Lord Cameron of Dillington
Main Page: Lord Cameron of Dillington (Crossbench - Life peer)Groceries Code Adjudicator Bill [HL]
Lord Cameron of Dillington Excerpts
Lord Grantchester
My Lords, I declare my farming interests on the register. In moving Amendment 2, I am also speaking to Amendment 26. Having investigated the grocery market on two separate occasions, the Competition Commission found that abuses of market power by retailers damage suppliers’ confidence and their ability to innovate and invest. In turn, this can lead to a reduction in choice and availability and increased costs to consumers. The Competition Commission in 2010 set up a strengthened code of practice and the Bill sets up the adjudicator to enforce the code. We wish to see it enacted as soon as possible.
In Committee, we debated the anomaly that the Bill creates the office of an adjudicator to hear and rule on complaints brought under the groceries supply code of practice, which itself is not on a statutory footing. It was also brought to the House’s attention by the Delegated Powers Committee that the code may be altered or revoked without any parliamentary involvement. This amendment seeks to clarify that Parliament will be able to scrutinise the code’s workings.
Notwithstanding the strengthening of the code in 2010, my noble friend Lord Knight of Weymouth gave further examples of the complaints not covered under the code. The Food and Drink Federation has also given examples of further abuse, such as the unilateral deduction of invoices without sound business reasons or prior agreement. The amendment requires that the Office of Fair Trading, which has competence for the code, must set up a review in consultation with the adjudicator into the effectiveness and scope of the code, to report no later than two years after the Bill becomes enacted. It is vital that the workings of the code are updated and are relevant and responsive in an organic sense to changing market conditions.
Last Wednesday, more than 2,500 dairy farmers came to Parliament to make public the cuts and their concerns about a drop in prices of more than 10% on short notice this spring. At present, this situation is not covered by the code, which only covers the relationship between the top retailers and their immediate suppliers. The code does not cover the whole supply chain. The downward pressure from supermarkets is simply transferred from suppliers to their suppliers. The response of supermarkets to seeing their suppliers reduce prices down the supply chain is to immediately demand a share of the margin created—that is to say, a further reduction to their prices.
This is not the first or an isolated example in the dairy industry. In response to a similar situation in 2002, my noble friend Lord Whitty, when he was Minister of Agriculture, set up the Dairy Industry Supply Chain Forum to encourage relationships through the supply chain. That was 10 years ago. It is disappointing that the dairy industry has not improved over that time. The problems persist.
In response to the EU dairy package, the Minister of State in another place seeks a voluntary code, through Dairy UK, between processors and their suppliers. Indeed, in reply last Wednesday to a question from the noble Baroness, Lady Parminter, the Minister—the noble Lord, Lord Taylor of Holbeach—confirmed the situation. My understanding is that the issues covered are rather limited and unlikely to solve the problems. The Minister says that, without voluntary agreement, he will legislate, but my understanding is that that is not believed. He should legislate. This amendment gives him two years to make it work. If after a review we find that the situation has not improved—and we have seen no evidence over many years of any improvement—the OFT will be able to take effective action, highlighted by the experiences of the adjudicator.
I have highlighted the situation in the dairy industry. I am told that similar problems occur in other sectors. The amendment seeks to give the adjudicator and the OFT wide scope to make an effective code of practice work throughout the supply chain. I beg to move.
Lord Cameron of Dillington
My Lords, I first declare my interest as a farmer. I put my name to the amendment because it is important that we remain as flexible and light on our feet as possible in changing circumstances in this area. The effectiveness of the groceries code adjudicator is dependent on the effectiveness of the code. Both are equally important. It is surprising that while the adjudicator and his role are continually under review in Clauses 15 and 16, the review of the code is not given such emphasis.
Clause 13 in its simplicity is not sufficient. It sets out what the adjudicator could do but does not give me any confidence that anything will happen. It is important that as the adjudicator gains more experience, and as all the players inevitably try to push the rules to the limit, we should be able to review their roles and the rules involved. Circumstances change. The rules of rugby change from year to year and from time to time. The rules of Parliament relating to MPs’ and Peers’ expenses change. There are always new problems to be dealt with and overcome. We need to ensure that we can overcome the shortcomings in a structural way—hence subsection (2) of the proposed new clause.
The noble Lord, Lord Grantchester, mentioned the problems of the dairy industry. I do not know whether any review of the dairy code in the light of these recent developments would necessitate change, but the matter would certainly be worth looking at. It is vital that the groceries supply code of practice is not set in concrete. The amendment represents the necessary Kango hammer to free it.
