Groceries Code Adjudicator Bill [HL]
Lord Knight of Weymouth Excerpts(12 years, 4 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)
My Lords, we are off to a marvellous start. This is a great level to start at—whether we are doing something in plain English or not. I was in on the beginning of the Plain English Campaign, as, I think, was the Office of Fair Trading and the noble Lord, Lord Borrie. I was rather hoping we would get a crystal award for how we have written this Bill in plain English, but I can see I am going to have to work very hard during this Committee stage to reassure everyone that we are trying to be as clear as possible.
I fully appreciate the sentiment behind this amendment. The Government have committed to writing the Bill in plain English, and we strive to apply this principle to all communication as the Bill goes forward. However, in this case the amendment would change the meaning of the clause. “There will be” is a prediction, whereas “There is to be” indicates that the Bill establishes the Groceries Code Adjudicator. I hope that that clarifies the point for the noble Lord.
I will answer the second question when we come to the appropriate amendment, if that is okay. I thank the noble Earl for giving me notice.
Baroness Wilcox
It might. I wonder if the noble Lord, Lord Browne, would be kind enough to let me take this away and return. I ask him to withdraw his amendment.
Lord Knight of Weymouth
I am most grateful to the noble Viscount for giving way. Has he seen the briefing that has been provided by the National Farmers’ Union, particularly the second point in the section on myths and misconceptions? It states:
“Suppliers do already have the right to independent arbitration under the code. However, this requires suppliers to make the details of their grievance known to the retailer they believe has breached the code. The Competition Commission explicitly referred to the climate of fear in this sector preventing small suppliers from complaining about unfair treatment. The current system of arbitration clearly makes no provision for this serious problem”.
Viscount Eccles
My Lords, I am grateful for that intervention, and no doubt we shall come on to discuss the climate of fear. The concern of the National Farmers’ Union is a pretty difficult issue because very few farmers are direct suppliers to supermarkets and so they are not covered by the code. Indeed, the detriments identified by Professor Lyons, to which I shall come in a moment, include the extended chain of supply to the supermarkets. Perhaps I should say at this point that I owned some cows for a while, but maybe it is not an interest I need to declare on this occasion. It is a difficult issue and we shall come on to it. I do not accept that the problem of indirect suppliers and the question of arbitration so torpedoes the present regime that it is necessary to change it. It may be necessary to do so and I am here to be persuaded, but at the moment I would not change it.
Of course, with regard to farmers, I think that we are going to talk primarily about milk and cheese production. Some 53% of milk finds its way into fresh milk, 27% into cheese and the remaining 20% into manufactured products. While I think we will be talking about that, I do not believe it quite lies within the remit of where Professor Lyons was finding detriments, except on the point of indirect supply.
The first detriment that Professor Lyons worried about was that he thought that the third-party intervention—however that was structured, but at the time the description was “ombudsman”—would be counterproductive. I suppose that was based on “two’s company and three’s a crowd”, or some such version of it. He thought that independent arbitration with the addition of monitoring by the Office of Fair Trading was a better option than the intervention of a third party for the interests of the industry.
Secondly, Professor Lyons worried very much about anonymity. He did not believe that it could be maintained and he cited the German experience. I have no doubt that we will discuss anonymity in more depth as we go along. Thirdly, he thought that justifiable investigations had a very limited potential because he did not see the third party intervening in disputes or discussions between supermarkets and suppliers about a particular contract. Her Majesty’s Government do not think that that is the way that the adjudicator should work. Professor Lyons thought that finding justifiable investigations would be quite difficult because of the length of the supply chain and the lack of ability to look into actual disputes. I am sure that we will want to discuss that more.
Next, Professor Lyons thought that any third party—an ombudsman or now an adjudicator—could be seen to be in support of suppliers, and of them throughout the supply chain. He thought that that itself could become anti-competitive. He saw difficultly in dealing with complaints from suppliers about buyers and at the same time achieving benefits for the public, particularly long-term ones. The successful outcome of intervening in a contract between suppliers and supermarkets would presumably be that the suppliers got better terms. It was difficult to link that to a benefit to the public—that link was pretty weak.
Professor Lyons also saw any third party intervening in this market as being subject to external pressures and to the almost inevitable regulatory creep. Regulatory creep has been a feature of our lives in recent years, as noble Lords have seen in the amendments to secondary legislation which have tended to make legislation more complicated and severe, not lighter or less severe. Finally, Professor Lyons said that this would be a much more expensive system than leaving things as they are.
Quite a lot of these points have been discussed but I submit that they have not really been properly dealt with and therefore, as I am probing and as we go through, I am sure that these subjects will recur. It will be interesting to see where the argument leads us. I very much agree with Professor Lyons. Sometimes, minorities can turn out to be right. His minority report was very good and absolutely on the ball. I am still left with the question: why have we got this Bill? I beg to move.
Lord Knight of Weymouth
My Lords, I am sure that we are all extremely grateful to the noble Viscount, Lord Eccles, for giving us the opportunity to test at this early stage some of the principles behind establishing an adjudicator. He used the phrase, “As far as I can tell, it is working.”. The core of this debate is whether having just the rules of the game in place is enough or whether we need a referee alongside the rules at this stage.
My strong view is that we need a referee now in order to enforce the rules and to make sure that everyone who is a part of this market and supply chain understands that if they break the rules, there will be consequences. In preparing for Committee stage I have spoken to a number of suppliers to supermarkets and to people in the supermarket supply chain. The anecdotal evidence I have received is that there are still some considerable problems. If there is a belief that it is working, that may be correct technically in terms of the OFT’s analysis, as we have just heard from the noble Lord, Lord Curry, but the reality for people who are trying to operate within this market is that it is not.
As regards notice periods, in some aspects of this business there are no contracts. Thus, the supermarkets often give very short notice—for example, one week for the complete stopping of ordering goods. A minimum of three months’ notice should be given for changes. There are short-term changes to forecasts. The current system is that suppliers get the forecast from the retailer, which is not binding, and then receive the order generally on the day of dispatch. The supermarkets then charge a penalty for not supplying the volumes on the order—shorting—even if they are massively different from the forecast. For example, the sale of salads on a hot weekend can go up fourfold or the supermarket can choose to do a promotion and not tell the supplier. If the supplier fails to supply the larger volume, it could get a penalty charge.
On the flip side, if a supermarket decides to cut back its orders massively, the supplier can be left with big stocks to write off because, often, these goods are on the supermarket’s own label and cannot be sold elsewhere. Consequently, the supplier loses out. I see the noble Viscount, Lord Eccles, wants to intervene, which will be a pleasure.
Viscount Eccles
Perhaps I may ask the noble Lord a short question. What part does he think that the public plays in the salad sales on a hot weekend?
Lord Knight of Weymouth
I am grateful to the noble Viscount for his intervention. Clearly, the public are the consumers. I am certainly aware that not every supermarket is guilty of abusing its power. The competition between supermarkets generally has been very good for consumers but that does not mean that they should continue to be able to use that power to exploit their relationship with suppliers.
