Agriculture Bill (Tenth sitting) Debate
Full Debate: Read Full DebateDepartment: Department for Environment, Food and Rural Affairs
George Eustice
Main Page: George Eustice (Conservative - Camborne and Redruth)Department Debates - View all George Eustice's debates with the Department for Environment, Food and Rural Affairs
Agriculture Bill (Tenth sitting)
George Eustice ExcerptsTuesday 13th November 2018
(6 years ago)
Public Bill CommitteesRead Full debate Agriculture Bill 2017-19 View all Agriculture Bill 2017-19 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 13 November 2018 - (13 Nov 2018)
The Chair
Amendment proposed, 97, in clause 17, page 12, leave out lines 39 to 44 and insert the words on the amendment paper. The question is that the amendment be made.
The Minister for Agriculture, Fisheries and Food (George Eustice)
Apologies, Sir Roger: there is quite a large number of amendments in this group, and I am just finding my way to amendment 46. This is another attempt to replace the word “may” with “must”. Again, the argument is that the use of the word “may” is wrong. The Agriculture Act 1947 has not been referred to at all today, and I know that the hon. Member for Stroud likes it a great deal, so let me try this quotation:
“Where…it appears to the appropriate Minister expedient so to do, or if it appears to him otherwise expedient so to do in the public interest, he may by order fix or vary any such price”.
Even provisions in the 1947 Act, in this case relating to deficiency payments or a price support mechanism, use “may”.
The important thing to note about all these sorts of powers is that, by definition, there is a wide element of discretion. We are talking about dealing with crisis scenarios. The aim is not to intervene routinely all the time but to intervene expeditiously and in a fleet-of-foot way when a crisis needs to be addressed. The wording we have used in the clause and in many other areas in this part of the Bill is largely borrowed from what currently sits in EU legislation. The European Union also has discretionary crisis powers for exceptional circumstances, and its wording and approach are similar to what we have here, and, indeed, what we have here is similar to what we had in the 1947 Act.
Amendment 97 would add an additional definition of “exceptional market conditions”: if, on the day the United Kingdom leaves the EU, it is not in a customs union, that, of itself, should be an exceptional market condition. The hon. Member for Darlington comprehensively set out her views on these matters. I do not want to drift too far into the debate about customs unions, because we will have hours and hours of fun in the months ahead debating the agreement that comes back before Parliament.
However, we do not have to be in a customs union with the EU to avert a so-called exceptional market circumstance. We have been clear that we want a comprehensive free trade agreement and, crucially, a customs agreement—although not a customs union. We also seek a transition period. We are clear, as a Government, about what we seek in this negotiation, which is in its closing stages.
George Eustice
Yes, I can. If the hon. Lady reads the proposal that came out of Chequers, she will see that a customs agreement is one that allows us to strike trade deals with the rest of the world and in which we would collect and process, on behalf of the European Union, the duty due on goods destined for the EU.
George Eustice
I will not, because, as I said, I want to deal with the substance of the clause.
The Government are clear about our approach to getting in place a new free trade agreement and a partnership. However, there are several other flaws with the amendment. First, we have to bear in mind that the impacts of a no-deal Brexit will vary from sector to sector; it is not possible to determine exactly what they will be. For instance, we know that the sheep and barley sectors export quite a lot of their goods to the European Union. However, we are net importers in virtually every other sector, so although there may be an impact on sheep, there would almost certainly not be on beef, because there will be less import competition.
I do not think it is wise to put this proviso into the Bill. The reality is that, if the terms on which we left the European Union—be that with no deal or any other circumstance that led to restrictions on trade—led to a severe disturbance in the agricultural market, and if that disturbance threatened to have a significant impact on agricultural producers, the power is already there to act. We do not need to artificially bring a current debate around the customs union into a Bill that is built to last for the long term.
Dr David Drew (Stroud) (Lab/Co-op)
One little snippet I learned last week is that the milk that makes Baileys Irish Cream goes backwards and forwards seven times across the Irish border. If there is not some sort of union—or agreement, as the Minister calls it—that will be catastrophic. Given that the backstop is the thing stopping us getting any sort of agreement, would he care to speculate on how he would overcome the downside of those movements not taking place?