Lord Whitty
My Lords, my Amendment 31 is in this group. I apologise to the Minister and the House that I was only a passive presence at Second Reading, and even more passive in Committee, despite my long-standing interest in the subject. I wish the Bill well and I am glad that the Government brought it forward.
I will resist the temptation to give my Second Reading speech now. I will say two things. First, as my noble friend Lord Grantchester said, it is 10 years since I started grappling with this issue and urging the noble Baroness’s predecessors, the competition authorities, to take this seriously. We have had the code since then and this begins to give it serious teeth.
Since I left office as a Minister I have also been a consumer champion. Occasionally I was leant on to say that it was not in the interests of consumers to have a go at the supermarkets by means of the groceries code. Supermarkets have made a very impressive contribution to consumer benefit, in terms of choice, price and convenience. However, it is not in the interests of consumers, even in the medium term, for part of the supply chain to be wiped out, or for supply at the retail end to be restricted in terms of competition if that is done by a large-scale operator. Consumers have benefited from supermarket activity, but they would not benefit from the supermarkets overstretching their ability to control the market.
It is also true, in defence of supermarkets, that it is not only they who could abuse their power in the supply chain and engage in the kind of activity that they are accused of, and which my noble friend and others referred to earlier in our debates on the Bill. As we know with the current situation of milk production, there is a question mark over the behaviour not only of supermarkets but also of large milk processors. My amendment does not seek immediately to broaden the scope of the code but it suggests that, were Amendments 2 and 26 adopted—in other words, were there to be a review—it may well be that it is not just the large retailers that should be included within the code’s provisions. In those circumstances the Minister would not have to wait another 10 years for primary legislation to extend the code and the adjudicator’s powers but, in the light of the reviews required by the other two amendments in this group, would be able by order to extend the provisions of the code to other large operators within the supply chain. That would be beneficial to the small suppliers; it would also give some clarity and restraint to those who were tempted to overuse their monopsonistic or oligopsonistic powers within the food chain. It would be an improvement to this Bill if the possibility of so doing were included in the primary legislation at this stage, rather than have to come back to it in a few years’ time.
Lord Borrie
My Lords, I support my Front-Bench spokesman who has just introduced this amendment. I hope I am right in thinking—the Minister will no doubt correct me if I am wrong—that the Bill currently going through the other place requires that the head of the proposed Competition and Markets Authority should be appointed by a Minister with the approval of the appropriate departmental committee. If that is so, and I am glad to think that it will be so, it emphasises the point that the Minister made in relation to the last amendment—namely the need to firmly establish the competition authorities’ independence of Ministers. She kindly said that this followed the Enterprise Act of the previous Government in their efforts to emphasise the independence of the competition authorities. It seems to me unduly subtle to say that the head of the Competition and Markets Authority, which is to be created shortly, is of a higher calibre of significance and importance than the groceries adjudicator. It is true that the groceries adjudicator’s role is narrower than that of the Competition and Markets Authority but, none the less, it is significant in its field. Indeed, the Government’s whole introduction of the Groceries Code Adjudicator Bill is based on the notion that, in a certain area of significance to the consuming public—supermarkets—the independence to be achieved by the appointment of this adjudicator is of some importance. I therefore hope that the Minister will agree with my noble friend who has introduced this amendment.
Lord Cameron of Dillington
My Lords, I am not so certain about this amendment—in fact, I think that I oppose it. If your Lordships have ever been involved in the appointment of a public post you will know that the criteria are very strict and there are many hurdles to be jumped, with independent assessors sticking strictly to the criteria and two or three interviews. I therefore think that this extra hurdle is an unnecessary piece of red tape. I know that it is common practice in the United States, for instance, to throw candidates for this sort of posts to the wolves before they have even got their feet under the table—the wolves, by the way, are the Select Committee—but I think that this is unnecessary. We want someone who is rational, methodical and good at making judgments in a legal or semi-legal context. We do not necessarily want someone who is used to the hurly-burly of political life and who might have to understand that when an MP is being rude to him he does not mean it. He is either showing off or trying to make a name for himself and just getting carried away.
I am opposed to the amendment. Perhaps that is simply because I do not have a particularly high opinion of MPs’ ability to take the right sort of decisions in this instance. It is better to leave it up to the usual channels to appoint a valid candidate who will really be able to do a good job.
