Groceries Code Adjudicator

Tuesday 25th February 2025 Westminster Hall

16:30

[David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)]

I beg to move,

That this House has considered the Groceries Code Adjudicator.

It is a pleasure to serve under your chairmanship, Mr Twigg.

There is a deep unfairness at the heart of our food system. That unfairness stems from the power imbalance between producers and retailers. At one end, the retailers we buy our food from are making huge profits. Last year, the big four supermarkets saw a 97% increase in their profits: Tesco made £2.3 billion, Asda made £1.1 billion and Sainsbury’s made £701 million. That is enough to convince anyone that there is enough money in the till to go around.

As we know, food prices have soared since 2022, yet Welsh farming incomes are actually falling. That is a sign of a food system that generates huge profits for the supermarkets and the big retailers, while the producers at the other end suffer what they must. Farmers and growers carry the risks of food production but do not receive a fair share of the rewards. The people who grow our food deserve to earn a decent living. That is why the Liberal Democrats will keep campaigning to level the metaphorical playing field for farmers.

[Rachel Gilmour (Tiverton and Minehead) (LD)]

The Groceries Code Adjudicator was established by my party, the Liberal Democrats, during that sad time in Government. It was an extremely important achievement designed to protect the interests of farmers and food producers. Some hon. Members will know of my background as a director of the National Farmers Union, and my constituency of Tiverton and Minehead is home to some 1,600 farmers. In recognising that farmers are the lifeblood of the rural economy, would my hon. Friend agree that the GCA’s resources and scope must be expended to ensure it can exercise its investigative powers and correct the imbalance between our farmers and the big supermarket chains?

[David Chadwick]

I thank my hon. Friend for highlighting the achievements of the Liberal Democrats in power, particularly the fact that we have a long record of standing up for rural communities. The physical hills that Welsh farmers have to climb are getting steeper. Energy and fertiliser costs are rising, subsidy schemes are changing and farm incomes are falling. To make matters worse, the Government’s family farm tax threatens to further strain their livelihoods. Those are just a few of the battles that farmers face. Their industry deserves a fair market, and it is for that reason that the Liberal Democrats introduced the Groceries Code Adjudicator during the coalition years.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman for bringing this debate forward. He is absolutely right to refer to the importance of the Groceries Code Adjudicator. In my constituency of Strangford, we are blessed to have many local suppliers and farmers, which have created jobs and opportunity. They supply to large shops and supermarkets, and are very much an integral part of the community. Does the hon. Gentleman agree that more needs to be done to ensure fair treatment, and to ensure that local suppliers can take advantage of fair payment and commission terms? We need fair play—and we need fair prices for the products we produce.

[David Chadwick]

Absolutely. We need greater transparency down the entire supply chain and fair conditions for everyone involved in the food system. The GCA was established in response to multiple scandals where large supermarkets used their market power to take advantage of local producers. It has helped to improve fairness in the food supply chain. Since its introduction in 2014, the Groceries Code Adjudicator has made significant progress, and the number of issues around the treatment of farmers by supermarkets and retailers has fallen. It is my belief, and that of many farmers and producers that I represent, that the Groceries Code Adjudicator needs to be strengthened and better resourced, and its remit expanded if we are to ensure fairness in our supply chain.

[Several hon. Members rose—]

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I am grateful to my hon. Friend for giving way because he has come to a very important part of the debate. First, we need proper resourcing of the GCA as it currently exists. Secondly, there is a structural problem with the accountability chain here. The GCA effectively governs the relationship between the middle link, the processors and distributors and the supermarkets. The Agriculture Act 2020 deals with primary producers in that middle link. What we need now, surely, as well as extra resources, is a process by which the whole thing can be rewired together.

[David Chadwick]

I thank my right hon. Friend for his intervention. I agree wholeheartedly. He will be aware that the levy that supermarkets pay to fund the Groceries Code Adjudicator has not been increased since 2018, despite the massive increases in food prices and supermarket profits since then.

[Caroline Voaden (South Devon) (LD)]

In November 2024, research by Riverford Organic Farmers, based in my constituency of South Devon, showed that 61% of farmers are concerned that they will not be operating within the next year but only 25% of them believe the claims that the big six grocers support British farmers. Would my hon. Friend agree that the big six need to do more to support our farming sector?

[David Chadwick]

I thank my hon. Friend for her intervention. She is absolutely right to highlight the power imbalance between the producers and the retailers. It is quite right that she also focuses on the important research that has been done on this topic by organisations like Riverford. The evidence they have provided has been crucial in helping us push forward the campaign for fairer prices for producers.

It is my belief, and that of many farmers and producers I represent, that the Groceries Code Adjudicator needs to be strengthened, better resourced, and its remit expanded if we are to ensure fairness in our supply chain.

[Ann Davies (Caerfyrddin) (PC)]

As the hon. Member for Brecon, Radnor and Cwm Tawe (David Chadwick) mentioned, Welsh Government figures show that income fell for Welsh farmers by 34% between April 2023 and March 2024 and the dairy income by 59%. Does he believe we should safeguard all future food production in Wales? Welsh farmers should be able to rely on a fair deal for the products and, as Elfyn Llwyd called for 10 years ago, the regulatory bodies should be made to support that.

