Groceries Code Adjudicator Bill [HL]

Baroness Sherlock Excerpts

Tuesday 22nd May 2012 Lords Chamber

[Baroness Sherlock]

My Lords, I add my voice to those who, unlike the noble Lord, Lord Howard of Rising, want to see this Bill go further, rather than backwards. I listened to his contribution with interest.

I am grateful for briefings from various sources including Traidcraft and the Grocery Market Action Group, as well as various retail bodies, including more supermarkets than I knew existed hitherto. Like many—indeed, almost all the noble Lords in this debate—I am delighted that we are where we are. I am thrilled that the previous Labour Government brought in the code. I am very pleased that the Government are introducing the adjudicator, and I commend them on that. However, I encourage them to think hard on this question. If it is worth doing, it is worth doing properly. I suspect that the critics of the Bill—and there are some even in this Chamber—would not be satisfied even if this were done in half stages. Therefore, if the Government are going to do it, they may as well take a step out and do it with some gusto.

I would like to make a few specific suggestions. First, I am delighted that the adjudicator will consider evidence from all sources, but will the Minister say what signal she intends to send by the ease with which that power could be revoked? What is that intended to say to the world outside?

Secondly, will the Minister tell us why there is not in the Bill a clear description of the purpose of the adjudicator? I assume, having reread recently the 2008 Competition Commission report, which the Minister cited earlier, that this is addressed directly to the second of the problems it found—the transfer of excessive risk and unexpected costs by groceries retailers to their suppliers. If that is the aim, would it not be helpful for that to be specified in the Bill? I know the Minister said that the only purpose of the adjudicator is to enforce and oversee the groceries code in the ways described in the Bill, but she may remember that she also said in her opening remarks that the adjudicator would be tasked with recommending changes to the code. If he or she is to do that, on what basis will that be done if they have not got a statutory objective for the organisation in the first place?

Thirdly, I am another person who believes that the GCA should have the immediate power to fine people who are in breach of the code. This makes it almost all of us, now, who believe this—a full house. I have heard no convincing argument against this at all. If the power is never needed, it need not be used, but the fact that the adjudicator has the power must surely concentrate the minds of those who are tempted to sidestep the provisions of the code. Like the right reverend Prelate the Bishop of St Edmundsbury and Ipswich, I read the report from the British Institute of International and Comparative Law, and very interesting reading it made. I commend it to the Minister, if she has not had the opportunity to read it. It would be very good bedtime reading, and I encourage her to look at it. Very usefully, it went through all the types of mechanisms used by different countries, and what was effective, and it produced a category of characteristics of favourable means, of which financial penalties—in other words, teeth—were firmly up there.

I also agree with noble Lords who have mentioned how important it is that the adjudicator should function well from the outset. That will be essential to give it credibility from the beginning. I suggest that it needs to flex and to respond to the scale of the task. We simply do not yet know what that will be. I hope the Minister will consider that quite carefully.

How did the Minister reach her decision about the nature of the financing? I, too, read the brief from Waitrose which expressed concern with the generalised nature of financing. I declare an interest as the senior independent director of the Financial Ombudsman Service. While I am not in any way suggesting a comparison, that and other adjudicators of various kinds often have a two-part fee. There may be a general levy of some sort on all those within the jurisdiction, and then either a case fee or a specific fee which is related in some way to the degree to which the firm is engaged in or is triggering the work of the adjudicator. Will the noble Baroness look at the fee systems employed by others making similar decisions in making a final decision on this?

Finally, I am concerned about whether the Government are being too hesitant in doing this. They have decided to set up an adjudicator but are retaining the power to shut it down by negative resolution. They are open to the idea of fines—but not yet—and it will take a rather complicated Heath Robinson mechanism to enable that to happen at all. They want to allow the power to take evidence from third parties but, again, want to threaten to withdraw it. Is the Minister concerned that she is taking the right step but that, in hedging it around so much, she risks undermining the good work that I know she is trying to do?