Business groups urge Swinney to scrap food

Twenty-three business organisations have told First Minister John Swinney to scrap his plan for a legal cap on some food and drink prices. The groups, representing retail, food production, manufacturing, and distribution in Scotland, sent a joint letter ahead of Swinney's programme for government announcement on Tuesday, branding the proposed statutory price cap 'ineffective'.

According to the BBC, the signatories include the Scottish Retail Consortium (SRC), the Food and Drink Federation Scotland, Scottish Bakers, and Dairy UK. The SNP's election manifesto pledged to compel large supermarkets to limit the cost of essential items like milk, eggs, cheese, and rice to ease the cost of living.

Opposition from industry groups

Ewan MacDonald-Russell, deputy head of the SRC, was blunt in his criticism. He told BBC Radio Scotland the plans were an 'appallingly terrible idea'. 'Price caps don't tackle food price inflation,' he said. 'They are not a solution, they are a gimmick that sounds quite effective, but it just displaces cost elsewhere.' MacDonald-Russell argued the policy would fail to address the root causes of high food prices, which the letter identifies as rising production, refrigeration, and distribution costs.

The SRC warned the cap could backfire. It risks making small shops, which would not be covered by the legislation, uncompetitive. MacDonald-Russell also pointed to international examples, claiming a price cap policy in Hungary led to shelf shortages, domestic products being replaced by cheap imports, and tension between retailers and customers. 'We can't see a single example of where this has worked,' he stated.

Potential complications and government response

The proposal faces significant legislative hurdles. It is thought the plan would require changes to the UK Internal Markets Act of 2020, which was established after Brexit to prevent trade barriers between the UK's nations. The Scottish government would likely need an exemption from the UK government, which has not indicated whether it would grant one. Furthermore, if approved by the Scottish Parliament, the legislation could be challenged in court by supermarkets.

A Scottish government spokesperson said helping people with the cost of living was a 'top priority'. The spokesperson added that ministers welcomed engagement with stakeholders and a consultation on the proposals would launch shortly. Swinney has argued he has a 'public health responsibility' to provide an affordable, nutritious diet, stating people are struggling to afford a basic shop.

Exploring other avenues

Given these complications, the price cap is not the only option being considered. The Scottish government has called a 'summit' with food producers and retailers for next week to discuss the way forward. The business groups, meanwhile, maintain the current model is the best way to handle inflation. MacDonald-Russell contended, 'Scottish consumers benefit from the most affordable food prices in western Europe.' He warned the cap could make overall shopping costs higher as businesses absorb the scheme's expenses.

Swinney himself has talked about a year-long process for the legislation. The joint letter from business groups represents a significant coordinated challenge to a flagship policy aimed at demonstrating action on living costs.