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Sir John Hayes (South Holland and The Deepings) (Con)
I beg to move,
That this House has considered the powers of the Groceries Code Adjudicator.
It is a delight to be here and to speak on this subject, which is of great importance to my constituents, both consumers and producers. A free economy works best when those who buy and those who sell can do so in a multiplicity of places. Nowhere is that more important than in the field of food, for food is the most basic of all commodities; we all, after all, need to eat. That variety prevailed for most of time. Indeed, if one thinks of the earliest civilisations, the way we mark them is by their trading capacity, such as those in the Levant who traded food produced there in markets between 7,000 and 10,000 years ago.
Yet in my lifetime—in all our lifetimes—the provision of food in this country has changed. It was Napoleon who described Britain as a “nation of shopkeepers”. If only that were still true. In my boyhood, my mother could shop at a variety of places to obtain the food products and other household items that she needed. What has happened during my lifetime is that a monopoly supply, or near-monopoly supply, of food provision has emerged, in the form of the great behemoths, the huge supermarkets, the corporate interests that now dominate the provision of food.
That has broken the food chain. Let us be in no doubt about where we are as a nation in respect of the provision and consumption of foodstuffs. The food chain is broken, and Governments of all colours have been reluctant to face that reality. Indeed, there has been a defence of the fact that most people now are obliged—I emphasise that: obliged—to buy their food from a handful of places, with little or no choice as to whether they do so, because, as I said, everyone has to buy and consume food. The defence offered is that it has driven prices down; but I will contest, in this short debate, that that is not really so.
Bulk buying of food, which is now the norm—most people buy their food on a weekly basis; they fill their trolley with any number of goods—does three things. First, it disguises the relationship between cost and value. In the days when people bought as they needed, they had a pretty good idea of what things cost and whether they were providing value for money. When people fill a basket, those details are lost in bulk purchase. That allows supermarkets to produce what they call loss leaders, which are cheaper products that draw people in.
Rachel Gilmour (Tiverton and Minehead) (LD)
The Groceries Code Adjudicator is of course vital, but my party and I believe that its remit is too narrow. Does my right hon. Friend agree with me that it is time for a new groceries code regulatory authority, with powers to introduce price floors and ceilings, ensuring fair prices for suppliers and consumers?
Sir John Hayes
I am delighted to accept the hon. Lady’s advice on that. She is not, in parliamentary technical terms, my hon. Friend, but she is a friend none the less, and she is right in her assertion, which I shall move to after I entertain the House a little further with my preparation for making exactly that argument. The essence of my call today is that this Government need to take action to deal with the near-monopolistic supply of foodstuffs that our constituents are obliged—I use the word again—to endure. The best way of doing that is through a more regulated market, and she is right to say so; but let me set the scene a little more before I come to the point at which I will call for exactly what she has suggested.
As well as the loss leaders that I mentioned, which have the seductive effect on consumers of encouraging them to buy many other things, secondly, that kind of provision of food has led to a great deal of waste. From studies that have been done, we know that these days much of what people buy—as much as 20%, or perhaps a little more—is never consumed. That would have been unthinkable a couple of generations ago. People would not have believed it was possible to stock the pantry or fridge with all kinds of things that ended up on the scrapheap.
Sir John Hayes
I give way to the Select Committee Chairman, to whom I pay tribute on this subject for bravely making the case that I will make today, with less expertise than his.
Mr Carmichael
The right hon. Gentleman flatters to deceive, I fear. He is right about the way grocery supermarkets go about their business, but much of the problem is the way they choose to go about it. I recently heard from a livestock farmer who bought in potatoes to feed stock. He expected to find them green, bruised or damaged, but when they arrived they were perfect; they just were not conformed to the particular specification that the supermarket demanded. That demand does not come from consumers, but directly from supermarkets. If he looks around Europe and elsewhere, the right hon. Gentleman will find that supermarkets there behave very differently.
Sir John Hayes
The right hon. Gentleman is right. That is why, when he and I were in Government together, we introduced the Groceries Code Adjudicator. He will remember that I worked closely with his colleague Vince Cable, then Secretary of State, and was involved in that decision. He is also right to focus on the producers. I have spoken so far about consumers, but I want to go on to talk, thirdly, about the distortion in respect of producers.
I began my speech by speaking about how both producers and consumers need a multiplicity of places to buy and sell. In the model that I set out, the one that prevailed for aeons, people who made and grew food, primary and secondary producers, were able to sell to a variety of places. In our lifetimes—I might be overestimating the age of some hon. Members present, but certainly in many of our lifetimes—markets existed where farmers would take their produce to auction. Indeed, there was a livestock market in Spalding in the streets until the 1930s and a covered market until the 1990s, where livestock was brought to be traded and auctioned very openly.
Producers have also been affected by this distortion. As the food chain breaks, it is not only consumers who struggle, able to go to only one or two places to get not just what they want, but what they need, because, as I said, foodstuffs are fundamental.
Jim Shannon (Strangford) (DUP)
I thank the right hon. Gentleman for bringing forward this debate on an incredibly important topic. Those of us here will express that shortly. Does he welcome, as we all should, the commitment shown by these examples? Tesco, Asda and Lidl in my constituency have an arrangement on Fridays and Saturdays to give those goods that are coming to the end of their shelf life but are still consumable to local community groups, which in turn filter them out to those who need help, the families below the poverty level. We are sometimes hard on the superstores for what they do, but we should recognise that there are occasions when they play their part.
Sir John Hayes
The hon. Gentleman is right. His endless good will, known in this House for some time, encourages him to emphasise that supermarkets do deal with their waste products, but inevitably, as well as the waste products that over-consumption produces, supermarkets throw away many of the things on their shelves because of sell-by dates. It is hard to get a handle on, because quite a lot of it is disguised, but supermarkets themselves are actually contributing immense amounts of food waste.
It is true that some communities have found settlements for that, in the way that the hon. Gentleman described. Some supermarkets have at least paid lip service—I say at least, because it is occasionally more than that—to redistributing some of the waste food from their shelves into communities, but we should not be gulled by that. Burke said that tyrants seldom need a pretext; this is a kind of economic tyranny. To have a circumstance in which a near cartel of supermarkets can determine the price of products and then foist them on to a consumer base that has little other option is, in commercial terms, about as tyrannical as can be imagined.
You can tell from all that, Dr Allin-Khan, that I am not a great admirer of the large retailers, and not just for the reasons I have given. I doubt, for example, that supermarkets are particularly careful—by that, I mean they are careless—about the circumstances of their customers and employees. I am not confident that a supermarket chain has quite the sensitivity to a locality, to a community or to a group of people who become their customers and employees that a small family business has. Happily, I still have some of those small family businesses selling food in my constituency, and thank goodness for that, but their number has shrunk. The nation of shopkeepers is now a nation of very large shops, and those are corporate entities rather than the kind of shops that I imagine Napoleon had in mind. This huge problem has affected our high streets, where supermarkets have become more ubiquitous and the only grocers one can spot is a Tesco or a Sainsbury’s—or perhaps an Aldi or a Lidl—rather than the variety once seen up and down our constituencies.
