Food Price Inflation

Mark Spencer Excerpts

Thursday 23rd March 2023 Commons Chamber

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

(Urgent Question): To ask the Secretary of State for Environment, Food and Rural Affairs if she will make a statement on food price inflation.

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

I will respond on behalf of the Secretary of State. I draw attention to my declaration in the Register of Members’ Financial Interests.

We recognise that food prices have gone up. The recent increase in food price inflation was driven by upward price movements in eight of the 11 food categories. The three most significant price increases since February 2022 are oils and fats, at 32.1%; milk, cheese and eggs, at 30.8%; and non-classified food products, at 28.9%. While recent unseasonable weather in Morocco has also created some temporary supply disruption to fruit and vegetables, domestic retailers have held prices comparatively low compared with the rest of Europe, where increased demand led to some cases of 300% rises in the price of some vegetables.

A number of media outlets have reported that the recent shortage of some salad and vegetables has been the driver for the increase in food inflation in February, but that is not the case. The overall inflation rate increases have been caused by several factors. There are other categories where price increases have been greater than that of vegetables over the past year.

These high overall inflation rates are driven by high utility prices and pressures on global supply chains that are being felt across Europe and beyond. Commentators expect the rate of inflation both across the economy and for food and drink to be near its peak. The Government have put in place a number of measures to support households with prices, including committing £37 billion to support households with the cost of living; £1 billion of that has already gone towards help with the cost of household essentials.

Looking forward to April, the Government will be uprating benefit rates and state pensions by 10.1%. The benefit cap levels will also be increasing by the same amount in order to increase the number of households that can benefit from those uprating decisions. In addition, for 2023-24, households on eligible means-tested benefits will get up to £900 in cost of living payments. That will be split into three payments of around £300 each across the 2023-24 financial year. A separate £300 payment will be made to pensioner households on top of their winter fuel payments, and individuals in receipt of eligible disability benefits will receive a £150 payment.

Free school meal eligibility is being permanently extended to children from all families with no recourse to public funds. The Government have extended free school meals to more groups of children than any other Government over the past half century. We remain committed to ensuring that the most disadvantaged children continue to be supported.

We are also working closely with retailers to explore the range of measures they can take to ensure the availability and affordability of food, so while we recognise that this is a challenging time for consumers, we are taking a large number of steps to support people with the cost of living and I have great faith in the food supply chain, which has proven itself to be extremely resilient over the past few years.

[Mr Speaker]

I call the shadow Secretary of State.

[Jim McMahon]

I thank the Minister of State for his response, but this is a cost of living crisis driven in large part by the cost of food, so where is the Secretary of State? She seems to spend more time in the departure lounge than in her own Department at times. Mr Speaker, I feel like I am shadowing a shadow. Where is the Secretary of State on the most important issue at this point in her brief?

Once again, we are in the midst of a cost of living crisis, in which food inflation is playing a large part. If inflation overall is not curbed, the danger is that that will have an impact on the ability of people to pay their mortgages and we could see further interest rate rises as a result. There are serious questions about the Government’s approach to the cost of food and our food security. Some producers are reducing production and some are exiting completely. There are now 7,000 fewer food producers in agriculture than in 2019. Food inflation is up 18.2%, which is the highest in 45 years, and import costs to February are up 12.7%. The Minister knows—he is in the business—that those import costs today will be felt for months to come.

There has been warning after warning. Thanks to you, Mr Speaker, this is the second urgent question on food security, but where are the Government on farming payments, on labour shortages, on energy costs, on the costs of feed and fertiliser and on the impact of avian flu? Last time the Secretary of State was here, her advice to the nation was a call to arms to go out and buy turnips —those were her words of wisdom. That just does not wash. When will the Government realise that this is a crisis of their making and they need to take action now?

[Mark Spencer]

I thank the hon. Gentleman for his comments and statements—there were not many questions in there. I can tell him that the Government wholly recognise the challenge that inflation brings to the economy. That is why the Chancellor of the Exchequer has set out a number of measures to curb inflation and to manage the economy in a way that he will struggle to understand.

