Scottish food price cap plans slammed by retail sector

The Scottish Government’s plans to introduce a price cap on certain food and drink lines has come under fire from the grocery and retail industry.

Expected to be part of its Programme for Government, set to be unveiled this week, the plans would see a legal cap on the price of selected food and drink products.

The Scottish National Party (SNP) discussed a price cap as part of its manifesto earlier this year. In the run-up to the Scottish election in May, it pledged “targeted intervention to protect people’s ability to afford essentials” which comprised of statutory price ceilings on a basket of 20 to 50 essential food items at large supermarkets, such as bread, milk and eggs to “provide tangible relief to families struggling with grocery bills, ensuring that necessities for a balanced diet remain affordable”.

Under SNP plans, the system would require large supermarkets to make one example line of the listed essential food items available at the capped price and would not require them to make every variation of that type of food they stock available at that price. Similarly to Minimum Unit Pricing for alcohol, a sunset clause would be implemented to ”ensure that it was effective in order to continue”.

The manifesto added: ”Crucially, this will be implemented alongside a robust support framework designed to shield Scottish producers with support mechanisms and monitoring to ensure that this will not be allowed to impact on farmers and food producers and we will work with them to ensure supermarkets make the change.”

A consultation on price caps is expected to be announced imminently. 

The Association of Convenience Stores (ACS) is one of 23 businesses and trade associations that have signed a joint letter urging First Minister John Swinney to reconsider these proposals. The signatories to the letter represent businesses across retail, food and drink production and manufacturing, and distribution, employing more than 300,000 people across Scotland.

ACS chief executive Ed Woodall said: “Local shops operate in an intensely competitive market and despite rising cost pressure are working hard to offer customers the best possible value. Retailers need support with managing the cost of trading, rather than introducing opaque price controls that will have a detrimental impact across the whole supply chain.”

When the proposals were first put forward in the SNP manifesto, Luke McGarty, head of policy at the Scottish Grocers’ Federation, said: “While the policy may be aimed at larger retailers, price caps on selected products will inevitably have knock-on effects for similar items sold in local stores.

“Capped prices in supermarkets could encourage customers to travel further to out-of-town locations for staple goods typically purchased locally, reducing sustainability and creating a competitive disadvantage for small local businesses.

“Local stores play a vital role in their communities, providing accessible, lifeline goods and services, supporting local employment, and enabling a local multiplier effect. All within walking distance of people’s homes.

“At a time when local retailers are already under considerable pressure from additional costs added by government regulation and global issues, some may feel compelled to try and match supermarket prices, which could threaten both their viability and the benefits they provide.”