[David Chadwick]

I thank the hon. Member for her intervention. She is absolutely right to draw attention to the plight of Welsh farmers. Their livelihoods are under threat. That is why it is so important that we ensure greater fairness in the supply chain for them, to ensure that they get a fair price for what they produce, and that the Government are fully aware of the impact the tax changes they wish to make will have on the rural communities we represent.

Rural communities are really suffering at the moment. We know that constituencies like my own are losing thousands of young people every year because there are fewer and fewer jobs to go around. The long-term consequences of that are terminal. That is why it is so important that we ensure that farming, the engine of the rural economy, continues to generate profit and jobs throughout the rural economy.

The GCA has improved the rights of farmers, but producers still report bullying behaviour by major suppliers. Just a few examples of the ongoing mistreatment of producers: a delay in payments—sometimes farmers and producers are not paid for up to and sometimes exceeding 45 days; no compensation for forecasting errors; de-listing; changes to orders placed and orders eventually accepted. It is a story of David versus Goliath.

With six major buyers and 14 retailers covered by the GCA, the supermarkets have often been accused of using their collective buying power to force thousands of farmers and producers to plough on with prices that have fallen below the cost of production. Supermarkets helped themselves to a 97% surge in profits in the last year alone. They passed on higher prices to customers during the inflationary crisis, yet they are not handing on a fair share of that to producers.

I am raising this issue after a local farmer told me how a supermarket went back on its pledge to buy animals he had spent years rearing, leaving him at a loss. That is not a small loss for a local farmer. The costs involved in raising livestock to maturity are immense, and the losses when supermarkets change their mind are damaging to local producers. A recent survey on behalf of Riverford found that 45% of farmers feared going out of business, with 75% of those asked saying that treatment by supermarket buyers was one of their top concerns. Research from Sustain has found that only 5% of farmers want to sell to supermarkets due to having little say over prices and not enough connection to shoppers.

The consequences of unfair practices extend far beyond individual farms. The UK’s food security is at risk when farmers are unable to make a living from their work. As more farmers are forced out of business, we become increasingly reliant on imported food, which can be subject to price fluctuations and supply chain disruptions. This brings me to the role of the Groceries Code Adjudicator. While the GCA and the groceries supply code of practice—I will refer to this as the code—are highly regarded among farmers and the rest of the industry, I often hear from local producers in my constituency that they feel that the GCA does not have all the powers it needs to fully level the playing field between farmers, producers and retailers.

Beyond powers, there remains work to be done on increasing awareness of the GCA among farmers. Although awareness of the GCA and its roles has increased since 2014, it has stalled recently, and a significant number of producers still do not fully understand its role. More worryingly, many farmers still feel reprisals for reporting breaches of the code. A staggering 67% of farmers have reported fearing being de-listed should they speak out about unfair practice by supermarkets. That means that there is almost certainly an under-reporting of incidents to the GCA, which undermines its effectiveness.

More needs to be done to improve confidence in the system for producers and to enable the GCA to instil understanding and trust in its role. That also extends to the requirement for the GCA to have received a complaint to launch a report. People I speak to in the industry would like the GCA to have the ability to launch its own investigations without having to wait for a farmer to report malpractice first. An example of using that power in practice could be launching an investigation into the recent issues with Amazon or concerns over the chicken meat supply chain.

The parameters of the GCA and the code are insufficient in an ever-changing food market. The inclusion of Amazon into the 14 suppliers covered by the GCA was a welcome move, but given Amazon’s low level of compliance with the code, it raises serious questions about whether other significant retailers who make less than £1 billion in revenue from the food system are falling through the gap. Likewise, there are serious concerns that food processors, packagers and manufacturers who act as the middle people between farmers and retailers are also falling through the gaps when it comes to regulation, despite collectively supplying over half of Britain’s food.

The GCA’s seven golden rules have been widely welcomed by the sector. To protect suppliers, the rules should be fully incorporated into the code, rather than only being guidelines. This needs to happen quickly, because suppliers are continuing to experience difficulties in cost price increase negotiations as a result of the ongoing inflation crisis we find ourselves in the middle of. The supermarkets are willing to use energy and fertiliser price inflation as justification for increasing prices for customers, but are seemingly unwilling to pay farmers a fair price that recognises those changes and the increased input costs for farmers.

The Government must strengthen the Groceries Code Adjudicator and the groceries code to ensure that we have true fairness across supply chains. First, the Government can improve the visibility of the GCA and awareness of its work. The GCA must give farmers the confidence to report issues and to know that they will be handled confidentially, especially as many farmers feel that they may be punished or blacklisted for making complaints. Secondly, the GCA only has seven members of staff, including the adjudicator himself, yet is responsible for regulating an industry worth billions of pounds.

