Business and the Economy

Andrew George Excerpts

Monday 14th May 2012 Commons Chamber

[Vince Cable]

Bringing the two organisations together will in itself produce some efficiencies, but I cannot assure the hon. Gentleman that they will be protected from the efficiency savings that the rest of the public sector is having to undergo. We are confident, however, that with the reforms that we are undertaking, competition procedures will be faster, not slower.

The same concerns about competition underpin our decision to bring forward a separate Bill, establishing an independent groceries code adjudicator, which will protect suppliers—small firms and farmers—from unfair treatment. In doing so, we will support investment and innovation in the groceries supply chain, and support British food manufacturing and British farming. The measure has been welcomed by the Food and Drink Federation, the National Farmers Union and the Association of Convenience Stores.

The case of a highly concentrated industry buying from and selling to large numbers of suppliers and customers is a classic, economic textbook case in which intervention is needed to prevent monopoly profits. Retailers should not of course be prevented from securing the best deals and passing on the benefits to consumers, but equally retailers should be required to treat their suppliers fairly and lawfully. An independent adjudicator will ensure that the market is working in the best long-term interest of consumers. It will have the powers to intervene proactively and to name and shame offenders. In such a competitive market we consider that those powers will be an effective tool, but if it appears that they are not adequate, I, as Secretary of State, will be able to grant the adjudicator the power to impose financial penalties.

[Andrew George (St Ives) (LD)]

I must congratulate my right hon. Friend and the Government on bringing forward this important measure, which has all-party support. If supermarkets have nothing to hide, they have nothing to fear from the introduction of the adjudicator. Given that the OFT and the Competition Commission are due to merge, however, may I urge him to introduce the measure as quickly as possible so that the merger does not distract from the important job of getting on with the adjudication that is clearly necessary in the sector?

[Vince Cable]

May I first congratulate my hon. Friend, who I think was one of the prime movers behind the legislation and was very persistent in demanding it? Of course, I have no control over the parliamentary timetable, but given that the Bill is small and there is a consensus, it should go through very quickly.

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[Mr Bailey]

The figures my hon. Friend quotes are quite self-evidently a demonstration of the Government’s ridiculous priorities.

Let me turn to the green investment bank, which was Labour’s idea. It has been talked about for a very long time by this Government and now, two years later, we actually have it. However, it is inadequate, and unfortunately the Government have already introduced a series of policies on feed-in tariffs that will decimate many of the companies that would potentially have benefited from the green investment bank. Again, it is difficult to see how we will lift ourselves out of recession on the back of that.

There are certain measures that are welcome, such as the Groceries Code Adjudicator Bill. However, earlier I spoke about the slowness of implementation. Both the Select Committee on Environment, Food and Rural Affairs and the Select Committee on Business, Innovation and Skills, which I chair, examined the issue before the last summer recess, and we did so quickly at the request of the Government. The Bill could have been implemented last autumn or at the beginning of this year. Indeed, the parliamentary business over the last three months was hardly so crowded that such a quick and simple Bill that had received so much pre-legislative scrutiny could not have been introduced. Why is it being introduced only now?

[Andrew George]

Given that the hon. Gentleman is the Chair of a Select Committee and will want to be seen to be even-handed in this matter, does he agree that it was a great disappointment that the previous Government failed to act on the recommendations of the Competition Commission, which reported on 30 April 2008, and did not implement the measure during their time of office?

[Mr Bailey]

May I compliment the hon. Gentleman, who I know has been an ardent campaigner on this issue for many years? All credit to him for that. The measure was in the Labour party manifesto for implementation, and I am sure that it would have been implemented far more quickly, and perhaps more profoundly, than what is currently proposed.

I want to raise two issues about the measure, the first of which is fines. I welcome the Secretary of State’s comments about that, because our Committee recommended that there should be fines, not just a name-and-shame process. It would appear that he may be moving in that direction, although we will question him more closely on it. However, something that he did not mention was the ability of third parties such as trade associations to submit complaints. If individual companies or farmers have to make a complaint, they might fear discrimination. No doubt we shall tease out these issues during the Bill’s passage through Parliament.

I am most concerned about the missing elements from the Queen’s Speech. As a Labour and Co-operative party Member of Parliament, I am particularly concerned that, despite the Prime Minister’s trumpeting of his commitment to a co-operatives Bill, such a Bill is mysteriously missing. There is a degree of cynicism in the co-operative movement over the Government’s motives. They are keen to trumpet their commitment to co-operation when it is politically expedient to do so, but the absence of the Bill that the Prime Minister promised us during this parliamentary Session is bound to create a suspicion about their true commitment and motives in this regard.

