Food prices are set to be reduced under a radical new Government initiative which will provide relief to thousands of households in Bermuda.

The Royal Gazette understands that Government has worked out an agreement to reduce grocery prices after working closely with a number of stakeholders.

Full details of the groundbreaking plan will be unveiled in this morning’s Throne Speech, when Government sets out its agenda for the coming year.

Last night Government sources would not provide details of the arrangement, although one source said it was a “never-been-seen-before” idea developed as a result of a pledge made during contract talks this summer with the Bermuda Trade Union Congress. The policy also demonstrated Government’s commitment to “collaboration” and “shared sacrifice”, according to the source.

The proposal has been thrashed out after weeks of meetings between Ministers and retailers in a bid to drive down the cost of groceries and other essentials.

And electricity supplier Belco is also understood to have been involved in the negotiations, although there is no indication that those talks have borne fruit in terms of rate reductions.

In September, Home Affairs Minister Michael Fahy confirmed Government was holding discussions with a leading supermarket and Belco in an attempt to bring prices down.

“To encourage true shared sacrifice I can confirm that very recently the Deputy Premier Michael Dunkley and I met with one of the leading grocery chains to see how we can work together to reduce prices on standard food items,” Mr Fahy said.

“The leading grocers are meeting among themselves, and once they look at the potential options, they will revert to the Government,”

At that time, Mr Fahy said that, because of the sensitive nature of the talks, he could not reveal further details to the public.

But sources say the negotiations have resulted in an agreement that will be revealed today.

It is understood the plan does not involve price fixing or a reduction in duty on imported foodstuffs.

Last month, Government reiterated its focus on bringing down the cost of living — but ruled out price-fixing as one option.

Acknowledging that a committee was examining the cost of food, Finance Minister Bob Richards said: “This Government is a firm believer that free markets are the most efficient and cost-effective way of delivering goods and services. Government doesn’t fix prices. Government price-fixing doesn’t work.

“There’s an old saying in economics that you can fix the price of something and you can fix the supply of something, but you can’t fix both at the same time. If the Government wants to fix the price of a loaf of bread they can do so, but they can’t force someone to bring it in and sell it at that price.”

And while a reduction in import duties would dramatically reduce the cost of food items, it would also slash Government revenues. Currently Government imposes import taxes at a rate of 22.5 percent on all items made with sugar, ten percent on the price of bread and pasta and related products, and five percent on meat, fish, fruit and vegetables.

Although the contents of tomorrow’s Throne Speech have been kept under wraps, sources in and out of Government speculated yesterday that it would continue with initiatives to spur job creation through measures to encourage investment in the Island.