Enterprise Bill [ Lords ] (Eighth sitting)

Alan Brown Excerpts

Thursday 25th February 2016 Public Bill Committees

[Bill Esterson]

I beg to move, That the clause be read a Second time.

We debated some elements of the Groceries Code Adjudicator as part of our lengthy discussions about the creation of the small business commissioner a long time ago—two and a bit weeks ago, at the start of our proceedings. There is a great deal of overlap in the nature and aims of the adjudicator and the commissioner. Both were created to give a voice to smaller suppliers in their dealings with larger companies and both were designed to address the imbalance in those relationships.

New clause 15 seeks to acknowledge that there will be considerable concern about the Groceries Code Adjudicator, which was set up in 2013, and the small business commissioner, when it is established, presumably later this year, and the extent of their powers, the breadth of their remit and the teeth they have to deliver in their sectors. I appreciate that the general review of the Groceries Code Adjudicator is expected this year. We are asking in the new clause for a specific investigation of the adjudicator’s role, which is particularly relevant to the Bill because of the relationship with the small business commissioner. The review we are asking for is to learn from the first years of the Groceries Code Adjudicator so that we can apply those lessons to the post of the small business commissioner. The new clause is a simple way of saying that we did not get it quite right in 2013 and that we have an opportunity to learn valuable lessons now. We ought to ensure that those lessons are taken on board at the appropriate stage, which is in this Bill.

On confidentiality, we have said repeatedly, here and in the Lords, that if small businesses complain about big businesses that are their customers, they risk damaging their business relationships. Now, the Groceries Code Adjudicator has said that a lack of trust is a barrier to suppliers who might have complaints. Lord Mendelsohn cited that as a key area of concern. Without robust provisions for confidentiality and without learning from the experience of the Groceries Code Adjudicator, we will be doomed to repeat those deficiencies with the small business commissioner.

When it comes to providing greater powers for the commissioner, we can learn lessons from the Groceries Code Adjudicator. In January 2015, the then coalition Government announced that they would give the Groceries Code Adjudicator the ability to fine supermarkets 1% of their annual turnover for serious breaches of the grocery code. This was a recognition that the adjudicator needed to back up their influence with greater powers, but it took almost two years after the creation of the post to ensure that those powers were available. The new clause would avoid repeating that delay as we create the post of the small business commissioner. It would ensure that the commissioner’s office has the powers needed to do the job from day one by learning from the experience of the Groceries Code Adjudicator.

When the position of Groceries Code Adjudicator was created, concerns were raised about its ability to fulfil the Government’s ambitions for it, because it was given too few staff and resources to deliver effective change. Let us remember that the Groceries Code Adjudicator works only three days a week and has only five staff, who are responsible for 7,000 direct suppliers and a further 300,000 indirect suppliers. As we have pointed out, it is clear from the Australian model that this could well be a cause of problems in the UK. The Groceries Code Adjudicator is another reference point from which we can learn, as she is an adjudicator working part-time with five staff responsible for so many suppliers. With the small business commissioner, we are looking at a similarly small team taking responsibility for an estimated 390,000 disputes from 70,000 businesses.

We had an impact assessment for the creation of the small business commissioner. It is a shame, is it not, that we did not have one for Sunday trading. The impact assessment for the small business commissioner estimated that the commissioner’s team would deal with only 500 complaints out of the estimated 390,000 disputes every year. From the experience and comments of the Groceries Code Adjudicator, we know that she is understaffed. She has made it clear that she was given a small office and spends much of her time just explaining what she can and cannot do, and is left with little time to actually deliver. That is why there has been only one investigation in two years, as good as that investigation clearly was. She has made it clear that she cannot cover the suppliers in the supply chain.

As it stands, we will be putting more pressure on the small business commissioner, because the volume of potential activity is even greater. We need to learn the lessons and that is what the new clause is about. If the Government will not change the Bill, we should at least try to speed up the process of evolving the role to meet the challenges that the small business commissioner will face. I hope the Government will learn and apply the lessons from the first years of the Groceries Code Adjudicator. Throughout the process, we have called for the remit of the small business commissioner to be broadened and for the commissioner to have the resources at his or her disposal to fulfil the ambitions that we all have for the post. We want the commissioner to be given the powers to deliver real change to the crippling culture of late payments and poor business practice.

