Ministers are right to look at ways to make food more affordable amid a cost of living crisis, but parking a promotions ban is not one of them, says Nick Hughes.
The cost of living crisis is biting and the statistics make for grim reading. Even taking into account measures announced in the chancellor’s spring statement a typical working-age household faces a drop in income of 4% in 2022-23, according to the Resolution Foundation, with the poorest quarter of households braced for an even larger 6% fall.
Recent Food Foundation data showed that almost five million adults experienced food insecurity in January – before the worst effects of food and energy price inflation had even hit. It’s right therefore that policies which put more money into people’s pockets or reduce the cost to businesses of feeding them should be under constant consideration by ministers.
But this is also a time to be alert to calls to ditch policies that have little or no bearing on the price of food, but happen to be unpopular among certain groups.
The upcoming ban on HFSS (high in fat, salt and sugar) promotions is a case in point. Under pressure from elements of the food industry to reduce the cost burden on businesses and consumers, the government is reported to be considering the case for halting legislation it passed just months ago to mitigate the impact of inflation.
It smacks of muddled thinking and industry opportunism, not least because the government’s own evidence suggests food price promotions don’t actually save people money. In its consultation response, the Department of Health and Social Care noted how promotions increase consumer spending by encouraging people to buy more than they intended to buy in the first place – around 20% more compared with the 16% they can expect to save over buying the same items at full price. Nor do people typically stockpile these extra purchases to take advantage of the lower price; instead they increase their consumption.
Industry calls for a delay also betray the fact there are multiple ways manufacturers could circumnavigate the ban should they choose to do so. The legislation restricts “buy-one-get-one-free” or “3 for 2” offers on unhealthy products but does not prevent brands offering price discounts or simply adopting an everyday low price (EDLP) position – strategies that would immediately save shoppers money at the till.
Nor does the ban apply to all food and drink products, just those classified as HFSS based on the government’s nutrient profiling model. Suppliers with healthier alternatives in their portfolios could simply switch promotional activity to those products. Indeed, a key rationale for the policy is that it will drive product reformulation and ensure healthier food is more widely available, much in the way the soft drinks industry levy has done so successfully.
So kicking the ban down the road won’t save shoppers valuable pennies at the till, it will simply extend the window during which purveyors of unhealthy foods can maximise sales, and restrict opportunities for healthier substitutes to be promoted in prime aisle end and checkout locations.
A government that really wanted to reduce the cost of food through targeted policy interventions might have chosen instead to park a new law for mandatory calorie labelling on menus, which came into force on April 6th and has created upfront and ongoing costs for businesses that will surely be passed on to customers.
Or it could have continued to freeze VAT at 12.5% for the hospitality sector as many business leaders have been calling for. Instead, VAT reverted to 20% from the start of the month.
Indeed, it’s easy to forget amid the bleating from retailers and manufacturers over the promotions ban that it’s hospitality that has suffered two years of trading carnage during the pandemic while sales of packaged goods from supermarkets have benefited from unprecedented levels of growth.
Of course the entire food supply chain will come under pressure as supplies tighten and inflation bites, exacerbated by the war in Ukraine. But ultimately it’s the public – and those on low incomes in particular – who will bear the brunt of the pain at the supermarket checkout or café counter.
So let’s listen to the voices of those facing genuine hardship over the next few months, not those with ulterior motives.