I would also say that huge pressures in the global economy, following Putin’s invasion of Ukraine on the back of a global pandemic, are being felt all around the world. Global energy prices have driven huge spikes, for example in the cost of fertiliser, which the hon. Gentleman mentioned: ammonium nitrate went from circa £250 a tonne to in excess of £1,000 a tonne for a short period. The good news is that global gas prices are easing back and coming back under control into a more affordable price range. That will take time to feed through to some of the cost pressures that are being put on our primary producers, but the Government are continuing to talk—[Interruption.] From a sedentary position, the hon. Gentleman mentions labour. That is why the Government increased the number of seasonal agricultural worker visas to 45,000.

[Jim McMahon]

We need 90,000.

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[Mark Spencer]

So the hon. Gentleman says, but there are an extra 10,000 visas available should the industry request it and require it. That request has not come to the Government, because we still have enough people in the supply chain with the 45,000 visas that are available. We continue to work and co-operate with retailers, processors and the food sector on continuing to supply good-quality food to our consumers.

[Harriett Baldwin (West Worcestershire) (Con)]

Yesterday’s inflation numbers were a sobering reminder of how terrible a tax inflation is on our economy. It is a tax that harms everyone, but it harms the poorest most. Does the Minister agree that, while Government fiscal policy this year needs to help in terms of halving inflation, the primary responsibility for getting inflation under control has been set in a remit letter given to the independent Bank of England? It is the Bank’s job to make sure that inflation gets back in its box.

[Mark Spencer]

I pay tribute to my hon. Friend for her work chairing the Treasury Committee and holding the Treasury to account. She will be aware that the Prime Minister’s priority is to get inflation back under control and get it down. We will continue to work across Government to make sure that that happens, and we do recognise the challenge that this brings to consumers and to our constituents.

[Mr Speaker]

I call the SNP spokesperson.

[David Linden (Glasgow East) (SNP)]

I congratulate the shadow Secretary of State on securing this urgent question. The cost of living crisis remains the SNP’s top priority, alongside tackling energy bills. This Government talk about halving inflation, but just yesterday it went up again to 10.4%, and we know that at lunchtime the Bank of England will hike interest rates up to reflect that.

All this, I am afraid, puts pressure on household budgets, which are under enormous strain already. Stats from the Office for National Statistics show that food price inflation runs at 18.2%. The poorest tenth of households experience an even higher rate of inflation, according to the Resolution Foundation. A number of adults are buying less food at the supermarket; worryingly, we are hearing of mothers diluting formula with water just to try and get by. Does the Minister agree that we therefore need to look at the essentials guarantee proposed by the likes of the Joseph Rowntree Foundation and the Trussell Trust: £120 a week for single people and £200 for couples? If the Government will not do that, will they just get out of the way and let an independent Scotland get involved so that we can actually tackle food poverty and make sure that people can live in dignity?

[Mark Spencer]

I think being able to ride the challenges and operate on an international basis as a United Kingdom is actually a very good example of our being genuinely better off together. However, we recognise that the spike in food prices is a challenge for consumers, particularly the people on lower incomes whom the hon. Gentleman mentioned. That is why the Chancellor has introduced a £37 billion package to support those people, including pensioners, and that is why they will receive regular £300 payments over the next few years, with continued support from the Government to try to mitigate the impact of these prices.

[Andrew Bridgen (North West Leicestershire) (Ind)]

Let me first draw the House’s attention to my entry in the Register of Members’ Financial Interests.

Before the recent rises in energy and fuel costs, the UK had the most affordable food prices in its history and was considered to have the third most affordable food prices in the world. Does my right hon. Friend agree that the Chancellor made exactly the right decision in continuing to freeze fuel duty, and that that will be extremely welcome both to food producers and to the food processing industry?

