Business groups urge Swinney to scrap 'ineffective' food price cap plan

Business groups urge Swinney to scrap 'ineffective' food price cap plan The Scottish government's projected food price cap will be "ineffective", concern groups have told the first minister. Twenty‑three organisations have written a joint letter to John Swinney – who will set out his programme for government on Tuesday – urging him to abandon his plan for a legal cap on certain food and drink prices. Signatories include bodies representing retail, food and drink production, manufacturing and other businesses in Scotland. In its election manifesto the SNP pledged to compel large supermarkets to limit the cost of essential items – such as milk, eggs, bread and cereal – to ease the cost of living. Swinney said people were struggling to afford a basic shop and that he had a "public health responsibility" to supply an affordable nutritious diet. However, the joint letter argues that a statutory cap would not address the "root causes of elevated food prices" – rising production, refrigeration and distribution costs. The letter is signed by the Scottish Retail Consortium (SRC), the Food and Drink Federation Scotland, Scottish Bakers and Dairy UK. Ewan MacDonald‑Russell, deputy head of the SRC, told the BBC's Radio Scotland Breakfast programme the proposals were an "appallingly unspeakable idea". He stated: "Price caps don't tackle food price inflation." "They are not a solution, they are a gimmick that sounds rather effective, but it simply displaces cost elsewhere." "We can't see a single example of where this has worked." MacDonald‑Russell pointed to Hungary, where he said a price‑cap policy led to shortages on shelves, domestic products being replaced by "cheap imports" and hostility between retailers and customers. The SRC also warned that the policy risked forcing small shops not covered by the proposed legislation into an uncompetitive position. "Scottish consumers benefit from the most affordable food prices in western Europe," MacDonald‑Russell added. "We know food price inflation is a problem, but the best example to deal with it is the one we have right now and price caps are going to make that worse." "It is giving a false promise that it is going to be able to help with something." "In reality, there is as good a chance it is going to make the overall cost of a shopping basket higher, because the cost of the scheme as well as the cap have to be absorbed by businesses." It is thought the proposals would require changes to the UK Internal Markets Act of 2020, which was introduced after Brexit to prevent trade barriers and regulatory divergence between England, Scotland, Wales and Northern Ireland as powers returned from the EU. The Scottish Government said helping people with the cost of living was a "top priority". A spokesperson added: "Ministers have welcomed engagement with stakeholders, including retailers, food producers and farmers on proposals for food price controls." "A consultation will launch soon for further views." By proposing a food price cap, John Swinney aims to demonstrate a commitment to tackling the rising cost of living. In turn, this means supporters risk appearing to be on the wrong side of the argument. There are, of course, significant questions about whether a cap would actually work in practice and whether the government could even implement it. Firstly, drafting legislation takes time; Swinney himself has mentioned a year‑long process. Secondly, the Scottish government would likely need the UK government to grant an exemption from the internal market act, which is designed to harmonise trade across the UK. UK ministers have not said whether they would oblige. Thirdly, if legislation were approved at Holyrood, supermarkets could challenge it in court. These complications help explain why this is not the only avenue being explored by the Scottish government. They have called a "summit" with food producers and retailers next week to see the way forward.