Business Groups Urge Swinney to Scrap ‘Ineffective’ Food Price Cap Plan

 

Business Groups Urge Swinney to Scrap ‘Ineffective’ Food Price Cap Plan

**Twenty-three industry organisations representing 300,000 workers across Scotland have written to the First Minister, warning that the SNP's flagship policy will increase costs and cause market disruption .**

The Scottish government's proposed statutory price cap on essential food and drink items is facing its most significant challenge yet. On August 30, 2026, a coalition of 23 business groups sent a joint letter to First Minister John Swinney, urging him to abandon the plan just before he sets out his Programme for Government .

The signatories, including the Scottish Retail Consortium (SRC), the Food and Drink Federation Scotland, the National Farmers Union of Scotland, and Dairy UK, have warned the policy is “unnecessary, ineffective, and likely to deliver significant adverse consequences” .

## The 'Ineffective Gimmick' Argument

The business groups argue that a statutory price cap would fail to tackle the real drivers of high food prices. They point to rising production, refrigeration, and distribution costs, as well as global supply chain shocks caused by the wars in Ukraine and Iran .

Ewan MacDonald-Russell, deputy head of the SRC, described the plan as an “appallingly terrible idea,” arguing, “Price caps don't tackle food price inflation. They are not a solution, they are a gimmick that sounds quite effective, but it just displaces cost elsewhere” .

The groups warned that the cap could actually **increase** household costs. They argue that by forcing stores to sell staple items at a loss, retailers will be compelled to recoup the cost elsewhere, either through higher prices on other products or by sourcing cheaper goods .

## The Hungarian Precedent

Critics have pointed to the example of Hungary, where a similar policy introduced in 2022 under Viktor Orbán led to unintended consequences . According to the SRC, the Hungarian price cap resulted in:

- Shortages of some foods on shelves

- Tensions and abuse between customers and shop staff

- An influx of “cheap imports” at the expense of domestically-produced food

- The policy was eventually found to be unlawful by Hungarian and European courts .

## Unintended Consequences for Small Shops

Independent retailers have expressed concern that the cap would place them at a severe disadvantage . The proposals are understood to apply only to large supermarkets, meaning that convenience stores and corner shops—which are not covered by the legislation—would be unable to compete with the artificially low prices .

Luke McGarty of the Scottish Grocers’ Federation warned that the policy “could encourage customers to travel further to out-of-town locations for staple goods typically purchased locally,” reducing the sustainability of local stores .

## The Industry Letter: A United Front

The joint letter was submitted to the First Minister last Thursday, 27 August, and has been signed by leaders across the food supply chain .

> *“We jointly believe the mooted statutory food price cap is unnecessary, ineffective, and likely to deliver significant adverse consequences. The effects will be to increase, rather than decrease, the cost of household goods.”*

> — Joint Letter from 23 Business Organisations 

## The Government's Defense

Despite the mounting pressure, First Minister John Swinney has stood by the flagship policy, which was a key SNP manifesto pledge . He has insisted the plans “remain as they were set out in the manifesto” .

Swinney has framed the policy as a public health intervention, arguing that the cost of living crisis is impacting the nation’s nutrition . Speaking to the Press Association, he stated, “I’m keen to make progress on an issue that is causing real hardship for members of the public” .

A Scottish Government spokesperson said that helping people with the cost of living was a “top priority,” and a consultation on the proposals will launch shortly .

## Frequently Asked Questions (FAQs)

### 1. Who signed the letter against the food price cap?

Twenty-three organisations signed the joint letter, including the Scottish Retail Consortium, the Food and Drink Federation Scotland, Dairy UK, Scottish Bakers, the National Farmers Union of Scotland, the Scottish Grocers' Federation, and the Association of Convenience Stores .

### 2. Why are business groups opposing the cap?

They argue it is “ineffective” and will not address the root causes of high food prices, such as global energy costs and supply chain shocks. They also warn it could lead to food shortages, increase prices on other goods, and harm small businesses .

### 3. Does the Scottish Government have the power to introduce a price cap?

The Scottish Government believes it can do so under public health provisions. However, the policy would likely require changes to the UK Internal Markets Act, or a deal with Westminster, to prevent trade barriers between Scotland and the rest of the UK .

### 4. What are the risks of the policy?

Industry leaders have warned of a range of risks, including food shortages, unintended price increases on other goods, a competitive disadvantage for small retailers, and tensions between customers and shop staff .

### 5. What is John Swinney's current stance?

John Swinney has insisted his plans for the price cap remain unchanged. He maintains that the policy is a necessary intervention to help families struggling with the cost of living .