To give another example, I heard about a company which was developing an innovative low-sugar jam. It took the product to a very large supermarket because, having invested in developing this new product, it needed to get the volume of sales that could be achieved only by using one of the large supermarkets. The supermarket was very interested and said, “Leave it with us. We will give you a call.”. It gave the company a call and said, “Do come in. We want to talk to you about the low-sugar jam that you showed us.”. The supermarket called the company in just to put on the table its own product which it had developed in response to that company’s innovation. Therefore, that investment was a loss for that innovator. Similar stories of abuses of market power by some supermarkets—not all of them—are legion. I referred to the helpful briefing from the National Farmers’ Union. We have had similarly helpful briefings from the Country Land and Business Association and the Federation of Small Businesses. All were extremely supportive of the establishment of this adjudicator because they agree that we need a referee.
I know that we will go on to talk about some of these things throughout the proceedings of the Committee. In response to my intervention, the noble Viscount, Lord Eccles, said that not many farmers supply retailers directly. The NFU tells us that some do and, what is more, the Competition Commission has identified an adverse affect on competition whereby grocery retailers pass unexpected costs and excessive risks down the supply chain. Ultimately, those risks, in the form of extra costs, are passed on to producers, even when they do not deal directly with retailers.
Lord Howard of Rising
I must declare an interest as I have a tenant who is a direct supplier to a supermarket. The examples that the noble Lord, Lord Knight, gives us are all those of vested interests that would like to have better commercial arrangements. There is nothing whatever to stop any farmer saying to his supermarket, “I do not like your terms of trade and I will not supply you”.
Lord Knight of Weymouth
It is very helpful to have the contribution of the noble Lord, Lord Howard, because he has a particular view that we can leave this all to the market, which is operating perfectly. I disagree. I remember from my economics A-level that you can have perfect markets but you can also have imperfect ones and powerful players within markets who abuse their market position. I believe—as did the Competition Commission in its analysis—that that is the case here. That is where the noble Lord and I will differ as we debate these things. In the end, those suppliers will struggle to find another market. Often, they have worked with a supermarket and built up a relationship where they have been persuaded that it is worth investing in, for example, growing a product. That needs at least a 12-month timeline. The supplier or grower of that product takes on a huge risk because they have invested 12 months in advance but the contract will only give them at best three months’ notice of cancellation. They can just be cancelled on and that happens all the time. That is a difficult aspect of that market relationship.
I give another example: I know of an innovator of a new chocolate product using pomegranate dust from Afghanistan. That innovator had to invest significantly in developing the product. It is a fine product but the innovator has to recoup the cost of that investment and needs to get the product out in volumes that are only achievable using large supermarkets. The response from the supermarkets is, “Yes, we like the product. If you want us to stock it then you need to pay us to take it on. If you want a decent shelf position, you need to pay us some more money. If you want point-of-sale merchandising, you need to pay us for that as well”. That individual needs to acquire a huge amount of investment to be able to innovate. In the end, a healthy market allows new players to come into it, to innovate and introduce new supply. That is not happening very easily in this particular market because of that power relationship and the structure of how it is set up. I strongly urge the noble Viscount to withdraw his amendment and strongly urge the Committee to support proceeding with the establishment of the adjudicator.
Baroness Wilcox
My Lords, this group of amendments goes to the very heart of the Bill. It concerns whether or not there should even be a groceries code adjudicator, or whether oversight of the code should continue to rest with the Office of Fair Trading. It is therefore only fitting that we should debate it early on, and I thank the noble Viscount, Lord Eccles, for raising it. I also thank him for allowing us to discuss all these amendments in one go. I also thank the noble Lords, Lord Borrie, Lord Razzall, Lord Curry, Lord Knight and Lord Howard, for their contributions to this debate.
I will not repeat all that I said at Second Reading. I know that the majority of us here support this Bill. Suffice it to say that, in its 2008 report on the supply of groceries, the Competition Commission found that the buying power of large supermarkets was potentially a cause for concern. It found that retailers were transferring excessive risks or unexpected costs to their suppliers, a practice that was likely to lessen suppliers’ incentives to invest and innovate, and that this would operate to the long-term detriment of consumers.
The Competition Commission therefore made an order that required large retailers to incorporate the Groceries Supply Code of Practice into their contracts with suppliers. It also recommended that an independent groceries code adjudicator be established to enforce the code and ensure that it was effective.
The adverse effect on consumers is not something expected to follow immediately and directly from a specific action by a retailer. Rather, the transfer of excessive risk or unexpected costs lessens incentives for innovation and investment, and the reduction in innovation and investment is what causes consumers harm.
This is a long-term effect and not one that can easily be measured—and not one that we should stop to measure before we have even implemented the measures recommended by the Competition Commission. I ask noble Lords to note that in the pre-legislative scrutiny the BIS Select Committee explicitly considered whether another review should be carried out, but concluded that we should instead implement the recommendations of the Competition Commission as swiftly as possible.
On the point from the noble Viscount, Lord Eccles, about the report from the Office of Fair Trading, I will pass his concerns to the OFT. I remind noble Lords that the OFT operates independently of Ministers, but I will pass that on and see if we can get some result for the noble Viscount. He has referred to the fact that the members of the Competition Commission were not unanimous in their view that an independent adjudicator should be established. He cited passages from the report which set out that minority opinion. He is right that one member of the panel did not agree with the rest, and I recognise that not everyone thinks the adjudicator is necessary. However, five out of six of the members did consider that an independent adjudicator should be set up. They concluded that an adjudicator is essential for the effective monitoring and enforcement of the GSCOP. That is why the Government are committed to establishing an independent adjudicator.
The amendments in the name of the noble Viscount, Lord Eccles, would give the powers in this Bill to the Office of Fair Trading, not to an independent adjudicator. However, the Competition Commission recommended an independent adjudicator. There are clear advantages to establishing an independent, dedicated office with industry expertise, which can build working relationships with supplier trade associations and retailers, monitor compliance and promote best practice. The Office of Fair Trading has told us that it fully supports the argument that the GCA should be an independent body, separate from the OFT or any other organisation. Furthermore, on a practical point, it would not be appropriate to give these powers to the OFT while the broader competition regime is undergoing so much reform.
The Government believe that the best way to address the issues in the groceries market identified by the Competition Commission is to establish an independent groceries code adjudicator to enforce the groceries code, not to give more powers to the Office of Fair Trading. This is also the view of the BIS and EFRA Select Committees, of the Office of Fair Trading and of five out of the six panel members of the Competition Commission investigation.
I have listened to all the views that have been expressed and I thank in particular the noble Viscount, Lord Eccles, for taking the time and trouble to explain his differences so clearly. However, at this stage, I would ask him to withdraw his amendment.
Viscount Eccles
I am grateful to the noble Lord for his intervention, but I doubt whether a state-appointed sole corporation will generate more confidence.
There are all sorts of problems. I used to supply power steering pump casings to Delphi in Strasbourg on a schedule. One week it would be three container loads and the next week it would be one, then suddenly in the middle of the week it would be four, but the following week it would be none. That is the way that just-in-time supply works. There is no escape from it, and it does not matter whether it is the supply of lettuces or steering pump housings, where we were the only people who made them for Delphi.
Lord Knight of Weymouth
For how long did the noble Viscount’s steering pump parts last if he had to store them? What was their shelf life?
Viscount Eccles
We did not know how soon Delphi would change its designs because there was a range of power steering pumps. Let me assure the noble Lord that there was no question of storing them. Delphi wanted them to come in and be fitted straight on to the machines. For many years I was a supplier to Marks and Spencer. The schedules changed every two or three days. That is the way of the interaction between suppliers and the retail market, particularly for anything that has a short shelf life. The noble Lord is quite right, if it has a longer shelf life, one can be a little more relaxed.
