Tesco has issued a stark warning to the Labour Party government, urging it not to proceed with a proposed new supermarket rule. Ken Murphy, the chief executive of Tesco, has directly cautioned Chancellor Rachel Reeves against intervening in supermarket pricing.
Murphy insisted that major retailers including Tesco, Sainsbury's, Morrisons, Asda, Aldi, and Lidl do not require government intervention to keep food costs under control. He spoke out against a proposed supermarket price cap, which was speculated last month.
"We don't believe that any sort of regulation on pricing in grocery is either necessary or desirable, because we operate in a highly competitive market," Murphy said on Thursday. "This market, this industry is very good at self-regulating from a price perspective," he added.
Reports in May suggested supermarkets could agree to cap the price of everyday essentials such as bread, milk, and eggs in exchange for a reduction in regulatory requirements. Treasury secretary Dan Tomlinson confirmed talks with the sector had taken place "about the steps that they can take to support people with the cost of living."
Tomlinson said supermarkets would not be forced to cap prices, but even a voluntary scheme has been described by Marks & Spencer's chief executive Stuart Machin as "completely preposterous."
"It's right that the government looks across the board at what more we can do - both government levers but also talking to industry about the steps that they can take to support people with the cost of living," Tomlinson said.
Machin stated: "My advice is that the Government should reduce some of the tax and regulatory burden and free us up in a very competitive market." Former chairman of Ocado and Conservative peer Lord Stuart Rose told the Today programme: "I think the whole idea is the stuff of nonsense and it will never fly. This smacks of state control, it's idiotic, it's dangerous, and it'll never work." He argued there was "no better system than a free market economy."
The former boss of Sainsbury's, Justin King, told the BBC that the proposals were "pretty silly" and would create "all sorts of competition law issues."
