Reeves food tariffs policy will ‘barely touch the sides’ on supermarket prices
Food manufacturers and retailers have slammed Rachel Reeves’ cost of living measures, claiming the government’s loosening of food tariffs will do little to help supermarkets to cut prices.
The Chancellor urged supermarkets to pass on savings from the stripped tariffs to shoppers “in full,” but retailers fear this measure will “barely touch the sides,” Morning Wire can reveal.
Reeves was attacked by top UK grocers earlier this week after it emerged she had urged supermarkets to sign up to price caps on certain foods.
Announcing a set of “Great British Summer Savings” on Thursday, Reeves told MPs she was acting to stem the rising cost of living caused by the Iran war.
She said: “I know that the cost of the weekly shop is often one of the biggest worries for families. So last month, I met with supermarkets to urge them to do all they can to keep prices low.
“And today I am taking action by suspending tariffs on over different 100 foods sold in supermarkets. And I am clear that I expect supermarkets to pass these savings on in full to their customers.”
Treasury urged to cut energy bills
The Treasury said this measure will affect foods like biscuits, chocolate and nuts and will save British shoppers between £230m and £370m per year. A list of the products affected will be published next week.
But a leading trade body representing British supermarkets has slammed the proposals and urged Reeves to go further on helping grocers to cut prices for shoppers.
Andrew Opie, director of food and sustainability at the British Retail Consortium, told Morning Wire: “To support shoppers, the government should focus on the UK’s farmers, food producers and retailers by cutting energy bills.
“While any assistance is welcome, cutting tariffs alone will barely touch the sides in offsetting the rising costs supermarkets face.”
The Food and Drink Federation (FDF), which represents the UK’s 1,200 food producers, said the government should cut tariffs on raw ingredients rather than finished products to boost British manufacturers.
Reeves should cut ‘burdensome’ red tape
Karen Betts, the FDF’s chief executive, said: “This is a well-intentioned attempt to help keep a lid on food price inflation. But removing tariffs on products that businesses make here in the UK undermines rather than supports those businesses and the people they employ.
“Instead, government should remove tariffs on ingredients and address the root causes of food inflation, including by rigorously prioritising burdensome regulation. Otherwise, this risks benefiting overseas manufacturers at the expense of our domestic food system.”
Reports that the Treasury was considering price caps on food were slammed as “completely preposterous” by the boss of M&S and described as “not a sustainable thing in the long run” by Bank of England governor Andrew Bailey.
Supermarkets have called on the government to instead address red tape – like Extended Producer Responsibility (EPR), a sustainable packaging tax, and changes to healthy food rules – to allow them to lower prices.
It is understood that supermarkets had hoped Reeves would announce further measures on Thursday to support grocers including the loosening of the EPR tax.
The Treasury declined to comment.