Supermarkets: Voluntary Price Caps

Private Notice Question

Asked by

To ask His Majesty’s Government what plans they have to ask supermarkets to introduce voluntary price caps or freezes on essential food items; and what assessment they have made of the impact of such measures on food prices, supply, competition and investment.

My Lords, the Chancellor has held a round table with supermarkets to discuss the role that retailers can play in bearing down on food prices and the additional steps that the Government can take. This comes on top of the action that the Government have already taken to reduce the cost of living, which has helped drive today’s larger than expected fall in inflation.

My Lords, I am grateful to the Minister for his Answer. The Government should understand and know that price controls do not work and do not reduce prices. They instead suppress supply, create shortages, and ultimately leave consumers worse off and more exposed to food insecurity. I must say that, when we first heard these stories, we feared that the ghost of Stalin was roaming the corridors of the Treasury. For the avoidance of doubt, will the Minister today give an unequivocal commitment that the Government will rule out price caps, voluntary or otherwise, entirely? Can I suggest that he confers with noble Lords in this House, including on his own Benches, who will confirm that the supermarket industry is fiercely competitive?

I am grateful to the noble Lord for his questions. I agree with his last point, if not all of what he said. I understand exactly what he set out, which is why we are not doing what he suggests we are doing. We are of course having discussions with supermarkets—that is the right thing to do—as we have with all sectors. The Chancellor has held round tables with fuel retailers, supermarkets and high street banks, among other industries. It is right that we discuss ways we can work together to ease the cost of living for households. This is not about price caps, as some speculation has suggested. We will never advocate for that, as it is not for the Government to tell supermarkets how to do their jobs. We are taking action across the board, with rail fare freezes, prescription fee freezes and £150 off energy bills. These are the driving factors behind today’s bigger than expected fall in inflation. Further, today, the Chancellor extended the 5p cut on fuel duty and introduced further new fuel duty support for HGVs and farmers.

My Lords, I am pleased to hear that the Government are talking to supermarkets about the role they might have in prices, because prices are an important worry for people right across the country—they really are going up. In the course of those discussions, did the Government talk about their role in bringing down prices and with supermarkets? The input costs that supermarkets face have gone up dramatically; some of those things a Government cannot control, but some of those things they can. They can control employer contributions for NICs and the level of business rates—so ask not what the supermarkets can do for you but what you can do for the supermarkets to bring down the cost.

There is definitely something in what the noble Lord says, although I am not sure that I quite agree with where his question ended up. He is right to say that families are struggling with the cost of living, and they will be worried about the prospect of food prices rising again following the conflict in the Middle East. That is why, in April, major food and farming trade bodies came together with the Government to share intelligence, assess emerging pressures and agree on how we can keep our food sector resilient and stable. As I say, the Chancellor held a round table with supermarkets to discuss the role that retailers can play in bearing down on food prices, and, as the noble Lord asked, additional steps that the Government can take.

Will the Minister congratulate the supermarkets on being competitive, with good prices, despite all the costs the Government are imposing on them? Does he agree that their net profit margins are very low, showing that the problem of rising food prices rests elsewhere?

As I said yesterday in response to similar questions, we want the most competitive supermarket sector we can possibly get, and it is not for the Government to tell supermarkets how to do their jobs.

My Lords, I asked the Minister yesterday about caps on food prices and he said then that that was not the role of the Government. Having said that, the suggested freeze is voluntary, as I understand it. Given that supermarkets— I think I might get booed here—squeeze producers of all kinds, farmers and their customers, making huge profits, should the Government not be a little bolder and actually think about the people for once?

The end of the noble Baroness’s question is preposterous. This is not about price caps, as some speculation has suggested. As I said yesterday, we would never advocate for that, and I repeat that it is not for the Government to tell supermarkets how to do their jobs.

My Lords, food poverty and food security need a joint focus. Examples of best practice can be found in our neighbourhoods, in Italy’s approach to local food systems, where there is a 50% reduction in business rates for greengrocers selling produce from within 50 miles of their town, or in the Liège food-land belt initiative, which sponsors the growth of farmers’ co-ops to supply 50% of their own food needs. Have the Government explored these alternatives to addressing the cost of living crisis?

I am not in a position to stand here and suggest a 50% business rates reduction for any business, but my noble friend is absolutely right on the importance of taking action across the board to help reduce the cost of living. As I say, we have frozen rail fares, frozen prescription fees and taken £150 off energy bills—these are the driving factors behind today’s bigger than expected fall in inflation.

My Lords—

My Lords—

It is the turn of the Conservative Benches next, and then of the Liberal Democrat Benches.

I am grateful to the Government Chief Whip. The Minister will be aware that the Scottish Government are proposing compulsory caps on the prices of basic foodstuffs in supermarkets that operate in Scotland. Can the Minister confirm for the benefit of your Lordships whether that power is actually within the devolved competence of the Scottish Government?