George Eustice
The issue in all those circumstances is less about the customs union and more about border inspection posts. That is why we have outlined in our approach a commitment to a common rulebook on those areas that require a border inspection, so as to reduce or even eliminate the need for border checks, and then an agreement on equivalence in other areas of legislation. So the border issue is less about customs.
Let me give another example. Scotch whisky is currently our most successful export, and yet it is always sold as a bonded product in an individual national market, because you have different alcohol duties in national markets, even within a single market. We already have examples of some of our most successful exporting sectors having no problem at all dealing with variable tax rates within a market.
Mr Philip Dunne (Ludlow) (Con)
Is the Minister able to confirm what I learned last week? Scotch whisky sales to China amount to £35 million, but pork exports to China, which were opened up by this Government in 2016, I believe, amounted to twice that last year—£70 million in one year.
George Eustice
My hon. Friend is absolutely correct. In the agri-food sector, as in most other sectors, our trade with the rest of the world is growing far faster than our trade with the European Union.
Martin Whitfield (East Lothian) (Lab)
It is also the case that Scotch whisky is created and bottled within Scotland and travels as a single product. The issue with Baileys is that it passes to and fro during its production.
George Eustice
That is the case with a number of other things that we import from other countries, including Iceland, which we import a lot of fish products from. We have ways of dealing with these issues.
As I said, the approach that we have adopted with the common rule book and the customs agreement will address those issues.
George Eustice
I will not give way. With these interventions, a number of Members are giving the impression that they would rather be in the main Chamber taking part in the EU debate than in a debate about future farming policy.
The purpose of this amendment is to define not being in a customs union as being a crisis in and of itself. That is absolutely wrong, because we can have a highly successful partnership and trade agreement that does not require us to be in a customs union with the European Union. Many nations in this world are not in a customs union with the European Union.
Jenny Chapman
Some of the contributions have been helpful in giving the lie to the idea that you cannot trade successfully and extensively with countries in other parts of the world while in a customs union, but that is not the point I wanted to make. The Minister says that not being in a customs union is not a crisis, but can he name any border anywhere on the planet where the kind of frictionless trade on which our industry depends is achieved without being in a customs union?
George Eustice
There are many successful economies in the world that are not in a customs union with the European Union.
I come back to my point: if as a consequence of the agreement—or indeed of there being no agreement—with the European Union, there are market disturbances that have an impact on agricultural producers, the power is there to act. There is no need to try to define additional powers in the way that this amendment does.
Amendments 117 and 123 seek to downgrade the test from a severe market disturbance to a significant market disturbance. It is wrong to lower the threshold in that way, for reasons I want to explain. We had evidence from one of the academics that suggested we needed something akin to the old deficiency payments system in that famous 1947 Act. The world has moved considerably since that point, and in many sectors we are seeing the development of viable futures markets to help farmers manage risk. In some countries—notably the US, in places such as Chicago—they put in place legislation to deliver the transparency needed to get a functioning futures market that enables farmers to defend themselves against price fluctuations.
We also have some interesting projects being developed in the UK. We are world leaders in issues such as agricultural insurance. There are some interesting projects on forming mutual funds—effectively, mutualised risk insurance models—that help farmers to insure their margin and protect a given quantity of milk, for instance, at a given price. Moving these powers away from just intervening where there is catastrophic risk, and away from a “severe” to some sort of “significant” disturbance, is the quickest way to snuff out the development of those private futures markets and risk management models.
Dr Drew
The Minister quoted the US a minute or two ago. I have some experience of the way in which the US operates its agricultural policy. Whenever there is any challenge to US farmers, it brings the Farm Bill out and openly subsidises its farmers—it is a straight subsidy. That is one of the problems I have with a free trade deal with the US: it is not a level playing field if we get rid of direct payments. I ask the Minister again: how do we defend against exceptional market conditions in this country when another country has already decided that it is going to defend its farmers by taking action through subsidising them?
George Eustice
We are adopting an approach to agriculture policy that is all around investing in farmers to help them reduce their costs to improve their profitability and to reward them for the work they do for the farmed environment. Part four, starting with clause 17, which we are debating now, is all about intervention powers in exceptional circumstances. We have deliberately not defined what those are because there should be a strong element of discretion here, and the Government have to be able to move, decide and act in an expeditious way to tackle a crisis.
