Post-Brexit food labelling rules to appease DUP will lead to higher prices, says industry | Brexit

Forcing all UK supermarkets to put “not for EU” labels on meat, dairy and plant products in a move to assuage the concerns of unionists in Northern Ireland will force up prices and increase inflation, ministers have been told.

After months of uncertainty about the post-Brexit regulations, the government has said it will legislate so that the labelling requirement is universal from October as part of a “safeguarding the union” deal with the Democratic Unionist party (DUP).

The government is trying to convince the DUP, Northern Ireland’s biggest unionist party, to return to the Stormont power-sharing executive after a bitter two-year standoff over the trade border in the Irish Sea created by Brexit.

As part of the new deal, ministers have said they will go further than is required under the so-called Windsor framework agreement with the EU that is designed to ensure meat, diary and plant products do not enter the single market via Northern Ireland.

Rather than just products coming into Northern Ireland from Britain requiring “not for EU” labels, all agri-foods sold in the UK will need to be labelled “to ensure no incentive arises for businesses to avoid placing goods on the Northern Ireland market”.

Unionists have raised concerns that restricting the labelling requirements to goods transported into Northern Ireland from Great Britain would lead to a dwindling in the range of products going across the Irish Sea.

Waitrose is among the supermarket brands that do not have stores in Northern Ireland but which will be affected by the draft legislation. It has claimed that redesigning the packaging will “add unnecessary costs when we are doing everything we can to keep costs down”.

Karen Betts, the chief executive at the Food and Drink Federation, said it had been in “quite insubstantial” discussions with government for months about what was a “very complicated and expensive way” of ensuring the full array of British products are sold in Northern Ireland.

She claimed the requirement would cost the industry about £250m a year and that the legislation would inevitably lead to a rise in prices for consumers.

“We think the transition to the new label is going to cost about £150m and then somewhere between £200m and £250m costs a year. None of our companies operate on wide margins. So if you introduce a significant cost, in the end, at least a proportion of that will have to be passed on to the consumer.”

Betts said many companies would not be able to meet the timetable set out for labelling to be changed. The government is expected to open a consultation on the issue on Friday.

She said: “I think the real pity of it all is that companies are not going to put that money into innovation or investment into upskilling their employees or into pay.

“It’s kind of a sunk cost. It’s a labelling change to solve a problem that we don’t think exists. We would like proper monitoring in place to understand whether it exists before you get into the place of imposing such a burden and such costs on businesses. In the end, some of that will be passed on to consumers. That will be unavoidable.”

The post-Brexit deal struck by Boris Johnson with the EU in effect drew a border down the Irish Sea. The then prime minister later claimed that the EU was acting in bad faith when it demanded implementation of the appropriate checks on goods crossing from Britain to Northern Ireland. A solution was found under the Windsor framework, under which there is a green lane, renamed the UK “internal market lane”, for goods that are not destined to leave Northern Ireland. The latest deal is designed as a further sweetener.