On Wednesday, the same day that Keir Starmer announced he was “focused on the cost of living”, the Food and Drink Federation published a forecast that food inflation would rise above 9% by the end of the year. This is three times the level the federation predicted previously. Worryingly, the forecast rests on the assumption that the Strait of Hormuz will open within the next few weeks and that energy production in the Middle East will return to normal within a year. Both prospects seem unlikely given the current state of the conflict.

This is not just about groceries. Higher food prices will be met with demands for higher wages, which will drive up prices further. But while Starmer claims he is focused on the cost of living, he, like most leaders, hasn’t focused on the core reasons for high food prices. That is, our inability to produce core goods such as food and energy.

Food production in Britain has slowly declined since its peak in the early Eighties, with domestic production equivalent to only 65% of all the food we consume. That’s part of a general decline in the sheer quantity that the country produces. Britain produced 13% fewer fruits and vegetables in 2023 than in 2011, yet the population grew by 8%. Our food supply chain is stretched, and producers have the country over a barrel in the event of disruption.

One might have hoped that after the outbreak of the war in Ukraine, when food prices rose by over 10%, the Government might have prepared for future emergencies. But, perhaps unsurprisingly, this never came to pass. England does not provide any incentives or subsidies to farmers to produce more food domestically. Repeated shocks have seen Britain go from having some of the cheapest food among the big European economies to some of the most expensive. Food and non-alcoholic drink prices have increased by 37% since the pandemic. Covid, alongside the wars in Ukraine and Iran, has hammered away at the comforting myth that Britain does not need to grow its own food, and that we can always rely on cheap imports from overseas.

Whitehall’s repeated inability to grasp the challenge of food insecurity is linked to Chancellor Rachel Reeves’s strange request to G7 countries to “avoid energy protectionism”. The vague term implies that other countries should prioritize Britain’s energy needs in their own domestic policies. This delusion is the biggest political barrier to tackling the cost of living. It encourages politicians to defer making big investments in domestic supply chains and instead waste money on short-term gimmicks such as shifting green levies onto general taxation. These make for catchy headlines, but do not fundamentally boost production.

The solutions for Labour are clear. Firstly, the Environmental Land Management subsidy system needs to be scrapped and replaced with a new framework that rewards farmers for producing food, rather than loading on fashionable environmental targets. Secondly, Britain needs to stop building over productive agricultural land with solar farms. There are plenty of places where you can generate energy, but not all land is suitable for food production. Thirdly, farming is hard work and financially unpredictable. There need to be tax credits to boost household incomes for farmers and encourage more people to become farmers or take over family farms.

The cost-of-living crisis is a crisis of production. Until the Prime Minister and Chancellor accept this, they are not focusing on the right thing.

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Andrew O’Brien is the former Director of Policy at the think tank Demos and currently Head of Secretariat of the Independent Commission on Neighbourhoods. He writes in a personal capacity.

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