Food Price Inflation and Food Banks

Ian Byrne Excerpts

Wednesday 17th May 2023 Westminster Hall

[Beth Winter]

Yes, I am very aware of those people. I work closely with food banks in my community, as I know other Members do, so I know that there has been a significant increase in the number of people in work who are accessing food banks, which is completely unacceptable. It is unacceptable for anybody to be using them.

Why are prices going up? We have to be clear that there are multiple causes. Droughts, climate disaster, fuel costs and the Ukraine war have all had an impact. However, as Unite the union has set out in real detail in its research on profiteering, which looks at the profits of companies in the FTSE 350, all of this has been made worse by profiteering along global supply chains, from agribusiness multinationals to high street supermarkets. It is not just Unite saying that. The European Central Bank recently said:

“Profit growth remained very strong, which suggested that the pass-through of higher costs to higher selling prices remained robust.”

The top eight UK food manufacturers made profits of £22.9 billion in 2021, with both profits and margins up 21% on 2019, with Nestlé, Mondelēz and Unilever all benefiting from double-digit growth in profit margins. In the supermarket sector, Tesco, Sainsbury’s and Asda—the top three UK supermarkets—nearly doubled their combined profits to £3.2 billion in 2021 compared with 2019.

Supermarkets are turning over hundreds of millions of pounds and handing dividend payments to wealthy investors, who are obviously not the people struggling to eat. In 2021-22, a total of £704 million was paid by Tesco in dividends and last July the company also paid shareholders £1 billion in its share buyback scheme.

The problem is that people who are reliant on low pay and social security are funding these exorbitant dividend payments and I really do not understand how the Government can justify that; I am interested to hear what the Minister has to say. People who cannot even afford to go to supermarkets are going to food banks. This is a crisis—a cost of living crisis—and it should not be allowed. We have taken action to control energy prices. When are we going to take action on the cost of food?

In Wales, where the Labour Government are in touch with ordinary people’s concerns, we are doing what we can, despite our underfunding by the UK Government. The Welsh Government are rolling out universal free school meals, which are now available in reception and years one and two, and they have a timetable to roll them out to all children in primary school. Think how much more quickly they would be rolled out in Wales if there was a fair, needs-based funding formula for central funds to the Welsh Government.

[Ian Byrne (Liverpool, West Derby) (Lab)]

I thank my hon. Friend for the fantastic work that she does in her community on the issue. Does she agree that the Minister should follow Wales’s lead and introduce universal free school meals? The Government should introduce a free school breakfast and lunch for all children in state education and, alongside that, enshrine a right to food in law, so that all children and adults have enforceable food rights, and we tackle the scourge of hunger in our communities.

[Beth Winter]

I congratulate my hon. Friend on the sterling work that he does on the Right to Food campaign in Liverpool. I totally agree that the UK Government need to follow the Welsh Government’s lead and roll out universal free school meals to all children. I thank him for his intervention.

Universal free school meals could be rolled out across the UK if supermarkets and suppliers were not allowed to pay such enormous dividends to shareholders, and instead paid a windfall tax. Imagine that—food retailers taxed to provide free school meals. It is an obvious thing to so. Elsewhere around the world, other Governments are taking action. In France, the Government have announced an anti-inflation trimester, during which supermarkets are expected to make discounts on food that will cost them, according to the French Prime Minister, hundreds of millions of euros. That appears to be a voluntary scheme. Carrefour and Casino supermarkets have made cuts. We need more information on the scheme’s impact and the benefit for families, but I hope that the Government are watching and discussing the matter with their French counterparts. Will the Minister respond to that point? Another example is Switzerland, where food is subject to price regulation. Prices there grew at a rate of 4% in December last year, compared with nearly 12% in the US and nearly 17% in the United Kingdom. Have the Government considered how Switzerland regulates its food pricing?

Sadly, this Tory Government are not taking action. I looked at the outcomes of yesterday’s food summit, which was renamed the Farm to Fork summit—no reference whatsoever to food inflation or food poverty. I note that the union most heavily involved in the food sector and agriculture, Unite the union, and the Bakers, Food and Allied Workers Union were not invited to the summit. Why?

The Environment, Food and Rural Affairs Committee

“is to investigate how profitability and risks are shared through the food supply chain and the existing government system of monitoring and regulation of these.”

On Monday, the Competition and Markets Authority announced

“the stepping up of our work in the grocery sector to understand whether any failure in competition is contributing to grocery prices being higher than they would be in a well-functioning market.”

Will the Government commit to learning from those processes, and will they look at other Governments’ interventions in their food markets? The crisis is such that the Government must act now, even while those investigations go on.

What should the UK do? First, we must inflation-proof incomes. Many of us on the Opposition Benches have been calling for that for a long time. That means an end to the Tory low-pay agenda that cuts public sector workers’ pay in real terms. Secondly, the Government should adopt the Trussell Trust and Joseph Rowntree Foundation’s call for an essentials guarantee. That would mean an independent process to determine the level of that guarantee, ensure that universal credit meets that level, and ensure that deductions do not take it below that level.

Thirdly, we need a windfall tax on food profits for supermarkets and, where possible, suppliers. If we can have such a tax on fossil fuel suppliers, why not food suppliers? It is incumbent on the UK Government to engage with that proposal, for which they have set a precedent, given what they have done on oil and gas. The tax revenue could be used to expand the provision of free school meals, as my hon. Friend the Member for Liverpool, West Derby (Ian Byrne) just said. Fourthly, we need controls on food speculation, as the former shadow Chancellor, my right hon. Friend the Member for Hayes and Harlington (John McDonnell), said in a debate yesterday. Finally, have the Government explored any mechanisms for a price ceiling on a core basket of goods? People are struggling in this cost of living crisis, and this Government are standing by as they suffer.

