Ed Davey demands inquiry into supermarket profiteering as cost of weekly shop soars by over £600 a year

Liberal Democrat Leader Ed Davey is calling for the competition watchdog to launch an inquiry into profiteering by supermarkets, as part of a plan to bring down food prices for struggling families.

The proposals include increasing support payments to farmers, expanding free school meals and tackling workforce shortages in the farming and fishing sectors.

It comes as analysis by the Liberal Democrats reveals that the cost of a typical weekly shop has soared by nearly £12, or £604 a year. Food inflation in the UK is now 20%, the second highest in the G7.

Meanwhile the big supermarkets have made billions of pounds in profits in the past year. Tesco and Sainsbury’s, who account for nearly half the UK’s grocery market, saw their combined profits rise to £1.5bn in 2022 – more than 50% higher than last year.

The Liberal Democrats are calling for the Competition and Markets Authority (CMA) to investigate whether any profiteering has taken place among big supermarkets and food multinationals, and for tougher rules to prevent them raising the price of essentials more than they need to. 

The party is also calling for a £1bn boost to British farms to increase environmentally-friendly and sustainable domestic food production, and fixing visa rules that are preventing farmers and fishers from recruiting enough workers from abroad. In addition, Ed Davey is demanding Conservative ministers immediately extend free school meals to the 800,000 children in poverty who don't currently receive them.

Liberal Democrat Leader Ed Davey said:

“Under the Conservatives, the cost of the weekly shop is going through the roof while supermarkets are raking in eye-watering profits.

“Millions of families risk being overwhelmed by soaring food prices, coming on top of rising bills and housing costs. The Conservatives have no plan to deal with this cost of living crisis – instead they’re making it so much worse with all their chaos.

“British farmers will not see any extra income from these soaring food prices. These food prices benefit absolutely no one but the supermarket giants.

“We need to bring soaring food prices back under control and offer relief to families. That means cracking down on profiteering by food multinationals and the big supermarkets so customers get a fair deal.”

ENDS

Notes to Editors:

UK Food inflation currently stands at 19.6% according to the ONS.

The number of farmers in the UK has dropped from 137,800 in 2019 to 92,100 in 2022.

Liberal Democrat analysis of the weekly shop based on ONS statistics can be found here.

Tesco and Sainsbury’s account for around 43% of the UK grocery market according to Assosia.

Supermarket profit figures compiled by the House of Commons Library can be found here.

According to AJ Bell, large consumer staples corporations spent at least £8.5bn on share buybacks in 2022 – led by Unilver (£2.5bn) and Diageo (£2.3bn). AJ Bell also expects consumer staples’ pre-tax profits to rise by £3.6bn in 2023.

Liberal Democrat 5-point plan to bring down food prices 

1. Raise the farming budget by £1bn:

An immediate injection of £1 billion into agricultural and horticultural budgets, taking them from £2.4bn to £3.4bn, to further support sustainable domestic food production, initially targeted at shortage areas. The funds would go towards productivity improvements, training and technology to bring down prices for the long-term and make the UK more resilient against import shocks, and would support farmers committed to a more sustainable environmentally-friendly direction for farming.

2. Reinstate energy bill support for businesses and class farms as energy intensive: Reinstating the more generous ‘Energy Bill Relief Scheme’ which ended on April 1st, and offered 85% more support than the current ‘discount scheme’. This would cut input costs for farms and retailers. In the meantime, energy-intensive farms should be included in the current Energy and Trade Intensive Industries scheme, to ensure they qualify for extra support.

3. Fix workforce shortages for farmers, fishers and food processing: Let farmers, fishers and the food processing sector recruit the workers they need to boost our food supply by scrapping arbitrary visa salary thresholds. According to the NFU, a shortage of workers caused £60m worth of fruit and veg to go to waste in the first half of 2022. The union also said they need an additional 70,000 workers, when the Government’s ‘Seasonal Worker Visa’ only offers 45,000 positions. Meanwhile those working on fishing boats must apply for a skilled worker visa.

4. Launch a CMA investigation into multinational food manufacturers and supermarkets: The Government should ask the CMA to investigate reports that food conglomerates and big supermarket chains could be unfairly using their market power to inflate their markups and raise prices even further. A similar CMA investigation was launched about petrol prices. The Government should also strengthen the Groceries Code Adjudicator, set up by Liberal Democrats in Government, to improve the power of farmers and food producers against supermarkets, manufacturers and intermediaries, keeping consumer prices lower.

5. Expand Free School Meals to all children in poverty: The Government has excluded 800,000 children in poverty from receiving Free School Meals by introducing an arbitrary £7,400 household income threshold in 2018. In addition, more than 200,000 eligible children are missing out on Free School Meals because they are not registered. The Government should expand Free School Meals to all children in families receiving Universal Credit by scrapping the income threshold, and automatically enrolling all eligible children. That would mean approximately 200 million more Free School Meals each year.