Supermarket bosses say food price caps would be ‘preposterous’ and ‘idiotic’
Supermarket executives have dismissed suggestions of price caps on essential food items as “completely preposterous” and “idiotic”.
The reaction follows reports that the government had urged retailers to limit costs on staples such as eggs, bread, and milk, potentially in exchange for eased regulations.
While a government minister denied any concrete plans for price caps, they confirmed ongoing discussions with supermarkets amidst growing concerns over rising inflation.
M&S boss Stuart Machin said he had received “no direct communication” regarding the reported proposals.
He told reporters: “It’s completely preposterous. I don’t think the government should be trying to run business.”
Instead, Mr Machin advocated for ministers to reduce “some of the tax and regulatory burden” to foster competition.
He further argued that the current 3 per cent food inflation rate demonstrates retailers are “taking a big responsibility to try and minimise passing through prices.”
Mr Machin highlighted M&S is currently incurring losses on the sale of several essential products, including milk, bread, and bananas.
Former Asda chairman Lord Stuart Rose branded a potential cap as “stuff and nonsense”.
He told BBC Radio 4’s Today programme: “This smacks of state control. It is idiotic. It is dangerous and it will never work.”
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Treasury minister Dan Tomlinson said “this isn’t something we’re looking at”, when asked if there had been conversations with supermarkets about bringing in price caps.
He told Sky News: “The government is not looking at doing this. Instead, what we’re doing is looking across the economy at what are the different ways that we can help households.”
But he later appeared to muddy the waters as he explicitly ruled out a “mandatory price cap” on supermarket essentials.
He told BBC Radio 4’s Today programme: “Of course, the government is going to be having conversations with supermarkets about what more we can do to support households, but no, we are not going to be implementing a mandatory price cap.”
It comes after Scotland’s first minister John Swinney pledged to cap the price of essential items.
Pressed on whether Treasury ministers would like a voluntary agreement with supermarkets to control prices, particularly on essential items, he said: “People are experiencing rises in prices, you know, particularly at the petrol pumps in recent weeks.
“It’s right that the government looks across the board at what more we can do, both government levers, but also talking to industry about the steps that they could take to support people with the cost of living.”
The Financial Times had reported that the Treasury had spoken to supermarkets about offering “incentives” which may include easing packaging policies and delaying potentially costly changes to healthy food rules.
Helen Dickinson, the chief executive of the BRC, the leading trade association for retailers, said: “Rather than introduce 1970s-style price controls and trying to force retailers to sell goods at a loss, the government must focus on how it will reduce the public policy costs which are pushing up food prices in the first place.”
She added: “The challenge facing retailers is a combination of higher energy and commodity costs resulting from the Middle East conflict, and the soaring cost of the government’s domestic policies.”
Ms Dickinson also said: “The UK has the most affordable grocery prices in Western Europe thanks to the fierce competition between supermarkets.”
A spokesperson for the Treasury said: “The chancellor has been clear we want to do more to help keep costs down for families, and will set out more detail in due course.”
The prime minister’s spokesperson told reporters: “We’re continuing to have conversations with supermarkets and businesses around reducing cost pressures on households.
“You’d expect the government and ministers to continually engage with business about the impact of the conflict in Iran on the cost of living and how we can work together to support families on that front.”
Asked whether ministers could ease packaging policies and delay changes to healthy food rules, the official said: “It’s a long-standing position that we keep regulation under review and we want to streamline the regulatory framework for businesses.”
The Treasury asked supermarkets for guarantees that British farmers would not lose income from price caps, according to the FT.
Some measures, including the packaging regulations, generate revenue for the Treasury, it reported.
The government has also recommended supermarkets reinvest the savings from the regulation changes to freeze grocery prices, it added.
This comes after UK food inflation rose to 3.7 per cent in April.
The foreign secretary on Tuesday told an aid summit of the risk of “sleepwalking into a global food crisis” as a result of Iran’s blockade of the Strait of Hormuz.
Rachel Reeves is to set out measures to help households with the cost of living on Thursday.
Writing in The Times, she said she had made decisions which were “responsible in the national interest”.
“I will not tolerate anyone exploiting a crisis to make a quick buck off the back of hardworking people,” the chancellor added.
“I am clamping down on price gouging, giving regulators new, focused investigatory powers. Where regulators identify concerning practices, they will be encouraged to name and shame.”
