Food Price Inflation

(Urgent Question): To ask the Secretary of State for Environment, Food and Rural Affairs to make a statement on food price inflation.

The global spike in oil and gas prices has affected the price of agricultural commodities. Agricultural commodity prices have always been closely correlated with energy costs, since gas is used to manufacture fertiliser and fuel energy is needed throughout the food chain. Gas prices were rising as we emerged from the pandemic, but the invasion of Ukraine has caused some additional turbulence in international commodity markets. I have already set out measures to support farmers and growers in England ahead of the coming growing season. Those measures are not a silver bullet, but they will help farmers to manage some of their input costs from fertilisers.

The turbulence of the market has brought into focus again the importance of a resilient global supply chain and the importance to our national resilience of having strong domestic food production. In the UK, we have a high degree of food security. We are largely self-sufficient in wheat production, growing 88% of all the wheat that we need. We are 86% self-sufficient in beef and fully self-sufficient in liquid milk, and we produce more lamb than we consume. We are also close to 100% self-sufficient in poultry. Sectors such as soft fruit have seen a trend towards greater self-sufficiency in recent years because of the extended UK season.

As part of a global market, however, there have been pressures on input costs and prices. As a result of those rising input costs, there are of course also some pressures on households, predominantly as a result of the energy costs. There have also been some rises in food prices in recent months, although the ferocity of retail competition means that price pressures have been contained on certain product lines.

In March, overall food prices rose by 0.2%; the price of fruit actually fell in March by 1.2%. In April, however, food prices rose by 1.5%, which is a faster rise than we have seen in some years. If we look at the price of specific categories of food, in April, bread and cereals rose by 2.2%; sugar, jams and syrups rose by 2%; fish rose by 2%; meat rose by 1.9%; vegetables, including potatoes, rose at a lower level of 1.3%; fruit remained broadly stable; and oils and fats decreased slightly by 1.1%.

I am staggered by that response. The Secretary of State speaks like a commentator or spectator on the sidelines, rather than the person responsible around the Cabinet table for food security. He seems oblivious to the cost of living crisis that people are facing. He can reel off the stats all he wants, but working people know that when they go to the supermarket, the price of almost everything they are buying is going up and up. All the Government do is spectate and commentate from the sidelines.

The Secretary of State says that the Government have made interventions, but to what end? He talks about a fertiliser shortage and an input costs crisis, but there is a fertiliser plant in the north-west that is completely closed and has been since September, and the fertiliser plant in the north-east is running at only 30% capacity. Let us also look at carbon dioxide, the labour shortage and distribution costs, and what they are doing to the cost of food.

Let us then look at the public sector. Bear in mind that the NHS serves 140 million meals a year, schools serve 600 million meals a year and prisons serve 90 million meals a year. Cost inflation has an impact on frontline services as well as on household budgets. For households, that is on top of inflation, on top of energy prices going up, on top of mortgage payments going up, on top of petrol and diesel going up, and on top of taxes going up.

What interventions have the Government actually made in practice? They have told people to ride the bus for the day to keep warm, to try to live off 30p a meal, or to just work that bit harder and they will be fine. Well, let me tell them: the number of working people in poverty is the highest since records began. Sixty-eight per cent. of people in poverty are in work. Working is not a route out of poverty after 12 years of this rotten Government.

I see it in Oldham. People who are coming for food parcels now are not in temporary crisis, but in permanent crisis. They are in debt. They are wearing NHS uniforms, coming to collect food parcels to put food on the table. But let us go from Oldham to Camborne, because I have visited the Secretary of State’s constituency. The food bank there is now giving out 10,000 meals a month—just one food bank in his constituency. It is a constant crisis. Will he commit, even at this late stage, to call an urgent cross-Government, industry and charity commission to get ahead of the food crisis? He knows that, if the Government do not get a grip by Christmas, it is going to be even worse.

I am sorry that the hon. Gentleman does not want to hear facts, but the urgent question is about food price inflation and the facts about that do matter. He is the one who wishes to spectate and commentate, rather than dealing with the facts before us. I absolutely acknowledged that food prices are rising, and faster than we have seen in recent years. Indeed, household spending among the poorest 20% may return to the levels it was when his party was last in power. However, it is also the case that, in April, overall food prices rose by 1.5%.

The hon. Gentleman asked about fertiliser prices. Here there has been more positive news this week. Fertiliser prices peaked at about £1,000 per tonne in March. This week they have fallen to about £620 per tonne—it was £290 per tonne a year ago. Farmers are purchasing at that level. He expressed concerns about carbon dioxide supply, but that is a by-product of the manufacture of ammonium nitrate, and now that the main fertiliser plants, including the one at Billingham, have reasonably full order books for the remainder of the summer and are manufacturing and selling ammonium nitrate, we do not foresee a problem when it comes to carbon dioxide.

The hon. Gentleman made a good point, which was that the cause of the pressure on household incomes has been the global spike in gas prices and the corresponding impacts on people’s energy bills—household electricity and gas bills have risen sharply. The Government have put in place some measures to try to mitigate and dampen that, but we have always been clear that we cannot remove the impact altogether. Of course, because people need to buy food every week, when there is pressure on the household budget, an inability to buy food is what they notice first, even if food prices have not changed dramatically from where they were previously.

