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Is inflation – and the spectre of the next election - slowing down sensible regulation of consumer products?

Consumer Industries
Consumer Campaigns & B2B

The Government is fully aware that it must avoid doing anything that can be seen to increase the cost of goods and services to voters at a time when inflation remains stubbornly high.

Food price inflation has been particularly difficult and Ministers have trained their crosshairs on the supermarket industry in particular, attempting to lay the blame at their door for not reducing prices. But this approach could have unintended consequences, especially around any changes to consumer products which encourage healthier choices, make shopper decision-making easier, or indeed help us reduce our waste.

In May, Prime Minister Rishi Sunak hosted a Food Summit - prompted by the National Farmers Union’s public lamenting of retailer negotiations on produce, which led to supply shortages on supermarket shelves. Eggs, dairy and other animal products saw some of the biggest rises leading to some retailers adding security tags to tubs of butter. This consequently led to the Food and Drink Federation and British Retail Consortium making the case for Government to be more mindful of the impact of upcoming regulatory burdens on food prices.

What followed was the Government delaying the introduction of the ban on two-for-one promotions for High-Fat-Salt-Sugar (HFSS) foods for two years until October 2025.

The reason given that it would restrict choice during a cost of living crisis, prompting complaints from health campaigners, who said the NHS needs the resources to tackle obesity and associated health challenges at a time when numbers and waiting lists are rising. Some manufacturers have since come out in favour of a dedicated HFSS tax, showing that industry itself is not afraid to improve, reformulate and encourage healthy choices – as many did during the sugar tax debate.

Wales also decided to simply go ahead with introducing the so-called Buy-One-Get-One-Free (BOGOF) banning policy, with the legislation to be introduced next year and rolled out by 2025. The Welsh Government is notably a Labour one, so is this a sign of things to come if Keir Starmer wins next year? Another policy that impacts supply chains, which those in the food sector will be watching closely, is the introduction of the Extended Producer Responsibility (EPR) regulations. These were enshrined in the Environment Act and are designed to ensure packaging is taxed depending on its recyclability and Council collections are funded by those putting the waste onto the market: producers. But there are fears adding costs to producers could lead to higher prices on the shelves – something the Government is desperate to avoid. Therefore, some think this could lead to a delay.

Campaigners argue the policy is a major driver towards achieving Net Zero – and associated consumer costs could have been avoided had the Government done more effective engagement to prepare industry to budget for these costs.  Even if those two decisions are delayed, the Government could face calls for more changes elsewhere in the supply chain. The DEFRA Committee recently launched a Call for Evidence into “Fairness in the food supply chain” which will review issues from ‘farm to fork’. It will investigate how profitability and risks are shared through the food supply chain and the existing Government system of monitoring and regulation of the sector. Closing at the end of the month, the Committee is looking to assess some of the deficiencies in the food system which makes the system so volatile, and offering suggestions to the Government for changes.

This leaves the Government in a difficult position going into an election.

Sunak’s five pledges include halving inflation, and it is clear this is proving difficult. Bringing down consumer prices is a key route to hitting that pledge and the sentiment is that all decisions must lead to short term achievements before the end of the Government’s term. There is also a political angle, in which Sunak wants to avoid the tug of war in the Conservatives over the issue of “nannying” and pivot towards showing he is listening to the concerns of businesses.  Critics might question the authenticity of his concerns but, if the delays can be achieved without much backlash, expect to see more delays on anything that risks keeping prices high and, unless the mood turns, we might be waiting a while longer until new regulations emerge.