Food price cap unnecessary and will be ineffective, industry bosses tell Swinney

A proposed cap on the price of some food items is “unnecessary” and will be “ineffective”, business groups have said as they urged the Scottish Government to scrap the plans.

Twenty-three business organisations have written a joint letter to First Minister John Swinney asking him not to introduce a statutory cap on some food and drink prices.

Mr Swinney announced the move in the SNP’s Holyrood election manifesto, saying he would use devolved powers to compel supermarkets to limit the cost of bread, milk, cheese and other staple items to ease the cost of living.

The joint letter was submitted to the First Minister before he sets out his Programme for Government this week.

Mr Swinney said, however, his plans for the price cap “remain as they were set out in the (election) manifesto”.

Speaking to the Press Association, he said the government would “consult on these questions” but he insisted: “I’m keen to make progress on an issue that is causing real hardship for members of the public.”

The First Minister stressed that food prices are “a significant part” of the cost of living challenges many families face, saying the “necessity” for the policy “remains absolutely the same”.

He added: “We are working to try to ensure the proposals we bring forward are strong and robust and they can deliver the assistance we want to see in place.”

But the joint letter sent to him said that there are “differing views on how best to ease the cost of living, particularly for less affluent households”

The business organisations added: “We jointly believe the mooted statutory food price cap is unnecessary, ineffective, and likely to deliver significant adverse consequences.

“This is despite the assurances you have sought to provide to primary producers. The impacts upon retailers, food and drink producers, and shopworkers in themselves are undesirable but the effect will be to increase, rather than decrease, the cost of household goods.”

The letter’s signatories include groups representing retail, food and drink production, manufacturing and distribution businesses in Scotland.

It is also signed by David Lonsdale, director of the Scottish Retail Consortium; David Thomson, chief executive of the Food and Drink Federation Scotland; Lesley Cameron, chief executive of Scottish Bakers; and Judith Bryans, chief executive of Dairy UK.

The letter continued: “A statutory cap would not address the root causes of elevated food prices: rising production, refrigeration, and distribution costs. Supply chain shocks after Covid and conflicts in Ukraine and Iran have pushed up fertiliser, fuel, and energy costs.

“Taxes on employment and packaging have – as the Bank of England has pointed out – added further pressure, with costs cascading through farming, food manufacturing, refrigeration and distribution.”