Labour’s Anti-Profiteering Push Risks Turning Shortages into Queues

British businesses will soon face a new test: “Will regulators deem my prices morally acceptable?” When the next war, flood or energy crunch disrupts supply, companies cannot simply price by costs, inventories or expected demand. They will have to second-guess whether regulators will call the result fair.

That is the menace of the chancellor’s anti-profiteering push. The Competition and Markets Authority will get rapid powers to investigate “unjustified price hikes” by companies “taking advantage of crises”. Regulators may scrutinise margins, publicly name offenders and impose interventions.

This is not 1970s crude price control, but legal intimidation that ignores the discipline of competition and consumers’ right to walk away.

Many US states have these anti-price-gouging laws. During emergencies, they effectively suspend market pricing for covered goods. Prices cannot surge despite higher demand for snow shovels after a snowstorm, hotel rooms after forest fires, or petrol prices after hurricanes.

The problem is that a market price is not a moral confession. It is, as the economist Alex Tabarrok puts it, “a signal wrapped in an incentive”. Suppress it and you blunt incentives to economise, substitute, import, restock or maintain emergency capacity for scarce goods. Politicians bask in “fairer” prices and their “anti-profiteering”. Consumers get prolonged queues, hoarding, empty forecourts and black markets.

British politicians, though, increasingly treat prices not as scarcity signals but social maladies. Labour wants to ban live-event ticket resale above face value, deeming profit inherently unfair. Yet if primary tickets are underpriced because artists, uncertain about demand, want to ensure full venues, scarcity does not disappear. It becomes queues, ballots, memberships, hospitality packages or something else.

Without profitable resale, many true fans willing to stump up miss out. Confusingly, the same politicians object when sellers use dynamic pricing to mitigate the role of resellers. Witness the prime minister’s outrage over Oasis and Fifa World Cup ticket prices.

Yet government price meddling is not confined to entertainment. The flirtation with voluntary caps on supermarket staples showed ministers’ itch to control essentials. The Ofgem energy price cap, born as a temporary Conservative fix for excessive bills, already sees a regulator setting maximum unit rates and standing charges quarterly. It dulls competition and politicises every rise.

Soft rent control was reintroduced by the Renters’ Rights Act. It opens rent increases to tribunal challenge and “open market rent” tests, while banning tenants from bidding above advertised rents. In a country short of homes, the state will now referee the price of the shortage it created, while encouraging more landlords to exit. In transport, administered rail fare freezes through to Andy Burnham’s £2 Manchester buses shift the cost of services to subsidy, lower quality or future investment.

Work doesn’t escape either. We now have a government-set minimum wage at two thirds of median hourly pay, alongside tribunals determining the inherent value of warehouse roles relative to supermarket store workers.

Healthcare shows British price-moralising at its most absurd. In some markets the state deems the approved moral price is zero. So paying blood, plasma or platelet donors is illegal. The result is shortages, with Britain importing plasma from America, where donors can be paid. As with carbon emissions, we enjoy the virtuous glow of our morality while outsourcing the dirty work.

When it comes to kidney donations, forbidding a market price in favour of altruism kills. Six people die weekly waiting for a kidney transplant, with the waiting list more than double the annual number of operations. Everyone around those treatments can be paid, except the kidney donor. The resulting shortage of kidneys means expensive dialysis, as patients suffer and die.

None of this means every market price is perfect. Fraud, externalities and genuine exploitation can justify pricing rules. But our government too regularly comes between willing buyers and sellers, deeming market prices immoral, rather than information about reality. Cap prices and scarcity isn’t repealed. It reappears, often somewhere uglier.