I do not therefore see that the problems raised by the noble Lord will come at all easily within the purview of the adjudicator. We shall shortly consider the investigations clause, and I am not at all confident, even if they do come within the adjudicator’s purview, that any substantial progress will be made from the point of view of those who want the supplier’s life made easier and the returns made greater. I do not see it working.
My noble friend is quite right to say that the Competition Commission stated that if there was no satisfactory agreement with the supermarkets it would be necessary to introduce an ombudsman. We should note that we are actually proposing to introduce something quite different to an ombudsman, and we should not therefore pray in aid the Competition Commission without any qualification.
I should add that the decision was, I suppose, made in 2007—it takes quite a long time for these decisions to get into a final published report—which is almost five years ago and the circumstances are different. The high street is under tremendous pressure that is much greater than it was when the report was written. The shares on the London Stock Exchange of the four British-based supermarkets on the list are all languishing near the bottom of their 12-month range.
I therefore feel that anything we do to erode the highly successful competitive model of the supermarkets and their suppliers—including, I may say, Nestlé, Kellogg’s, and Unilever and its subsidiaries—is not going to serve the public well. However, at this stage, and I may come back to this matter—
“The Groceries Supply Order
(1) The Secretary of State must make an order to establish the Groceries Supply Order by statutory instrument.
(2) The Secretary of State shall commission a review into the effectiveness of the Groceries Code to report no later than two years following the commencement of this Act.
(3) An order may not be made under subsection (1) until a review under subsection (2) is completed.
(4) An order made under subsection (1) is subject to the approval of both Houses of Parliament.”
Lord Knight of Weymouth
My Lords, many of the debates we have had on the Bill, and will no doubt continue to have, are of limited relevance to the legislation before us because they have been about the market practices of the major retailers.
I am in many ways grateful that we have been able to have the debate initiated by the noble Viscount, Lord Eccles, to get some of those matters off our chest in a way that is relevant. However, those debates are on the groceries code itself, not the adjudicator’s role as referee to that code. Yet, despite sitting at the heart of the debate, the code has never been subject to any formal parliamentary scrutiny. If noble Lords wish to blame the previous Government who introduced the code for doing it that way, that is fair enough. However, in a slight echo of the noble Viscount, we are where we are and my job relates to 2012, rather than 2010.
It is worth referring the Committee to the Delegated Powers and Regulatory Reform Committee’s first report of this Session which considered the Bill. The first paragraph states:
“This is an unusual Bill, for its purpose is to provide for enforcement of a Code which no Act of Parliament requires to exist, and which may be altered or revoked without any Parliamentary involvement. The Groceries Code is a Code of Practice set out in Schedule 1 to the Groceries (Supply Chain Practices) Market Investigation Order 2009 which was made by the Competition Commission. The Order is not a statutory instrument and is not subject to a Parliamentary procedure”.
The committee goes on to say that that informed its consideration of the Bill.
The committee is right to point out that it is a bit odd that primary legislation is being used to set up a referee for something that does not exist in any kind of parliamentary statute. In part, what I seek to do with the new clause is to right that. The code is not a statutory instrument but a function, as we have heard, of the Competition Commission’s power under the Enterprise Act 2002. While the Act was thoroughly scrutinised by Parliament, the groceries code had no scrutiny by this House. We in the Lords take extremely seriously our responsibilities to scrutinise secondary legislation. While it is right that the Competition Commission has powers to correct the market, surely there is merit in allowing proper oversight and scrutiny of the remedy proposed. It is fundamentally odd that while Parliament is entitled to debate and scrutinise the function and powers of the referee, we are denied the opportunity to give the same scrutiny to the rulebook itself. Amendment 3 introduces a new clause to establish the code as a statutory instrument of Parliament.
I do not want in any way to delay the passing of the Bill and the establishment of the adjudicator. I do not propose that we pause the whole process in order to introduce a new statutory code and then set up an adjudicator because that would delay things considerably. The Committee should consider allowing the adjudicator to go ahead with the established code that came into effect in 2010, but at the same time requiring the Secretary of State to commission a review into the effectiveness of the existing code and the operation of the whole supply chain. When the Competition Commission was commissioned, it was asked to look only at direct supply into supermarkets; it was not asked to look at the operation of the whole supply chain. We now hear a lot of complaint about the operation of intermediaries. What I propose would allow a review to look at how that is working and to see whether any amendment of the code would then be helpful, which could then be introduced to Parliament for approval.
I am extremely grateful to the Minister for her letter of 19 June explaining the government amendments that we will discuss later. The main amendment is to Clause 15. I am also extremely grateful to the many Members of your Lordships’ House who thought that the letter had been misdirected to them and chose to send on their copy to me. I have many copies of this letter; clearly they did not see that it was being copied to all Peers. Never mind—it was all entertaining stuff. In the letter, the Minister clarifies that through the amendment the groceries supply order will provide that each designated retailer will ensure that its subsidiaries comply with the order. Therefore, subsidiaries that deal with suppliers should incorporate the code in their supply agreements and then comply with it. That is extremely helpful because it clarifies for us that the code as it is written—and as the adjudicator will then referee it—operates down the supply chain. That is certainly of comfort to those of us who are concerned about that.
Nevertheless, having a review at this point—two years in—that looks at the whole supply chain and makes a judgment about whether some improvement to the code can be made would be helpful so that we can then have a statutory code. That is the basis of the amendment. Placing it in statute is a good opportunity for parliamentary scrutiny and would provide a mechanism for it then to be updated and to remain a living instrument, which is something that the National Farmers Union, for example, is asking for. It would then be capable of responding to changing market forces and would be as durable as the adjudicator whom the Bill sets up in primary legislation to referee it. I beg to move.
Baroness Wilcox
The noble Lord, Lord Knight, has brought us an interesting amendment, supported by his colleague, the noble Lord, Lord Grantchester. It is perhaps not fully aligned with the subject of the Bill, which is the creation of a groceries code adjudicator. I reassure noble Lords that the groceries code, contained within the Groceries Supply Code of Practice Order 2010, already has full statutory force and the requirement to incorporate it in their supply agreements is binding upon all large supermarket retailers. There is therefore no need for the Secretary of State to establish it by statutory instrument.
Furthermore, the review of the groceries code is the responsibility of the Office of Fair Trading not the Secretary of State. If the OFT considers that a change in the code or the order is needed, it can advise the Competition Commission accordingly. As the code concerns the remedying of practices that are concerned with competition, it is right that oversight of the code rests with the independent competition authorities, which have the necessary expertise and can make decisions based on objective economic criteria.
The noble Lord, Lord Knight, also asked whether it is right that the Competition Commission can make such orders without recourse to Parliament. Noble Lords who wish to discuss the powers of the competition authorities will have to wait until the Enterprise and Regulatory Reform Bill enters this House. However, the Government consider it entirely appropriate for the Competition Commission to make remedies based on the findings of its investigations.
Lord Knight of Weymouth
I am grateful to the noble Baroness on that matter but I am struggling a little. Fundamental to the amendment is whether or not Parliament should have a role in scrutinising the Groceries Supply Code of Practice, which the adjudicator will referee. If the noble Baroness is saying that we will have to wait before we find out how Parliament will then scrutinise the code, we are in a difficult position to legislate. Have I misunderstood?