[Mark Spencer]

My hon. Friend is right to draw attention to the fact that we have benefited from very low food prices for a number of decades, because of the robust systems that we have in place for retailers and producers of high-quality food. He is also right to recognise that fuel costs are a huge driver of inflation if they are allowed to rise dramatically. That is why the Chancellor has maintained that support, and I am glad that he will continue to do so in the future.

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

Rising food price inflation is terrifying for many families, none more so than those who are already struggling with the cost of living crisis. I speak to numerous families in my constituency who are having to use food banks although in many cases both partners are in full-time employment. That is truly shocking, and such an indictment of Tory Britain in 2023. The Government are clearly not doing enough, so may I ask the Minister what more they can do to help manufacturers and suppliers to bring costs down and make food more affordable once again?

[Mark Spencer]

We continue to have regular meetings with the processing and hospitality sectors and with retailers to ensure that there is co-operation throughout the food supply chains. There has be fairness in those supply chains so that risk and reward are shared equally among primary producers, retailers and processors. I think that that co-operation will continue, and the Government are always available to try to co-ordinate these discussions to ensure that we have most effective food supply chains possible.

[Theresa Villiers (Chipping Barnet) (Con)]

The Government’s measures to assist people with cost of living pressures are among the most generous in Europe, and includes their paying roughly a third of people’s energy bills, but this news on food price inflation is really worrying. Can the Minister assure us that the Government are on track to deliver the Prime Minister’s promise to halve inflation by the end of the year?

[Mark Spencer]

We continue to monitor inflation, and the Prime Minister’s ambition is to reduce it. Food prices have driven that inflationary figure over the last month, but the good news is that we are starting to see signs that it is at its peak, and already some of the driving factors such as the wholesale prices of gas, fertiliser and imports are beginning to ease back.

[Wendy Chamberlain (North East Fife) (LD)]

I think that all of us, as constituency Members, are dealing with an increasing amount of casework relating to the cost of living. Yesterday the all-party parliamentary group on ending the need for food banks, which I co-chair, published its first report, “Cash or Food?”, which I commend to all Members. Sadly, no one from the Government was able to attend the launch, so will the Minister agree to meet me and discuss its findings?

[Mark Spencer]

It is always a pleasure to meet the hon. Lady. She did text me to draw my attention to the event, but my diary did not allow me to attend. However, I will of course be happy to read her report and to meet her at some point in the future.

[Bob Blackman (Harrow East) (Con)]

The Government’s short-term measures are of course welcome, but we also need a long-term food security plan to encourage farmers to grow more and to ensure that more of our food is produced in this country rather than our relying on expensive imports. What action is my right hon. Friend taking to ensure that that long-term plan is implemented?

[Mark Spencer]

My hon. Friend has asked an important question. This applies to energy production as well as food production, which is why we are moving away from the common agricultural policy to environmental land management schemes that will help farmers not only to produce great food, but to have a positive impact on our environment and our biodiversity.

[Clive Efford (Eltham) (Lab)]

The Chancellor of the Exchequer may be trying to convince us that he has the economy, and inflation along with it, under control, but food prices show us what is happening to the lives of people in our constituencies. The price of full-fat milk has increased by 42%, the price of low-fat milk by 34%, the price of eggs by 32%, and the price of bread by 21%. These are staple foods that people have to buy. Why is the UK so far out of step with other countries, with such huge food price inflation?

[Mark Spencer]

The hon. Gentleman is right that we are not in step with our European colleagues, who have seen 300% rises in some fruit and vegetable prices. We are way below those sorts of spikes. If we compare food prices across Europe, we see that the UK is very well placed. That is because we have a very robust food supply chain. However, I accept that the fact that it is harder elsewhere is of little consequence to our constituents. We recognise the challenge they face. That is why we have introduced a huge package of support for people with their household bills.

[Jo Gideon (Stoke-on-Trent Central) (Con)]

Obviously, inflation is about supply and demand. I am sure my right hon. Friend agrees that having more domestic production will help our food security. It was worrying to hear that food producers—I am thinking of midlands tomato growers—switched off their electricity instead of planting and having an early season, because of the cost. They said that it did not pay for them to grow an early crop. How can the Department help to enable producers to produce more? This is a question of the cost of electricity, but it is also about ensuring that we have that supply.