Lord Razzall
My Lords, the problem with the amendment of the noble Lord, Lord Howard of Rising, is that when we drill down, the real reason why the previous regime did not work is because a lot of farmers are very nervous and want to preserve their anonymity. That is why the regime, which I know the noble Lords, Lord Howard of Rising and Lord Borrie, and the noble Viscount, rather wish had been maintained, did not actually work in practice. Farmers were afraid that were they to complain and lose their anonymity, they would be victimised by the 10 major supermarkets. That is the reason we want to have this Bill. The amendment would go to the heart of the Bill and that is why it should be rejected.
Lord Cameron of Dillington
My Lords, I too am not convinced by any of these amendments, and I support the noble Lord, Lord Razzall, in that. The amendment undermines the point of the Bill and the adjudicator; there is currently an imbalance between the power of the various parties involved in the food supply chain which the Bill tries to redress. Thus, to tie the hands of the adjudicator in this way is not particularly helpful. After all, if we are trying to minimise spurious and vexatious complaints, is it best to limit the complaints to the supplier who may have been personally affected, or is it best to have their grievance or grievances assessed and filtered by a trade association and others, who might be able to point out what is reasonable and what is not? That, of course, is quite apart from the point about anonymity raised by the noble Lord, Lord Razzall.
I am afraid that I cannot support Amendments 19 and 20. The whole point of the Bill is to defend the little man against the power and possible bullying tactics of the big man. The whole point of the groceries code is that legal redress is too costly to risk, even if one thinks one has a case and does not have to succumb to the threat of delisting or other bullying tactics. I like the word “may” in Clause 10 because it deals with time wasters and those who are trying it on, but I strongly object to “must” in Amendments 19 and 20, which would undermine the flexibility of the adjudicator and thus much of the point of the Bill.
Lord Plumb
My Lords, I rise for the first time after something like an hour and a half of debate. I am very concerned at the way it has gone so far. I declare an interest as a farmer. In the course of the debate, I thought about the 2,500 farmers who were in Central Hall last week. Every one of them would have difficulty understanding what we have been talking about. We have rightly been talking about legal aspects of the Bill, because they have to be right and clear. However, what concerns the farmer at the moment, as a supplier of goods, is simply fairness in the marketplace. Therefore, farmers believe someone should be appointed to see that that is achieved.
That person—I presume that it will be a team—will have to take responsibility for dealing with issues not only fairly but correctly and with full understanding of what the job is about. They are not there to be involved in competition but to deal with investigation of the market that exists, or of the market that should be. The other day in Central Hall, the Minister held up a pint of milk and a bottle of water to illustrate the difference in price—56p as against 83p. A lot of questions must be asked. Surely it goes without saying that something has to be done and someone must be appointed.
If the person who is appointed finds unfairness on the other side, let it be so. That is their role and responsibility in this field. I do not agree with the amendments in this group, tabled by my noble friend Lord Howard. This amendment would leave the Bill in a similar form to the draft Bill that we saw in May 2011. Nothing has changed, and we are trying to bring about changes in the interests of the industry with which we are concerned.
The amendment would seriously narrow the sources of evidence that the adjudicator could use in launching an investigation into a possible breach of the code. That would be of considerable concern. The powers need to be broadened to allow credible evidence from any person who is prepared to come forward with a legitimate reason for asking the adjudicator to take responsibility and deal with an issue. All organisations, including charities, will have to be able to provide evidence of a breach of the code. This is a crucial element in safeguarding the adjudicator’s duty to protect the identity of the complainants. Therefore it is essential that the investigatory powers in the Bill are safeguarded but not complicated by cumbersome rules that could delay the process of ensuring a fairer functioning supply chain.
Lord Cameron of Dillington
My Lords, I put my name to Amendment 15 because I am very much in favour of the immediate application of financial penalties where, after due process, a clear breach of the code has emerged. I do not believe that merely naming and shaming will have any effect at all. Supermarkets know that, in the short term, their customers shop with them largely because they are local. Why would the supermarkets still be chasing a further 44,000,000 square feet of retail space in a recession if they did not believe that? They need more retail space nearer to more customers.
Shoppers stick to their habitual supermarkets either because they are local, as I said, or because they get to know where things are on the shelves and find it much easier to shop that way. It seems that very few supermarket customers actually make shopping decisions based on ethical or moral grounds. There are one or two but they are very few. I suspect that some supermarket staff believe that any publicity is good publicity, so I do not believe that naming and shaming will work. Supermarkets have to feel the effects of their misbehaviour in their pockets, or at least to know that they could.
