Industry members slam ScotGov plans on food price cap
INDUSTRY bodies across Scotland have slammed the Scottish Government’s plans for a food price cap, claiming it could push up household bills.
Both the Federation of Small Businesses (FSB) and Scottish Grocers’ Federation (SGF) has said that new evidence has shown that price controls will fail to reduce the overall impact of the cost of living and could instead lead to higher prices and reduced consumer choice.
Research from the Scottish Parliament Information Centre (SPICe) found little evidence that price controls deliver lasting reductions to the cost of living and the review notes that, while shoppers may initially benefit from reduced prices, the pressures placed on suppliers and retailers often lead to “adverse results” for consumers.
Both the SGF and FSB have said that the proposed cap would place extra pressure on Scotland’s community-based retailers, convenience stores and family-run businesses who do not have the money to absorb commercial pressures from bigger supermarket rivals.
Pete Cheema, chief executive at the SGF, said: “Many food producers, wholesalers and retailers continue to face significant costs, including energy, transport, employment costs, increased inflation & interest rates and a raft of new product restrictions and regulations. These costs do not disappear simply because the Scottish Government decides to impose a maximum retail price on certain products.
“Ultimately, consumers could find themselves paying more elsewhere in their weekly shop, undermining the very objective the policy is supposed to achieve. For many small shops, this could be the difference between remaining viable and being forced to close.”
Similarly, Colin Borland, Scotland director for the FSB, has remarked that countries across the globe have struggled to implement price caps on food items and leaves shoppers facing higher prices as a result.
He said: “The experience from other countries suggests that when governments intervene in prices, the costs often appear elsewhere. Consumers can end up facing higher prices on other products and reduced choice on shop shelves, while local stores who already operate on very tight margins face extra pressures.
“The Scottish Government’s own assessment acknowledges that smaller retailers could lose business as spending shifts towards larger supermarkets. That should concern anyone who values thriving local high streets and access to shops in rural and island communities.”
In addition to this, David Lonsdale, director at the Scottish Retail Consortium, has called for the food price cap to be scrapped following comments made from foodbank charity The Trussell Trust in a recent STV News story.
The charity claimed that the proposed food price cap could have unforeseen consequences elsewhere and warned that it could have a negative impact on the country’s farming infrastructure.
With this in mind, Lonsdale has called on the Scottish Government to work with grocers and food producers across the country to resolve issues from the cost of living.
He said: “There are ways to make food more affordable for less well-off households but imposing poorly targeted sector-wide price controls is an astonishingly poor way to do it. Ministersshould ditch the price cap, get behind our hyper-competitive grocery market, and work to reduce the mounting cost burdens grocers and food producers face.”