--- Later in debate ---

[Mark Spencer]

I pay tribute to my hon. Friend for her work in this area; I know that she is a big campaigner on food security and the cost of food, particularly for her constituents. Again, we are working with the sector to try to help and support those who produce food in greenhouses. I recently had the privilege of visiting Thanet Earth in Kent, which is producing cucumbers, tomatoes and peppers for the UK market, linked to an energy supply plant from which it gets free heat and carbon dioxide to help with that process. There are opportunities to do that in the UK. Traditionally, in January and February we have procured tomatoes and cucumbers from north Africa and southern Europe, because the climate is much warmer there. Unfortunately, Morocco and southern Spain suffered a snow event, which led to some challenges in the supply chain.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Food prices have risen by over 18% in the past year. For people in my constituency on low wages, the underlying crisis being caused by that and, of course, the hidden cost of basic foodstuffs rising by two or three times that amount, is crushing. Contrary to what the Minister said, the London School of Economics put the price increases at the door of Brexit. Will he apologise for his Government’s actions and allow my constituents the same access to the single market as those in Northern Ireland?

[Mark Spencer]

As the hon. Gentleman will have heard earlier, food inflation is higher in Europe than in the UK for some products. He may well want to join back with his friends in Europe, but we have the very best and most robust supply chains. Brexit makes very little difference to that trading relationship. We are still importing products from our friends in Europe, as well as other parts of the world, and we are supporting UK producers to produce great food here, too.

[Kerry McCarthy (Bristol East) (Lab)]

Public sector procurement will play a significant role in ensuring an affordable, healthy and sustainable supply chain. The Department for Environment, Food and Rural Affairs consulted on that last year; the consultation finished on 4 September, and apparently there were 126 responses. I have to keep checking that the consultation really did exist, because whenever I ask Ministers about it, they do not seem to know. Labour has adopted one of its policies, about 50% of food being locally sourced and sustainable. When are we going to hear from the Government whether they will do the same?

[Mark Spencer]

We are very keen to use the power of government to procure top-quality, UK-produced food. As the hon. Lady identifies, we made a commitment to try to get to 50% as soon as possible. We remain committed to encouraging UK Government Departments to procure great British food, which is one tool the Government are using.

[Navendu Mishra (Stockport) (Lab)]

Both Chelwood Foodbank Plus and Stockport food bank support people in my constituency, and I am grateful to them. The Trussell Trust network has had to distribute more than 7,000 emergency food parcels each day this winter. Is the Minister proud of his Government’s record on food poverty?

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[Mark Spencer]

The number of households in absolute poverty has actually gone down since the Government came to power, but I join the hon. Gentleman in paying tribute to the people working in Stockport’s food banks. We recognise the challenge that consumers are currently facing, particularly those on low incomes, which is why the Chancellor was so supportive in introducing a huge package—£37 billion—to help households get through this crisis.

[Chris Stephens (Glasgow South West) (SNP)]

When the current Secretary of State for Environment, Food and Rural Affairs was Secretary of State for Work and Pensions, she said, in a memorable televised Select Committee exchange with me, that the responsibility for food poverty lies with DEFRA. I note that she is not here. Does the Minister believe that these food price inflation figures will result in more people using food banks, and that the best way to end food bank use is to support the affordable food networks of Good Food Scotland and Feeding Britain? Will he meet them and me to discuss how we can support affordable food projects?

[Mark Spencer]

We should be clear that I am the Minister with responsibility for food, which is why I am here to answer this urgent question. We take this challenge very seriously, and we continue to work with other Departments to try to help households cope with food price increases. As I said earlier, the good news is that we are seeing signs that this is the peak of food price inflation. There are signs that global gas prices, fertiliser prices and import costs are starting to reduce.

[Mr Speaker]

I call Kim Johnson.