Clause 9(1) seems to be merely a delaying tactic, which will put off the much-needed effects of this Bill for yet another year or so—maybe three, as the noble Lord, Lord Knight, said—until the Secretary of State grips the issue. I believe we should try to grip the issue now and that the introduction of an effective adjudicator has been delayed long enough. Frankly, there is no point in having an adjudicator unless he or she has the powers to be effective. Of course, we all hope that if they have such effective powers, those will in itself be enough to make it unnecessary for them to be used. However, the powers must be effective, and I do not believe that they will be without the ability to fine.
Lord Borrie
My Lords, I am delighted to follow the noble Lord, Lord Cameron. He has made a clear case and, of course, my noble friend on the Front Bench, Lord Knight of Weymouth, made a very powerful case, for a power to fine from day one—in other words, under the Bill itself—without having to wait for some subsequent statutory instrument which may come into force some year or so later. My noble friend Lord Knight made the powerful point that the Government’s commitment to this is lukewarm. Yes, we have the Bill—that is something and it is important; the Government have indicated that it is important—but then they draw back. They draw back from the possibility, among other weapons to be used by the adjudicator, of a fine.
Who might be subject to a fine? We are talking about powerful businesses. Not any supermarket, but only the 10 most powerful supermarkets in the country could possibly be subject to the Bill. Will they be frightened off doing what some of them have done up to now—which is why we have the Bill in the first place—by the other powers that are mentioned; naming and shaming and so on? I do not think so. Mind you, they may not, because of their power, be terribly put out by a substantial fine, but fines can be very effective as a deterrent and, after all, that is what we are mainly concerned about: not the actual imposition of a fine, two fines, or whatever, but the deterrent value of a fine. To have that deterrent value from now, from the moment when the Bill becomes law, rather than at some distant point in the future, is what makes a real difference, it seems to me. I trust that we may succeed in getting the Government to agree to this change.
Lord Knight of Weymouth
My Lords, in moving Amendment 30, I shall also speak to Amendments 43 and 44. As we interpret the letter that I referred to earlier from the Minister’s friend in the other place, Norman Lamb, to Ian Murray, regarding Select Committee confirmations of the appointment of the adjudicator, it did not show in a good light the Government’s esteem or priority with regard to the adjudicator. However, unlike the Government, we think that this is a significant new public body doing a very important role that people have long campaigned for, not just in the countryside but across the supermarket supply chain.
We therefore think that the process by which this body could be got rid of should mirror what we came up with in this House in the Public Bodies Act. Noble Lords will remember that when the Public Bodies Bill first started here it was not a great piece of legislation, with widespread use of Henry VIII powers, and the relevant committees of this House tore it to shreds. As a result, I am pleased to say the Government listened and we had a much improved Bill by the time it left this House, including introducing the super-affirmative procedure—which we have merely replicated in Amendment 44—for getting rid of public bodies that were listed in that Act. I am simply proposing that we should use the same process for the groceries code adjudicator. It is entirely logical. I suspect that the Minister will resist this amendment, although I would be delighted if she did not. Could she confirm in her reply that it is a cross-government policy that the super-affirmative procedure is particular to the Public Bodies Act and as new public bodies are created by the Government, they will use the affirmative procedure and not the super-affirmative procedure? If that is now cross-government policy, it would be helpful for your Lordships’ House to know, so if the Minister could help in that respect, if not by agreeing to the amendment, that would be wonderful. I beg to move.
Lord Cameron of Dillington
My Lords, I am all in favour of sunset clauses for quangos and for posts that are created. I believe it is right that such posts and bodies should be reviewed from time to time to see whether they are fulfilling their purpose or their effectiveness. However, it is also right that they should be reviewed under a proper procedure and consultation with all the relevant parties including Parliament, in spite of my perhaps slightly rude remarks about professional politicians earlier. Clause 16(2) provides for a very inexplicit kind of review for the Secretary of State to carry out. It does not say anything about what sort of review this is. Are we talking about the Secretary of State’s kitchen cabinet or the Treasury? What sort of review is this? Something definitely needs to be clarified. I believe that Amendment 44, albeit with its rather longwinded, legalistic caveats, is probably as good as one can get in terms of clarification. However, I will wait and hear what the Minister has to say about this.