It has also affected producers, as I will come on to in the second part of my speech, because my constituency is disproportionately responsible for the production of UK food. Lincolnshire grows 30% of the UK’s vegetables, 20% of the sugar beet, 18% of the poultry, 20% of the potatoes, and it processes 70% of the kingdom’s fish. In total, my county produces 12% of all the food that fills the shops and shelves, pantries and fridges of our country. Given that, one can understand the particular concerns that farmers and growers in my constituency have about the way those big retailers treat them.
The picture I painted, of an open economy where people can sell in a variety of places, has long gone. Most of my primary producers have very few options, and therefore often have a gun put to their head by their customers, the supermarkets. That might affect their terms of trade and the prices they are offered, which is why the relationship between farm-gate prices and retail prices is, again, distorted in this broken food chain. It often involves sharper practice still, where supermarkets cancel orders quickly; even when a farmer is tooled up ready to provide goods, they will find that in the next season they no longer have a contract to do so.
In the past, supermarkets have lumped all kinds of other costs on to the supplier, such as marketing and transport costs. That is unacceptable, and it is ultimately unsustainable, as those businesses make too little profit to reinvest and therefore become less competitive. We might say, “Well, surely the supermarkets need to obtain their goods to sell them,” but we know where they then go; they import goods from countries that produce those goods at standards we cannot imagine in this country, thereby putting even more pressure on domestic producers. Do we really want that, or do we want a country that cares about food security and becomes more economically resilient because more of what we consume is made here?
A Labour Prime Minister once spoke of British jobs for British workers. He was right. We indeed want British jobs for British workers and we want British goods for British consumers, too. We need to recognise that the provision of food as locally as possible provides economic security, cements and secures communities, and shortens supply lines and therefore, apart from anything else, has immense environmental benefits by cutting food miles. That is the kind of economy that we can have, because there is nothing inevitable or pre-ordained about fewer and fewer food suppliers dominating the food chain.
I have spoken about the impact on consumers of reduced choice and the impact on producers of not being able to trade their goods fairly and freely. Now, I shall talk about the changes we could make. In addition to the decline in income that all types of farm have suffered in the last several years—figures from the Department for Environment, Food and Rural Affairs suggest a sharp decline between 2023 and 2024—there is an issue with the GCA itself.
I am proud to have played a part in setting up the Groceries Code Adjudicator in 2013, but since then the GCA has conducted only two major investigations—into Tesco in 2015 and the Co-op in 2018. The GCA’s power to fine retailers came into force in 2015 and applies only to breaches that occurred after that date, so it did not apply to the first of those investigations. Then, in 2018, the adjudicator said that it did not consider
“the nature and seriousness of the breaches by Co-op to merit a financial penalty.”
So although the GCA has had the power to investigate and punish retailers who breach the groceries code, for that is what the GCA oversees, it has not done so. Why is that? Where is this reluctance rooted? What has been the reason for it?
The reason is partly that those detrimentally affected by the broken food chain are reluctant to report their problems to the adjudicator. They fear they will be identified and later punished—after all, these economic tyrants have little mercy. Those affected can go nowhere else to sell their produce, so what would they do then? They literally have nowhere to go. It is also partly that the adjudicator’s powers are insufficient, and that is the reason for and purpose of this debate.
I am pleased by the reports that the adjudicator is now taking a look at Amazon. As a matter of record, I have never bought anything on Amazon and never will; let me establish that before we go any further. I like to buy my goods in small shops, face to face, and meet real people. I do not want to live in the virtual world—why would we? I want to live in the real world. That investigation is good news, but I fear that, rather like the two previous investigations, it may come to nothing, merely raising false hopes of action that will not in the end be taken.
By the way, I hold in high regard the Chairman of the Select Committee, the right hon. Member for Orkney and Shetland (Mr Carmichael), with whom I worked in government. Not all Liberals are as bad as they are painted—at least, not as bad as they are painted by me, that is for sure. I know, too, that the Under-Secretary of State for Business and Trade, the hon. Member for Ellesmere Port and Bromborough (Justin Madders), is a good and responsible Minister, who will be listening to this debate with care. I implore him and the shadow Minister, my hon. Friend the Member for Keighley and Ilkley (Robbie Moore)—because the previous Government’s record on this is not great either—to step up to the mark, because the present position is unsustainable and cannot continue, for we cannot perpetuate a situation where a handful of corporate giants wield disproportionate power over the provision of food, and by so doing, dictate the food security of this country. If they continue to import food at the rate they are without care, how can we be food secure?
Let me deal with the particular measures we would like to see. We need to extend the role of the adjudicator to include more retailers and food service providers, including food manufacturing businesses, because at the moment the scope is narrow. We need to find a better way of guaranteeing the anonymity of those who bring their complaints to the adjudicator. Efforts have been made in that respect, and even at the time we set up the system we were mindful of that issue and tried to create some degree of protection for people going to the adjudicator with complaints, but I am not sure that has bedded in as well as it might have done. I know from speaking to farmers and growers in my constituency, whom I meet weekly, that that remains a fear. That is a barrier to the effective application of the adjudicator’s powers.
We also need to expand the adjudicator’s remit to include the ornamental sector, which is important in my constituency. Lincolnshire, particularly South Holland and The Deepings, has a thriving ornamental sector, employing a large number of people in many smaller, often family-run, businesses. They are currently outside the adjudicator’s scope and should be included.
We need the adjudicator to have a role in initiating inquiries and studies, rather than simply waiting for complaints. It would be perfectly reasonable for the adjudicator, on the basis of his or her expertise to initiate inquiries into particular aspects of food provision and retailer behaviour. We want a more proactive role. When the role of Groceries Code Adjudicator was established, it was dubbed the “food ombudsman”. That was never the official title, but perhaps it ought to be. Rather than simply having a narrow remit to enforce the groceries supply code of practice, perhaps the adjudicator could have a slightly broader remit to look at the whole issue of the provision of food and its relationship with food security.
When people such as the right hon. Member for Orkney and Shetland and I began speaking about food security donkey’s years ago, it was regarded as a rather arcane subject and we were seen as mildly eccentric for worrying about such things. Now, food security is a salient issue and at the top of many nations’ political agenda. More than that, it has become critical to national wellbeing. What a good time this is to think more laterally about the role of the food ombudsman and how it might reinforce the Government’s commitment to food security. It would be a way of delivering the objectives that the Government have set out. They said that they are keen to reinforce food security, so why not use the GCA as the means of doing so?
Doing that would allow the adjudicator to develop a strategy and to roll out a set of co-ordinated actions against unfair practices. I would include prices in that because, while all of the techniques I have briefly outlined are used to distort the relationship between buyers and sellers, prices are an issue. How can we ensure that farm-gate and retail prices are brought into closer union?