The GCA’s reliance on temporary and seconded staff hinders its ability to enforce the code. Giving the GCA a dedicated staff team would allow it to respond effectively at all times and to build and retain specialist knowledge. Likewise, the GCA should not have to wait for a producer to report malpractice. If it suspects that retailers are not complying with the code, let it launch its own independent investigations.

We should also move to expand the remit, as over half of the food being supplied by packagers, processors, distributors and manufacturers and in several other key areas of the food supply chain still falls outside of the regulation. The seven golden rules have been rightly welcomed across the industry, but many concerns remain that those are only guidelines set by the GCA, rather than forming part of the code itself. Legally incorporating them into the code would help to ensure that producers are fully covered when it comes to reports of unfair cost-price negotiations.

Overall, the Groceries Code Adjudicator is improving the relationship between farmers and large retailers, but as our food market evolves, so too must the GCA. By expanding its remit, providing additional resources and enhancing its enforcement powers, the Government can ensure that the GCA truly works for farmers and producers, and ensures fairness in the food supply chain. Let’s give our food system the fair market it needs, let’s give our rural communities the support they need, and let’s make sure that the GCA remains a strong and effective safeguard for the future of our food system. I look forward to other hon. Members’ contributions and the Minister’s response.

16:45

[Rebecca Long Bailey (Salford) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Twigg. I thank the hon. Member for Brecon, Radnor and Cwm Tawe (David Chadwick) for his fantastic speech. I draw the House’s attention to my role as the chair of the Bakers, Food and Allied Workers Union parliamentary group, which I thank for its helpful briefing.

As we have heard, the UK grocery sector is shaped to a large extent by the huge concentration of power in the hands of the major supermarket retailers, which are competing to achieve the lowest prices and the biggest profit margins on key goods, but there is a limit to suppliers’ ability to keep prices down through productivity, automation or cheaper input costs. The story that the hon. Member told was about the pressures faced by farmers, but there is also often a relentless downwards pressure on labour costs, which has led to attacks on the pay and conditions of workers employed across supply chains. This race to the bottom has resulted in a proliferation of low-paid and casualised jobs, and the growing exploitation of agency and migrant workers.

Surveys of food workers conducted by the Bakers, Food and Allied Workers Union show that in-work poverty has spiralled in recent years, with food workers worrying about feeding themselves and their families. At the same time, staggeringly, the supermarket chains have continued to report huge profits and dividend payouts to their shareholders. We have also seen rocket and feather pricing: because of wholesale cost rises, the price of key items is increased excessively, but when those wholesale costs come down, the price on the shelf does not come down in tandem.

The role of the Groceries Code Adjudicator is therefore an important one. The GCA has helped to tackle some of the most abusive practices, such as unreasonable short-notice terminations of contracts, abusive promotional practices and other failures of compliance with the code. But sadly, as it stands, the GCA cannot intervene to protect suppliers or consumers when it comes to supermarket pricing. This puts the short-term interests of shareholders above the wider public interest.

In this context, I have a few suggestions for the Minister to consider. First, the existing powers of the GCA should be incorporated within the remit of a new groceries regulatory authority, with a wider responsibility to protect the sustainability of UK suppliers and the interests of consumers. The new regulator should be given the power to introduce price floors and ceilings to protect suppliers and consumers from aggressive pricing tactics and exploitative price-gouging. Secondly, a sectoral collective bargaining framework for workers employed in the UK food supply chain should be restored and extended, to ensure decent pay and security. Finally, a statutory right to food should be introduced in UK legislation, to protect consumers and address the root causes of food insecurity.

I will finish by drawing Members’ attention to another matter of concern, which is the impact of private equity acquisitions on UK supermarket chains and food manufacturers. As FoodChain magazine recently put it,

“Under private equity ownership, the strategic focus often shifts towards short-term profitability, which can lead to decisions that are not always aligned with long-term market positioning. For example, cost-cutting measures may involve reducing staff, limiting store refurbishments, and cutting back on product variety.”

There are a couple of examples of major supermarket chains engaging in those practices recently, and many fear that it is just the tip of the iceberg. To that end, I would also be grateful if the Minister considered launching a joint investigation, across the Department for Environment, Food and Rural Affairs, the Department for Business and Trade and the Competition and Markets Authority, about the impact of private equity acquisitions of UK grocery retailers on the security and sustainability of the UK food supply chain.

16:50

[Andrew George (St Ives) (LD)]

It is a pleasure to serve under your chairmanship, Mr Twigg. I congratulate my hon. Friend the Member for Brecon, Radnor and Cwm Tawe (David Chadwick) on an excellent and eloquent speech, which covered all the issues. I also thank the hon. Member for Salford (Rebecca Long Bailey) for contributing very tellingly.

My background in this subject is that, from 2002, I chaired what was known as the Grocery Market Action Group, which had among its members the National Farmers Union, the Country Land and Business Association, ActionAid, Traidcraft, Friends of the Earth and others. It was amazing to have such a disparate group of organisations in the same room, actually working together and agreeing 100% about the injustices and dysfunctionality of the way in which the grocery supply chain was operating.