Baroness Wilcox
No, I do not suppose for one minute that the noble Lord has misunderstood, because I spoke quite slowly and clearly. As to whether it is a question I can answer now, I do not know. Obviously, the noble Lord may feel that the Bill is going to stop at this very moment if I do not answer that question, but perhaps I may have a conversation with him on this matter before we come back on Thursday. As I understand it, the powers of the competition authorities are going to be debated under the Enterprise and Regulatory Reform Bill when it enters this House. Perhaps I may leave it at that for the moment.
I move on to another question on whether the code will apply further up the supply chain. I should emphasise that government amendments that we will discuss later do not extend the code to intermediaries. The amendments ensure that only subsidiaries of the 10 retailers are covered, as they are in the code. I hope that that is clear when noble Lords read it tomorrow in Hansard. It might be a little more cogent. I have no more help from behind me, so perhaps I may ask the noble Lord to withdraw his amendment at this stage.
Lord Knight of Weymouth
I am kind of grateful to the Minister for that. The noble Viscount, Lord Eccles, was in many ways right to say that I sought to go beyond where the Competition Commission had reached and was looking for an opportunity to debate this issue. We are establishing the adjudicator who will referee the code. Plenty of people who have debated the Bill want to ensure that the code is a living code and is regularly reviewed so that changes in market conditions can be accounted for. There are concerns about intermediaries and we are looking for ways in which we might think about whether the code could be extended to cover them. That is worthy of consideration. In response to what the Minister said, I am sure that if the Secretary of State were to ask the Competition Commission or the Office of Fair Trading to have a look at the operation of the whole supply chain, they would do so. I am sure that if the Secretary of State were to then ask them, as a result of that review, to consider whether or not the code should be updated, they would be happy to do so. That is the way things work in government. If the Secretary of State asks these people to do things, there is a very good chance that they will give that serious consideration and try and meet the Minister’s wishes.
I understand what the noble Baroness was saying regarding the Enterprise and Regulatory Reform Bill. In the end, I understand that there is nothing technically wrong with the code as it is written. The powers that were used properly to set it up remain until they are changed, subject to Parliament, by the Enterprise and Regulatory Reform Bill. I understand that they are not going to know how that works. For now, I am content for this Bill to be debated in the context of the current environment rather than some speculative future environment that may or may not come about, subject to parliamentary process. We can probably park that convoluted little debate in which we managed to find ourselves.
The fundamental thing remains: if this is not the right mechanism for keeping the code as a living code and something that Parliament can scrutinise, I am relaxed about that but would love for the Government to come back with a way for this Committee and your Lordships’ House to amend the Bill so that we can keep it a living code and, at points, consider whether or not it is up to date. With that, I beg leave to withdraw the amendment.
Lord Browne of Ladyton
The honest answer to the noble Viscount is that we have many adjudicators. We call them judges. However, I am not aware—although the Minister may be—of the use of this term in another set of circumstances that could be instructive to the Committee in analysing the process. I have no doubt that the noble Baroness will quickly leap on the alibi granted to her by the noble Lord, Lord Borrie, that the drafters of the Bill unfortunately came up with this unhelpful title. My argument is that, if it walks like a duck and quacks like a duck, it is a duck. When they created the position and wondered what to call it, they must have said, “It is an adjudicator, so let us call it that”, and they were right.
Lord Knight of Weymouth
Before my noble friend Lord Grantchester responds, I will say very briefly to the noble Viscount, Lord Eccles, that there is a schools admissions adjudicator who adjudicates the schools admissions code.
Lord Browne of Ladyton
I am grateful to the Minister for dealing so comprehensively with the constituent elements of my argument. I am not entirely persuaded by all her arguments. I read that the distinction between an ombudsman and an adjudicator is that an ombudsman deals with only consumers and therefore cannot regulate a set of circumstances in which consumers are not involved. I am not entirely sure whether that argument is sustainable but it has been deployed in earlier debates on this legislation for justifying the move from the recommendation for an ombudsman in relation to this role. When I read it in the past I was not convinced and, with respect to the noble Baroness, I am not convinced now. However, I realise that that is the Government’s position, which I respect.
I am grateful to my noble friend Lord Borrie for his intervention and I am enormously respectful of his vast experience in the area of consumer protection and competition. I thought that he got almost to the point where he agreed with me but could not break through the cigarette paper that was between us—which I have to say he put there. I am also grateful to him that he thought that there was something in my argument.
There is nothing implicit in any of these arguments that is in any sense critical of the way in which I expect the Secretary of State to behave. I expect the Secretary of State of whatever party is in government in this country to behave in an entirely appropriate way and not to make capricious decisions. I accept also that it may be possible to find other examples—as there were in the noble Baroness’s brief—of similar types of appointment that have not been considered to be judicial appointments or have required the intervention of the Judicial Appointments Commission in the past. However—I will research this as I cannot be certain about it—I suspect that none of those roles was created by statute since the creation of the Judicial Appointments Commission in 2005. In view of the roles held in the OFT in the post-2005 constitutionally changed environment, I would argue that it would be inappropriate to appoint someone with those sorts of powers without the element of independence that we imposed on the nature of these appointments by passing that legislation.
I am concerned that perhaps we treat constitutional change now as being of the moment and that we revert to type thereafter. But the 2005 Act was a significant step in creating an element of independence in the role of people who exercise these types of functions. We extended it well beyond what people would normally think of as judges, for instance into tribunals that cover a significant area of public life. I do not believe that competition should be immune from that restraint as regards the constitution. However, despite the fact that I believe quite strongly in this argument, at this stage I am content to withdraw the amendment—before I do so I will give way to my noble friend.
Lord Knight of Weymouth
Before my noble friend withdraws his amendment, I ask his indulgence so that I can come back to the Minister on what she said in respect of Select Committees being involved in a confirmation hearing. I refer her to the coalition agreement, which stated:
“We will strengthen the powers of select committees to scrutinise major public appointments”.
I turn to the Conservative Party manifesto for 2010, which stated that it would,
“give Select Committees the right to hold confirmation hearings for major public appointments, including the heads of quangos”.
The Liberal Democrat manifesto stated that the party would:
“Strengthen the House of Commons to increase accountability. We will increase Parliamentary scrutiny of the budget and of government appointments and give Parliament control over its own agenda so that all bills leaving the Commons have been fully debated”.
I now refer the noble Baroness to some of the appointments that have been subject to pre-appointment hearings. From her own department, hearings were held for the chair of the Gas and Electricity Markets Authority, the chair of Ofcom, the chair of the Competition Commission, the chair of the Office of Fair Trading and the chair of the Postal Services Commission. She may argue that those are more major appointments than that of the adjudicator, but we think that it is important, otherwise we would not be here. Does she think that the post of adjudicator is more important than the chair of Oftenant, which is a quango from the Department for Communities and Local Government? I might also mention the chair of the Agricultural Wages Board, the chair of the Gangmasters Licensing Authority and the chairs of the research councils. That is a list of quangos, some of which are now being abolished. However, these are equivalent appointments and it is clearly the policy of her party and the coalition to give Parliament more scrutiny of such appointments. I do not understand why there is a problem.
