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To ask Her Majesty’s Government how they expect Brexit will affect United Kingdom food prices over the next five years.
My Lords, food prices are dependent on a number of factors. Commodity prices, exchange rates and oil prices are key drivers of UK retail food price changes. We are negotiating a unique, ambitious economic partnership with the EU, as well as future trade deals with the rest of the world. Any agreements we enter into will need to be right for consumers and industry.
My Lords, I thank the Minister for his reply. He will be aware that food price inflation hit 4.1% today, which gives credence to predictions of the kind made by the British Retail Consortium that a no-deal Brexit would be followed by rises of up to 33%. I think that the whole House would agree that it is always the poorest households that are hardest hit, so will the Government prioritise food in trade negotiations and make sure that both affordability and quality come to the top of that deal, and that we are not faced just with cheap food such as chlorine-washed chicken, because both quality and affordability will impact on the national diet?
My Lords, although inflation has stayed unchanged at 3%, the noble Baroness is right that the annual rate of food price inflation is 4.1% as of today. That is on the basis that fuel prices rose by nearly 40% last year. The noble Baroness is right to raise trade deals. We are absolutely clear that trade deals will need to reflect our food safety, environmental protection and animal welfare standards. They need to be right for consumers and industry, too.
My Lords, is it right that the best estimate within my noble friend’s department is that, after Brexit, food prices for the consumer will rise as a result of changes in the exchange rate—and, furthermore, that the income of the farming industry will fall due to an overall reduction in subsidies?
My Lords, it is clear that food prices have throughout history had a lot to do with the exchange rate, so my noble friend is right that exchange rates are a component of food prices. We believe that there is a vibrant future for agriculture. Having been at Harper Adams last week to see its work in agritech science and heard Professor Blackmore talk about robotic arrangements for agriculture, I think that there is a very strong future for agriculture. All the students whom I met were very enthusiastic about the future of our agricultural sector.
My Lords, as the noble Baroness said, low-income households will be the hardest hit by rising food prices—they already are, because they spend more of their budget on food than other people. At the same time, their benefits are steadily losing their value. Will the Government show through their actions and not just their words that they care about what is happening to the poorest people in our society by ending the benefits freeze as a matter of urgency?
Clearly, the Government are very conscious of the need to ensure that there is a safety net for vulnerable parts of the community; it is why we have the triple lock for pensions and why we spend more than £50 billion a year on benefits to support disabled people. Indeed, with the getting of many more people into employment, the number of workless households with children has decreased enormously. In many ways the matters the noble Baroness raises are matters for the Chancellor—but, as I say, we are very strongly of the view that all we are doing is providing a safety net and encouraging employment.
My Lords, does my noble friend agree that the EU external tariff punishes producers in poor countries and consumers here in wealthier countries and that cancelling it on Brexit on products such as oranges, coffee and rice that we do not grow here would cut the cost of living for British people dramatically?
My Lords, as I say, we want a unique and very special relationship with our EU friends and the continent of Europe, but the United Kingdom has always sourced food from a variety of sources and there is a high degree of diversity of foodstuffs—so we are looking to work with our European partners and also to seek deals across the globe.
My Lords, I declare an interest as the owner of two hill farms: I understand the economics of hill farming. The Minister said that he was confident in British agriculture but, without subsidies, hill farming, which is already almost uneconomic, will become disastrous. Can the Minister say whether the subsidies, including the environmental subsidies through entry-level and high-level stewardships, will be confirmed to the end of this Parliament? Sorry—I had better say “by 2022”.
My Lords, the Secretary of State and the Minister have made very clear that the continuing support—I think that the word is “support” rather than “subsidies” for agriculture—will continue until the end of this Parliament in 2022. It is important that we look to new arrangements countenancing public benefits, which I believe agriculture and management of the land undoubtedly do. Obviously we are considering agri-environmental schemes, which I think will be of considerable benefit to agriculture, farmers and the environment.
My Lords, will the Minister accept that his words stating that the Government are aware of the impact of rising food prices on the poorest people in the country have a hollow ring? To be aware of the problem and pursue policies that worsen the situation is a very evil act. Many of these families are suffering enormously because of the Government’s policies. Will the Minister take back the message that nobody wants to see this deprivation continue and that all benefits should be increased to account for the increase in the cost of food?
My Lords, I hope that the noble Baroness will accept that the Government have done a number of things, including introducing a new mandatory national living wage which has meant a £600 a year increase in earnings for a full-time worker on the previous national minimum wage. According to the ONS, the lowest-paid workers are seeing their pay go up most—by more than 6% last year. We obviously need a safety net and we have a safety net. As I say, the amounts the Government are spending on disability, incapacity, the unemployed and mental health are very considerable indeed. In fact, as a share of GDP the UK’s public spending on disability and incapacity is higher than that of any G7 country except Germany.