kenlaidlaw

There has been an article in the Huffington post and various articles and shares recently about supermarkets coming out in support of independence and confirming that prices wouldn’t rise. Below is the article from the Huffington post with my comments in red. It is far from the positive story being presented. When you read news items, the headline almost always misleads and the story is always a lot more involved.

Article Below

Asda has become the second of the Big Four supermarket chains to signal its food prices could fall in an independent Scotland if politicians stepped in to cut taxes.
Writing in the Herald, Asda CEO Andy Clarke singled out Scotland’s retail levy, a tax on large retailers selling alcohol or tobacco, as an item of regulation adding to the cost of doing business.
“Politicians could help by abolishing the large retail levy. It would recognise the need to make Scotland a more competitive environment and reward rather than penalise those retailers that invest capital in bricks and mortar and support supply chains in Scotland,” he wrote.

In other words what he is saying is please drop our taxes, but taxes are needed now and in an independent Scotland, any shortfall would need to be made up by us, the tax payers in Scotland.

“To replace the amount taken off the bottom line by the levy, retailers would need to sell an additional £2 billion. That’s not happening in this economic climate. But the reality for Asda is that the impact of this cost is spread across our 18 million UK customers, rather than our 1.8 million Scottish shoppers.”

So the levy is split among the whole of the UK at present, so what this is saying is what is paid for by 63 million people will be paid for by 5 million people if it isn’t scrapped. You do the maths! This is a threat that if Scotland doesn’t remove its retail levy they will put prices up.

The Asda chief’s latest comments come after supermarket rival Morrisons suggested its food prices could fall in an independent Scotland, with a spokesman saying: “If an independent Scotland increased or decreased regulation or taxes we’d have to take a second look at our pricing. Clearly that could work for or against Scottish customers depending on the direction of travel.”

Doh, if taxes change supermarkets could change their prices, should not be news, good or bad. It is once again an implied threat that if taxes go up prices will go up.

The Scottish government has suggested that supermarket food prices would still stay competitive as plans to cut fuel duty and reduce corporation tax would balance out any increased cost from doing business in Scotland.

Lets hope they stick to that plan then otherwise we are being told by that statement that prices will go up.
Clarke warned that Asda could be forced to increase food prices if politicians fail to help reduce the cost of doing business.
So no reduction will mean an increase in prices?

“Our business in Scotland would have to reflect our cost to operate here. Already it costs more money to get groceries to people in Scotland, our taxes are higher and our margins are lower.”

So what he is saying with this statement is that food prices will go up unless action is taken (ie reduced taxes).

“I am not saying prices have to rise in an independent Scotland. I am saying that politicians of all sides need to work with business if they want to reduce the cost of doing business.”

No he isn’t saying prices will rise, just that if he doesn’t get the reduced costs he wants they will rise

The furore over supermarkets’ potential food pricing in an independent Scotland comes after a report in the Financial Times suggested that supermarket executives from the Big Four were planning to increase food prices if Scotland gained independence in next year’s referendum.

I would suggest it appears they are with this report.

Scottish independence campaigners reacted with fury to initial reports, with some threatening to boycott Asda and Morrisons in retaliation.
Sainsbury’s declined to comment. However, a Tesco spokesperson told the Huffington Post UK: “We’ve got a great business in Scotland and our job is to create the best offer for customers whatever the outcome of the referendum.”

Hence these sort of non-committal and confusingly ambiguous statements.

Tim Lang, professor of food policy at City University, told the Huffington Post UK: “Food prices are rising already. Scotland hasn’t got the most benign of climates to do business.”

Its ok he’s only an expert so I’ll assume we can ignore him.:)

Scottish Rural Affairs Secretary Richard Lochhead said: “The reality is that independence will provide the means to create a prosperous economy and better business environment, one that will deliver benefits for consumers and retailers alike – and supermarkets can look forward to a thriving future in Scotland under all constitutional circumstances.
“Supermarkets operate in competition with each other, and you can be sure if one supermarket chain has higher prices – for whatever reason – then their competitors will not be slow to take advantage of that.”

Supermarkets will indeed thrive, still sell stuff and still prosper at our expense, they will as all have stated remain competitive in an independent Scotland.

They have all stated this to ease your minds. What they have not said is prices will stay the same or reduce. That is more important than the rest of the noise they make. Staying competitive is not staying competitive with those South of the border, it is staying competitive with each other in Scotland, that could be at £10 for a box of tea bags, £20 or £3.  We do not know.

If they truly wanted to put our minds at ease they would have simply said
PRICES WILL NOT RISE – They Didn’t.