Groceries Code Adjudicator Bill [Lords]

David Hamilton Excerpts

Monday 19th November 2012 Commons Chamber

[Nia Griffith (Llanelli) (Lab)]

I am delighted that, at long last, we have reached the Second Reading of the Groceries Code Adjudicator Bill. Its gestation period seems to have been longer than that of an elephant. Before I proceed any further, I pay tribute to my hon. Friend the Member for Ynys Môn (Albert Owen), who brought forward a private Member’s Bill with a rather long title—the Grocery Market Ombudsman Bill—back in 2010. He has since worked hard to lobby for a grocery adjudicator—or, as he much prefers to call it, a supermarket ombudsman. I pay tribute, too, to the hon. Member for St Ives (Andrew George), who chaired the Grocery Market Action Group and was active in pushing forward the agenda from the early days of the Competition Commission inquiry in 2006.

I have already put on record my support for a grocery supermarket adjudicator, so I shall confine my comments to the areas where I feel that the Bill could be improved. It is, above all, about fairness—about ensuring that the groceries supply code of practice is properly adhered to. That code came into force in February 2010, but without an adjudicator it is very difficult for any individual supplier to challenge a retailer who breaches the code. A complaint has to be brought under the dispute resolution procedure or go to court.

Having an adjudicator is about ensuring fair play, having a referee and ensuring that everyone plays by the rules. It is important to stress that the Bill is not an anti-supermarket measure. Any retailer who respects the groceries supply code of practice has nothing to fear from the establishment of the adjudicator’s office. It is about creating a level playing field and tackling any attempts to breach the code which, if left unchecked, can damage suppliers, rival retailers and ultimately customers.

We should not underestimate the intimidation and difficulties that suppliers face if they are being badly treated by retailers. It is frightening to hear from the Farmers Union of Wales and the NFU about some of the sharp practices to which suppliers are subjected—varying supply agreements and decreasing the price paid for milk retrospectively. There is no doubt that this type of treatment can have a devastating effect on farms, particularly small family farms, and the driving down of prices by these retailers is certainly threatening to put some farmers out of business. We have already lost many farms from the dairy industry, and this type of driving down of prices, particularly when there is little flexibility from the banks, is threatening to put even more farmers out of business.

I very much welcome the fact that the Bill will now allow the adjudicator to accept complaints and evidence from third parties such as trade associations and trade unions. It can be extremely intimidating for any one supplier to bring a complaint, and trade associations and trade unions can offer help and support, and they are often in a position to see patterns of behaviour emerging—if, for example, there is a systematic breaking of the code.

The very fact that such organisations can bring issues to the attention of the adjudicator will in itself act as an incentive for retailers to abide by the code, but it worries me that clause 15(10) gives power to the Secretary of State completely to rescind that power. If we are serious about giving the opportunity to third parties such as trade unions and trade associations to bring issues to the adjudicator’s attention, why on earth do we have such a provision that would allow the list of the adjudicator’s powers to be deleted completely? As I say, that worries me considerably.

The question of the safeguarding of anonymity is extremely tricky. Several Members have given instances in which it would be easy to identify suppliers when their number is very small. That is one reason why the adjudicator’s power to undertake proactive investigations is so important. It might be possible for an adjudicator with both the power to work with trade associations and unions and the power to undertake proactive investigations to keep an ear to the ground, look out for examples of sharp practice, and take up complaints in a broader context. That could help to protect anonymity.

Like other Members, I am disappointed that the adjudicator will not have the power from day one to impose fines on those who breach the code. The Government propose that the adjudicator must make the case for such a power to the Secretary of State. That process would be very convoluted, and would involve further delay—the Minister herself spoke of a delay of at least six months—but, more important, it would convey the message that the adjudicator was powerless. It would make far more sense to give the adjudicator the power to levy fines from the outset, enabling him to exercise discretion and impose fines if that seemed appropriate.

[Mr David Hamilton (Midlothian) (Lab)]

If the adjudicator were given the power at the outset, would not companies be more likely to self-regulate, because they would know that action could be taken at a later stage?

[Nia Griffith]

As the hon. Member for North Antrim (Ian Paisley) pointed out, the stronger the adjudicator is from the outset, the more likely everyone will be to fall into line. If it is made clear that the adjudicator has powers that can be used immediately, there will be no need for us to faff around for six months trying to introduce some other piece of legislation that puts the power in the right place for the adjudicator.

It is crucial for the power to be there from the start. That would give everyone far more confidence in the role of the adjudicator, and would undoubtedly make the adjudicator much more effective. It would enhance the status of the adjudicator in the minds of the public, the supermarkets and the suppliers. We have already heard many Members and many organisations issue a plea for the adjudicator to have the power to fine from the outset, and I hope that the Government will listen to it.

Many Members have mentioned intimidation and suppliers’ fear of victimisation. The adjudicator should also have the power to fine retailers who discriminate against suppliers on the basis that, rightly or wrongly, they are suspected of providing evidence for the purpose of investigation. In other words, there should be some protection for the whistleblower. Otherwise, it will still be incredibly difficult for people to come forward and expose some of what is going on.

I warmly welcome the Bill and hope that it will make excellent progress in Committee, but I think that if we do not grab the opportunity to give the adjudicator the teeth that the office deserves, it will be a wasted opportunity.