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[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I know the Minister to be an honest chap, so will he stop making excuses, whether it is Putin or snow, and wake up to the fact that the food bank network is crumbling? The network cannot cope with demand, and it cannot get the supply. Its volunteers across the country are stressed out by the pressure. When will he do something? Perhaps all the money raised by the plastic bag charge could flow not into the supermarkets’ back pockets but into the food banks.

[Mark Spencer]

The Government have a responsibility to deal with the facts as they are presented. It is a statement of fact that Ukraine was a huge producer of food within Europe. It is a statement of fact that Putin’s illegal invasion caused global gas prices to go up exponentially, and even the hon. Gentleman would recognise that that has had a huge impact.

The hon. Gentleman suggests that the retailers are creaming off huge profits on the back of the plastic bag tax, but the margin on their profits is actually around 1% or 2%. We continue to work with retailers and the processing sector to make sure there is fairness in the supply chain, so that the risk and reward are shared. UK retailers are doing a very good job of keeping us well supplied and of suppressing prices as much as possible in comparison with our European colleagues.

[Amy Callaghan (East Dunbartonshire) (SNP)]

Our constituents who use first-stage infant formula with their babies are experiencing soaring costs, and those who are unable to afford these increased prices are watering down the formula to make it last. Such products should be treated with the utmost caution, as unsuitable alternatives can damage the health of babies. What does the Minister have to say to families in our constituencies who are not able to afford infant formula for their babies? What action will he take to ensure these products are affordable and available to all?

[Mark Spencer]

I recognise how challenging that situation must be. That is why the Government are putting in huge support packages to try to help households cope with the increase in energy and food prices. We will continue to look after the most vulnerable people in society, offering them support to help them through this challenging time.

[Darren Jones (Bristol North West) (Lab)]

Many food and drink businesses express their frustrations to me, as Chair of the Select Committee on Business, Energy and Industrial Strategy, about the lack of co-ordination between the Minister’s Department and BEIS. Given the influence of inflation, the challenges in the labour market, and the need for technology adoption and automation in the sector, is it not time for a proper, co-ordinated sector deal between BEIS, the Department for International Trade and the Minister’s Department for the food and drink industry?

[Mark Spencer]

We do, of course, talk to our colleagues across government, and we also invest a huge amount in technology to help develop new technologies to reduce the price of food production. We are running competitions to encourage robotics and computerised systems to help in the processing sector. We have also introduced the gene editing Bill—the Genetic Technology (Precision Breeding) Bill—which I hope will reach Royal Assent very soon. It will help the industry to develop new technologies to reduce the cost of food production.

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

I grew up in West Dunbartonshire in the 1970s and 1980s, when the legacy of de-industrialisation was compounded by recession after recession, weak economic growth became the norm and well-paid, skilled jobs were replaced with minimum wage service industry jobs, creating a vicious circle that seems difficult to escape. Will the Minister advise my constituents, and similar constituents across these islands, who are living close to the breadline what the Government are doing for them, as Brexit Britain has brought about this 1970s food inflation?

[Mark Spencer]

There is a fundamental difference between today and the 1970s: employment is at a very high level and lots of jobs are available to people. But that does not mitigate the challenge that some constituents are finding themselves in. That is why the Chancellor of the Exchequer has introduced this huge package of support to try to help people with that cost of living challenge they face.

[Mr Speaker]

I call Kim Johnson.

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[Kim Johnson]

Thank you, Mr Speaker, for giving me a second opportunity. The Minister mentioned the number of children accessing free school meals. We have nearly 4 million children living in poverty, so will he explain what assessment he has undertaken of the impact of food price inflation on the delivery of school meals, given that schools receive only £2.41 per pupil and that has increased by only 7p in the past 13 years?

[Mark Spencer]

We are supporting more children now than at any point in history. We continue to offer them that support and we will carry on doing that. School meals are the responsibility of the Department for Education, but we consistently have conversations with our friends across government to make sure that we are co-operating and co-ordinating our approach.