We presented a range of evidence to the Competition Commission. That ultimately provoked an investigation in 2008, which resulted in the commission proposing the establishment of a groceries code to drive fair trade through the supply chain. The Groceries Code Adjudicator was created to enforce the code and ensure that it was applied by those supermarkets. In those days, only five had a turnover in excess of £1 billion, which was the recommendation of the Competition Commission at that stage.

Having done that, and having worked for over a decade to get the legislation through, I obviously have some skin in the game, which I probably need to declare. I am not trying to claim the credit myself, because it was a cross-party effort.

[John McDonnell (Hayes and Harlington) (Ind)]

Why not? Go on!

[Andrew George]

Well, I suppose I should—no, I will not. One stands on the shoulders of giants, and Colin Breed did a tremendous amount of work from 1997 to 2001. He produced an excellent report called “Checking out the Supermarkets”, which laid a lot of the groundwork for the Grocery Market Action Group. Albert Owen, David Drew and other Labour Members were also very supportive and active throughout those years. There was not always cross-party agreement, or even agreement within my own party, that we should intervene in the market in the way that was proposed. We had to win that argument, and ultimately we did.

At the end of the day, the justification for why the Groceries Code Adjudicator, or any kind of market intervention of that nature, was needed, was that, fundamentally, we had a dysfunctional supply chain operating largely to the benefit of the supermarkets. Not all of our agricultural sector was benefiting from European subsidies or any other public subsidies in those days, but it had become dependent on subsidies because the market was so dysfunctional that public money was needed to prop up the whole system. If we have a functioning market, one can enable the agricultural sector to free itself from dependence on public subsidy. That was largely what was behind what we were trying to do in those days.

When the Groceries Code Adjudicator was established and the code was created, the intention then was only that it would create a framework in which future Governments would review its progress and then build on the framework by introducing or reducing regulations. Certainly the framework was to provide the skeleton on which further developments could happen; of course one cannot anticipate all circumstances.

I want to follow up on the points made by the hon. Member for Salford and my hon. Friend the Member for Brecon, Radnor and Cwm Tawe. There are a number of improvements that I hope the Government will look at very closely. For example, the code should be applied throughout the supply chain, not just to the direct supplier to the supermarket. It was never the intention of the Grocery Market Action Group that the adjudicator should look only at the final transaction between the ultimate supplier to the supermarket and the supermarket itself, because the impact of that contract could be fed right down through the supply chain.

The second point concerned third-country suppliers. The reason why Traidcraft, the Fairtrade Foundation and so on were involved is because they were rightly hoping that third countries could be involved. Then, as my hon. Friend the Member for Brecon, Radnor and Cwm Tawe said, the adjudicator could launch its own investigation on the basis of market intelligence. Finally, it could work alongside the Gangmasters and Labour Abuse Authority, for example, to use its intelligence to take matters forward. Fundamentally, we have a framework that can be developed and improved. It certainly should not depend on seconded staff. We do not get commitment to the cause if we depend entirely on seconded staff, as my hon. Friend the Member for Brecon, Radnor and Cwm Tawe said. I hope the Minister will look carefully at this. Thank you very much, Mr Twigg, for allowing me to speak.

[Derek Twigg (in the Chair)]

We have just two more Members left to speak, but I want to call the Front-Bench spokespeople no later than 5.08 pm.

16:57

[Dave Robertson (Lichfield) (Lab)]

What a pleasure it is to serve with you in the Chair, Mr Twigg. I thank the hon. Member for Brecon, Radnor and Cwm Tawe (David Chadwick) for securing this debate on such an important issue.

I spent the whole of last Monday during the recess visiting farms across my constituency, from the edge of Lichfield all the way up to Kingstone. Several of the dairy farmers I met last week raised with me, independently and without prompting, the need to see dairy processors covered by the groceries supply code of practice. Independently, they said that one of the things that we can do to encourage and improve profitability in dairy farming is to ensure that the code is applied to those processors—the middlemen who buy their milk from the farmers and sell it on to supermarkets.

The code is designed to ensure that farmers get a fair deal, but because it applies only to those retailers with an annual turnover of £1 billion or more, the 14 biggest supermarkets are covered but some third parties that supply the supermarkets are not in its scope. British farmers, whether they are dairy farmers or from any other part of the industry where there are different processes, must get that fair deal. That is what the code and the adjudicator were set up to establish, and we should ensure that we carry that forwards so that every single farmer gets a fair deal.

One thing that strikes me is that the NFU’s call to expand the coverage of the code by decreasing the turnover limit from £1 billion would mean that a lot of those processes would be covered. I am interested to hear the Minister’s remarks on that, because that is a non-fiscal intervention we can make that can drive profitability significantly in the farming sector and support the people who feed the nation.

16:59

[John McDonnell (Hayes and Harlington) (Ind)]

The hon. Member for St Ives (Andrew George) should not be so self-deprecating. The Groceries Code Adjudicator was brought about by an excellent piece of work and a good campaign. It was possibly the only thing of any worth that the Lib Dems did in government with the Conservatives.

