The government has announced a campaign encouraging businesses to cut their prices with no additional support to make up the lost income.  

Cost of living tsar, David Buttress, has proposed the advert campaign but a government source said there will be no extra subsidies for businesses to cut prices. Instead, taxpayer money will be going on a marketing campaign.

The campaign messaging will be around recognising businesses which are helping during the cost of living crisis, encouraging other firms to do the same. Businesses are being urged to join the campaign and cut their prices in exchange for adding the campaign name and logo to their branding. This could give businesses “kudos”, according to a government source. The campaign is intended to launch early next month.

In a speech to business leaders at the CBI on Monday night, Buttress said he “wanted their best ideas to help”. The tsar, who used to be CEO of Just Eat, suggested that businesses emulate schemes such as Gregg’s breakfast clubs, which give free breakfasts to certain school children.  

Unfortunately, all of this lays favour towards larger businesses who are better able to absorb the costs.

Andrew Goodacre, CEO of the British Independent Retailers Association (Bira), expressed concern about the campaign which he said would harm independent retailers further. He said: “Asking retailers to reduce prices is a flawed idea from an independent retailer perspective. Buttress believes that retailers can cut prices by reducing marketing spend – a policy clearly aimed at the large retail chains because small indie retailers do not have large marketing spends to start with. Such a policy is likely therefore to disadvantage the thousands of smaller retailers who struggle to compete on price in normal times.

>See also: Making the most of marketing on a shoestring budget

“This policy also assumes that retailers are adding on all the increases they are experiencing, which is simply not true. Supply chain inflation has been ahead of consumer inflation for some time, and as a result, independent retailers have been operating on reduced margins by suppressing the retail prices.

“We believe that government intervention is needed to reduce prices and stimulate demand, and the best way is to reduce VAT (as they did for hospitality during Covid). With inflation at 10 per cent, VAT income has been increasing or the government, giving them the opportunity to support businesses and stimulate consumer expenditure.”

Recent hospitality industry data reveals that only 37 per cent of businesses in the sector are still turning a profit. Leading industry bodies have also called on the government for extra support.

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Hospitality firms want help – only 37% are still profitable