[Chris Elmore (Ogmore) (Lab)]

There are 10 food pantries across my constituency supplying the surplus food from the various main supermarkets for between £5 and £10 per bag. The demand is so great that the volunteers cannot keep up with people doing their weekly shops at these pantries. We now face a new challenge: FareShare, which co-ordinates the surplus food, is running out of surplus food. What is the Minister going to do to start dealing with the huge problem of constituents paying for a week’s food of whatever they can find for £10, which is almost past its sell-by date, but the suppliers are running out? When is he going to get a grip and start dealing with the issues of food poverty in this country?

[Mark Spencer]

The hon. Gentleman is right to draw attention to the great support our retailers are giving to those people who face that challenge; they continue to work with charities in that sector to help supply food to the most vulnerable. Of course, the Government also play their part with a huge package of support, helping people through this challenge.

[Rachael Maskell (York Central) (Lab/Co-op)]

My concern is here and now: the food banks in York are running out of food because demand is going through the roof and people cannot afford to make the donations that they were. For my part, I am having a food drive on 31 March and 1 April for our city to donate. What is the Minister doing on his part? Will he make grants available to food banks so that they can actually afford to feed our city?

[Mark Spencer]

We continue to work with the whole sector, including retailers, manufacturers and primary producers, to maintain the most robust food supply chain. I pay tribute to the work that food banks do in the hon. Lady’s constituency to support the most vulnerable; that is what we are doing too, as a Government, by supporting people with the cost of their household bills.

[Richard Foord (Tiverton and Honiton) (LD)]

Our farmers were promised by the Conservative Government that the support that they received from the EU would be replaced in full after the UK left the EU. Instead, their subsidies are being phased out; there will be a basic payment cut of 20% this year. On top of that, in April, farmers’ energy bill support will be cut by up to 85%. Given those 2016 Government promises to farmers, will the Minister commit to stopping the phasing out of support payments until the new environmental land management schemes are fully rolled out, so that we can bring down food prices?

[Mark Spencer]

I thank the hon. Gentleman for his question. We are moving to a new phase—away from the common agricultural policy and towards environmental land management schemes. If we listened to him and his party, and agreed to motions that they have tabled in this place and the other place, we would cut off farmers’ access, up and down this country, to the environmental land management schemes, which also cover countryside stewardship. The fatal motion his party has tabled in the other place would crash the rural economy, and destroy the opportunity for farmers to move to a new system and improve our environmental impact.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

Food retailers report that food packaging is a key area in which costs have risen significantly. That contributes to higher prices in shops. What conversations have there been about supporting businesses in reducing packaging, or sourcing more affordable materials?

[Mark Spencer]

There have been many conversations, both across Government and with producers, manufacturers and retailers, on reducing the amount of plastic packaging that we release into the environment, and on making packaging more reusable and recyclable, and less costly to the consumer.

[Mr Speaker]

As it is his birthday on Saturday, and given the worries about the price of birthday cakes, we had better hear from Jim Shannon.

[Jim Shannon (Strangford) (DUP)]

I am still a young person at heart. I thank the Minister very much for his responses. He understands the issues well. He and the Government are doing their best. I hail from a constituency that grows the best potatoes: Comber potatoes. Everyone knows that they are the best in the UK, and indeed the world. My constituency ships ready-to-eat mash and other veg throughout the United Kingdom. The potential is there for us to be self-sustaining. Will the Minister outline how he intends to support the farming industry, so that it can make more British produce to sell in the internal market, which will lower the price of staple foods? That, in turn, will lower inflation for all.

[Mark Spencer]

I thank the hon. Gentleman for his question, and for his interest in this area. I hope he recognises that we are self-sufficient in lamb; we are very close to being self-sufficient in beef; and we are more than 100% self-sufficient in liquid milk. The UK has a very good supply chain and top-quality producers. The good news, which I hope he will join me in celebrating, is that the Windsor framework now allows Northern Irish farmers to plant Scottish seed potatoes without interference. That is good news for the United Kingdom, for Scottish seed producers, and for Northern Ireland’s potato growers.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I thank the Minister for answering the urgent question.