Groceries Code Adjudicator Bill [HL]

Baroness Randerson Excerpts

Tuesday 22nd May 2012 Lords Chamber

[Baroness Randerson]

My Lords, I join with other speakers in supporting the principle of this Bill and the vast majority of its content as well. Indeed, the cross-party support here has been exceptional. The processes that the draft Bill went through have definitely assisted that support.

It is a rare cause that unites both trade unions and small business organisations in its support. It is important to remember that this Bill is not just about the small suppliers, which are most obviously immediately affected; it is also about consumers. The excessive risk and costs that have been forced on occasions on suppliers by some supermarket chains have deterred investment and innovation. It is innovation that helps consumers in the long run.

Seventy-five per cent of the groceries market is in the hands of the top five retailers. That market is just about the most reliable and stable market imaginable. It has all the conditions of monopoly power, and that monopoly power has increased dramatically over the years. The Competition Commission statistics show that the major chains account for 98% of grocery sales. Tesco is the giant of them all, accounting for 30%. The spider’s web of street-corner shops, as well as the large supermarkets, has of course increased and reinforced that power. Possibly most astonishing is that, despite the recession, there are still 44 million square feet of projected new supermarket developments in the pipeline, so the expansion has not stopped.

The Competition Commission has identified the adverse effect on competition of grocery retailers passing unexpected costs and excessive risks down the supply chain. Ultimately, the extra costs of this are imposed on producers, whether or not they deal directly with the retailers, and that is an important point in this debate. As many noble Lords have pointed out, this is not a new issue; it has been debated thoroughly over the past 15 years. I was a Member of the Welsh Assembly for 12 years, and the NFU and the FUW were very vocal in their support for the need for a supermarket ombudsman, as they called it.

The impact of the dominance of large retailers has been phenomenal—on the way we live, on what we eat and on the shape of our towns and villages. The large retailers have given us cheap food but they have also created out-of-town shopping, with its impact on the number of cars on the roads and the distance we have to drive, as well as its social impact on those who have no car. In many places, it has led to empty shops in our town centres, which can be desolate in some poorer parts of the country. Very importantly, it has led to the delocalisation of our food shopping and, hence, of our diet. This is all part of a very fundamental movement in the way we live our lives, and the adjudicator is an important part of that picture.

In the Explanatory Notes, several references are made to the small scale of the adjudicator’s office and the low budget that it will have. I greatly support and appreciate the need to save money and I am not trying to argue with that principle. However, given that there are more than 300,000 farmers in the UK and more than 6,000 food and drink manufacturers, I would welcome some information from the Minister about the basis for this calculation and the assumption that the budget will be low. Because the costs will be covered by a levy on the retailers—and several noble Lords have pointed out how small that levy is proportionately—it seems that the total budget for this office will be some £2 million a year. However, because the climate of fear will be removed, we can confidently expect a big increase in the number of complaints as a result of the Bill becoming law, and I wonder whether the office will have the capacity to deal with them.

I share the concerns of many others that fines will be introduced only as a second step and even then by a rather cumbersome process. I will listen carefully to what the Minister has to say on this point, as at the moment I feel that it would be better to have fines from the start as one of a range of actions—not necessarily the only action—that the adjudicator can take. I share the concerns about a flat-rate levy. Although a mechanism is built into the Bill to enable the adjudicator to order culpable retailers, or indeed vexatious complainants, to pay costs, I believe it is unlikely to create a truly fair system that would financially encourage retailers to avoid breaches of the code.

Like other noble Lords, I have received briefings from a variety of organisations. I have to say that they are mainly unusual in their fulsome praise for the Government in the action they are taking in this Bill. Not surprisingly, the British Retail Consortium argues that this Bill is not necessary and that everything now works well. In fact, I believe that once the adjudicator is in place we will see a big increase in complaints, so the British Retail Consortium should see the writing on the wall and, instead of arguing with the principle of the Bill, it should do what Waitrose has done in its briefing to many noble Lords—attempt to raise issues that may help to create a fairer and more effective system.

In conclusion, I believe that this is a very sound Bill. I have concerns about some small details but its principle is definitely right.