Just before Christmas last year, we had the obscene spectacle of one or two retailers bagging a series of vegetables in a plastic bag and saying, “These can be bought for 12p.” I had farmers and growers in my constituency telling me, “We have toiled hard to produce high-quality produce, only to see it being sold at a price far below the cost of production. Is it any wonder that the consumer does not appreciate the hard work that goes into making food and the quality of food grown in this country?” There has to be some means of reuniting value and cost by looking closely at the price farmers are paid and the price consumers subsequently pay. That is not to encourage food inflation, but simply to ensure that everyone gets a fair share of a bigger cake, rather than see their share be eaten up in the profits of these corporate behemoths.
By and large, I favour a capitalist economy, although I am not an unbridled admirer of capitalism. How could I be? I am a Conservative, after all. But on balance, I think it is perhaps the best of a series of faulty options. As I said at the outset, capitalism works when people can buy and sell in a multiplicity of places—circumstances that do not prevail in the UK food sector. By empowering the Groceries Code Adjudicator, which henceforth will be known as the food ombudsman, I think, we may be able to rebalance the provision of food and join again the food chain, which is so badly broken.
Dr Rosena Allin-Khan (in the Chair)
I remind Members that they should bob if they wish to be called in the debate.
Rebecca Long Bailey (Salford) (Lab)
It is a pleasure to serve under your chairmanship, Dr Allin-Khan. I thank the right hon. Member for South Holland and The Deepings (Sir John Hayes) for securing today’s debate and for his impassioned and articulate speech, which I very much associate myself with. I am quite staggered at how regularly our minds meet on the crisis of capitalism, although we do have different answers to it from time to time. I place on record my role as the chair of the Bakers, Food and Allied Workers Union parliamentary group, and thank them for their extensive work on this issue over the years.
As we have heard from the right hon. Gentleman, the groceries supply code of practice and the adjudicator, despite being well intentioned, miss the mark by quite a large margin in terms of protecting those whom they were designed to protect. The code applies only to designated grocery retailers whose annual turnover is more than £1 billion. It does not apply to indirect suppliers, cover pricing or consider the protection of workers throughout the grocery supply chain; and even with its limited powers, it has not issued a single fine.
Sustain, the alliance for better food and farming, agrees with the right hon. Gentleman that as a result of those deficiencies, the UK’s food system is on a precarious footing. It says that most suppliers producing and processing the food that ends up on our supermarket shelves are vulnerable to unfair purchasing practices, which can send competent businesses into bankruptcy, undermine competition and lead to a worse deal for consumers. As the bakers union says, there is a limit to suppliers’ ability to keep prices down through productivity increases from automation or sourcing cheaper inputs—a key factor in the horsemeat scandal. As a result, there is relentless downward pressure on labour costs, leading to attacks on the pay and conditions of workers employed in and across supply chains.
In the four weeks to 18 May, grocery price inflation has jumped to 4.1%—its highest level since February last year. Of course, the reasons for that are complex, ranging from wholesale costs, to energy and ecological issues, all the way through to problems with the supply chain, but that does not mean that the Groceries Code Adjudicator can continue to ignore the important issue of excessive pricing. Sometimes there is a reasonable cause, beyond the control of the supermarket or supplier, but sadly, sometimes it is a result of aggressive cost cutting, asset stripping, and unsustainable leveraging strategies.
There are long-running accusations that some of the big retailers and manufacturers have been using reduced competition and market leverage to set prices and, in turn, make excessive profits. For example, in 2023 wholesale food prices started to fall, with the World Bank saying they were expected to drop by 8% by the end of the year; but those falls were not reflected on supermarket shelves for some considerable time, which led to accusations of “greedflation”. Even the Tesco chairman suggested that suppliers might be at fault, telling the BBC at the time that it was “entirely possible” they were using high inflation as an excuse to raise prices unnecessarily. Of course, the major retailers and suppliers refute that, and the Competition and Markets Authority said there was nothing to find—nothing to hang their hats on—but large profits and record executive pay and shareholder payouts were juxtaposed against a backdrop of high food inflation and food insecurity.
Most people were perplexed, and rightly so. The Competition and Markets Authority might not have found widespread market abuse per se, but there remained a fundamental issue of fairness. Is it right to report bumper executive pay and shareholder dividends at times when consumers and the wider supply chain are struggling?
Last November, interestingly, the Competition and Markets Authority’s second report on pricing suggested that manufacturers had been raising the cost of first infant formula milk higher than was necessary to cover inflationary costs. It was not the Groceries Code Adjudicator that instigated action. Some supermarkets themselves responded by slashing the cost of formula, but the fact is that the Groceries Code Adjudicator should have had the powers to intervene earlier and to regularly monitor price fluctuations to identify emerging issues. It should not have taken a one-off CMA investigation to uncover that unscrupulous price hike.
If the Groceries Code Adjudicator cannot investigate and robustly intervene to protect suppliers, producers or consumers when it is clear that the pricing structure of a supermarket or a major supplier pricing structure is putting the short-term interests of shareholders above the wider public interest, and if it cannot respond to emerging issues, outline measures to help families facing hunger and protect the sustainability of the UK grocery supply chain, what is the point of the Groceries Code Adjudicator?
There are a few recommendations that I have made to the Minister on which I would like an update. I hope he will take these points on board. First, a new groceries regulator authority with beefed-up powers should be established with a wider responsibility to protect the sustainability of UK suppliers and the interests of consumers. It must apply to the whole sector, not just to those with a turnover of more than £1 billion. 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. There must be an investigation across DEFRA, the Department for Business and Trade and the Competition and Markets Authority into the impact of private equity acquisitions of UK groceries retailers and manufacturers on the security and sustainability of the UK food supply chain. We must restore and extend sectoral collective bargaining for workers employed in the UK food supply chain. Finally, we must introduce a statutory right to food in UK legislation and address the root causes of insecurity.
As the right hon. Member for South Holland and The Deepings rightly set out, consumers should not be forced to buy their goods from major retailers if they are the only retailers in town. We have to provide an economic framework that supports suppliers and producers and ensures that people enjoy a diversity of shopping experiences and diversity in pricing so that we have a sustainable UK food sector.
Several hon. Members rose—
Dr Rosena Allin-Khan (in the Chair)
Order. I will now impose an informal four-minute limit. If we run short of time, I will have to impose it formally or reduce it.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
It is a pleasure to see you in the Chair, Dr Allin-Khan. I congratulate the right hon. Member for South Holland and The Deepings (Sir John Hayes) on securing time for this debate from the Backbench Business Committee. I find myself in the curious position of being in violent agreement not only with him, but with the hon. Member for Salford (Rebecca Long Bailey). That is a moment worth reflecting on.
In advance of this debate, we have received some very useful briefings from the National Farmers Union and the Bakers, Food and Allied Workers’ Union about food insecurity and workers’ rights; the hon. Lady has just touched on those issues. Curiously, the one organisation from which we have not heard a peep is the Groceries Code Adjudicator itself. That is quite significant, because this is not the first time that the House has debated the work of the adjudicator: my hon. Friend the Member for Brecon, Radnor and Cwm Tawe (David Chadwick) secured a debate on it in February, I myself presented a ten-minute rule Bill on it in March, and now we have this debate today. If the adjudicator had a good story to tell, we would expect to have heard something from it by now, given the criticism that has been levelled at it. But not a peep: it has maintained an omertà that would put the Mafia to shame.