I just want to make a couple of brief points because my hon. Friends the Members for Salford (Rebecca Long Bailey) and for Lichfield (Dave Robertson) and others have covered the ground very well. I am a member of the bakers union group, too, and in 2013 we welcomed the introduction of the Groceries Code Adjudicator. We met a few times to talk about the individual issues that occurred then. If hon. Members can remember, we raised the issue of low-cost production, particularly of bread, which was a result of supermarket pressure.

My hon. Friend the Member for Salford raised the issue of private equity. If we thought it was bad enough when there were individual supermarkets of sizeable status, we are now in a completely different world. Private equity is sweeping them up, exercising enormous power. I feel that the Government need to get ahead of the game. It is like the residential care sector before private equity took over and leveraged those individual companies. I can remember a number of them collapsing, and I think we are in exactly the same position here. That is why the call for an inquiry, bringing in all concerned partners, is invaluable. It is important to think through the implications and what regulation we can develop. The bakers union is calling for a new regulatory authority, because that would give more status and resources, as my hon. Friend pointed out. We need to understand the significance of what is happening in the field at the moment.

I want to make a second, brief point. The Minister here today is also responsible for the Employment Rights Bill that is going through Parliament. My hon. Friend the Member for Salford mentioned low pay. The bakers union survey found that 80% of its members were struggling to get by on basics such as rent, heat and food. There is a scandal on sick pay in this sector. The survey found that 37% of workers have to rely on statutory sick pay alone when they go off sick. Staggeringly, 13% received no sick pay at all. As a result, I believe some are forced into working when they are sick, which is the last thing anyone wants in this sector. It is important that the issue of sick pay is addressed in the Employment Rights Bill, which I think most people will welcome. I know amendments on that are being tabled as we speak and, in this sector, it could have a direct impact on the wellbeing of workers.

Finally, if we are to move forward, from the bakers union perspective the establishment of a regulatory authority is critical. How it is made democratically accountable is also important. Along with the engagement of farmers and supermarkets, it is key that workers are involved and represented through the unions involved in this sector, so that we can plan a long-term strategy for food production that is not based on low pay or exploitation of farmers.

[Derek Twigg (in the Chair)]

Order. Before I call the Front-Bench spokespeople, I should say that I will call the Minister no later than 20 past. I call the Lib Dem spokesperson, Tim Farron.

17:03

[Tim Farron (Westmorland and Lonsdale) (LD)]

It is an honour to serve under your guidance this afternoon, Mr Twigg. I pay tribute to my hon. Friend the Member for Brecon, Radnor and Cwm Tawe (David Chadwick) for bringing this important issue to this place and for making an excellent speech.

There have been great speeches from all the speakers so far, with a number of interesting and useful interventions. The five hon. Members who have spoken all made good points that I want to endorse. My hon. Friend the Member for Brecon, Radnor and Cwm Tawe spoke about imbalance in the market with large numbers of producers—1,500 farmers in my constituency alone and thousands across the country—and 12 retailers making up 95% of the sector. That is an incredible imbalance of power. Others have also referred to the greater depth to the industry in the supply chain than the Groceries Code Adjudicator is allowed to give credit for. My hon. Friend talked of the impact on farmers of potential delisting, the impact of late payments, having to pay for waste, and all the things that many have to struggle with.

The hon. Member for Salford (Rebecca Long Bailey) made a great speech, emphasising the power those retailers have in the market and its irrational nature, which leads to farmers and producers of all kinds going out of business just because the large, powerful entities who own our supermarkets can make that happen in order to maximise their own profits.

My hon. Friend the Member for St Ives (Andrew George) absolutely deserves credit. I first heard the phrase “supermarket ombudsman” from his lips before I entered this place. When he was doing the job I am now doing—being the Liberal Democrats DEFRA spokesperson —he fought hard for that ombudsman, and that is the reason why, in the coalition agreement, what became the Groceries Code Adjudicator came to pass. It was introduced by Liberal Democrat Ministers including my right hon. Friend the Member for Kingston and Surbiton (Ed Davey), Vince Cable and Jo Swinson, who were involved in the Department.

The hon. Member for Lichfield (Dave Robertson) rightly talked about processors. They are significant and are often untouched by the arm of the Groceries Code Adjudicator. The right hon. Member for Hayes and Harlington (John McDonnell) talked about the role of ownership in the sector and the unfairness that affects the workforce in the retail sector, as well as the producers who supply to it. There is an important point for us to remember here. Those who are at the wrong end of the abuse of power in the food supply chain are processors in broadly rural communities and workers in broadly urban communities; they have a lot more in common than we are sometimes allowed to think.

The Groceries Code Adjudicator is one of the things that came from the coalition of which the Liberal Democrats can be rightly proud. It was motivated in no small part by the simple reality that many producers—many farmers—were being paid less than the cost of production for their produce. Most notably in my constituency in Westmorland, but elsewhere in the country, that means those working in the dairy sector, but there are many others besides.

