Economy

Iceland boss pleads with No 10 for radical action on cost of living crisis | UK cost of living crisis

One of Britain’s major retailers has contacted No 10 directly with a plea to prepare an immediate and radical cost of living package, amid warnings that broad help for businesses and direct cash aid will be needed to ease runaway energy costs.

In an interview with the Observer, Richard Walker, the managing director of frozen food retailer Iceland, said he had contacted Downing Street out of concern that the “half-baked response” touted by the potential successors to Boris Johnson would fail to address the scale of people’s needs.

Walker warned that a plan mooted by Tory leadership frontrunner Liz Truss to cut business rates for small- and medium-sized companies would not meet the size of the challenge.

“This is absolutely urgent,” Walker said. “I’ll happily share our data and findings with [the business department] and with the Treasury. Let’s get a plan up and ready for whoever the next prime minister is, because it really is urgent. Where markets dislocate completely, like they have with the energy markets, it’s time for the government to step in, otherwise what are they for?

“My fear is that they’ll do a half-baked response. I read that Liz Truss is thinking of further rate relief for small businesses. That’s lovely, but it won’t even touch the sides. What they need to understand is [this affects] big business as well as small, because it’s exactly the same trouble we’re in – there’s just more jobs at stake.”

It comes amid a warning that, by April, the proportion of people spending more than a fifth of their net income on energy will increase from 32% to 45.9%. Researchers at York University say that 91% of pensioner couples and 90% of couples with three children will be spending more that 10% of their net income on fuel by then. The estimates take account of the £400 discount that is being paid to all electricity customers between October and April next year.

Truss has said she does not believe in “giving out handouts”, preferring to cut taxes to ease the burden on families. However, with mounting evidence that big interventions will be needed to help households through the winter, Kwasi Kwarteng, the business secretary who is expected to be Truss’s chancellor, has said “help is coming” to deal with the energy crisis.

Walker has access to No 10 as a member of its business council. He said Iceland stores, which operate in the discount end of the market, were a “barometer of Britain” and were already offering interest-free loans to customers.

Walker said his father, Malcolm, who founded Iceland in 1970, had told him he had never seen a time when households faced such great pressures on living costs. “Even Dad said he’s never known it like this,” he said. “He’s told me a lot about retailing in the 70s with the oil price shock, but that was just one element. If you look at it now, we’ve got commodity prices going up, inflation, labour shortages. We’ve got tariff issues, we’ve got energy bills. It’s everything at once.”

He called for an energy cap for all businesses, huge longer-term reforms to the energy market and direct help for vulnerable households. “The consumer price cap isn’t working. Those who really need it the most – some of our customers who have got £25 a week to spend on food – they will need direct financial support. That’s obvious.

“But the way for governments to support consumers is also to support business, because unless they do, it will lead to job losses and further inflation. We’ve got suppliers coming to us now saying, ‘this isn’t a negotiation. You have to accept this price increase, or else I’ll just have to close my business’.”

It comes amid suggestions that Nadhim Zahawi, the current chancellor, has been drawing up options for whoever is announced as the new Tory leader and prime minister this week. Many Tories expect a “big bazooka” to be aimed at the energy crisis, despite the reluctance of Truss to commit to specific measures so far.

With warnings over the extent of the crisis rising as autumn approaches, Zahawi said last week failing to intervene in the crisis could force many companies over the edge and lead to economic “scarring” with longer-term consequences. He also insisted that Truss would “deliver help” if elected, as expected.

Whether it is Truss or Rishi Sunak who win the Tory leadership, the next prime minister will come under immediate pressure from opposition parties to announce radical proposals, with Commons votes over blocking higher energy bills already planned. “The country is facing a social catastrophe the likes of which we’ve not seen in decades,” said Lib Dem leader Ed Davey. “The lack of action from the Conservative government in the face of this impending disaster is simply unconscionable.

“Liberal Democrats have drafted a bill to freeze energy bills, which could be brought in as soon as the new prime minister is in place. Liz Truss or Rishi Sunak must make it their first act to cancel this eye-watering energy price rise, to save millions of families from being plunged into poverty this winter.”

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