I do feel slightly conflicted. The adjudicator has a tiny office and, I think, a staff of seven or eight. Given its inability to process complaints at the moment, I do not know that I want it to spend that much time talking to MPs and policymakers. But if it has a story to tell, it needs to come out and tell it. Otherwise, we will be entitled to assume that there is not much that it can say.
The right hon. Member for South Holland and The Deepings spoke about the need for reform and the way in which that reform might take shape. I disagree with very little of what he said. What we need, as the hon. Member for Salford says, is a single regulator from the farm gate to the supermarket shelves. At the moment, too many unfairnesses are hardwired into the system, there are too many players in the market and it is just too easy for outcomes to fall between the gaps. Those who suffer are always the consumers, who are left with higher food prices, or the primary producers. At the moment, it is principally the primary producers who are losing out. The supermarkets are entering into a price war as they try to push down food price inflation. As a primary food producer myself, I declare a registered interest.
There are wider issues around the behaviour of supermarkets. There has been widespread and justifiable outrage in the past few days about Asda selling Uruguayan beef. The way it is often done is instructive. The labelling on the top looks lovely. It says that the beef is 30-day matured rib-eye steak of “heritage breed origin”, whatever that means. A shopper has to turn it over and see the small print on the back or underside of the tray to find out that it is beef produced in Uruguay from cattle slaughtered in Uruguay. Even if we park for a moment the concern about animal welfare standards, the carbon consequences of shipping beef around the world in this way are utter madness, even though ironically it would help us to meet the targets set for us by the Climate Change Committee.
That example illustrates that amid growing competition among supermarkets on price, if we continue to reduce our levels of livestock in this country the resulting gap will be filled by cheaper imports. That surely renders any definition of food security utterly meaningless. Once we lose our own producers, we will not get them back.
Jim Shannon (Strangford) (DUP)
It is a real pleasure to serve under your chairship, Dr Allin-Khan. I thank the right hon. Member for South Holland and The Deepings (Sir John Hayes), as we all do, for leading the debate and setting the scene incredibly well.
The Groceries Code Adjudicator is imperative in setting out standards for fair trading between large stores and their suppliers. The right hon. Gentleman referred to doing his shopping locally. I am the same, but I know that for the generation after me—my son, my daughter-in-law and all their family—Amazon is probably their first contact. Life is changing, and it seems cheaper to do it that way.
People are becoming more interested in the food that they are eating and where it is sourced. I have been a member of the all-party parliamentary group for eggs, pigs and poultry for most of my time in Parliament. I am of a generation for whom there is no better way to start a day than with two boiled eggs. I remember the ’60s—that is how old I am—when the advertisements on TV said, “Go to work on an egg.” Well, I could go to work on two eggs and finish the day with two eggs as well. I am probably keeping the egg industry going just with my own purchases.
I understand the importance of the issue for the livelihoods of farmers in my constituency. The GCA’s jurisdiction extends across the entire United Kingdom of Great Britain and Northern Ireland: it regulates designated retailers with an annual groceries turnover exceeding £1 billion. In Northern Ireland, the GCA’s role is particularly significant. The Ulster Farmers Union— I declare an interest as a member—has highlighted the GCA’s importance in maintaining fair trade practices amid ever more challenging economic conditions. It believes that
“the GCA performs an essential role in a modern, sustainable and competitive grocery market in the UK.”
There is no doubt that reducing or weakening the powers of the GCA will put suppliers and consumers at risk. In my constituency of Strangford, large chains such as Tesco, Asda and SPAR have contracts with numerous suppliers, and their contributions keep the sector going. I have a great relationship with many local suppliers in my constituency, including the likes of Mash Direct and Willowbrook Foods, which provide fresh potato and vegetable dishes. One example is a local farmer, Roy Lyttle—a small farmer, but a decent enough producer—who has just developed a new salad product, Lyttle Leaves. I believe it will take off.
Local farmers and butchers, such as Carnduff butchers and Colin McKee’s, are incredibly popular throughout my constituency. The issue is that grocery inflation has risen to 4.1%, the highest in 15 months, and there is always a possibility that it will continue to rise. That highlights the financial pressure on suppliers and manufacturers to provide products at a competitive rate and ensure that they can make a profit with their wonderful produce.
Carla Lockhart (Upper Bann) (DUP)
My hon. Friend will know that farmers in Northern Ireland feed more than 10 million people across the United Kingdom every year. Does he agree that our farmers are treated as shock absorbers? They carry all the risk and receive the least reward. They are still being relentlessly squeezed by powerful retailers and processors. Does he therefore agree that the GCA’s role needs to go further in protecting our farmers from unjust and unbalanced practices?
Jim Shannon
I wholeheartedly agree. My hon. Friend’s words are on record, the Minister is here, and hopefully he will respond in a positive way.
Workers have reported feeling lonely, stressed and isolated. They find it hard to connect with others; they often work alone or as part of a small workforce. They are the ones who produce the food on our farms, and they must be properly rewarded for their actions to ensure that supermarkets always have produce to sell. Unfortunately, with inflation rates, people are working harder and under more pressure, with little recognition.
The scope of the problem is highlighted by a 2025 BFAWU survey that shows that nearly 60% of food workers are not earning enough to meet all their basic needs such as rent, heating, electricity and food. Some 86% say that they have had to reduce their heating to save money. It is important in this debate to give the perspective of workers, because they are the ones doing all the real graft.
I will conclude with this point: we must look at the sustainability of the UK food supply chain and ensure that suppliers have access to large food suppliers at a decent price that reflects their work. There are calls for DEFRA here and the Department of Agriculture, Environment and Rural Affairs back home to work together, as the GCA applies to the whole United Kingdom. We must do more to protect the collective UK food supply. I hope that the Groceries Code Adjudicator will commit to doing so in Northern Ireland. I thank the adjudicator for doing his bit to protect the farmers and suppliers of Strangford.
Dave Robertson (Lichfield) (Lab)
It is a pleasure to take part in this debate with you in the Chair, Dr Allin-Khan. I thank the right hon. Member for South Holland and The Deepings (Sir John Hayes) for securing this important debate. He and I discussed the matter in this very room quite recently, and I am proud to be here again to represent the people of Lichfield, Burntwood and, crucially, the farming villages of my constituency.
The Groceries Code Adjudicator regulates supermarkets and other businesses to ensure fairness in our food supply, but it does not go far enough down the supply chain—I almost said “food chain,” but I am avoiding the pun. It regulates only a small number of businesses, about a dozen. While it tries to keep prices as low as reasonably possible and aims to ensure that food profits get shared fairly across the supply chain, it simply is not reaching the most important layer of the supply chain—the producers and farmers.
