Groceries Code Adjudicator

Derek Twigg Excerpts

Tuesday 25th February 2025 Westminster Hall

[Andrew George]

Well, I suppose I should—no, I will not. One stands on the shoulders of giants, and Colin Breed did a tremendous amount of work from 1997 to 2001. He produced an excellent report called “Checking out the Supermarkets”, which laid a lot of the groundwork for the Grocery Market Action Group. Albert Owen, David Drew and other Labour Members were also very supportive and active throughout those years. There was not always cross-party agreement, or even agreement within my own party, that we should intervene in the market in the way that was proposed. We had to win that argument, and ultimately we did.

At the end of the day, the justification for why the Groceries Code Adjudicator, or any kind of market intervention of that nature, was needed, was that, fundamentally, we had a dysfunctional supply chain operating largely to the benefit of the supermarkets. Not all of our agricultural sector was benefiting from European subsidies or any other public subsidies in those days, but it had become dependent on subsidies because the market was so dysfunctional that public money was needed to prop up the whole system. If we have a functioning market, one can enable the agricultural sector to free itself from dependence on public subsidy. That was largely what was behind what we were trying to do in those days.

When the Groceries Code Adjudicator was established and the code was created, the intention then was only that it would create a framework in which future Governments would review its progress and then build on the framework by introducing or reducing regulations. Certainly the framework was to provide the skeleton on which further developments could happen; of course one cannot anticipate all circumstances.

I want to follow up on the points made by the hon. Member for Salford and my hon. Friend the Member for Brecon, Radnor and Cwm Tawe. There are a number of improvements that I hope the Government will look at very closely. For example, the code should be applied throughout the supply chain, not just to the direct supplier to the supermarket. It was never the intention of the Grocery Market Action Group that the adjudicator should look only at the final transaction between the ultimate supplier to the supermarket and the supermarket itself, because the impact of that contract could be fed right down through the supply chain.

The second point concerned third-country suppliers. The reason why Traidcraft, the Fairtrade Foundation and so on were involved is because they were rightly hoping that third countries could be involved. Then, as my hon. Friend the Member for Brecon, Radnor and Cwm Tawe said, the adjudicator could launch its own investigation on the basis of market intelligence. Finally, it could work alongside the Gangmasters and Labour Abuse Authority, for example, to use its intelligence to take matters forward. Fundamentally, we have a framework that can be developed and improved. It certainly should not depend on seconded staff. We do not get commitment to the cause if we depend entirely on seconded staff, as my hon. Friend the Member for Brecon, Radnor and Cwm Tawe said. I hope the Minister will look carefully at this. Thank you very much, Mr Twigg, for allowing me to speak.

[Derek Twigg (in the Chair)]

We have just two more Members left to speak, but I want to call the Front-Bench spokespeople no later than 5.08 pm.

--- Later in debate ---

[John McDonnell (Hayes and Harlington) (Ind)]

The hon. Member for St Ives (Andrew George) should not be so self-deprecating. The Groceries Code Adjudicator was brought about by an excellent piece of work and a good campaign. It was possibly the only thing of any worth that the Lib Dems did in government with the Conservatives.

I just want to make a couple of brief points because my hon. Friends the Members for Salford (Rebecca Long Bailey) and for Lichfield (Dave Robertson) and others have covered the ground very well. I am a member of the bakers union group, too, and in 2013 we welcomed the introduction of the Groceries Code Adjudicator. We met a few times to talk about the individual issues that occurred then. If hon. Members can remember, we raised the issue of low-cost production, particularly of bread, which was a result of supermarket pressure.

My hon. Friend the Member for Salford raised the issue of private equity. If we thought it was bad enough when there were individual supermarkets of sizeable status, we are now in a completely different world. Private equity is sweeping them up, exercising enormous power. I feel that the Government need to get ahead of the game. It is like the residential care sector before private equity took over and leveraged those individual companies. I can remember a number of them collapsing, and I think we are in exactly the same position here. That is why the call for an inquiry, bringing in all concerned partners, is invaluable. It is important to think through the implications and what regulation we can develop. The bakers union is calling for a new regulatory authority, because that would give more status and resources, as my hon. Friend pointed out. We need to understand the significance of what is happening in the field at the moment.

