"Labour Always Looking For Populist Interventions!" | Supermarket Price Cap Proposals Slammed

Added: 2026-05-21

[00:00:00]But Julia Jessop joins us now as an independent economist. Um, Julia Jessop, wanted to talk to you about this uh supermarket price cap that's been proposed. I'm sure you I think you were you were listening to what Richard Power was saying. He said, "First of all, are there any successful economies in the country that Sorry, in the world that do actually have routinely, you know, price caps on on on goods that people buy in at the conversation was about supermarkets and like on on food stuffs?" Mhm. Well, there there are actually a few. Um, uh your previous guest didn't know about this, but Switzerland is an example that's often cited. Quite a lot of sort of basic food stuffs have their prices controlled there. But, that's not a great example because um food prices in Switzerland are relatively high and supermarkets are relatively profitable. So, that's I would argue an I an example where Doesn't really work. I certainly I've not spent much time in Switzerland, partly because it is so unbelievably expensive. I'm not sure that would be a good example for for most of us. That's very interesting. Okay. So, um and in terms of um in terms of taxes going on around We were talking about things like fuel duty because my argument would actually be look, well, the market is working very well in the supermarkets in terms of that uh they they they they they No one has said they do loss leaders like milk. I'd rather they paid the dairy farmers uh uh more made sure that farmers actually got their fair share.

[00:01:11]But, if those supermarkets are cutting costs um to compete with other supermarkets, we're all benefiting from that and they make a very low profit margin, 3 to 4%. Make a lot of money in big terms because they sell a lot of stuff to us that we want to buy. But, um is the answer to our cost of living problems messing around with what's what the price of >> [clears throat] >> uh you know a loaf of bread is in, you know, in in in Tesco or is it things like cutting fuel duty and VAT on fuel?

[00:01:36]Mhm. Well, I mean, starting with the supermarkets, you're absolutely right.

[00:01:39]It's one of the, you know, most competitive sectors in the in the economy. Um, and it's not as if supermarkets are are raising prices because they've suddenly become greedy.

[00:01:49]It's because their costs have massively increased. That is partly a consequence of the fallout from the Iran war, but But also because of lots of things that the government itself is doing uh on business rates, on the cost of employing people, on on energy prices and so on.

[00:02:02]So if the government is serious about getting food prices down, that's where it should focus on the on the cost side, not bashing supermarkets.

[00:02:10]More generally, I think the problem is the government is always looking for these sort of populist interventions that, you know, might lower one or two prices but end up, you know, increasing prices elsewhere in the economy.

[00:02:21]Instead, the government should step back and look at the supply side before elements of the economy. You know, make more of the resources that we have and you know, North Sea oil and gas is a perfect example of it. We should be making more of the resources we have there rather than importing it. As far as cutting fuel duty is concerned, I'm I'm a little bit less enthusiastic on that in this particular case because I think it's right that, you know, when the global prices are high, that should be reflected in the prices that people have to pay. But the bigger >> Because then because otherwise the market doesn't work. Yeah, yeah, but the bigger picture is that regardless of the crisis we're having at the moment, I think fuel duty is far too high.

[00:03:01]I mean, your previous guest mentioned the need to, you know, pay for things like roads and so on and some of the sort of negative externalities on the things like pollution and congestion that driving causes. But even if you factored all of those into the appropriate level of tax, it would still be an awful lot lower than the current levels of tax that motorists pay.

[00:03:19]>> fuel duty and VAT, I mean, the cost cost we get for you know, the taxes on motorists generally, whether they're lorry drivers or driving kids to the school, they they are they are funding a heck of a lot of the rest of the economy, aren't they? In terms of government spending.

[00:03:32]>> exactly. So if you take fuel duty, it's around I think 55 p a liter at the moment. I think an appropriate level for fuel duty is probably nearer 20 p to take account of the sort of the costs involved in >> would make a massive difference to people who rely on their cars in terms of their outgoings, in terms of the cost of, you know, the the that that we that is used to transport the goods that we buy. That would have an instant knock-on effect, wouldn't it?

[00:03:56]Um yes, it would. Obviously, it would also mean that the government is making a lot less revenue from fuel. And it's not as if people are going to suddenly start driving their cars 20 times as two times as much as they would otherwise have done. So, I think you would have to offset that elsewhere.

[00:04:10]Um but you could do that by cutting spending rather than just raising tax.

[00:04:13]>> Exactly. Well, it's interesting and again, something Richard about I was saying about, you know, taxes on the wealthy. That's why they don't like labor. I mean, do wealth taxes work? I mean, you know, people who are very wealthy in this country, you know, 45 p top rate of tax.

[00:04:25]I mean, Andy Burnham was talking about a 50 p top rate of tax. I mean, this has been we've had that before. We had it under the Tories, didn't we? I mean, you know, would that make a difference to the tax take?

[00:04:35]Well, not really. We've already actually got some of the highest taxes on wealth, broadly defined, of any of the the major economies. It's just that we don't have a specific tax on on on wealth itself.

[00:04:45]And interestingly, those countries that do have a specific tax have either, you know, dropped it over last decade or so cuz it actually ends up costing money, or they set it at a far lower level than some of the advocates of this policy in the UK are talking about. So, so again, it's not just economic theory here. It's sort of the real-world experience in other countries and in the UK. The sort of people The sort of people who make the sort of money that could be taxed at level are ridiculously, especially in the modern technological world, are ridiculously mobile. And when they say they'll leave, they really, really do.

[00:05:17]Oh, absolutely. There's mounting evidence of that that happening. Um a lot of people the moment they you know, set up a successful business, uh they move out of the UK and and actually out of the European Union as quickly as they possibly can. And then we And then we lose all of their tax revenue instead of that just that extra bit that we would have got. And again, you know, I'd love to be one of those people. I'd be very happy to be one of those people. But I I I've got quite a lot of sympathy for quite a lot of them on that front. Uh lots more to talk about. Judy Jessop, thank you so much for joining us. A short but sweet