In almost all cases, farming is a pretty weird yet fundamental part of the UK economy, as it is the part we need to keep the country fed. Despite its importance, the sector does not always follow the economic patterns we would expect. The general rule of thumb in any free market economy is that those taking greater risks should see a greater return. They should see the value when things work well, as it is on their shoulders when things do not work well in difficult times. However, that is not always how farming works in the UK.
Farmers across the country are very much at risk of flooding, disease and drought. A huge number of potatoes are grown in my Lichfield constituency every year, and I know many farmers who were happy to see the heavens open a couple of weeks ago. Farming is a risky business. Factors well beyond a farmer’s control can have a profound impact on the yield from a particular field, on the quality of what is grown, or on a hundred other things that most people will never even think about. Usually that would mean bumper profits when things go well, to reflect the need for rain, sunshine or frost at the right time, but that is not how it is currently working in the UK. Most farms are simply not making enough money.
I make it clear that I am not saying that we have had it too good for too long, and I am not arguing for higher food prices—we have just had a cost of living crisis, and I hope it is a very long time until we see another—but there is enough profit in our groceries system to make sure that everyone gets fair prices, a fair day’s pay and a fair day’s return.
I am sure everyone in this room believes, as I do, in a free market economy that delivers fairness for everyone, but the free market is failing farming, food producers and our groceries system. It is therefore right that legislators should step in, and it is important for the GCA to take a more active role. It is important to farmers, and especially to dairy farmers on my patch—we need to look much more closely at dairy farming.
The dairy farmers I speak to openly say that the very best contract they can reasonably expect for their milk is a “cost of production” contract, which all but guarantees that there can never be any profit in their farming business. Some salaries will be included in the costs, but no line for profit. The result is a perverse situation in which the processors to which the milk is sold—the customers for much of my farmers’ produce—demand to see the farmers’ financials and will then tell them what it costs to produce milk. That is the antithesis of how a free market should work. There can be no situation more perverse than that.
This is really important to farmers in my constituency, who deserve a market that works in their interest; it is important to retailers, large and small, that want to do the right thing by their customers; it is important to my constituents who work in farming communities; and it is important to people living in more urban areas of my constituency, as they are also very interested in making sure that people get a fair shot in a fair economy. We need the GCA to stand up and play its role in making sure that we have a fair system for everyone.
Sadik Al-Hassan (North Somerset) (Lab)
A recurring theme of my conversations with farmers across North Somerset is that they have little interest in Government handouts. They want to stand on their own feet without relying on state subsidies to stay afloat. However, it seems that this aspiration can be realised only if we address that pressing issue of supermarket pricing and the power imbalance between suppliers and retailers in contract negotiations. Does my hon. Friend agree that we must revisit the groceries supply code of practice, and the Groceries Code Adjudicator that enforces it, to ensure that farmers producing high-quality British produce are paid the fair price they deserve?
Dave Robertson
My hon. Friend is absolutely right to raise that point. We do not need the Government to try to run everything. We need a free market, but one that is regulated properly to deliver for producers and consumers—to deliver for everybody.
Several hon. Members rose—
Dr Rosena Allin-Khan (in the Chair)
I am setting an official time limit of three minutes each.
David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)
It is a pleasure to serve under your chairship, Dr Allin-Khan. I thank the right hon. Member for South Holland and The Deepings (Sir John Hayes) for securing this debate—he is right to describe the supermarkets as an “economic tyranny.” We Liberal Democrats are also concerned about concentrations of power, and there is currently no greater concentration of power in our food chain than that held by the supermarkets.
Welsh farmers face pressures on all fronts. Nineteen per cent of British sheep are in Powys. However, despite the current bout of food inflation, farm incomes are still falling. One of the biggest challenges is the simple fight for fair treatment within the agricultural supply chain. Farmers deserve to be treated fairly, which is why the Liberal Democrats championed, during the coalition years, the creation of the Groceries Code Adjudicator to tackle unacceptable practices by supermarkets that, time and again, used their size and power to squeeze local producers.
The GCA has helped to improve the situation since its launch in 2014, but farmers are still coming forward with stories of unfair treatment such as last-minute order changes, delayed payments and punitive delisting. These are David versus Goliath situations in which small producers are left shouldering huge losses, while the big retailers rack up billions in profits. Just last year, Tesco posted £2.3 billion in profit, while Asda brought in more than £1 billion, but many farmers, particularly in Wales, are barely breaking even. Studies back this up: nearly half of UK farms fear they could go out of business, and three quarters say that supermarket behaviour is a major concern.
The GCA needs more teeth. It must be able to launch its own investigations, rather than waiting for complaints. Too many farmers are scared to come forward, as they are worried about being blacklisted or dropped. The GCA’s scope also needs to be widened. Many food suppliers, such as processors and packagers, are not covered, despite playing significant roles in the supply chain. Retailers such as Amazon were added only recently, and Amazon scores extremely low on compliance. With an increasing market share of smaller, online and non-traditional grocery retailers, many of which do not come close to hitting the £1 billion a year turnover threshold to be covered by the GCA, major players are falling through the cracks.
Better funding, more staff, greater transparency and anonymous reporting tools would all make the GCA more effective. It has achieved real progress in the last decade, but if we want to protect our farmers, our food supply and the rural communities they support, the GCA must be given the power, the scope and the resources to help secure a fairer agricultural supply chain.
Sarah Dyke (Glastonbury and Somerton) (LD)
It is a pleasure to serve under your chairship, Dr Allin-Khan. I congratulate the right hon. Member for South Holland and The Deepings (Sir John Hayes) on securing this important debate.
The number of English farms has fallen by nearly a quarter in 20 years, with dairy farms, which are highly prominent in Somerset, hit particularly badly. We all know that British farmers have faced a long list of challenges, such as the impact of Brexit, sky-high energy prices, terrible Tory trade deals, botched transitions from the basic payment scheme to the environmental land management scheme, the shattering blow of the family farm tax and the no-notice cancellation of sustainable farming incentive grants. Now the Government seem set to make significant cuts to the nature-friendly farming budget in their upcoming spending review.
On top of all that, farmers earn tiny profits and are regularly exposed to industrial-scale exploitation by supermarkets that are focused on delivering cheap food and meeting their just-in-time supply model. Many households are living in food insecurity as a result of our unbalanced food system, and food poverty is on the rise. Food security is vital for national security, but farmers are increasingly being forced out of business as they cannot afford to make a living growing food for our tables.
I cannot stress enough how important our farmers are to national security. As Professor Tim Lang’s recent report on the UK civil food resilience gap highlights, we must act now to ensure the UK’s food resilience and preparedness. We are living in a volatile and unpredictable world, and we must be ready for international shocks to food supply chains, so I urge the Minister to talk to his DEFRA colleagues, to look carefully at the damage being caused to the UK agricultural sector, and to support a system that empowers and rewards British farmers to produce high-quality food while protecting nature.