As with all things in the coalition, there were compromises. Even the good things we got were often watered down and were not what they might have been had we had what will one day obviously happen, that is, a majority Liberal Democrat Government. There are three particular areas of weakness with the Groceries Code Adjudicator, which we passionately believe should be addressed in the interests of our farmers, producers and consumers alike.

First, the reach of the adjudicator is too small, particularly its ability to investigate across the range of people involved in the sector. As has been mentioned, the adjudicator can investigate direct supply arrangements between farmers and retailers, but cannot get involved in the enormous majority of the food chain—that is, in the processing sector, and the middle people within the market. The Groceries Code Adjudicator should be given that ability. That is obvious.

The second point is about protecting farmers and other producers from the reprisals that they fear they will get if they refer something to the adjudicator. Members of Parliament, the National Farmers Union—local branches in Kendal and Appleby, and the NFU across the whole country—the Tenant Farmers Association and other advocates should be allowed to make referrals to the Groceries Code Adjudicator so that farmers do not feel that they have to do so themselves while fearing the reprisals, which they clearly do. We strongly support that idea.

Finally, there is the issue of resource, which has been mentioned by other people. The team is seven-strong, including the adjudicator themselves four days a week. That is not right. However wonderful those people are, they can be run rings around by the enormously powerful supermarkets.

The unfettered free market is indifferent to Britain’s food security, and we need to be not indifferent. We need to decide that it is of ultimate importance and that we therefore need to referee the market powerfully to protect our food security. Over the last 20 years, we have seen 30,000 farm holdings cease to be—a 22.7% reduction in the number of farms in the United Kingdom. That is undermining our ability to feed ourselves. Now, only 55% of Britain’s food is produced by farmers in the United Kingdom. If we are serious about food security, we are going to have to put that right.

The Liberal Democrats are challenging the Government over the family farm tax—we would scrap it—which is suppressing production and creating unfairness in the market. There is a 76% reduction in the basic payment this year, undermining small family farmers in particular, in Westmorland and beyond. DEFRA officials told the Environment, Food and Rural Affairs Committee the other week that they expect 92% to 93% of farms to survive the environmental land management transition—so, 7% to 8% will not survive that transition. The land use framework, which I welcome in principle, will in practice potentially take productive farm land out of usage. All of that leads us towards a situation where the UK is less food secure.

The overdue Groceries Code Adjudicator reforms are not just vital to ensuring British farmers are treated fairly, which they must be; they are about underpinning the vitality of food security in this country, which is essentially national security. A country that cannot feed itself is not safe.

17:10

[Dame Harriett Baldwin (West Worcestershire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Twigg. I congratulate the hon. Member for Brecon, Radnor and Cwm Tawe (David Chadwick) on securing the debate. It will perhaps come as news to him that I, too, was one of the people who voted for the Groceries Code Adjudicator. I was a Member during the coalition Government and it was put on the statute book back in 2013 because our farmers wanted an adjudicator to tackle the imbalance between small producers of food and big supermarket buyers. We will always back our farmers for fairness and equity for food producers.

The adjudicator regulates relationships between the UK’s largest grocery retailers and their direct suppliers, and it ensures that excessive risks and unexpected costs are not unfairly transferred. It brings fairer prices to the farming community and provides a guardrail for those smaller food producers who do not have a voice in the complicated food production market. It is funded by a pragmatic levy on designated retailers, with a UK annual turnover of more than £1 billion. There are currently 14 retailers covered by the code.

The results from the annual survey in 2024 show that the adjudicator is making a difference. More than 3,000 responses to that survey show that the number of suppliers experiencing a code issue has fallen to 33% and that the number of suppliers highlighting a retailer’s response to a cost price increase as an issue almost halved, falling from 28% in 2023 to just 16%. For the first time, the Co-op came top of the 14 retailers for overall code compliance, at 98%. The Co-op and Lidl both experienced a 2% improvement, which was the biggest percentage improvement across the 14 retailers.

The adjudicator is there to protect suppliers, such as our precious farmers. However, we are concerned that the Government’s recent actions have done anything but protect our farmers. Food retailers and suppliers of all sizes are under huge pressure because of Labour’s tax on jobs, its increasing red tape around jobs, food inflation and job losses in supermarkets. Labour’s family farm tax is yet another blow. It is a death tax on important family businesses. With no farmers in the UK, there would be no UK-grown food. Under Labour, the family farm will wither and die unless the Chancellor can be persuaded to change her mind.

Food producers are at the heart of our communities and the Government should be doing everything they can to support them, not harm them, and to ensure food security in this country. The attack on our farmers is shocking in every way. The Labour MPs who voted for an inheritance tax on family farms simply do not understand where their food comes from. Labour is harming our farms, not prioritising our rural areas. It simply does not understand.

The Conservatives believe that good policy needs to be created in collaboration with the farming industry, rather than in isolation. We have always kept the Groceries Code Adjudicator under review since its inception and we urge the Government to continue to do so.

[Derek Twigg (in the Chair)]

If the Minister can leave a bit of time at the end for David Chadwick to wind up, that would be great.

