Britain’s last Prime Minister, Liz Truss, sold herself as a liberty-loving free-marketeer. Yet her energy policy was decidedly statist. Instead of letting the market handle rising energy prices, she proposed a £170 billion bailout.
Truss’s replacement, Rishi Sunak, is generally seen as more pragmatic – though in July of 2022, he penned an op-ed for the Telegraph titled ‘I will be the heir to Margaret Thatcher’. Now, writers don’t often choose their own titles, but Sunak did say, “I am a Thatcherite, I am running as a Thatcherite and I will govern as a Thatcherite.”
Well, he can repeat the word “Thatcherite” as many times as he wants, but that won’t make his solution to Britain’s rampant food price inflation any less socialist.
According to the Telegraph, “Downing Street is drawing up plans for retailers to introduce price caps on basic food items such as bread and milk”. The newspaper describes this as “the biggest attempt to manage supermarket prices since controls established by Edward Heath in 1973”.
It’s the five-year-old’s approach to economic management. If prices are going up too fast, we’ll just cap them. And why stop at price caps – why not introduce price reductions? That would make basic food items cheaper!
“No 10 insists that any action by retailers would be voluntary”. But why would retailers voluntarily set prices below the market rate? There’s something funny going on. The Telegraph talks of a “deal with supermarkets”, which may mean the government ends up subsidising basic food items. They’ll be taking money out of our left pocket and putting it back in our right pocket – all while taking credit for “tackling inflation”.
Just how bad is food price inflation? According to the ONS, Britain is the second worst in the G7 after Germany, which just entered recession.
In fact, the inflation rate for food and non-alcoholic beverages in the year to April 2023 was 19.1%. So Brits are paying almost 20% more for food and drink than they were a year ago.
Unfortunately for Sunak, the British Retail Consortium has already poured cold water on his proposal, with a spokesman telling the BBC, “This will not make a jot of difference”. Prices aren’t rising because supermarkets suddenly got greedier. They’re rising because of higher energy and transport costs – which stem from other failed policies.
My advice to Sunak would be to govern a little more like Thatcher, and a little less like Heath. That is, after all, what he claimed he would do.