Of course, we must also address the power imbalance that farmers face on their route to market. The UK groceries sector is dominated by a handful of supermarkets, with around 95% of food sales controlled by just 10 retailers. That concentration means that supermarkets wield significant power over farmers, leaving them with very little negotiating leverage. Unethical practices from large supermarkets can lead to contracts being altered at the last minute, and supermarkets often use loss leader strategies, selling some products at a loss to attract more customers. That practice squeezes suppliers, which are often forced to accept lower prices, and if they do not meet their quotas, they will be punished.
In large part, that reflects the limited scope of the Groceries Code Adjudicator, which covers too few retailers. Many farmers and suppliers fear retaliation if they report unfair practices, while two thirds of farmers report feeling fearful of being delisted if they speak out of turn about supermarket behaviour. That leaves them underpaid and vulnerable. The Liberal Democrats are calling for a change in the Groceries Code Adjudicator. It needs teeth, and it needs to be strengthened.
Steff Aquarone (North Norfolk) (LD)
Farmers in North Norfolk are facing a litany of struggles. They feel let down by the previous Government for selling them down the river with dodgy trade deals and years of cuts to the farming budget. They feel let down by the current Government’s continued pursuit of the damaging family farm tax.
Farmers’ major struggle, however, is the continued decline in the profitability of farming. That is deeply worrying not just for farmers, but for the supply chains, businesses and communities that they support. Of course, it is not just about supermarkets: larger food manufacturing suppliers, most of which have indulged in record profits throughout the cost of living crisis, have allowed shrinkflation to surge and are engaged in their own race to the bottom on many prices for British-grown ingredients.
In North Norfolk, we grow huge amounts—almost 2,000 hectares—of sugar beet. In 2023, when the National Farmers Union and British Sugar were at loggerheads on the agreement for purchasing beet, British Sugar contacted the individual farmers who would be affected by the agreement to share the terms to which it wanted them to agree. That bypassed the NFU’s negotiating team, who exist to ensure that farmers are protected and get a good deal from the only buyer of sugar beet. The NFU was rightly outraged, as were many of the farmers I have spoken to. That is exactly the kind of bad behaviour by monopolistic multinationals that we need a strong regulator with teeth to protect farmers from.
I, too, want to see the adjudicator go further and act tougher. In future, I also hope that it will get involved in actively pursuing policy goals that I am sure we would all support, such as directing the market to incentivise healthier food alternatives, encouraging the consumption of whole foods, and tackling the swelling amount of ultra-processed food on our supermarket shelves, which is a cause of growing public concern. Market shaping, along with selective legal measures such as the sugar tax, is surely preferable to the nanny state telling us what we can and cannot eat.
The Groceries Code Adjudicator is an important protector to get the best deals for farmers and consumers. I am pleased that it continues in its role, but I hope it can step up in the years to come by using its powers to encourage measures so that our shelves are more fairly stocked with products that are better for our health, our farmers and our planet.
Andrew George (St Ives) (LD)
It is a pleasure to serve under your chairmanship, Dr Allin-Khan. I warmly congratulate the right hon. Member for South Holland and The Deepings (Sir John Hayes) on the manner in which he introduced the issues and perambulated around the full range of factors that are clearly having a significant impact on this country’s extremely and continually marginal food production base. He went back almost to the prehistory of food production and highlighted the collective near-monopoly held by supermarkets, and the restricted opportunities for small independent food retailers in that infrastructure.
The right hon. Gentleman was perhaps echoing the words of Lord Heseltine who, when he was President of the Board of Trade, memorably said that he was prepared to intervene before breakfast, lunch and dinner—or dinner and tea, to my way of thinking. The right hon. Gentleman is of that wing of the Conservative party that believes in free markets but recognises that they need to be regulated when they go in the wrong direction, as has clearly happened in this case.
A number of interventions and comments touched on the potential of going back to retail price maintenance, which was introduced before the second world war to regulate the final price. I do not think any political party proposes that the GCA or regulation should morph into finished retail price maintenance, although it was interesting that the spectre of final prices was reflected on in the debate.
The hon. Member for Salford (Rebecca Long Bailey) outlined the limitations of the GCA and the implied lack of teeth, a point that was echoed by many others. She called for its powers to be beefed up. My right hon. Friend the Member for Orkney and Shetland (Mr Carmichael), the Chair of the EFRA Committee, made a telling point that, amid all the briefings, the GCA seems remarkably silent in offering any advice on the many debates that we have had on this issue. He also highlighted that the GCA and the groceries code do not look at primary producers but the ultimate supplier to the supermarket, because that is how the code was written.
Perhaps I need to go into some of the pre-history, and not because I am concerned that I have been airbrushed out of the history of the creation of the GCA. The late Colin Breed, the former Liberal Democrat MP for South East Cornwall, produced a report called “Checking Out the Supermarkets” in 2000, following an investigation, which resulted in a Competition Commission inquiry. I took on his work and chaired the Grocery Market Action Group, which had members of the NFU, the Country Land and Business Association and Friends of the Earth all sitting in the same room, along with Traidcraft—I see Fiona Gooch from Traidcraft in the Public Gallery—and other organisations not normally expected to work together, because they saw a fundamental injustice in the grocery supply system. We must work together.
Further inquiries undertaken by the Competition Commission produced a report in 2007 that identified excessive risk and unexpected cost passed on from supermarkets because of their overwhelming power in the supply chain, and the impact that had on suppliers. That needed to be regulated and, hence, the groceries code was created. We campaigned and argued for the creation of the GCA as a means of policing the code. It could not simply sit on the shelf without anyone observing how the code operated.
That code was never intended to be the finished product. It was simply a framework for the Government to commence a review of how the process should operate, so the GCA should not be held in aspic for all time. I understand the Government are undertaking an inquiry covering 2022 to March 2025. I hope that review will reflect on the comments of hon. Members, the impact on primary producers and the current limitations.
The hon. Member for Strangford (Jim Shannon) emphasised the marginal status created for many farmers. The hon. Member for Lichfield (Dave Robertson) described the challenge of maintaining both a low retail price and a profitable supply chain. It is very difficult to get that right, but if there is fairness in the supply chain, then both can be achieved. All Members recognise that. My hon. Friend the Member for Brecon, Radnor and Cwm Tawe (David Chadwick) has already ably led a debate on this issue, so he is well practised. He understands these issues and brought the Welsh perspective. My hon. Friend the Member for Glastonbury and Somerton (Sarah Dyke) proposed changes to protect whistleblowers and made particular reference to those affected by the bully-boy tactics of supermarket buyers. Let us say it: that is effectively what is going on in the sector. My hon. Friend the Member for North Norfolk (Steff Aquarone) emphasised similar issues affecting his area.
It is really important that the Government look carefully at areas of the GCA where improvements can be made. The framework is there; what the Liberal Democrats are asking for is that the GCA be able to instigate its own investigations. That may well be on the basis of market intelligence or whatever it may be, but it is important that it is able to instigate its own investigations, while at the same time being aware of time-wasting fishing expeditions. Nevertheless, the balance can be struck. The pressure points in the supply chain are pretty clear. That freedom must be there.