The hon. Member for Darlington mentioned this morning what sort of circumstances these powers might be used in. Bearing in mind that they have largely been borrowed from existing EU provisions, we know when the EU has used powers of this sort. For instance, it was possible when we had the dairy crisis in 2015 and prices slumped for a long period during the latter part of that crisis, for the EU to fall back on these exceptional intervention powers to make grants and payments available to farmers to reduce their production. That is the kind of example where it would be absolutely appropriate to use these powers. However, there are other times when we have short-term fluctuations in the market, and when it would not be appropriate to use the powers.
Dr Drew
The Minister is being very patient with me, but I want to get this on the record: if another country, which we may have a trading arrangement with, chooses to subsidise its farmers in extremis because of a particular circumstance, which may be—dare I say it—an act of God, or the market may just be in a difficult position, would we use this particular power to support our farmers?
George Eustice
If that crisis in a third country led to a market disturbance here that had an impact on our producers, then yes, the power is there to do so. There is wide discretion in how this power could be used. In practice, the reality here is that when we have a crisis, we know what will happen. The Minister of the day will have representations from Back-Bench MPs who have met their farmers and he will have to make a judgment about whether this warrants declaring that exceptional market circumstance and taking action thereafter to address it.
This is a wide discretionary power, but I am certain Parliament will be plugged in to advocating that we should declare this exceptional market circumstance and act. It is right we enable it to be a flexible power that can be used in emerging crises that we cannot yet predict.
Dr Drew
I am sorry to intervene once again, but this issue is a minefield, because if a group of my farmers come to me, and I then go to the Government and say, “Well, this is an exceptional circumstance”, and the Government say, “No, it’s not”, but the United States has treated it as an exceptional circumstance, that will surely lead to all manner of legal actions against the Government. Clearly, farmers will defend their rights and their incomes when they feel another country that is trading with us is getting an unfair advantage. Is he not opening a can of worms?
George Eustice
No, I do not think we are. We are largely replicating what already exists. It is already the case that if there was a crisis in the US, and the US intervened but the European Union chose not to, there would be some disparity—
George Eustice
We should deal with the situation in our market. The test we should apply before acting is whether there is a severe market disturbance that affects our agricultural producers. We should not be worrying about what other countries happen to be doing.
Simon Hoare (North Dorset) (Con)
May I explore this point, because the shadow Minister is right that it is incredibly important? If an agricultural commodity was, in effect, being dumped into UK markets—analogous to the steel dumping from China—would that be a severe market disturbance and would it trigger some level of support, on the proviso that it was not possible to do anything about the dumping because a free trade agreement allowed it to take place?
George Eustice
In all international trade law, there are provisions on dumping—it is literally referred to as “dumping”—that enable us to restrict imports from other countries where under-priced, under-valued produce was being dumped in our market. That can therefore be dealt with elsewhere.
Sandy Martin (Ipswich) (Lab)
Would the Minister characterise all exports from a country that subsidises its agricultural production as “dumping”?
George Eustice
No, because we export and have some subsidies for our farmers. We have a range of different approaches that we can take to—[Interruption.] We are moving away from subsidies. We will support farmers in a different and better way. We will reward them for what they do for the environment.
I return to clause 17, not clause 1, which we debated earlier. Amendment 122 would broaden the scope of this exceptional market conditions power to enable the Secretary of State also to consider the costs incurred in production. This is neither necessary nor wise. We want this power to be aimed at markets, as it is now, and applied where there is a market disturbance, not necessarily where there is an increase in the cost of production.
The point about agricultural input costs is that there is a strong link between the main input costs, and the cost of oil, movements in exchange rates and weather events, and that also has an impact on output values. Typically, if the cost of animal feed rises, the value of the animal also rises, either because exchange rates, the price of oil or a weather event has driven it in that direction. That linkage is a natural hedge against the cost of inputs.
Sandy Martin
Will the Minister accept that the costs of labour and the costs associated with the exchange rate may well become much heavier for British farmers, especially those in horticulture or fruit and vegetables, than in the EU as a result of Brexit and that therefore our fruit and vegetable production might well be undermined by changes resulting from our leaving the EU?
