The Scottish government has come under fire over what critics have called "mind-boggling" plans to impose price caps on major retailers operating in Scotland, including Tesco, Sainsbury's and Aldi.

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

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 that policy – which Marks & Spencer boss Stuart Machin dubbed "completely preposterous" – but the Scottish government appears set to press ahead with its own regime. The episode echoes a broader European debate: France struck a voluntary agreement with major retailers in 2023 to cut prices on a range of staple foods, while formal statutory caps on groceries remain rare among Western economies, with price controls more typically applied to regulated utilities such as energy and water.

The draft bill sets 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 states.

Under the proposed laws, large supermarkets would be required to price at least one product in each capped category at or below a government-set level. If that product sells out, grocers would have to replace it with another product in the same category at the capped price – regardless of its original price point.

However, grocers would not be obliged to provide price-capped products in categories they do not normally stock, meaning supermarkets could be incentivised to stop offering essential foods altogether 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 would be capped, at what prices, or how the government would 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 City AM: "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."

The draft bill states that grocers could face 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 warned Swinney that the price-cap regime may be unlawful, as reported by the Scottish Sun. The consultation process will be the next milestone for retailers, producers and shoppers to gauge which products could be capped and on what legal basis the regime would proceed.

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."