The reach of the adjudicator is far too limited. Only the ultimate supplier is reviewed according to the code. They need to be seen in the context of the full supply chain. Very often the people who are actually catching the cold and suffering the most are the primary producers, but they are not the final supplier. That needs to be reviewed, and I hope the Government will allow that change.
A number of Members mentioned the lack of resources. Whether there are seven or 10 entirely seconded members of staff, this is a really shameful situation. The adjudicator has to control very large supermarkets, and the cost of a single investigation is greater than the GCA’s annual budget on many occasions. From 2013 to 2024, there were only 13 arbitrations and only two formal investigations. The GCA is rightly highly regarded and seen as efficient and effective, but with more resources will come more clout. The GCA is currently funded by a £2 million levy on the 14 supermarkets. Split 14 ways, that is only £142,857. Supermarket profits are in the hundreds of millions—indeed, billions—so it is really important that the Government review that. The Government should also be looking at sectors other than food, perhaps including the garments sector.
Robbie Moore (Keighley and Ilkley) (Con)
It is a pleasure to serve under your chairmanship, Dr Allin-Khan. I congratulate my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes) on securing this important debate. Who better to open this debate than a Lincolnshire representative from a county that I know very well and which produces 30% of our vegetables, 20% of our sugar beet and, collectively, 12% of all of the food that we find on our shelves?
We have heard contributions from Members from all four nations of the United Kingdom—Northern Ireland, Scotland, Wales and England. I represent the constituency of Keighley and Ilkley in God’s own county of Yorkshire, and we also have many producers and growers who have a relationship with supermarkets, and have been expressing their concern to me in advance of this debate.
The Groceries Code Adjudicator is hugely important in addressing some of the systematic issues within our food supply chain that have been referenced in the debate. It was set up under the coalition Government, which my right hon. Friend the Member for South Holland and The Deepings noted. It manages only 14 retailers, which cover a vast swathe of the food market, but that does not go far enough. Competition puts huge pressures on our suppliers and growers further down the chain, which is why it is vital that the Groceries Code Adjudicator addresses unfair practices. The questions that have been raised in this debate are those of power, funding and resource.
In 2024, a survey run by the GCA reported a reduction in the number of groceries code issues and an increase in supplier satisfaction with retailers, where issues were raised. I question that report. All Members speaking in this debate have picked up on the fear among growers and producers of being blacklisted if concerns are raised, and a reluctance to even report, because of the huge pressure that can be put on them by the retailers.
The 14 retailers included in the scope of the GCA and the code of practice cover a significant proportion of the UK market. However, it misses a number of smaller but significant retailers. That is the point I want to build on, as mentioned by other Members today. Has the Minister considered reducing the £1 billion turnover threshold that marks the point where businesses must be compliant? If that threshold were removed, many more retailers would be brought into the fold of the GCA. Members have advocated for that in today’s debate.
The work of the GCA is important in maintaining the health of our supply chains. An unfair contract between a retailer and a producer or grower can be devastating. We have heard the points made in the debate—the challenges are huge. That can result in growers and producers being locked into unfair contracts. Orders can be cancelled unnecessarily. The Chair of the EFRA Committee, the right hon. Member for Orkney and Shetland (Mr Carmichael), made a point early on in the debate about potatoes—they were of sufficient quality for any consumer to eat, and yet, because they did not meet the exact specification from the retailer, the order was not taken.
Sir John Hayes
I forgot to say what a pleasure it is to see you in the Chair, Dr Allin-Khan. My hon. Friend identifies a fundamental issue. In commercial transactions, there is always risk, and that risk needs to be balanced. At the moment, all the risk is taken by the farmer or grower and none of the risk is absorbed by the retailer. We need to adjust that balance to ensure fairness, in the way that has been articulated by so many Members across the Chamber.
Robbie Moore
My right hon. Friend makes a valid point. At the moment, the risk is all sitting on the shoulders of the growers and producers. That is unfair, because there is a certain expectation of the food they are preparing, whether in quantity or quality, but some of the risk factors are completely out of their control, as the hon. Member for Lichfield (Dave Robertson) noted. Those factors include weather conditions, which impact many of our farmers and growers. The lack of flexibility in the contracts is another.
That is why the GCA must have the teeth that many have talked about in this debate, because these issues go beyond the impacts of the unfair contract. At a time when pressures on our agricultural sector are mounting, additional budgetary pressures were announced by the Government in last year’s Budget. The hike in employer’s national insurance, the family farm tax, which has created a huge amount of uncertainty, the cuts to the sustainable farming incentives, and the drastic reduction in the delinked payments to a cap of £7,200 are all additional cash-flow pressures, exposing our farmers and growers to long-term uncertainty, beyond the challenges associated with the contracts they are entering into with retailers.
While the GCA has made hugely important steps, many producers and growers are still unaware of its role and powers. There is absolutely more work to be done within the industry to build awareness and trust of the GCA and its powers, and that is exactly what the nub of this debate is about. We know that pressures are mounting on the agricultural supply chains that run right the way through the system, from farm to fork. One of the shortcomings of the GCA in its current set-up is that it only handles the relationship between the retailer, the supplier and some farmers and growers, missing out many farmers, growers and other intermediaries in the supply chain. That has to be addressed, as has been referenced by many Members in their contributions.
That has to be addressed if we want to restore a level of trust in the system, and work to do so has been started. The Fair Dealing Obligations (Milk) Regulations 2024 were introduced recently, which have a specific focus on milk, and regulations for other products are on their way. But I ask the Minister: what are we doing to address this disjointed approach? It seems that multiple regulators are managing different elements of the supply chain, which is creating more friction and uncertainty for businesses.
The experience of the last decade shows the growing case for better lines of communication between the GCA, DEFRA and the Agricultural Supply Chain Adjudicator. What conversations has the Minister, in his role representing the Department, had with DEFRA and the GCA? That was a point made by the Chair of the EFRA Committee, the right hon. Member for Orkney and Shetland; I congratulate him on the work he did in introducing his ten-minute rule Bill, which had the support of the Opposition.
Going forward, I hope that the Government will be able to pick up where the last Government left off and not only expand on the fair dealing regulations, but tie in the GCA and its operation to the Agricultural Supply Chain Adjudicator, providing a joined-up approach to the full supply chain. Although I welcome the increasing scope of regulatory framework on the agricultural supply chain, does the Minister plan to include other products, such as ornamentals, as part of an expanded GCA remit? Ornamentals, like food, are perishable and suffer with the same challenges that many Members have outlined in this debate.