Lord Browne of Ladyton
I am grateful to my noble friend for expanding my peroration quite significantly. The only point I had left was to refer to the necessity for some element of independence in this appointment. At some stage in Committee we will consider the absence of independence with regard to the dismissal or abolition of this role, which is a wrong step for many reasons, not the least of which is the role of Parliament. It seems to me that as a society we were on a journey towards recognising the need for an element of independence in the appointment of people who exercise certain powers. With respect to my noble friend Lord Borrie, it is not the narrowness of the issue but the nature of the powers that is important. We should be very wary of giving powers of this sort to individuals to exercise in our society without going through the appropriate processes to ensure utter independence from the Executive. That means not just factual independence but independence in law, and we must be consistent so that people go through the same process of selection that has been imposed on others to ensure that they meet the criteria that have been created.
In the mean time, I will study what the noble Baroness said and research whether any of the examples she gave predate the 2005 Act, with the distinct possibility that I will return to this issue at a later stage. I beg leave to withdraw the amendment.
Baroness Wilcox
My Lords, I fully recognise the importance of ensuring that the adjudicator has the powers necessary to adequately carry out its functions. However, the powers listed in this amendment are already provided for in the Bill. I refer in particular to paragraph 16 of Schedule 1, which provides:
“The Adjudicator may do anything that is calculated to facilitate the carrying out of the Adjudicator’s functions or is conducive or incidental to the carrying out of those functions”.
It is clear that sub-paragraphs (a) and (d) of the amendment are covered by this. The adjudicator could, for example, use this to enter into contracts or to obtain and pay for legal advice. Similarly, it must be the case that the adjudicator has the power to enter into a lease, which is an interest in land. With regards to borrowing, I draw the noble Lord’s attention to, for example, provisions such as paragraph 20 of Schedule 2 to the Human Tissue Act 2004. That is exactly like our paragraph 16, except that it ends with the words,
“but may not borrow money”.
That implies that a general power includes a power to borrow unless it is specifically excluded. I hope that that is helpful.
Lord Knight of Weymouth
My noble friend raises an interesting point and I thought that I would wait to hear whether the noble Baroness prayed in aid paragraph 16. I worry about the very broad nature of the power that the adjudicator gets in paragraph 16 to do whatever he or she thinks is appropriate to perform the functions. It seems sensible enough, but I am mindful of what the large retailers are saying to us in respect of them having to pay a levy to fund the operation of the adjudicator and there being very little protection for them as to how much that would cost. Paragraph 16 as it stands seems to give a very wide power that leaves them vulnerable to some considerable costs. I wonder if the Minister needs to reflect on whether there is a way to give some protection to the levy payers to make sure that, were this interpreted by a frivolous adjudicator who thought there were some incidental things to the carrying out of functions, they could not go slightly berserk and incur quite a large cost on those levy payers.
Baroness Wilcox
The noble Lord, Lord Knight, will be pleased to know that we are ahead of him on this. The adjudicator will be able to carry out these acts only if it is to facilitate the carrying out of the adjudicator’s functions or if it is conducive or incidental to the carrying out of those functions. This will ensure that the adjudicator’s powers are used responsibly and are not abused. For example, it would not be possible for the adjudicator to make investments in land. I hope that that may be of some help. I was about to say that we might add things like, “should not go to Ascot” or this, that and the other, but I am being frivolous. I think that that is broad enough to cover any difficulties there.
Lord Knight of Weymouth
I am grateful to the noble Baroness. It is the “incidental” that would worry me the most were I a levy payer. I will leave it at that because I do not want to labour the point. We need to think about this a little. I know that we may have an amendment later that looks at whether the annual reports should explicitly include the cost of administration so that that is transparent and clear to levy payers as a way of ensuring that these “incidental” expenses are not excessive. I think that the point has been made.
Lord Browne of Ladyton
The noble Baroness asked whether I am reassured. I am. How could I not be, given her explanation that what lay behind “incidental” powers is now on the record and it has been made clear that the adjudicator will have the powers necessary to carry out the functions that will support the role?
I do not expect the noble Baroness to answer this question, but she may reflect upon it: if paragraph 16 is all-encompassing, what is the purpose of paragraph 8? Why is it necessary for paragraph 8 to be in this schedule at all to deal with the issue of the remuneration of the adjudicator and deputy adjudicator if incidental powers cover all those fundamental things? I was misled by the presence of paragraph 8, thinking that “incidental” meant, in plain English, what I would consider to be incidental.
The powers that I put in the amendment are pretty fundamental to the office of the adjudicator. Given that this is the money of those who will support the role and given that, as my noble friend Lord Knight articulated, there is an argument for spelling out in plain English the powers that the Government expect the adjudicator to operate or use, particularly if those powers are relevant to the spending of other people’s money, it would be more helpful to spell out the powers that an adjudicator has for spending money than to give an office of this nature incidental powers that are so all-encompassing against a provision such as paragraph 8.
That being said, the matter is now all on the record. It is very clear that there is some restriction on these incidental powers as well as on the exponential expansion of them. To that extent, I am grateful to the noble Baroness. In those circumstances and since the amendment is redundant, I can do nothing but beg leave to withdraw it.
Lord Browne of Ladyton
My Lords, noble Lords will be pleased to hear that I will not be insisting on these amendments. They were tabled for a specific reason, but that has actually been addressed in debate thus far. The answer to them is clear, because they anticipate the Enterprise and Regulatory Reform Bill, which is of course not yet enacted. They are therefore deeply premature, but were intended to initiate another debate, exploring what powers and relationships the adjudicator will have with these offices, but we have already had that debate.
I am conscious, however, because I argued that my amendments should be grouped with others in order to minimise the time, that if I do not move it that will imperil the rest of the grouping. I do not intend to insist upon my amendments because I understand what the Minister’s argument would be. I beg to move.
Lord Knight of Weymouth
My Lords, I will speak to Amendments 12, 96, 124 in my name and that of my noble friend Lord Grantchester, which are about the powers to abolish the adjudicator. It is always a little worrying when a Government are thinking about the manner in which they will dispose of a new office before it is even established. Clearly, this is what the Government have done. Clause 16 provides both for the transfer of the adjudicator’s functions to another public body and the outright abolition of the adjudicator, something which one or two Members of this Committee would, I am sure, welcome.
The fact that the Government have made such specific provisions rather implies that they already have a good idea about what they expect to happen to the adjudicator after a couple of years. A more cynical person might infer from this that the Government have calculated that they can benefit from a few good headlines now in setting it up, and then quietly merge the office with the Office of Fair Trading, or the new Competition and Markets Authority a couple of years down the line. That would probably feel like a very efficient win-win to the Government; but this is obviously a highly cynical view. The Government could even quietly get rid of the thing altogether with a simple Motion in Parliament.
We have heard how this issue has exercised suppliers to supermarkets for some time. It has been the subject of campaigns for a number of years. I do not believe that the affirmative resolution is in this instance a high enough threshold for Parliament to allow the Secretary of State to abolish this public body so easily. The reason for this goes to the heart of what the adjudicator is there to achieve, and to the arguments on the powers which the adjudicator should have available. In a sense, if the adjudicator never initiates a single investigation or uses a single one of his or her powers, this could just as easily indicate success as it could do failure of their functions. The reason for both the code and the adjudicator is not to catch retailers out so much as to compel good behaviour and to make clear where the boundaries lie between competitive and anti-competitive practice. The presence of the adjudicator alone, especially an adjudicator with teeth, such as strong powers to fine, should, we hope, be enough of a deterrent to ensure that retailers never stray beyond the rules of good practice set out by the code. If a referee—or, if it pleases my noble friend Lord Browne of Ladyton, a quasi-referee—goes through an entire football match without giving a single booking, you would applaud it as a success. You do not question the future need for the referee.