17:14

[The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)]

Certainly, Mr Twigg. It is a pleasure to see you in the Chair this afternoon. I thank the hon. Member for Brecon, Radnor and Cwm Tawe (David Chadwick) for securing this important debate.

Before I talk about hon. Members’ contributions, it is worth reminding the House of the role of the Groceries Code Adjudicator. Hon. Members obviously have a great deal of understanding of what it does, but it is important to put on the record its limits, which a number of Members referred to. In primary colours, its role is to enforce the groceries supply code of practice by providing advice and guidance to suppliers and large retailers on matters relating to the code; arbitrating in disputes between large retailers and their direct suppliers; investigating issues to ascertain whether there has been non-compliance with the code; and imposing sanctions and other remedies for breach of the code.

The code applies to the 14 largest grocery retailers in the UK, which have an annual turnover of £1 billion or more. Some Members spoke about changing that threshold—I would be interested to see what the effect would be—but it has been in place for some time. The competition measure is owned by the Competition and Markets Authority, and was put in place following a very detailed market investigation in 2008, which found that direct suppliers of groceries to large supermarkets faced unfair risks that adversely affected competition and, ultimately, consumers. As the hon. Member for St Ives (Andrew George) and others mentioned, it was in no small part due to a great deal of campaigning from a number of groups and hon. Members that the code saw the light of day.

The code regulates designated retailers’ dealings with their direct suppliers, which, as we have heard, do not include all the farmers and primary producers. Although it prevents the unilateral variation of supply agreements without notice, puts limits on seeking payments for wastage and requires retailers to pay for goods on time, it does not regulate the prices agreed between retailers and suppliers, which is a commercial negotiation between the two parties. However, it requires that such negotiations be conducted fairly and transparently, and the GCA has been keen to ensure that negotiations around cost price pressures do not lead to non-compliance with the code. In 2022, the GCA published the seven golden rules to remind retailers of best practice when agreeing prices with suppliers, and all the regulated retailers have signed up to them.

As we have heard, the GCA was established in June 2013, and since then there has been strong evidence to show that it has been effective in promoting compliance with the code and in changing retailers’ behaviour to improve fairness for direct suppliers. Improvements in retailer compliance with the code are evident from the annual survey. Average compliance with the code has increased from 75% in 2014, when the code was introduced, to 91% in 2024. It is also positive to see that among suppliers there is a high level of awareness of the GCA and the code itself, although I noted that the hon. Member for Brecon, Radnor and Cwm Tawe said that there is a question about awareness among some farmers, and I am happy to explore that further with him.

Moreover, all three statutory reviews of the effectiveness of the GCA concluded that it has been a highly effective regulator. The next review will commence after 31 March, and will look at the performance over the past three years, from 2022 to 2025. Given what we have heard today, I encourage hon. Members and their constituents to contribute to it. The hon. Gentleman raised concerns about the adjudicator’s remit and resources, and there will be an opportunity for him to feed those comments into the review.

The hon. Gentleman also mentioned what he described as bullying by supermarkets. A number of hon. Members talked about a fear of reprisals for raising concerns, and we obviously take that very seriously. It is important to note that the GCA has a statutory requirement to maintain supplier confidentiality. It has relaunched the Code Confident campaign and a confidential reporting platform called “Tell the GCA”, and published a code compliance officer commitment to confidentiality. The 2024 annual survey reported that 82% of suppliers were aware of its commitment to confidentiality. That is a good report, but obviously 18% were unaware of it, and clearly there is a perception out there that matters can find their way back to the supermarkets, which is something we can look further into.

The hon. Member for Brecon, Radnor and Cwm Tawe and a number of others questioned why the GCA cannot instigate its own investigations. I am told that it can carry out investigations of its own accord if it has reasonable grounds to suspect that a large retailer has broken the code or failed to follow a recommendation following a previous investigation by the adjudicator. It is for the adjudicator to determine how he uses his powers, and he has issued statutory guidance setting out his criteria for launching an investigation. The adjudicator’s four prioritisation principles ensure that he targets resources effectively and proportionately. Impact, strategic importance, risk and benefits, and resources are all part of those principles.

[Andrew George]

The Minister is certainly right, providing the investigation was on sound grounds. The worry was always that the investigation may identify a supplier simply by doing it, and that the anonymity intended when an intelligence-driven inquiry or investigation was generated may uncover that particular supplier. Therefore, a wider range of powers—not on the basis of being able to conduct fishing expeditions—to investigate on justifiable grounds is something that I hope the Minister will look at further.

[Justin Madders]

I hear what the hon. Member has said, and no doubt that is something that can be put in as part of the review. When I spoke to the adjudicator, he said that his approach is about ensuring compliance and helping to prevent problems from escalating in the first place, avoiding the need for formal investigations and dispute resolution. He has said that he is satisfied that his current powers provide the necessary tools to enforce the code and change retailer behaviour. He has also been clear—and has said publicly—that if he needs to instigate an investigation he is more than ready to do so.