What are the Government’s intentions when it comes to increasing the GCA’s powers, funding, resource and people power, so that it has the ability to enact the requests of both sides of this House? I reiterate that trust absolutely needs to be restored into the system, which can only be done by re-establishing better supply chain relationships throughout the system. That relies on giving the GCA more power, more finance and better lines of communication with DEFRA and the Agricultural Supply Chain Adjudicator.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
It is a pleasure to see you in the Chair, Dr Allin-Khan. I congratulate the right hon. Member for South Holland and The Deepings (Sir John Hayes) on securing this important debate, and on the sweeping historical nature of his opening comments, which gave us a broad view of the importance of agriculture and food in the development of civilisation. Of course, we are talking about more contemporary issues, which he went on to address, and I will respond to some of his comments in my remarks.
This is an appropriate time for the House to discuss the powers of the Groceries Code Adjudicator because, as Members will be aware, we are currently undertaking the fourth review of the GCA’s effectiveness, as required by the Groceries Code Adjudicator Act 2013. The statutory review will consider how the GCA’s powers have been exercised and how effective the GCA has been in enforcing the groceries supply code of practice. It will also consider whether the existing permitted maximum financial penalty for non-compliance following an investigation is appropriate and whether there should be any restriction on the information that the GCA may consider when deciding whether to investigate.
On the question of financial penalties, the right hon. Member for South Holland and The Deepings referred to two investigations where no fines were issued. However, it is worth stating for the record that, following the Tesco investigation, it was charged £1 million by the GCA for the cost of that investigation, and the Co-op investigation led to a charge by the GCA of £1.3 million for the cost of it, plus compensation to suppliers of £650,000. But it is noted that the GCA has not been issuing fines. I think that is part of its overall approach to try to get compliance rather than issuing fines, but that is something that Members can respond to as part of the review.
Mr Carmichael
The difficulty is that the review of a limited regulator is always going to bring up a limited answer. What we need is something much more holistic. Just to take one small example, the number of small abattoirs in the country is now down to the hundreds, from 2,500 some time ago. That is a direct consequence of the way in which the supermarkets bring pressure to bear in other parts of the supply chain, so what we need is something that looks at the whole process, from farm gate to supermarket shelf.
Justin Madders
I thank the right hon. Member for his question. Of course, the review is dictated by the legislation that his party was, in government, involved in introducing, so part of the problem is where we are with the statutory framework, but I do take his wider point that clearly there are a number of different developments in how we deal with the overall agricultural food supply market; the GCA is just one part of it. The other developments, which Members have talked about, particularly in terms of ASCA, probably need to be looked at more holistically than is the case at the moment.
Sir John Hayes
I am grateful to the Minister for that remark, but the right hon. Member for Orkney and Shetland (Mr Carmichael) is right: the important thing is co-ordination. The previous Government did a good job in establishing the basis for the “fair dealing” obligations, but it is really important that the work being done—outside the Minister’s Department in some cases—is co-ordinated, and the Groceries Code Adjudicator, in exactly the way that the right hon. Member for Orkney and Shetland suggested, has a purview that extends across the whole process. I hope the Minister will give a commitment to that now.
Justin Madders
I acknowledge the wider points that have been made. Members have raised today a number of issues that are beyond the scope of the Groceries Code Adjudicator and clearly are within the bailiwick of the Department for Environment, Food and Rural Affairs, which clearly I need to work with on developing a more holistic approach. That is one of the challenges we face, because the code regulates only designated retailers’ dealings with their direct suppliers and currently applies to the 14 largest grocery retailers in the UK, each with an annual turnover of £1 billion or more.
A number of Members referred to the threshold and questioned whether that is currently appropriate. It is worth pointing out that, according to the marketing data company Kantar, the 10 largest retailers covered by the groceries code amount to 97% of the grocery retail market, although the adjudicator has said that he is happy to hear views on whether the threshold should change and about suppliers’ experiences of dealing with retailers not currently covered by the code. The adjudicator has also said that he will pass on any relevant information to the CMA to inform future decisions on retailer designations under the code. There is therefore an opportunity for Members to feed in if they feel there are particular retailers under the current threshold that should be included.
A number of Members talked about the issue of price. The code does not regulate the prices agreed between retailers and suppliers. It does, however, require these negotiations to be conducted fairly and transparently, and the GCA is 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 to prices.
Justin Madders
I have quite a bit to get through, so if the hon. Lady does not mind, I will carry on.
The statutory review is focused on the powers and duties of the GCA as set out in the 2013 Act and the 2015 order. These powers include providing arbitration between suppliers and retailers, conducting investigations into retailers suspected of breaching the code, and enforcement powers where the adjudicator is satisfied that a retailer has broken the code. Enforcement can take the form of the adjudicator making recommendations against the retailer, requiring retailers to publish details of the breach, or imposing financial penalties of up to 1% of the retailer’s turnover. The adjudicator also publishes advice, guidance and best practice statements, and can make recommendations to the CMA about suggested changes to the groceries code.
Contrary to a common misconception, which I am afraid has been repeated by a number of Members today, the adjudicator does not need to wait for a complaint to be made before launching an investigation. What the Act requires is that the adjudicator has reasonable grounds to suspect that a retailer designated under the code has broken it or failed to follow a recommendation following a previous investigation. It is for the adjudicator to determine how to use those powers, but it is absolutely possible for it to pursue investigations without a formal complaint being made.
I heard a number of Members making reference to concerns about reprisals—that was also raised in the previous debate. As part of the review, I am keen to hear how we ensure that the system is robust enough, so that people in the chain covered by the code feel confident that they can raise complaints. Clearly, there will always be an element of concern when someone raises their head above the parapet, but it is possible to raise concerns confidentially. Indeed, the survey undertaken by the adjudicator is done on a confidential basis. The shadow Minister, the hon. Member for Keighley and Ilkley (Robbie Moore), referenced his scepticism about the high level of satisfaction in that. I note his comments, but it is the case that the survey is taken confidentially. The right hon. Member for South Holland and The Deepings also raised the question of anonymity. I am genuinely interested to hear from Members how we can find a way ahead so as to ensure that people can raise complaints confidentially and with confidence.
In general, the adjudicator has ensured a collaborative approach with suppliers, which has helped to prevent problems from escalating and reduced the need for time-consuming and expensive formal dispute resolution. A number of Members raised the question of resourcing, but it is for the adjudicator to set the level of the levy that is applied. That is always a matter of discussion, but I am sure that if the adjudicator wished to increase the levy, it would be able to do so within the powers it already has.
I am conscious that I need to give the right hon. Member for South Holland and The Deepings an opportunity to respond. I have not addressed all the points that Members raised in the debate, but where I am able to provide a further response, I will write to those Members. I would encourage all Members to engage with the review. It is important that a number of the issues that we have heard about today are fed into it.
Sir John Hayes
With that pledge that I can continue to communicate with the Minister, I am delighted to thank all colleagues who contributed to this debate. It is perfectly possible to feed the nation at a fair price without fuelling the excessive profits of greedy plutocrats. To do that, we need to extend the power of the adjudicator in the way that has been set out by a considerable number of Members from across the House. It is vitally important the food chain is relinked, to make sure that all those involved in the production, distribution and sale of food can act in a way that is commercially viable but fair. It is not fair now.
Motion lapsed (Standing Order No. 10(6)).