It is therefore worrying that the Government have included a mechanism for the adjudicator’s abolition without giving any indication of how they intend to measure the continued value of an adjudicator. At the very least, the bar for abolition should be set higher than it currently is within the Bill. Our amendments 12, 96 and 124 would require the Government to follow exactly the same procedures as are set out in the Public Bodies Bill model of a super-affirmative order in order to abolish the office. Indeed, in proposing these amendments, we are seeking some consistency from the Government.
Baroness Wilcox
My Lords, on the amendments tabled by the noble Lord, Lord Browne of Ladyton, I recognise that in due course the references to the Competition Commission and the Office of Fair Trading will most likely need to be changed to refer to the Competition and Markets Authority. My ministerial colleagues in BIS are currently working hard to ensure that the Enterprise and Regulatory Reform Bill, which will bring about these changes, makes a successful passage through the other Chamber. However, the Government believe that it would be presumptuous of us to take the will of Parliament for granted by making a reference to the Competition and Markets Authority when the Enterprise and Regulatory Reform Bill has not yet received its Third Reading in the other place, so we propose to consider the amendments tabled by the noble Lord, Lord Browne of Ladyton, at a later stage of this Bill’s passage through Parliament—namely, when the other Bill is more advanced.
With regard to the amendments tabled by the noble Lords, Lord Knight of Weymouth and Lord Grantchester, we all agree that when granting delegated powers, the appropriate degree of parliamentary scrutiny should be provided. Too weak a procedure could lead to a lack of scrutiny and the weakening of parliamentary authority. However, too stringent a procedure would not only be cumbersome, wasting Parliament’s valuable time, but could act as a barrier to timely action. The noble Lord, Lord Knight, asked why there are abolition provisions in the Bill. Abolition and review provisions are included in accordance with the broader policy on sunset and review that we are pursuing. It does not indicate an intent to abolish the body or transfer its functions.
The Public Bodies Act has been mentioned as a precedent. However, there is a big difference between that Act and this measure. The Public Bodies Act confers powers to abolish, reform and modify a wide range of public bodies, and confers a range of ancillary powers such as the power to amend primary legislation. However, this Bill is a limited measure to establish a new adjudicator in a single, specific area of the economy, the grocery sector. It is quite a different thing.
I remind noble Lords that the Delegated Powers and Regulatory Reform Committee examined the Bill. Its report is available to any Member who wishes to read it. The committee carefully considered whether the procedures provided by the Bill were appropriate, and specifically considered whether some measures should be delegated at all. However, it concluded that the procedures were appropriate and did not recommend the replacement of the affirmative procedure with the super-affirmative procedure at any point.
Lord Knight of Weymouth
The noble Baroness is of course right to refer to the first report of the Delegated Powers and Regulatory Reform Committee. When it considered abolition, in paragraphs 6 and 7 of the report, and Clause 16(2), it stated:
“This provision illustrates the unusual nature of this Bill”.
It then goes back to its opening paragraph, which states:
“If the Competition Commission revoked the Order containing the groceries code, the Act would serve no purpose so it could be repealed. There would be no great point of principle involved in its repeal, for the Act is wholly dependent on the Order”.
The committee’s view was very much informed by the weirdness—which I referred to earlier—of setting up in primary legislation a quasi-referee to govern a code that Parliament has no power to scrutinise.
It is entirely appropriate and comparable with the Public Bodies Bill, which was about the bonfire of the quangos and the Government having the power in secondary legislation to get rid of quangos that they had set up in primary legislation. In this primary legislation we are setting up a quango. In Clause 16 the Government are seeking to use just the affirmative procedure if they want to abolish it. It is entirely consistent with the Public Bodies Act to argue for the super-affirmative procedure.
Baroness Wilcox
Perhaps if I go back and continue for two paragraphs, we might find something a bit more helpful. I will go back again to say that the Delegated Powers and Regulatory Reform Committee examined the Bill. It carefully considered whether the procedures provided by the Bill were appropriate, and explicitly considered whether some measures should be delegated at all. The committee concluded that the procedures were appropriate and did not recommend the replacement of the affirmative procedure with the super-affirmative procedure at any point.
On the abolition of the adjudicator, the committee stated:
“We considered whether this goes far enough and whether the policy and repeal of the Act in these circumstances should be effected by another Bill. But we are satisfied that the affirmative procedure is appropriate given the overall purpose of the Bill”.
On transfer of functions, the committee said:
“An order under clause 16(1) can transfer all or some of the Adjudicator’s functions to another public body (undefined). The power is balanced by the affirmative procedure; and the Adjudicator’s functions are specific under the Bill. We are satisfied with this approach”.
Abolition and transfer of functions are major steps that should be subject to the super-affirmative procedure. The Secretary of State can abolish the adjudicator only for being ineffective or unnecessary, under the clauses referred to by noble Lords, following one of the triennial reviews. These reviews require full consultation. Transfer of functions can be done only after consideration of whether it will increase efficiency, effectiveness and economy, while ensuring appropriate accountability to Ministers.
This Committee’s job is to carefully scrutinise delegated powers and to ensure that the appropriate procedures are chosen. If the committee had recommended changes to the Bill, we would have considered them extremely carefully, but it said that the procedures were satisfactory.
As I said at the beginning, one must ensure that the degree of scrutiny is proportionate to the powers involved. That is why it would be absolutely wrong, for example, for the negative procedure to be used in these cases. Equally, the super-affirmative procedure is a step too far. With that explanation, I invite the noble Lord to meet me after today and talk this through further. I would be delighted to do so, rather than taking up any more of the Committee’s time at this stage. Therefore I ask the noble Lord to withdraw his amendment.
Viscount Eccles
I will try to be brief. I start by coming back to Professor Lyons, whose views were set out in paragraph 11.347 of the Competition Commission’s report:
“However, he believed that the Ombudsman would be counterproductive and strongly preferred rapid, independent arbitration of disputes, combined with OFT compliance”.
On the question of independent arbitration, I hope that we will investigate what is happening. It is very normal in conditions of supply and sale for there to be arbitration clauses. I suspect that if we were dealing with a large supermarket and somebody like Nestlé, Kellogg’s or Unilever, there would be arbitration clauses in the supply and purchase agreements. Are we saying that the adjudicator will override those clauses in some way because of the provisions of the Bill? That is one of my main reasons for suggesting that the adjudicator should play no part. That is why Clause 2 should come out of the Bill—and with it, under my Amendment 16, subsection (1) of the following clause. The adjudicator will not be at all well served by having the duty to administer arbitration or, if not being the arbitrator him or herself, to appoint another. That will override a lot of the existing and quite normal arrangements that are set out independently in contracts.
My noble friend said in different terms that the adjudicator will be neutral and fair between suppliers and retailers. I say with some regret that that is not the expectation. The expectation of the adjudicator, and those lobbying for the appointment of one, is that he or she will be in support of suppliers. I do not think that we should blink at that in this Committee. There has been no argument by the retailers of the kind that there has been by the suppliers. I quite accept that that is something to do with the gearing of perceived market power between the two sides, but if the adjudicator does not serve the interests of the suppliers, there will be a lot of disappointment.
Lord Knight of Weymouth
I am grateful to the noble Lord. As we have already heard, Waitrose, as one of the big retailers, is fully supportive of the establishment of not only the code but the adjudicator as well.
