Groceries Code Adjudicator Bill [Lords]

Baroness Ritchie of Downpatrick Excerpts

Monday 19th November 2012 Commons Chamber

[Ms Margaret Ritchie (South Down) (SDLP)]

I will be supporting this long-awaited Bill, and I am in favour of the primary motivation behind it: to create a dedicated and impartial adjudicator. However, we must ensure that this does not become a missed opportunity to introduce lasting reform of the regulation of the relationship between producers, suppliers and consumers.

The broad coalition of signatories to the letter in The Sunday Telegraph yesterday, which included the NFU, ActionAid and the Federation of Small Businesses, is testament to the depth of feeling on this issue. I represent a rural constituency in Northern Ireland, where farming, fishing and tourism are the main economic drivers, and there is a growing need to sustain the current economic base at a time of low economic growth. Producers of food and consumers are facing daily economic and financial challenges. If handled properly, this Bill affords an opportunity to redress the balance in the supply chain.

I do not want to paint an entirely negative portrait of the relationship between suppliers and the large supermarkets. I know that often they work together extremely well—I know that is true of Sainsbury’s—and many examples of good practice can be found that are central to the development of a sustainable supply chain. However, it must be acknowledged that the regime for dealing with bad practice is not even close to what it could be. To provide that stability and protection to farmers and producers, we need to introduce a groceries code adjudicator that possesses the necessary statutory and legislative teeth to correct unfair practices that have been apparent for some time in the food market chain. There is broad support in the farming community for this Bill and the implementation of its provisions without delay following Royal Assent. Farmers and their respective representative bodies have argued for years for action to prevent retailers from treating their suppliers, particularly smaller producers, unfairly. The establishment of the ombudsman or adjudicator to monitor and enforce a code of practice has been the central part of the campaign in recent years, and to this end the Bill is welcome.

Having accepted that such an adjudicator is necessary, it is vital that it should be adequately empowered and not become a paper tiger. The adjudicator must have robust powers of investigation and enforcement to hold to account the organisations engaged in bad practice. A primary concern is that we should endow the adjudicator with the capacity to accept representations, appeals and complaints from a range of interested parties, including trade associations. Not doing so in this Bill is a missed opportunity, which we will be looking to address through amendments at later stages. Empowering the adjudicator to receive representations from trade associations would create a much needed buffer between suppliers and supermarkets. Too often, suppliers fear that making complaints will prejudice their future business with large, dominant retailers and are hesitant to initiate complaints under the existing dispute resolution mechanism. A buffer could enable a more harmonious relationship between suppliers and supermarkets. Furthermore, the involvement of trade associations or representative bodies would allow a wider scope of analysis that could take in a wider picture of market practices, in contrast to cases that just focus on one supplier and one retailer.

I also support the Competition Commission’s call for the adjudicator to have the capacity to implement fines in cases of serious breach or malpractice. A naming and shaming system will simply not be strong enough to hold retailers to account. Large retailers would be delighted if the adjudicator did not have the power to levy fines. I appreciate that the Government could introduce a fining system at a later stage through secondary legislation if the watered-down approach were to prove inadequate, but I strongly contend that the adjudicator must be able to fine retailers from the outset if the code is breached. No doubt the Minister will address that point when he winds up the debate. We must have learnt by now, whether in relation to energy market regulation or banking regulation, that a regulator must have real teeth and real power if it is to have any influence or impact. Let us not make the same mistake again with the groceries code adjudicator. I want to see an emboldened Government here tonight saying that they will ensure that the adjudicator has real teeth.

From a devolved perspective, it is regrettable that the adjudicator will not be tasked with addressing the producer price differential that exists between Northern Ireland and Britain, or with overseeing the practices of processors or intermediaries. Many of the food producers in Northern Ireland feel that there is a dysfunctional food supply chain, and that what the consumer pays for food produce bears no resemblance to what the farmers receive for the product from the processors or retailers.

The Minister will recall that I raised this issue with him when we met several weeks ago. It needs to be addressed, to ensure that the primary food producers in Northern Ireland are protected. I suppose that that might fall outside the scope of the Bill, but I will take the matter up with the devolved Minister and with DEFRA. It is important that this dysfunctional relationship should be investigated and that measures should be put in place to remedy the situation. The hon. Member for North Antrim (Ian Paisley) has already raised the matter today. The Ulster Farmers Union has been lobbying us to a significant degree, although my approach to the question is slightly different from his, in that I believe that we need a partnership rather than a fight. Fighting will not resolve the situation.

It is clear that the Bill offers the potential for real, lasting reform of the groceries market. If we set up a weak adjudicator, however, we will have undermined the new regime before it has been in operation for even a day. If we do not grant the adjudicator the necessary powers, on a statutory basis, to fine and to investigate without prejudice, we will have missed a golden opportunity to rebalance the supermarket supply chain and provide support to our farmers and producers. It is in everyone’s interest—the supplier, the farmer and the consumer—that we create a sustainable food supply chain that is profitable for all, and not just for the dominant players.

As the Bill makes its passage through its Committee and Report stages, I hope that the Government will table amendments to ensure that it is made stronger through greater enforcement measures and a greater capacity to impose fines. I hope that it will be suitably amended to provide remedies that will further protect the primary producer and the consumer.