Retail bosses have reacted with fury today at a Labour plan to get them to cap the prices of everyday essentials in return for easing regulations. They lashed out at 'completely preposterous' and 'idiotic' proposals by the Treasury for a limit on the price of eggs, bread and milk. In return ministers are said to have floated easing packaging policies and delaying rule changes around healthy food.
Government criticised over price cap plans
It comes just weeks after Downing Street attacked plans by the SNP administration in Scotland to use health powers to cap the price of everyday essentials, warning the move was 'incoherent and undeliverable'. Former Asda chairman and Tory peer 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.'
And M&S boss Stuart Machin branded it 'completely preposterous', adding: 'I don't think the Government should be trying to run business. My advice is that the Government should reduce some of the tax and regulatory burden and free us up in a very competitive market.'
Food price rises and Treasury proposals
The rate of food price increases rose to 3.7 per cent in April and industry groups have warned it could hit almost 10 per cent by the end of the year due to the blockade of the Strait of Hormuz. Chancellor Rachel Reeves is due to announce measures to help households with the cost of living on Wednesday and the Treasury is said to be pushing for her to announce the price cap policy.
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.'
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.'
Retail industry response
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.'