That leads on to some of the points Members made about the resources of the adjudicator. My information is that there are actually nine staff rather than seven, but the overall point is that that does not seem to be a great deal, given the number of supermarkets and the purchasing power that we are talking about. But it is entirely within the adjudicator’s gift to ask for more resources through the levy. If he feels he needs more, he can also talk to the CMA about secondments—that is something that is entirely up to him. If there is a question that things are not happening because of resources, I am confident that the adjudicator would come forward and discuss that with us.

My hon. Friend the Member for Salford (Rebecca Long Bailey) rightly referenced her leadership of the Bakers, Food and Allied Workers Union parliamentary group, and I am proud to associate myself with that group, having represented it on many occasions in my former legal career. I know how much it has done in this area, and how this area affects its members. My hon. Friend was right to talk about how that sector is often characterised by a race to the bottom, with insecurity and low wages. That is what we hope to tackle through the Employment Rights Bill.

My hon. Friend the Member for Salford also made a number of interesting suggestions about how we move forward, which I will not be able to respond to in detail today, but I note that the Business and Trade Committee has recently begun an investigation into pricing practices. It focuses primarily on dynamic pricing, but the evidence session I attended covered a range of areas where prices were an issue. That report is something I will look forward to reading in due course.

My right hon. Friend the Member for Hayes and Harlington (John McDonnell) also referred to the use of private equity in the supermarket sector, as did my hon. Friend the Member for Salford. He was right to reference other sectors where that has become more of an issue. The CMA has recently looked at that issue in the veterinary sector, so it may be that it has the opportunity to conduct an inquiry, should it wish to do so. My right hon. Friend mentioned a survey in which 13% of respondents had no access to sick pay. We think that that is absolutely wrong, and that is why the Employment Rights Bill will ensure that statutory sick pay becomes a day one right for everyone, regardless of their earnings.

My hon. Friend the Member for Lichfield (Dave Robertson) talked about how dairy farmers in his constituency would like the GCA to apply to their work. He may be aware that the Fair Dealing Obligations (Milk) Regulations 2024 came into force in July last year, and will apply to all existing contracts from 9 July this year. I will pass his comments to the relevant Minister in the Department for Environment, Food and Rural Affairs to see whether those regulations will assist in dealing with his constituents’ issues. DEFRA is also looking at powers in the Agriculture Act 2020 to see whether expanded regulations could improve fairness in the pig sector, as well as looking at the egg and fresh produce sectors. There are therefore a number of tools at our disposal to tackle some of the issues that Members have raised.

The dairy regulations are enforced by the Agricultural Supply Chain Adjudicator, Richard Thompson, who was appointed last summer. We expect that in future he will deal with any fair dealing regulations in the other sectors that I have mentioned. It is important to note that ASCA and GCA are in regular contact to ensure that the two regimes operate effectively alongside one another. We will conduct a review to understand the effectiveness of the fair dealing regulations.

As I have already mentioned, there will also be the triennial review of the GCA. Hon. Members have spoken with great knowledge and passion about a number of issues that they would wish to put forward, particularly about the GCA’s remit and powers. I encourage them to do so, and we will see what the review takes forward. The points made about the importance of this country’s food security and fairness to consumers and producers are absolutely right. I congratulate the hon. Member for Brecon, Radnor and Cwm Tawe on securing the debate.

17:27

[David Chadwick]

I thank the Minister for his response and his particularly generous offer to listen to further contributions about how we can strengthen the GCA.

I thank all hon. Members for their contributions. The hon. Member for Lichfield (Dave Robertson) talked about the issues facing dairy farmers, which are also relevant in my constituency, and the hon. Member for Salford (Rebecca Long Bailey) and the right hon. Member for Hayes and Harlington (John McDonnell) talked about the impact on the Bakers, Food and Allied Workers Union and people employed in that industry. That is a reminder of just how far-reaching the food system is for us all. It is particularly important for farmers and primary producers, but the importance of properly regulating those relationships extends further than just those areas.

I thank my hon. Friends the Members for St Ives (Andrew George) and for Westmorland and Lonsdale (Tim Farron) for their contributions. I am sure that they will join me in commending Roger Williams, the former Liberal Democrat MP for Brecon and Radnorshire, for the part that he played in securing the Groceries Code Adjudicator.

There is clearly broad consensus that the introduction of the Groceries Code Adjudicator has been a positive step forward for British farmers. Fairness in the agricultural supply chain is essential and benefits us all, whether we are consumers, farmers or communities relying on local produce. It is still my firm belief that we must do more to strengthen the current regulations and improve the resources behind them. We cannot afford to sit back and allow the power imbalance between producers and retailers to persist. We need to ensure that bullying behaviour by large corporations becomes a thing of the past.

There is still so much work to be done, and I am committed to continuing, throughout this Parliament, to press the Government to introduce stronger measures to protect farmers and producers, who are the cornerstone of rural communities and the rural economy that they support. Let us continue to work together to create a fairer and more sustainable food system that uplifts everyone, from the fields to the supermarket shelves.

Question put and agreed to.

Resolved,

That this House has considered the Groceries Code Adjudicator.

17:29

Sitting adjourned.