The most astonishing omission of all from the Queen’s Speech was a Bill on higher education. My Committee carried out a long inquiry into this matter, and offered a raft of recommendations to the Government last November. To date, the Committee has not even had a reply to its recommendations. On two occasions, excuses have been given. The consultation on the White Paper ended in January, and we were told that further consultation was needed. We were also told that the matter would best be dealt with as part of an announcement of the Government’s policies in the Queen’s Speech in the new Session, yet the Queen’s Speech contained absolutely nothing about it. The inevitable suspicion is that there is such profound disagreement between the coalition partners on this subject that we shall have a White Paper and a consultation but no Bill on an issue of profound importance to hundreds of thousands, if not millions, of students in this country. This is also a serious matter in that higher education is one of the biggest export earners for this country. The omission of a Bill demonstrates a complete lack of consistency and commitment to it.

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[Andrew George (St Ives) (LD)]

It is a pleasure to follow the hon. Member for Llanelli (Nia Griffith). She highlighted the importance of the Groceries Code Adjudicator Bill in the Queen’s Speech, a measure for which I have campaigned for more than a decade, so its introduction is not before time.

In these debates, it is quite difficult to dig below the surface of party political point-scoring and mutual blame for the situation that the country finds itself in, but if we do, we find potential for a great deal more cross-party consensus of the sort that there has been on grocery market management—or, to put it better, fair dealing in the grocery supply chain. This is a Queen’s Speech for jobs and growth, but we cannot, simply by passing a law, decree that there shall be jobs, just as one cannot decree that the sun will shine. We need to create the conditions in which a free market is regulated appropriately—hopefully as lightly as possible—to enable that process to happen.

Regarding the groceries code adjudicator, let me set out why our current situation arose and why we need regulation. It is great that there are successful companies in this country, supermarkets foremost among them, but those who have followed what has gone on in that trade have found that, when it comes to the treatment of suppliers in the grocery supply chain, some supermarkets have moved from successfully using their market muscle to abusing it.

There were welcome reforms to the common agricultural policy in 2003, when the Labour Government helped to decouple support from production and moved to other forms of support. That meant that the agricultural industry had to be much more market- facing, but when it looked to the market, it found the supermarkets there, beating suppliers up all the time and retrospectively changing the conditions of supply after they had been agreed. In any case, on many occasions, the contract was verbal. There were problems to do with the introduction of promotional campaigns, which suppliers found themselves paying for; there was the issue of paying for shelf space; and there was late payment of bills, as well as many other overriders in supermarkets’ treatment of their suppliers. In my view, many of those problems persist.

In 1998—the debate goes back that far—my colleague, Colin Breed, then Member of Parliament for South East Cornwall, produced a report, “Checking out the Supermarkets: Competition in Retailing”. That resulted in the Competition Commission undertaking a report in 2000 that led to the first voluntary code of practice, but that code was pretty ineffective; suppliers never used it because of the climate of fear. The most recent Competition Commission report in 2008 resulted in the commission introducing, in 2010, the groceries supply code of practice—I have to correct the hon. Member for Llanelli; it was not the previous Government but the Competition Commission that did that. We want to make sure that contracts, and the relationship between producers and supermarkets, can succeed.

I chair the Grocery Market Action Group, which has members from the National Farmers Union, NFU Scotland, ActionAid, Friends of the Earth, and many other bodies such as the British Independent Fruit Growers Association, so I should declare an interest, though it is not a pecuniary one. It is simply part of my campaigning role to achieve the outcomes that we all want—the Bill has cross-party support.

The GSCOP is all very well, but it is like having the rules of rugby and no referee. That is why the adjudicator is required. The message I want to get across to the supermarkets is that if they have nothing to hide, they have nothing to fear from the proposed measure, and I urge them to embrace it. In fact, they could use it as a marketing tool that enables them to reassure their customers, who benefit from a good, healthy relationship between suppliers and retailers, that they engage in ethical, fair trading with all their suppliers.

One of the great benefits of the grocery code adjudicator proposed by the Government is that it will help customers. The proposal to allow third-party complaints is right and the reserve powers on fining are appropriate. I urge the Government to bring in the measure as quickly as possible.