Groceries Code Adjudicator Bill [HL]

Debate between Lord Browne of Ladyton and Lord Borrie

Thursday 28th June 2012 Grand Committee

[Lord Borrie]

My Lords, I am very happy to follow the right reverend Prelate as I agree entirely with everything that he said. He gave useful examples. I attached my name to the amendment tabled by the noble Baroness, Lady Byford, because I was convinced—I think I said something like this at Second Reading—that this provision should be in the Bill rather than there being just a possibility of a statutory instrument being laid at some later stage, with all the delays and question marks that that would involve. It should be in the Bill that there is a possibility of a financial penalty.

The noble Baroness, Lady Randerson, used a word with which I entirely agree, saying that the Government’s approach by not putting the power in the Bill is cumbersome. It is a cumbersome way of going about things. I am so glad that the noble Viscount, Lord Eccles, is here. If I may refer to some of the things he said earlier this afternoon, if this power goes into the Bill, I do not envisage the adjudicator taking a great deal of time thinking about penalties, the amount, and all the rest of it. I use a word most often used in criminal law, which I hope will appeal to my noble friend—deterrence. The possibility of a financial penalty —whether anywhere near that imposed by the Financial Services Authority on the bank yesterday—has a deterrent effect that is extremely important. The adjudicator will not be judged on the amounts of fines that he imposes to prove that he is a good or a useful man in his post—he will be judged as much by the effect of his powers upon the industry.

[Lord Browne of Ladyton]

My Lords, my understanding of both these amendments is that they are intended to have the same effect. One may be more elegant than the other, but I think that they probably have the same effect, and I support both.

I do not intend to rehearse the arguments that the noble Baroness who moved the amendment made comprehensively. However, there are some other points that are worth making, and points that we have debated already this afternoon which are worth drawing on.

First, the noble Viscount, Lord Eccles, as we began our deliberations this afternoon, encapsulated the problem at the heart of the Bill in relation to penalties. He set out quite fairly the fine as a penalty and enforcement mechanism, and the choices that face the Committee and Parliament in relation to the Bill. Either we have a piece of legislation that includes financial penalties or we do not—or, because of the road that the Government have gone down, we have a piece of legislation that kind of includes financial penalties.

However, the decision on whether these financial penalties will ever become operative lies outwith the control of those who are being asked to legislate—other than that they will, by the interaction of Clause 9, Schedule 3 and, I think, Clause 23, get an opportunity, via a statutory instrument, to have a short debate which will probably be conducted with very few people in the room, in a comparatively short time and with no power to amend. If the Secretary of State comes to the view that the history of the adjudicator’s experience thus far reveals that the operative penalties—the recommendations and the naming and shaming—have proved to be insufficient, these financial penalties can be activated.

That means that, in terms of this Bill, we cannot have any debate on what level of penalty is appropriate, what sort of circumstances would trigger a penalty as opposed to one of the other enforcement mechanisms or whether we would like rules to be made so that violations of the code can be differentiated by their nature and attract different types of penalties. I do not think that that is constitutionally appropriate. Given the nature of the sort of penalty that we must expect, it is not appropriate for Parliament to be denied the opportunity to have such a debate if the penalty is to be meaningful. I say that because this code can be enforced only against the top 10 retailers in the country. These are enormous businesses. If financial penalties are to have any effect on them, they will have to be significant.

However, there is a much more concerning issue about this construction. I am sure that the noble Baroness—or those advising her—may say, or even be able to find, an example of where something similar was done in the past in order to support doing it again—although the example will probably turn out not to have been extraordinarily successful. I am sure that in responding the Minister will say that Parliament has supervision of this to the extent that it allows this mechanism and that it is entirely proportionate—and I am sure that the word “proportionate” will be used regularly in the response. Of course, the mechanism does not give Parliament any role if it disagrees with the Secretary of State’s persisting view that financial penalties are not appropriate.

The Secretary of State holds all the cards now. The Secretary of State is constrained by this to allow financial penalties only if he concludes that the other powers are inadequate. If the Secretary of State does not conclude that, how are they accountable to Parliament? How on earth can Parliament make the Secretary of State accountable in terms of these mechanisms for not triggering this power, other than the inadequate process of Questions or maybe a Question for Short Debate? There is no mechanism whereby Parliament can say, “This is not what we intended. There are egregious breaches of this going on and the Secretary of State is not willing to trigger this power”, and that is inappropriate. There is not even a continuing method for amending this legislation or a clause that can be resurrected in some fashion. There is just no method for making the Secretary of State accountable for a continuing failure to recognise what is going on and to leave a piece of legislation ineffective because a part of it has not been enacted.

