said Swinney’s plans risked causing disruption across the supply chain, adding there were huge questions over how price caps could work in practice.
“If they set the price for those products too high it becomes a paper tiger,” he told the BBC. “On the other hand, if they set it too low it means changes in supply, it can have an inflationary effect on other products in store and put huge pressures on farmers and suppliers.”
He said the consortium had also been contacted by “small retailers who would be affected because it will make them uncompetitive”.
The Financial Times, which first broke the story of the UK’s plans, claimed today the government had “backed away” from the idea because of the ”ferocity” of the reaction.
Only yesterday, however, Treasury secretary Dan Tomlinson defended the moves, telling the BBC they were “about the steps that they can take to support people with the cost of living”.
Sources claimed discussions were continuing with retailers who had not “briefed against” the government.
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