The hon. Gentleman mentioned those in work. The Government have been very clear about that. Over the years, we have continued to raise the threshold before the lowest earners pay any tax at all and in April this year we increased the new national living wage to £9.50 an hour. Those on the lowest pay will have an additional £1,000 in their pay packets as a result.

Compared with the last major recession we had under the Labour Government, we have done a great deal to expand provision, including free school meals to post-16 students and to all infant-aged children—something the Labour party never offered. On the issue of community food pantries and food banks, I commend to the Secretary of State the model established by Councillor Anne Handley in Goole, the Two Rivers community pantry and the incredible team of volunteers. They are providing heavily subsidised food to anyone in the town who wants it. We have received support via the Department for Environment, Food and Rural Affairs in the past. Can he assure me that that support will continue for amazing schemes such as the Two Rivers community pantry?

My hon. Friend makes an important point. Projects and charities such as that do indeed perform an important role in our country. Often, the strongest part of their role is not just the provision of immediate emergency support, but help for people to get the support that they need to address other issues and challenges they might have in their life, so that they can get things back on track.

I call the SNP spokesperson.

The 9% rise in the consumer prices index is the highest since records began, with a quarter of those in the UK resorting to skipping meals. The Governor of the Bank of England has warned of an “apocalyptic” outlook for consumers, with the worst yet to come as inflation looks set to hit 10% by the autumn. Food banks are already struggling to cope as households face unprecedented demands with the cost of living. Food banks themselves are a clear sign that the welfare system is failing: that is why food banks exist. Will the Secretary of State argue in Cabinet for measures such as converting the energy loans into grants, the reintroduction of the universal credit uplift, a reversal of the national insurance hike and an inflationary uplift for all welfare and state pension payments, so that—in 2022, in the UK—we do not have to witness the scandal and shame of people being unable to afford to feed themselves and their children?

We have obviously made some changes to the benefits system over the years, in particular the introduction of a tapered reduction in universal credit; it always pays people to work more hours and take on more work. We are in a fortunate position in this country in one way: unemployment rates are very low—the lowest since 1974—with close to 1 million job vacancies, and wages for the lowest-paid have been rising.

The same price shocks have left Japan and Switzerland with inflation nearer 1%. What difference in monetary policy has protected them and exposed us?

The analysis we have done on food price inflation—I would point out to my right hon. Friend that, in the month of April, food prices on average rose by 1.5%—suggests that around three quarters of the price pressures we have seen can be directly attributed to the price of gas and the remainder to other factors, including rising costs of labour as wages rise for the lowest-paid.

In my constituency, many people before inflation began to become an issue were already finding it difficult to make ends meet. That is not propaganda; that is a matter of practical reality. Every Member of Parliament knows this about their own constituency. What I looked for from the Secretary of State was some indication that there was action that he and his colleagues in Government were going to take, and there came no answer. What is he going to do to help my constituents, who really are on the breadline?

The action that the Chancellor has taken so far was announced earlier this year in the spring statement. It included a £150 rebate on council tax bills, and a £200 rebate on energy bills to dampen and spread the cost of the spike in energy bills. We increased the national living wage in April to £9.50 an hour, and that puts an extra £1,000 in the pockets of the lowest-paid. Obviously, we keep this matter under constant review, as the Chancellor has made clear.

My constituents in Scunthorpe and the surrounding villages well understand the global factors affecting the cost of living and of course food price inflation, but they are worried about what is to come. I know the Government have set out a number of measures, and we are doing a lot. When does my right hon. Friend think we will start to see the effect of those measures at the supermarket till?

The reality, as I have said, is that the changes in global commodity prices are being driven by the high price of gas and energy. As I pointed out earlier, the cost of fertiliser, which is one of the key drivers of those international commodity prices, has now fallen by 40% from its peak in March, and is now running at about £620 a tonne. If fertiliser prices remain at that level, or indeed continue to fall, we are likely to see pressure come off the forward prices of international commodities.

I want to share with the Secretary of State the experiences of my constituent Rebecca, who is a single mum expecting her second baby soon. She said she reached out to me in “desperation and fear”,

and she told me:

“The cost of living has shot through the roof, it is unaffordable and I am having to make some pretty desperate decisions. My weekly shop amount has already jumped from under £50 per week to £75 a week… I am finding it virtually impossible to buy the necessary equipment for my baby’s impending arrival.”

How can the Secretary of State expect Rebecca and millions like her to struggle with tax increases and soaring inflation with no additional support? What is he going to do and what are the Government going to do to ease this pressure on families, which Rebecca tells me is now making her “fearful for the future”?

As I acknowledged in the statement, it is undoubtable that rising energy bills have affected household incomes, because people are paying more money on their gas and electric. Food prices have indeed risen—but across the year, with the rate currently at about 6.5%. Of course, we all have constituents with such challenges in their lives, and we all work with them. The Government have put in place the household support fund specifically to help those who fall between the cracks and cannot get support elsewhere, and we have doubled the size of that fund.