Price controls on essential food items: consultation paper

Chapter 9: Future operation of any scheme and wider considerations

The Scottish Government believes that a food price cap scheme has the potential to improve the affordability of essential food items and help reduce some of the pressures facing households. These benefits may be more significant for low income households, who typically spend a greater proportion of their income on food and other essentials.

Throughout this consultation and the draft legislative provisions, we have demonstrated one potential model to deliver a food price cap, while recognising there are different models which could be followed. We have invited views on the key components of a potential food price cap scheme including the products in scope, the businesses to whom any requirements may apply, possible approaches to setting price caps and arrangements for monitoring and enforcement.

We recognise that further development of this policy and intervention will require, and be strengthened by, ongoing engagement with a range of stakeholders. Wider input will help ensure that consideration of the full range of social, economic, practical and regulatory issues is as robust and comprehensive as possible.

Draft Bill provisions have been included in this consultation, but it is proposed that many aspects of any future scheme would be specified in regulations, following further policy development, consultation and parliamentary scrutiny. It is therefore important that any future framework remains capable of responding to changing circumstances and is informed by evidence gathered through continued engagement with those affected.

This chapter seeks views on broader issues relevant to future decision making.

Future consultation and engagement

The draft legislative provisions (Part 1 section 9) would require Scottish Ministers to consult such persons as they consider appropriate before making regulations under key parts of the proposed framework. This reflects the Scottish Government's view that future decisions should continue to be informed by evidence and stakeholder engagement.

Future decisions that would be consulted upon could include:

• the food products subject to a price cap.
• modifications to businesses to whom requirements apply.
• the level of any price cap.

• other changes to the operation of the scheme.

It would be expected that updates to a scheme might be required, which could include adding or removing products subject to a price cap, changing which businesses are covered by the scheme as the retail market evolves, revising set prices, or responding to changes in consumer behaviour, food supply chains or wider economic conditions.

We welcome views on how any future consultation and engagement should be undertaken and which interests should be represented.

Responding to changing circumstances

Food prices and food supply chains can be affected by a wide range of factors including inflation, changes in consumer behaviour, global economic conditions, supply chain disruption, and geopolitical events.

Any future scheme would need to adapt to changing circumstances. The draft legislative provisions include powers which would allow aspects of any scheme to be updated through regulations where necessary.

It is also proposed that Scottish Ministers should have the ability to suspend and revive the operation of price caps by way of Regulations – either altogether, or for a specific food. See section 7 of the draft legislative provisions at Annex A. This is to ensure that fast action can be taken to stop or pause the effect of the legislation where circumstances require it. This would also ensure that price caps do not remain in place any longer than is necessary.

It is also recognised that there could be urgent circumstances where Regulations need to be made swiftly. For that reason, it is proposed that a separate procedure may be necessary for urgent Regulations which would usually be subject to the affirmative procedure but the timescales for that procedure cannot be followed. This would only be used where it is considered necessary due to urgency. See section 17 of the draft illustrative provisions.

We welcome views on how future flexibility should be balanced against certainty and predictability for consumers, businesses and other affected parties.

Wider considerations

The Scottish Government recognises that food affordability, particularly for low income households, is influenced by a wide range of factors and that any intervention may have effects beyond consumers, food businesses, producers and retailers.

We are therefore interested in evidence or views on wider considerations that should inform future policy development as the Scottish Government considers how best to improve food affordability and support households experiencing cost of living pressures. These may include household access to affordable food, food supply chain resilience, consumer behaviour, business impacts, market operation or other practical considerations not addressed elsewhere in this consultation.

Regulatory considerations

As recognised throughout this consultation, there are many different models and ways the Scottish Government can take forward the price cap proposal. Each design choice may give rise to different interactions with various regulatory regimes: these may include reference to the World Trade Organisation, the Competition and Markets authority or the application of the United Kingdom Internal Market Act (UKIMA) 2020.

Legislation that sets limits on the price at which goods are sold, such as a price cap, is a “manner of sale” requirement in terms of the United Kingdom Internal Market Act 2020. This means that the mutual recognition principle, which can nullify devolved policies, is unlikely to apply to legislative provisions setting price caps but the non-discrimination principle will be relevant. The final design of any scheme would take into account potential impacts on trade within the UK and information about trade impacts is sought as part of this consultation. The extent to which UKIMA may impact final proposals depends on the final design of any scheme.

The consultation questions contained in this document will support future choices about the scheme, which could in turn determine how the proposals interact with different regulatory regimes.

Impact assessments

The Scottish Government undertakes impact assessments as an essential part of policy development. These impact assessments help ensure that policies, legislation and interventions are developed with a clear understanding of their likely effects on individuals, businesses, communities and the wider economy. They help us to identify potential benefits, risks and unintended consequences and support us meeting our commitment to evidence-based decision making. The impact assessment process is deliberately iterative, and they develop and evolve alongside the policy, strategy or intervention whilst it is being developed.

Throughout this consultation, we have set out draft legislative provisions to illustrate one way in which legislation could support the delivery of a price cap on essential food items. Whilst there are a number of design choices and implementation options that could result in different versions of a future scheme, impact assessments have been initiated to support the development of the evidence base and to consider the potential impacts of the proposal. This ongoing work has informed the development of the consultation and will underpin further analysis as the policy evolves. Whilst it is not possible to fully assess all potential impacts with certainty a partial Business and Regulatory Impact Assessment (BRIA) has been published alongside this consultation.

The responses received from this consultation will provide important evidence to better understand the potential impacts of different approaches. This evidence will inform any updates to the partial BRIA and the other relevant assessments that may be required to support the design of a final scheme to effectively deliver its objective while minimising unintended impacts.

Consultation questions

43. Should Ministers have flexibility to amend elements of a food price cap scheme in response to changing circumstances? [Agree. Disagree. Unsure].

• Please explain your answer.

44. Please outline the detail of any other groups, communities or businesses that might be affected by a price cap scheme that is not considered elsewhere in this consultation.

45. Are there any wider social, economic, practical, regulatory or supply chain considerations that should inform future development of this policy?

46. Do you foresee any impacts on the ability of businesses to trade either within the UK market or internationally from any of the proposed measures?

47. Please provide any comment here about the partial Business and Regulatory Impact Assessment referred to above and published separately to this document.

48. Please provide any comments on this proposal not covered elsewhere in this consultation.