I want to make a second, brief point. The Minister here today is also responsible for the Employment Rights Bill that is going through Parliament. My hon. Friend the Member for Salford mentioned low pay. The bakers union survey found that 80% of its members were struggling to get by on basics such as rent, heat and food. There is a scandal on sick pay in this sector. The survey found that 37% of workers have to rely on statutory sick pay alone when they go off sick. Staggeringly, 13% received no sick pay at all. As a result, I believe some are forced into working when they are sick, which is the last thing anyone wants in this sector. It is important that the issue of sick pay is addressed in the Employment Rights Bill, which I think most people will welcome. I know amendments on that are being tabled as we speak and, in this sector, it could have a direct impact on the wellbeing of workers.

Finally, if we are to move forward, from the bakers union perspective the establishment of a regulatory authority is critical. How it is made democratically accountable is also important. Along with the engagement of farmers and supermarkets, it is key that workers are involved and represented through the unions involved in this sector, so that we can plan a long-term strategy for food production that is not based on low pay or exploitation of farmers.

[Derek Twigg (in the Chair)]

Order. Before I call the Front-Bench spokespeople, I should say that I will call the Minister no later than 20 past. I call the Lib Dem spokesperson, Tim Farron.

--- Later in debate ---

[Dame Harriett Baldwin (West Worcestershire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Twigg. I congratulate the hon. Member for Brecon, Radnor and Cwm Tawe (David Chadwick) on securing the debate. It will perhaps come as news to him that I, too, was one of the people who voted for the Groceries Code Adjudicator. I was a Member during the coalition Government and it was put on the statute book back in 2013 because our farmers wanted an adjudicator to tackle the imbalance between small producers of food and big supermarket buyers. We will always back our farmers for fairness and equity for food producers.

The adjudicator regulates relationships between the UK’s largest grocery retailers and their direct suppliers, and it ensures that excessive risks and unexpected costs are not unfairly transferred. It brings fairer prices to the farming community and provides a guardrail for those smaller food producers who do not have a voice in the complicated food production market. It is funded by a pragmatic levy on designated retailers, with a UK annual turnover of more than £1 billion. There are currently 14 retailers covered by the code.

The results from the annual survey in 2024 show that the adjudicator is making a difference. More than 3,000 responses to that survey show that the number of suppliers experiencing a code issue has fallen to 33% and that the number of suppliers highlighting a retailer’s response to a cost price increase as an issue almost halved, falling from 28% in 2023 to just 16%. For the first time, the Co-op came top of the 14 retailers for overall code compliance, at 98%. The Co-op and Lidl both experienced a 2% improvement, which was the biggest percentage improvement across the 14 retailers.

The adjudicator is there to protect suppliers, such as our precious farmers. However, we are concerned that the Government’s recent actions have done anything but protect our farmers. Food retailers and suppliers of all sizes are under huge pressure because of Labour’s tax on jobs, its increasing red tape around jobs, food inflation and job losses in supermarkets. Labour’s family farm tax is yet another blow. It is a death tax on important family businesses. With no farmers in the UK, there would be no UK-grown food. Under Labour, the family farm will wither and die unless the Chancellor can be persuaded to change her mind.

Food producers are at the heart of our communities and the Government should be doing everything they can to support them, not harm them, and to ensure food security in this country. The attack on our farmers is shocking in every way. The Labour MPs who voted for an inheritance tax on family farms simply do not understand where their food comes from. Labour is harming our farms, not prioritising our rural areas. It simply does not understand.

The Conservatives believe that good policy needs to be created in collaboration with the farming industry, rather than in isolation. We have always kept the Groceries Code Adjudicator under review since its inception and we urge the Government to continue to do so.

[Derek Twigg (in the Chair)]

If the Minister can leave a bit of time at the end for David Chadwick to wind up, that would be great.