Groceries Code Adjudicator Bill [HL]

Earl of Sandwich Excerpts

Tuesday 22nd May 2012 Lords Chamber

[The Earl of Sandwich]

My Lords, I am another supporter. I should declare an indirect interest as the life tenant of agricultural land in West Dorset and a member of the NFU, but my real interest comes from my experience of the voluntary sector and fair trade organisations such as Traidcraft and the Fair Trade Foundation, many of which have links with the churches, which I know will have a close interest in the Bill, as we shall hear in a moment.

From small beginnings, these organisations have made tremendous inroads into our supermarkets in recent years. I also know it has been an uphill struggle for some of them, just as it has for small farmers and milk producers, who often operate just the wrong side of the price margins. It means everything to them to get this sort of guarantee. The noble Lord, Lord Plumb, knows about this, as does the noble Lord, Lord Knight of Weymouth, as he comes from the West Country. I see that the BIS leaflet on the adjudicator has a dairy producer on its front cover, which is always encouraging.

Dairy farmers have simply gone out of business all around us and they still blame the supermarkets. They hark back to the time of the Milk Marketing Board, when they received a fairer and more stable price and there was much more certainty in forecasting and budgeting. Anyone who has worked with small businesses must be relieved to see this legislation come forward at last. Although it is imperfect, we must not hold it up for long, because of its importance. Although it is essentially a Labour measure, this is not a bargaining chip for the coalition. It is long agreed by all the parties and, while capable of being improved, it must be allowed to pass into law—perhaps in time for the adjudicator to start work in the new year. In the Minister’s words, retailers act well on the whole, and breaches of the code have, thankfully, been rare.

The major bone of contention is of course the extent of powers given to the adjudicator who, in the Bill, still appears to be the dog that growls but has only one or two teeth. The supermarkets—even the good ones such as Waitrose, which was just mentioned—that are nominally behind the code are nervous about the Bill. Not surprisingly, they resent any interference with the market. They think that the code is working; they distrust the influence of trade associations; they do not like flat levies—or fines, for that matter—and they would like any powers that enforce the code to remain at the naming and shaming level. Clause 9 says that financial penalties on retailers can be enforced only via the Secretary of State and,

“only if … other powers are inadequate”,

as stated in Schedule 3. It is easy to see that this process could be cumbersome. Clause 19 also stops short of requiring retailers to pay levies towards the adjudicator’s expenses, again leaving it to the Secretary of State. The reserve powers in both these clauses surely need to be strengthened if the adjudicator’s office is to have credibility.

Then there is the vexed question of third parties, which was mentioned by the noble Lord, Lord Razzall, and the previous speaker. Sainsbury’s says that obtaining evidence from trade bodies and charities is impractical and would add an unnecessary layer of bureaucracy. On the other hand, the CLA argues that third parties must be included and the NFU says that the GCA must have,

“the power to take credible evidence from reputable sources, and to use its judgment to assess its worth, before launching an investigation”.

Those points seem very reasonable. The Government have listened to them and the BIS Select Committee has spoken on this. As a result, the draft Bill has been altered to include third parties and, on the whole, to ensure anonymity. However, under Clause 15(10) there could still be restrictions on sources of information. I know that the Minister will cover that in her reply.

I appreciate that there is a risk of overregulation and I look forward greatly to the noble Viscount, Lord Eccles, who will expand on that. The adjudicator cannot be expected to investigate every complaint and the Government’s concessions will not satisfy everyone. Problems are bound to occur when retailers hide behind larger suppliers and middlemen. The British Retail Consortium claims that very few farmers supply directly to retailers and that most grocery supplies now come from large manufacturers such as Kraft and Nestlé, some of whom may have greater market power than the food retailers that they supply. We must keep a close eye on how legislation affects these other suppliers. Under the Bill, their business should be covered by the adjudicator.

I do not intend to play a major part in Committee because others have so much more experience, but I wanted to offer those few words and I shall be watching to see how far the Minister will have to bend in the face of some of the strong arguments that I know will be deployed.