We have repeatedly used the example of the Australian small business commissioner, because it is a good model and we stand to learn a good deal from it. New clause 15 is an attempt to make sure that the powers that we believe ought to be put in place now are at least fast-tracked for the small business commissioner, by keeping a weather eye on and learning from the experience of the Groceries Code Adjudicator.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to serve under your chairmanship, Sir David, in this last sitting.

My thoughts are broadly in line with those of the hon. Member for Sefton Central. As we know, this Bill introduces the small business commissioner, which obviously has cross-party support. Amendments have been tabled that we thought might give the office of the small business commissioner more teeth, to allow it to work more efficiently on behalf of those it will represent. Obviously the amendments have not been accepted today, but hopefully the Government will consider that in future.

In thinking about the office of the small business commissioner, it certainly makes sense to think about the office of the Groceries Code Adjudicator. Given that this is a wide-ranging Bill anyway, it makes sense to use it as an opportunity to review the powers and purpose of the GCA and to learn from its short history.

When the GCA was created in 2013, my SNP colleagues gave their support at that time, but my hon. Friend the Member for Banff and Buchan (Dr Whiteford) urged the Government to give the GCA enough power to address two key issues that she raised then. First, she highlighted the underlying problems caused by the concentration of power in the grocery supply chain due to the dominance of a handful of large supermarkets. We are well aware of the recent issue of Tesco breaking the code of practice and abusing its market position to prioritise its cash flow and finances over those of their suppliers. It was often excessively late with its payments. Tesco did that, but what was the outcome of the case? Yes, Tesco was named and shamed, which was good—the matter has been highlighted and Tesco has said it will not do it again—but the GCA, Christine Tacon, was unable to impose a fine, because she was only given the power to impose fines in 2015, two years after the establishment of her office.

The second issue that my hon. Friend highlighted was about sustainable food production and the ability of non-direct suppliers to supermarkets to make complaints that the GCA can investigate and follow through on. Recently we have seen evidence that this issue is rearing its head again, with the dairy farmers and the price they receive for milk. A stronger GCA may have been able to intervene and take greater action in support of the farmers or those at the end of a supply chain, who we need to survive in order to get the end product, provide local employment and have a greener product as a result of a smaller carbon footprint. Also, my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr) has called for the GCA to have greater powers over labelling, to make the supply chain from source to product much clearer.

Overall, the position of the GCA is welcome, but there are still imperfections. The new clause could allow some of them to be smoothed out. I support the new clause and certainly agree with the principle behind it.

[Anna Soubry]

It is obviously a pleasure, Sir David, to serve under your chairmanship in our final sitting.

In short, the Government are already committed to reviewing the GCA after next month. That commitment is in the Groceries Code Adjudicator Act 2013, so this very review is going to happen; it is in statute. Yes, we are looking at the terms of reference. We are preparing them to make sure they include all the things we want the review to look at, so we are looking at consideration of the remit and the powers of the GCA being part of that review.

The review will cover the period up to 31 March, so we will begin the public consultation shortly after that date, as part of the review, providing an opportunity for everyone to input their views. As I say, it is all there already in the 2013 Act. The new clause is just not necessary, because all these points are covered already.

--- Later in debate ---

[Hannah Bardell]

Further to that point of order, Sir David, I echo the comments of the hon. Member for Cardiff West and thank all the Clerks and staff and yourself and Ms Buck. This is the second Bill Committee that I have been part of, but it is the first for my hon. Friend the Member for Kilmarnock and Loudoun, and I know I speak on his behalf when I say that it has been a largely enjoyable experience.

[Alan Brown]

I did not say that.

[Hannah Bardell]

Perhaps I am misspeaking.

We are disappointed that more amendments were not accepted, but it has certainly been interesting and engaging and, as the hon. Member for Cardiff West says, I am sure that there will be extensive debate when the Bill returns to the Floor of the House. I thank you again, Sir David, on behalf of myself and my hon. Friend.