Viscount Eccles
I am grateful to the noble Lord, Lord Knight. I have looked at that with some care and he is quite right that the things said by Waitrose during these procedures have been more positive than some of the things said by other supermarkets. If you read the compliance reports in the supermarkets’ annual reports and accounts—those that are available—you will find that they are all complying, and doing so in cheerful and positive way. That is why I want the OFT, under paragraph 7 of the code—it gets all the reports and it has all the information—to give its assessment and judgment of the extent to which the supermarkets are complying in a cheerful and positive manner with this code. My belief is that they are complying. I have sought to find out the views of the supermarkets and all their responses have been 100% positive; not one has put up any kind of negative response. Their trade association’s response has been, “We are going to make this thing work. We are making this thing work. We do not really think that an adjudicator will help, but we may have to have one”. That is perhaps the attitude I am taking—if we have to have an adjudicator, we will get on with it. I do not think the argument that Waitrose stands out as an exception runs.
Lord Knight of Weymouth
Given that the noble Viscount had said that there were no suppliers, I merely wanted to offer the information to the Committee that clearly there was one.
Viscount Eccles
I am only talking about expectations. It is up to Members of the Committee to make up their minds as to where the expectations that might arise as a result of this Bill being enacted lie. We all make up our own minds. In conclusion, I would much prefer it, and I think that it would be much in the public interest, if Clause 2 did not stand part of the Bill.
Baroness Byford
My Lords, we have moved on to looking at investigations. My amendment seeks to amend Schedule 2(6). The Explanatory Notes refer in line 3 on page 11 to the adjudicator considering information supplied by whistleblowers. The rule in the Bill that allows the payment of expenses only to someone who has to undertake a journey of “more than 10 miles” could exclude—I do not say that it will do so—people who live in the countryside. As we know, if they do not have a car, public transport can be quite a problem. Does the choice of a distance of 10 miles follow what has been provided for in previous legislation or does it relate only to this Bill? A distance of 10 miles in urban areas with plenty of transport options is one matter, but in rural areas where buses sometimes run only three times a week, it is another. Is it necessary to restrict this provision to that distance? It could well be that someone has to make a six-mile journey and cannot manage it easily. As the Bill stands, they would not be entitled to any financial help to get to the adjudicator and give their evidence.
Earlier today, we had a meeting of the All-Party Parliamentary Group on Rural Services. One of the things we talked about was the provision of rural bus and rail services. I have to say that it is an increasingly difficult problem. For those who own cars, it is not something that needs to be thought about, but for those who do not own cars, it is. If someone happened to be a whistleblower, which is what we are talking about here, and had lost their job, they might find themselves in difficulties. I have therefore tabled the amendment to seek clarification. I beg to move.
Lord Knight of Weymouth
My Lords, I am interested in the noble Baroness’s amendment. I shall not comment on it at length, but I understand the problem she raises here. I want only to ask the Minister whether, under paragraph 16 of Schedule 1, which we discussed earlier in respect of incidental powers, it would be better to offer the adjudicator some flexibility under this wonderful paragraph and thus allow him to use his judgment on what would be a reasonable level of travel expenses.
Baroness Wilcox
My Lords, I can understand why my noble friend is asking this question because she lives in the countryside. I live in Cornwall and I know about buses in rural areas, and can understand the principle behind the amendment. From a practical point of view, a simple distance criterion will be much easier for the adjudicator to apply than one based on the time taken to use public transport. It says here that it is more straightforward and harder to dispute to decide whether someone has travelled more than 10 miles than to calculate whether it would have been possible to make that journey within half an hour on public transport.
However, my instinct is similar to that of the noble Lord, Lord Knight, and I feel that somehow or other the adjudicator should at least be able to have some thoughts on this matter. Although I shall ask my noble friend to withdraw the amendment, I can say that we will go back and look at this issue to see what the answer may be. I do not know whether there can be some discretion, and I may be treading on all sorts of impossible ground, but when we discussed this matter previously, and my team asked why we should consider this, I said, “I think you will find that this is a rural question”. There is obviously sympathy in the Committee for my noble friend’s question. I therefore ask her to withdraw her amendment. However, I will take it away and see if there is anything else that we can come back with.
Baroness Wilcox
My Lords, the reports that the adjudicator must publish at the end of each investigation are a vital part of his or her accountability and an important way of keeping retailers, suppliers and consumers informed of his or her work. It is therefore right that we should carefully examine what is contained within them. To take each of the amendments in turn, I find the amendment in the name of the noble Lord, Lord Browne of Ladyton, interesting and he has made his case eloquently. It is indeed reasonable that the report should give the reasons for the decisions reached, as well as the decisions themselves. I would be happy to speak with him further about this amendment before the next stage of the Bill.
I am less sure of Amendment 33, which is proposed by my noble friend Lord Eccles. I think that it is reasonable to say that the adjudicator’s report need not always identify the retailer concerned. This is because there may be cases where the adjudicator considers that the matter can more appropriately be dealt with privately. For example, if there were no breach of the code, the adjudicator might conclude that it would be unfair to name the retailer that had been investigated, due to the possible reputational damage.
Lord Knight of Weymouth
I am most grateful to the noble Baroness for giving way. In what way will the Freedom of Information Act apply to the adjudicator? If a report was published that did not identify a retailer and someone wanted to find out who the retailer was, would it apply? I think that that is pertinent to the noble Viscount’s amendment.
Baroness Wilcox
Will scrutiny from freedom of information or the parliamentary commissioner not undermine the principle of confidentiality? The duty to maintain confidentiality is very strong and the Bill is explicit that it can only be overruled in certain defined circumstances. Those would not include a freedom of information request and that position is a result of Section 44 of the Freedom of Information Act, which is engaged by Clause 18. Generally, freedom of information will apply to the adjudicator with the exception of Clause 18 overriding it. I am sorry that that was a slightly disjointed answer. Was it of help?
Lord Knight of Weymouth
I am grateful to the Minister for giving me another chance to seek clarification. It seemed clear and then the second piece of in-flight refuelling to the Minister made it less so. She essentially said that there is a confidentiality get-out on FOI for the adjudicator. Normally, freedom of information would apply to the work of the adjudicator unless there were good reasons for confidentiality such as protecting the interests of a retailer who would otherwise be damaged. Is that the case? If the Minister or her in-flight refuelling were able to give us some examples, that would be quite helpful.
Baroness Wilcox
My view—and that of the advisers behind me—is that at this stage I need say only one thing: I will write to the noble Lord. That will be easier and fairer. We will make sure that everyone else receives a copy of that, too. I apologise for not being able to be clearer at this stage. Maybe it is getting late. Furthermore, regarding the deletion of subsection (4), it is only fair that if a retailer is identified in a report they are given a reasonable opportunity to comment on a draft of that report before publication.
That brings us on to my noble friend Lady Byford’s amendment, which would require the retailer’s comments to be published as an annex to the report. Although I understand the thinking behind that, on balance it is unnecessary. Although the retailer may comment, the adjudicator is not obliged to include any of these comments and the final report is fully the adjudicator’s. Furthermore, if a retailer knew that any comments they made would be published, it could impair free and frank discussions. I hope that that clarifies the position a little. Apart from the fact that I will write to everyone to clarify the point about freedom of information, I ask noble Lords to withdraw their amendments.
