The Scottish government has been criticised for its “mind-boggling” plans to impose price caps on major retailers operating in the country, including Tesco, Sainsbury’s and Aldi. 

The Scottish National Party (SNP) has published a draft bill for the policy, which has been dismissed as an “unnecessary exercise” by leading retailers. 

SNP leader John Swinney’s initial announcement of the plans was swiftly followed by reports that then-Chancellor Rachel Reeves was considering voluntary price caps for grocers in England. 

Reeves quickly abandoned the policy – which Marks & Spencer boss Stuart Machin dubbed “completely preposterous” – but the Scottish government looks set to plough ahead with the regime. 

The draft bill has set out plans to introduce “statutory price ceilings” for up to 50 essential food items, including bread, milk and eggs. 

“Whilst food price inflation has eased from recent peaks, many households continue to face challenges affording essential food items, and it is possible we could face future high inflation,” the draft legislation claims.

The new laws would require large supermarkets to price a product in each capped category at or below the government-set level. 

If this product runs out, grocers would be required to replace it with another product in the same category at the capped price – regardless of its original price point. 

Grocers are not required to provide price-capped products in categories which they do not normally stock, meaning supermarkets could be incentivised to stop offering essential foods to avoid losing money. 

“There is recognition that the proposed approach may simply mean that retailers affected choose not to stock a specific item that is subject to a price cap,” the draft bill concedes. 

Price caps ‘will force shortages’

The Scottish Retail Consortium (SRC), which represents leading grocers, said the sample legislation “show[s] how fiendishly complex, costly, and onerous this unnecessary exercise will be if implemented”. 

The trade body criticised the SNP for failing to specify which products will be capped, what the prices will be, or to provide detail on how it will support producers in offering cheaper imports. 

“Ironically one element the paper does confirm is that we have a robust competitive grocery market – which Ministers don’t seem to recognise obviates the need for statutory price caps in the first place,” the SRC added.

Clive Black, an analyst at Shore Capital, told : “If the Scottish Government wants to send a message to the food and wider industries of ‘do not invest in Scotland’, then introducing minimum food prices is one of them.”

In the draft bill, the SNP said that it could hit grocers with unlimited fines for high-level convictions relating to the new laws, or penalties of up to £10,000 for lower-level breaches. 

The Scottish government’s own lawyers have told Swinney that the price-cap regime may be unlawful, as reported by the Scottish Sun.

Dr Chris Snowdon, head of lifestyle economics at the Institute of Economic Affairs, said: “John Swinney is a latter-day King Canute hopelessly trying to stop the rising tide of inflation. As surely as night follows day, price caps lead to shortages on the shelves and the sale of inferior products. 

“At some point in the near future, the SNP’s price caps will require supermarkets to sell products at a loss, which they will not do, and shoppers will soon find that they can’t buy them at all.”