Groceries Code Adjudicator Bill [Lords]

Debate between Ian Murray and Ian Paisley

Monday 19th November 2012 Commons Chamber

[Ian Murray]

I know that my hon. Friend has worked on the Gangmasters Licensing Authority, and we will take that debate forward to Committee. The Gangmasters Licensing Authority has been downgraded under this Government—indeed, the Beecroft review recommended that it be scrapped. We must be vigilant and ensure that the great work done by that authority in saving lives and stopping exploitation continues, and we can debate that in Committee. If I look towards the Whips, perhaps my hon. Friend will join us on that Committee to make those points—his name is being jotted down as we speak.

I was talking about the huge impact and value that supermarkets bring to our economy. The groceries market was worth nearly £157 billion in 2011, and it provides significant choice and good value for customers, which is vital. A number of supermarkets in my constituency do a tremendous job through investment in our high streets, job creation, and supporting community projects, and I am grateful to them for that positive role. I also place on record my thanks to Sainsbury’s at Cameron Toll in my constituency for its continued support for my schools Christmas card competition. Likewise, farmers and small suppliers play a critical part in achieving economic growth. It is an incredibly difficult time to be a farmer or small supplier in the UK—there have been increases in feed prices, not to mention the difficulties that many small and medium-sized enterprises have experienced in accessing finance. We should set retailer abuses against that backdrop.

We should acknowledge that retailers have done much to clean up their supply chains, but we know that abuses by retailers against suppliers still occur, and that evidence supports the need for a groceries code adjudicator more than ever. FoodDrinkEurope, the European federation, surveyed businesses from around Europe anonymously. It asked whether businesses had been confronted by various situations, and the survey gives us a picture of the situation in the UK. Seventy-seven per cent. of businesses said they had experienced non-respective contractual terms; 75% said they had experienced de-listing threats to obtain unjustified advantages; and 60% said they had experienced unilateral deductions to invoices. Only a very small number of the businesses interviewed—3%—said that they had done something other than discuss the situation with their customers. When asked why, more than half said they did not believe in the effectiveness of the remedies by public or legal authorities, and 44% said they were afraid of commercial sanctions. In one case of which I am aware, the supplier—a salad grower based in Yorkshire—said:

“The retailer has reneged on a commitment to cover the costs of packaging should they terminate dealings with me at short notice—despite this being confirmed”

on numerous occasions in e-mails.

[Ian Paisley]

Given those statistics, does the hon. Gentleman believe that food producers will feel emboldened to come forward and make their complaints if no financial penalty is front and centre in the Bill?

[Ian Murray]

The hon. Gentleman is absolutely right. We need proper sanctions—we need to take the carrot-and-stick approach. Without proper fines in the Bill, the adjudicator could, as the Minister said, be a toothless dog or tiger. I will come to that shortly.

There are times when a market needs intervention to make competition work well, particularly if players in that market become too powerful. Roughly 3.6 million people are employed in food production in this country, and making competition in that market function more fairly through the introduction of the adjudicator is ultimately good for growth and for those jobs. It will undoubtedly also be good for consumers in the long term. Because the choice of products is supported, small suppliers and products will not be driven from the market by anti-competitive practices, which hon. Members have mentioned. The choice of retailers will also be supported, because small retailers will not be driven from the market by the disparity in buying terms, which can be exacerbated by anti-competitive practices. Suppliers will be better able to plan their businesses, yielding efficiencies. Critically, they will be able to invest in innovation, new products and product quality. Finally, more competition will hopefully bring down prices.

The benefits of a strong adjudicator are clear, but fundamentally the Opposition’s major concern is that the adjudicator will be toothless. The adjudicator must have teeth to tackle the breaches of which all hon. Members are aware.