Building Regulations (Review) Bill [HL]
Lord Knight of Weymouth Excerpts(13 years, 8 months ago)
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Lord Best
My Lords, I support the amendment and the Bill. I declare my interest in the building of new homes for older people as the chairman of the Hanover Housing Association, which is the country’s largest builder of extra care apartments.
At previous stages of the Bill and in its previous incarnation, I congratulated the noble Lord, Lord Harrison, on his interest and expertise in this subject and strongly supported the idea of a comprehensive review of this aspect of the building regulations. I know that some of my colleagues in the housing world are concerned at the potential cost of fitting sprinkler systems in residential premises, and a full cost-benefit analysis should reveal whether or not those worries are well placed. Some of those colleagues have had non-financial concerns.
One chief executive of a major provider of new apartments told me that the policy of his organisation was that in the event of a fire alarm being set off, residents should stay put in their flats, each of which is secure against fire, for long enough to await the fire being put out—or, very exceptionally, for them to be rescued. He felt that sprinkler systems in the whole building would lead to residents vacating their flats, perhaps in a panic, and placing themselves at greater risk in the corridors and stairways outside. I am not at all sure that these fears are justified, and if a fire is started within a flat, as it so often is, it can be extinguished only inside that flat, which is where the sprinklers would be so valuable.
A positive reason for the installation of sprinkler systems in older people’s housing, one that appeals to me, is the possibilities that this opens up, apart from the potential for saving lives, of increased flexibility in the design of new buildings—the internal design. In other countries it has been possible to do without a lot of clumsy lobbies and internal walls which are required for fire protection but which can waste space and give a boxed-in feel to the environment. Sprinklers can liberate an open-plan design, sometimes with dividers to separate living, sleeping, cooking and eating areas, without enclosing and confining the whole space of the apartment. I think that sprinklers may have some spin-offs in terms of the design of apartments, some of which are in themselves a saving of the capital cost of those new homes.
Incidentally, I was pleased to note that fires started by cigarettes left burning, perhaps because a smoker falls asleep, are less likely in the future not only because fewer people smoke but because cigarettes will be required to no longer smoulder but to go out if left to their own devices.
All those considerations can be brought together in a review, and it seems entirely sensible for that to proceed now in the hope that it will shed light, and perhaps lead to important changes to the building regulations. On the basis that a review is more likely to be acceptable to government if the timescale is not too constrained, I support the noble Lord’s amendment and hope that the Government will accept that a review should proceed.
Lord Knight of Weymouth
My Lords, I want, briefly, to reinforce the comments made by the noble Lord, Lord Best. I do so as a former patron of the national fire sprinkler campaign and former chair of the Fire Safety Council. That was some years ago now and I do not currently have any interest in that area. When I was Schools Minister I ensured that the attitude towards sprinklers in schools was shifted significantly so that only the very lowest-risk schools in terms of fire would be exempt from installing sprinklers. That took a lot of ministerial heavy lifting when officials were giving contrary advice, so I urge the Minister to adopt such a policy if he is hearing all the reasons why not to do something when the case made by my noble friend Lord Harrison has been so strong in respect of the views of fire officers.
In the work that I have done over the years with fire officers—I pay tribute, in particular, to Peter Holland the chief fire officer at Lancashire—they have consistently said, “This is about saving lives for probably the cost of installing carpets in a building”. For that cost a huge amount is to be gained. Once you get into residential installations you are starting to achieve the sort of scale that can drive innovation. The noble Lord speaking from the Liberal Democrat Benches talked about the cost of tanking. Tanking systems are often but not necessarily used. If there is good enough water pressure—negotiation needs to be had with the water companies there—it is possible to go ahead with a small sprinkler system without using a tanking system.
Similarly, there may be other ways of scoring innovations. There has been some discussion about using the piping within a central heating system in a residential dwelling, and indeed using the water pump from the central heating system to supply a sprinkler system. Such innovations can be tested better, as they are in Wales, when we start to do residential systems. The comments of the noble Lord, Lord Best, about design freedom should be taken into account by the Department for Communities and Local Government—and not just design freedom within properties where some of the passive protections that can be quite frustrating to homeowners can be removed. Indeed, many of us have seen fire doors propped open which means that all the effectiveness of those passive measures is lost. There is also potential design freedom within new estates where the risk assessment from the fire authority is such that you might not need quite the same turning circles for large fire vehicles because the risk around fatalities in fires is so much reduced by having a sprinklered estate.
I urge the Minister to be sympathetic to my noble friend’s very modest proposal. I draw his attention to the first word of Clause 1—“Within”—and I hope that if he accepts the 30-month proposal, the drive is still on to get it as soon as possible. We should have in mind the story of the fire officer related by my noble friend Lord Harrison. As you wait an additional 18 months the lives of yet more fire officers and residents will be at risk.
Lord McKenzie of Luton
Briefly, I support my noble friend's Bill and the amendment and pay tribute to his persistence and dedication on the issue of fire safety. I support the amendment with reluctance, because the Bill is perfectly adequate as it stands, but my noble friend has gone the extra mile by extending the time.
Given that extension, what assurance can the Minister give us on funding for ongoing community fire safety activity, which has been at the heart of driving down the number of deaths from fires in this country? Since we last debated this at Second Reading, we have had the CLG publication, Future Changes to the Buildings Regulations—Next Steps. In Part B, on fire safety, it states about the consultation:
“However, this exercise has not produced any significant new evidence on the health and safety benefits of greater sprinkler provision that would alter the cost/benefit analysis and the basis of the current approach. The Department will not, therefore, be considering this as part of next year’s programme of work”.
It seems an odd position to take that the Government do not want to engage in or encourage new research but are happy to rely on current research, which has been a bone of contention—we debated the BRE research previously under the Bill—as the benchmark to say that there is no new evidence. That is a rather perverse way to proceed.
On the summary of work to be taken forward from the consultation exercise, I am certainly pleased to see that Part P, to do with electrical safety, will be in next year's work programme, because there is interrelation with issues of fire safety. About 8,000 deaths in the home are caused by inadequate electrical work. I would hope that that will focus on greater use of competent person's schemes. Paragraph 3.4 states:
“Finally, there is also a third group of issues that we believe currently lack clear evidence to support regulation in 2013, but which we would not wish to definitively rule out. This includes whether to expand the provisions for radon gas protection and whether flood resilience/resistance should be incorporated into regulations”.
My second question for the Minister is: where does that leave the review of Part B? What is the programme for review in Part B, or will the Government continue to oppose the Bill and the research that it seeks and rely on the status quo of research, therefore closing their minds to further review of that important part of the building regulations to deal with fire safety?
I support my noble friend and his amendment, although I think that the Government should have been more encouraging and not have required him to seek this extension.
Transport: Mobility Scooters
Lord Knight of Weymouth Excerpts(13 years, 9 months ago)
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Earl Attlee
My Lords, the noble Baroness is correct, but we are looking towards the future and want to improve the independence of disabled people by making sure that they can make maximum use of the available equipment.
Lord Knight of Weymouth
My Lords, we were most encouraged yesterday when the Minister said from the Dispatch Box, in the context of the Public Bodies Bill, that the Disabled Persons Transport Advisory Committee would be continued at least until the Olympics. However, given what the Minister said today in respect of the need to communicate with stakeholders, and in particular the users of public transport, is there not a case for retaining this important body?
Earl Attlee
My Lords, I am not briefed on that issue, but I am sure that noble Lords had great opportunity during discussion of the Public Bodies Bill to debate it in detail.