I will finish with some personal commentary. Prior to entering this place, I volunteered at a local food bank for a long period. It will never leave me: when I looked into the eyes of the people coming into the food bank, I saw despair, but also a sense of embarrassment and shame at having to access a food bank in the fifth-richest nation in the world. It is an absolute disgrace. The answers are there; this is a political choice. It is extremely urgent that immediate action be taken by the UK Government to resolve this issue.

[The Minister for Food, Farming and Fisheries (Mark Spencer)]

It is a pleasure to serve under your chairmanship, Mrs Harris. I thank the hon. Member for Cynon Valley (Beth Winter) for securing today’s important debate. I also pay tribute to her efforts in her constituency, and in her previous roles before joining this House.

We have seen food price inflation continue to rise. As the hon. Lady said, it was 19.2% in March 2023, up from 18.2% in February. That is the highest rate that we have seen in 45 years. I certainly recognise the impact that high food prices are having on household budgets and on tackling inflation, and this Government’s No. 1 priority is to lower—to halve—that inflationary rate this year. Yesterday, as she identified, the Prime Minister hosted the first UK Farm to Fork summit, which focused on how Government and industry can work together to bring great British food to the world, build resilience and transparency across the supply chain, strengthen sustainability and productivity, and support innovation and skills.

[Ian Byrne]

Can the Minister inform the House—my hon. Friend the Member for Cynon Valley (Beth Winter) touched on this—whether any trade union representatives were invited to the UK Farm to Fork summit held at Downing Street yesterday? I have tabled a written question on that, but the response was not very clear.

[Mark Spencer]

I am not privy to the whole guestlist, but of course there is a limit to the capacity in No. 10 Downing Street. There are lots of people who would have liked to be there whom we were not able to accommodate. However, it was important that we drew together industry leaders—retailers, processors, and primary producers—so that they could work together on delivering innovation in the sector, and so that they could try to lower food prices and not only make our great British food producers competitive across the world, but benefit our constituents.

Following that summit, we announced a package that includes a broad range of actions to strengthen the resilience of our farming sector and drive long-term sustainability. That includes a new set of principles to protect farmers’ interests in future trade deals, more funding to help producers export, plans to reduce red tape for farmers looking to diversify their income streams, and making it easier to build glasshouses in the UK.

Last week, the Chief Secretary to the Treasury met supermarkets to discuss the cost of food, and the Chancellor is meeting them again shortly to discuss how we ensure that consumers have access to a range of affordable food, in recognition of the pressures that people and producers are feeling. We have also provided significant support this year, worth an average of £3,500 per household. That includes direct cash payments to the most vulnerable households, as well as our uprating benefits and the state pension by 10% in April.

Food banks are a great example of the generosity of spirit of communities across the country. The Government do not have any role in the operation of food banks, as they are independent, charitable organisations that bring people in local communities together to support one another. However, recognising that good work, the Government will provide over £100 million of support for charities and community organisations in England. It will be targeted at supporting critical frontline services for the most vulnerable people—services that are struggling to meet increased demand.

[Mark Spencer]

I am grateful for the hon. Lady’s intervention. What I was saying was that I recognise the great work that those in food banks do. I recognise the work that the charitable sector does to support the most vulnerable. I am not saying that food banks should be the model for the future; I am saying that the great work they do should be recognised. The best way to get out of poverty should be through work and opportunities to earn a fair wage, so that people can afford to buy their own food.

[Ian Byrne]

On that point about wages, the Bakers, Food and Allied Workers Union found that four in 10 food workers are forced to skip meals. Over 60% of respondents to its recent survey said that wages are not high enough for them to meet their basics needs. The people who produce food cannot afford to buy and eat it. What does the Minister say to that?

[Mark Spencer]

We are slightly straying into the area of the Department for Work and Pensions and the Treasury, as the hon. Member for Cynon Valley indicated at the beginning of the debate, so I hesitate to comment too much. What I would say is that that is why the No. 1 priority of the Government is to get inflation under control. As the hon. Gentleman identified, the people who are most vulnerable and who are struggling to make ends meet are the people who are damaged by high inflation. In ’21-22, 93% of UK households were food-secure; that is virtually unchanged from’20-21, when it was also 93%. In ’21-22, 3% of individuals, or 2.1 million people, lived in households that had used a food bank in the previous 12 months.

My Department is working across Government to ensure that we have the right support in place to address rising food price inflation. More than 8 million households are eligible for means-tested benefits. Some will receive additional cost of living payments totalling up to £900 in the ’23-24 financial year. Over 99% of the first cost of living payments this year have already been made. For those who require extra support, the Government are providing an extra £1 billion of funding, including Barnett impact, to enable a year-long extension of the household support fund in England from April. That is on top of what we have provided since October 2021, bringing total funding to £2.5 billion. From April 2023, we increased the national living wage by 9.7% to £10.42. That represents an increase of over £1,600 to the annual earnings of a full-time worker on the national living wage; estimates suggest that could help over 2 million low-paid workers.

I once again thank the hon. Member for Cynon Valley for introducing this debate. I reassure her that the Government take food prices seriously. We will continue to work across Government.