Treasury rules out '1970s-style' supermarket price freezes as minister insists 'no evidence of significant price gouging'

Want LBC stories before everyone else? Set us as your Preferred Source on Google

It follows suggestions that the Treasury had asked major supermarkets to limit prices on the likes of eggs, bread and milk in return for the lifting of some regulations amid an ongoing cost of living crisis.

"This isn't something we're considering," Treasury Minister Dan Tomlinson told LBC in response to the claims.

Asked by Nick Ferrari at Breakfast whether the realities are that supermarkets are profiteering, Tomlinson insisted he's seen no evidence of "significant price gouging in the supermarket sector".

"My personal view is that the supermarket sector is a high, highly competitive," he told Nick.

"I think that often profiteering happens when businesses and sectors are not competitive and there might be one or two suppliers. That's often where the state steps in with regulation, e.g. water, energy etcetera."

It comes amid reports that Rachel Reeves's Treasury has asked supermarkets to limit food prices in return for deregulation, reports claim as retail firms slam the Government for policies it says are driving up costs.

Read more: Supermarkets asked to cap price of eggs, bread and milk but bosses slam Reeves for '1970s-style price control'

Read more: Prime Minister, Jess Glynn and Lewis Hamilton join stars celebrating Arsenal title

It comes as the Treasury revealed that new powers will be given to the markets authority to halt supermarket profiteering.

"The Competition and Markets Authority is able to request from sectors where they want to do an investigation, some information about the input costs, their profit margins and the prices that they're selling their goods at.

"But they do not have the power during crises, like the one that we're in here, to require businesses to bring forward that information until they've done a loan load of work to build up a case that's time consuming.

"It means that the CMA, our regulator, doesn't have the teeth and the powers that it needs to get the information that it needs to investigate whether price gouging or profiteering is happening."

Adding the government needs to be "really carefully" in monitoring markets for signs of profiteering, the minister insisted "that's why we want to give the CMA more power".

"Right now, my view is that this is a competitive market and I haven't seen personally evidence of, you know, of significant price gouging in the supermarket sector," he continued.

"But that's precisely why we want the CMA, when it comes to future shocks like this, to have the powers to look at it, because they are the regulator. They are the ones who spend all their time thinking about."

Proposals from the Treasury reportedly asked major supermarkets to limit prices on the likes of eggs, bread and milk in return for the lifting of some regulations.

Suggestions were that the Treasury would in return offer supermarkets “incentives” which may include easing packaging policies and delay potentially costly changes to healthy food rules - rumours dispelled by Mr Tomlinson.

It comes as today's figures from the ONS showed that inflation has slowed to 2.8% in April from 3.3% in March.

Helen Dickinson, the chief executive of the British Retail Consortium (BRC), the leading trade association for retailers, said: “Rather than introduce 1970s-style price controls and trying to force retailers to sell goods at a loss, the Government must focus on how it will reduce the public policy costs which are pushing up food prices in the first place.”

She added: “The challenge facing retailers is a combination of higher energy and commodity costs resulting from the Middle East conflict, and the soaring cost of the Government’s domestic policies.”

“The UK has the most affordable grocery prices in Western Europe thanks to the fierce competition between supermarkets,” she also said.

A spokesperson for the Treasury said: “The Chancellor has been clear we want to do more to help keep costs down for families, and will set out more detail in due course.”

The Treasury asked supermarkets for guarantees that British farmers would not lose income from price caps, according to the FT.

Some measures, including the packaging regulations, generate revenue for the Treasury, it reported.

The Government has also recommended supermarkets reinvest the savings from the regulation changes to freeze grocery prices, it added.

This comes after UK food inflation rose to 3.7% in April.

The Foreign Secretary on Tuesday told an aid summit of the risk of “sleepwalking into a global food crisis” as a result of Iran’s blockade of the Strait of Hormuz.

Chancellor Rachel Reeves is to set out measures to help households with the cost of living on Thursday.