Groceries Code Adjudicator Bill [HL]

Debate between Lord Browne of Ladyton and Lord Borrie

Tuesday 26th June 2012 Grand Committee

[Lord Borrie]

My Lords, I am reluctant to disagree somewhat with my noble friend, who has argued so eloquently that this is a judicial appointment, but I do not think that it is. It may be close to it, and there is nothing unusual in certain positions being on the borderline of administrative and judicial. However, in examining the role of the adjudicator, we have heard the noble Viscount, Lord Eccles, and others mention that, when this was first introduced, the title given to the man or woman in charge was “ombudsman”. There seems to be general agreement that that was not suitable, so we came to “adjudicator”.

Because we have adopted—or the Government have adopted—“adjudicator”, I strongly sympathise with my noble friend Lord Browne, because “adjudicator” suggests that there are at least two sides and that this is a judicial role. However, one thing that I have noticed, looking at the detail of what the adjudicator can and cannot do, is that he cannot settle or determine or arbitrate on a civil claim made by a particular supplier and a particular supermarket. It is of course typical for a judge, or indeed an arbitrator, to determine civil disputes of that kind, yet the detail of this Bill tells us that this is something that cannot be done by the adjudicator. The word “adjudicator” may not be entirely appropriate and may have led the noble Lord, Lord Browne, along a false path.

[Lord Browne of Ladyton]

Will my noble friend do two things for me before he sits down? First, will he address with the same certainty the issue of whether this is a quasi-judicial role? With respect, it is not fatal to my argument that this role does not meet the high test for a judicial role that my noble friend has—arbitrarily, I may say—imposed on us. Secondly, will he also address the ability or potential ability of this adjudicator to impose financial penalties? Does that cause him to reflect on whether this is the sort of role that he is describing?

[Lord Borrie]

With respect to my noble friend, he has not, in his question to me, dealt with the fundamental point that I raised, which is that the adjudicator is unable to determine civil claims between suppliers and supermarkets. The adjudicator has to go to a separate civil claim in the civil courts, or through arbitration. That is fundamental in my argument that this is not a judicial appointment and that involvement of the Judicial Appointments Commission would be inappropriate.

“Quasi-judicial” is a fascinating phrase, and we heard it a lot in the Leveson inquiry. It is amazing how Ministers have got accustomed to defining and knowing what quasi-judicial is, even though they did not always pronounce it the same way. It was a quasi-judicial role that the Minister had in determining whether the bid by Mr Murdoch for BSkyB should go to the Competition Commission. That was determined by everybody who spoke at the Leveson inquiry to be quasi-judicial. In answer to the noble Lord, Lord Browne, I have already admitted that the job of the adjudicator in this Bill is close to being judicial and, if it is close to being judicial, it is certainly close to being quasi-judicial.

The noble Lord, Lord Browne will know that the Judicial Appointments Commission has nothing whatever to do with Ministers and others who have quasi-judicial functions. It does not have that role. The Government must have found it difficult to know whether to call this person an ombudsman, an adjudicator or something else. He or she will be a regulator with powers to fine, like other regulators that are set out in statute. That is what is intended here. Some of us are in favour of this being in the Bill, whereas the Government want it only to follow a new regulation. Be that as it may, the adjudicator is closer to being a regulator than a High Court judge.

--- Later in debate ---

[Lord Browne of Ladyton]

My noble friend set a test for me that he knew I must fail, because the adjudicator does not have the power to impose a decision on a civil dispute—and because I failed this entirely arbitrary test, which he imposed with his customary skill, my argument was apparently nullified. Perhaps I may engage him by referring to another area of life in which there is a separation of powers. We have settled health and safety legislation in this country. Where there is a prosecution for breach of health and safety regulation before a criminal court, the court does not have the power to impose civil compensation, because that is not its function. However, it is a judicial process. Of course, another court can impose a civil remedy by awarding compensation for breach of health and safety regulations as an indication of negligence where somebody is injured, but it cannot impose a criminal penalty, because that is not its function. However, both courts have judicial functions. The fact that one court cannot impose its will on the jurisdiction of another does not nullify the fact that they both have judicial functions. Why does that logic not serve me well in this argument?

[Lord Borrie]

The only thing that I can say is that it has been the deliberate intention of the Government through their drafting of the Bill to deprive the adjudicator and to deprive anybody else except civil courts—in a completely different process—of the ability to determine a civil claim or something like it. As the noble Lord, Lord Browne, has considered this matter very deeply and carefully, there cannot be a lot between us. We are talking about a matter of title or name. Whatever that is, it does not seem suitable for the Judicial Appointments Commission to be involved in the appointment of this individual in a narrow field of the grocery trade, with the fairly narrow role provided by the Bill.

[Viscount Eccles]

Perhaps I could ask the noble Lord, Lord Browne, whether we have any other adjudicators.