Grocers call for VAT cut to offset post-Brexit price rises

The plea was made by a number of food retailers yesterday during crunch talks with the Government’s top no-deal planner, Michael Gove, and business secretary Andrea Leadsom.

According to the Daily Mail, senior representatives from Waitrose, Marks & Spencer and Amazon were among the businesses who called for tax changes to be prepared.

VAT currently stands at 20%, following a hike from 17.5% back in 2010, but it is not charged on most food items.

However, the retailers argued that cutting the rate would allow them to mitigate any price increases that could arise if Britain were to crash out of the EU without a deal on October 31.

The showdown discussions came just days after the bosses of Waitrose, Aldi and Ocado warned that there would be shortages of certain foods – and potential price rises – if there were any delays at the UK’s borders following Brexit.

The likes of Tesco chief executive Dave Lewis and Sainsbury’s supremo Mike Coupe have already cautioned that the timing of an October 31 Brexit is “as bad as it gets”, with retailers at full capacity ahead of the crucial Christmas trading period.

They cautioned that retailers would have little ability to stockpile and suggested that it could lead to reduced availability in certain categories.

Shortage row

But Gove sparked a row after claiming there would be no food shortages following a potential no-deal Brexit during an interview with the BBC.

The British Retail Consortium lashed out at those suggestions, insisting they were “categorically untrue”.

The BRC’s director of food and sustainability Andrew Opie later told MPs on the Brexit select committee that Brexit “will affect fresh food in various ways – availability, shelf life and potentially cost”.

He added: “Our assessment is based on discussion with our members, who move fresh food every day, and the likely disruption. We modelled that with our members who have told us there will be disruption to fresh food.”

The Government’s own Yellowhammer document, containing details of its Brexit contingency plans, also cautioned that the supply of fresh food “will decrease” in the event of a no-deal Brexit.