The Scotland food price cap proposed by First Minister John Swinney has been condemned as unworkable by 23 business organisations, who have written a joint letter urging him to drop the policy before he sets out his programme for government. The signatories, drawn from retail, food and drink production, manufacturing, and distribution, argue that a statutory cap would do nothing to fix the underlying reasons food costs so much.
The Scottish National Party (SNP) made the policy a manifesto commitment, pledging to compel large supermarkets to limit the price of essential items such as milk, eggs, cheese, and rice. Swinney has defended the plan on public health grounds, saying people were struggling to afford a basic shop and that he had a responsibility to ensure access to an affordable, nutritious diet.
Why business says the Scotland food price cap would backfire
The joint letter, signed by groups including the Scottish Retail Consortium (SRC), the Food and Drink Federation Scotland, Scottish Bakers, and Dairy UK, states that a legal cap would not address the ‘root causes of elevated food prices’, which it identifies as rising production, refrigeration, and distribution costs.
Ewan MacDonald-Russell, deputy head of the SRC, was blunt in his assessment, telling BBC Radio Scotland Breakfast that the plans were an ‘appallingly terrible idea’. ‘Price caps don’t tackle food price inflation,’ he said. ‘They are not a solution, they are a gimmick that sounds quite effective, but it just displaces cost elsewhere. We can’t see a single example of where this has worked.’
MacDonald-Russell pointed to Hungary as a cautionary example, where he said a price cap policy led to shortages on the shelves, domestic products being replaced by cheap imports, and tension between retailers and customers. He also warned that small shops, which would not be covered by the proposed legislation, risked being made uncompetitive against larger stores forced to hold down prices on certain lines.
‘Scottish consumers benefit from the most affordable food prices in western Europe,’ he said. ‘We know food price inflation is a problem, but the best model to deal with it is the one we have right now and price caps are going to make that worse.’ He added that there was ‘as good a chance’ the policy would actually push the overall cost of a shopping basket higher, because both the cost of administering the scheme and the cap itself would need to be absorbed by businesses somewhere in the chain.
Calls to tackle supply chain costs instead
The criticism of the Scotland food price cap is not limited to Scottish trade bodies. According to The Irish News, Rain Newton-Smith, head of the Confederation of British Industry (CBI), has urged the government to scrap the cap and focus instead on reducing the cost of producing food and cutting expenses in the supply chain. That argument echoes what the Scottish business coalition is making in its letter: that price controls treat a symptom while leaving the causes untouched.
There is also a legal complication looming over the plan. Implementing it is thought to 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 European Union. Any move by Holyrood to carve out separate pricing rules for Scottish retailers could run up against those provisions.
The Scottish Government said helping people with the cost of living remained a ‘top priority’. A spokesperson said ministers had welcomed engagement with stakeholders including retailers, food producers, and farmers, and confirmed that ‘a consultation will launch shortly for further views.’ That consultation will be the next formal opportunity for the business groups to put their case on record.