George Eustice
I do not accept that. We learned from the exchange rate mechanism crisis in this country that floating exchange rates work, and work for our economy. The ERM caused a deep recession in this country, and it was only by leaving it and allowing our currency to float and find its correct value that we saw that boom. We know that the existence of the single currency eurozone is throttling growth in countries such as Italy and Greece and causing massive unemployment, particularly youth unemployment. We know, too, that, since the referendum result, sterling has eased back against the euro, which has led to the biggest boost in farm incomes for more than a decade. In the two years since the referendum decision, farmers have benefited from the pound’s slightly softer rate against the euro.
On the amendments, I believe that the issues have already been addressed or that they seek to constrain or fetter the discretion in the power, so I hope that the Opposition spokespersons will not press them.
Dr Drew
This has been an illuminating discussion. The Minister has done well with a bad set of cases. Farm systems throughout the world are subsidised; they might be subsidised in different ways, but they are subsidised. In the normal course of events, that is not a particular problem—we can deal with it, partly because we are in the EU and so have a bulwark. The difficulty is that the clause puts an enormous responsibility on the Secretary of State—I would not want it if I were Secretary of State—to decide whether something is an exceptional market circumstance. I would want to know with my Cabinet colleagues that I had the power to insist on action.
The clause will make it difficult for a Minister to make the right decision, because farmers, understandably, will say, “You have to support us—the Americans support their farmers,” but here it is at the Minister’s discretion. That has always been our problem, and it is why I will press the amendment to a vote. I think my hon. Friend the Member for Darlington will do likewise with her amendment.
This is the crunch point of the Bill that we are asking the Government to consider. We do not want to fetter a future Administration, but we would want that Administration to understand their responsibilities, and that can be more clearly spelt out in terms of a duty—not a power, but a duty—so that if exceptional market circumstances were affecting the operation of agriculture in this country, the Secretary of State, or whoever was making the decision in government, had to respond, because of how the legislation had been framed. That is why I will press the amendment to a vote. I want to make it clear that the Bill is deficient in that regard.
We have heard many other interesting things that we will read back over with the benefit of hindsight. The Minister needs a few more examples to give us certainty that what is going on is coherent. At the moment, this seems a woolly set of arguments. We are protecting British farmers. We are also protecting British landowners, who might also be affected, as we can sadly see in California at the moment. I referred earlier to President Trump. He was hardly on the front foot. In a sense, the amendment would help the Secretary of State because he or she would know they had to act and that it was the Government’s responsibility. We can argue about what exceptional circumstances are, but the action should be clear, and that is why I will press the amendment to a vote. I think that my hon. Friend the Member for Darlington will be so moved as well.
Question put, That the amendment be made.
Jenny Chapman
A procedure would take place in Parliament but we have all sat on those Committees and seen just how thorough the examination of regulations can be.
The protection of the environment and consumers is very important. We would argue that, if anyone wants to change those important rules and the law of this country, they should introduce a Bill. We can then scrutinise it properly, with votes on the Floor of the House and the involvement of both Houses. Let us have the warranted scrutiny because these incredibly important issues affect how our country perceives itself and is perceived overseas, and the protection of the environment. The protections warrant the hard work that would need to be undertaken by Ministers, which is what people put their hands up for when they voted to leave—they wanted the ability to make their laws properly, as they saw it. To do that by regulation, through whatever procedure, is not what the public had in mind when they voted in 2016.
I am afraid that warm words from the Minister will not do this time, nor will assurances that Parliament can be involved when future regulations are proposed. We are very concerned. Subject to what the Minister says, we might want to test the opinion of the Committee on these amendments.
George Eustice
It is important to note that amendments 47 and 82 are to some extent antagonistic. On amendment 47, as the shadow Minister said, we have debated the issue of “may” or “must” on many clauses. I simply reiterate that having that power conveyed through the term “may” is how comparable legislation is drafted and is the approach we take. In addition, in this instance, there is another reason why “may” is absolutely the appropriate word to use rather than “must”.
The hon. Member for Stroud should read the clause in the context of the fact that all existing EU marketing standards will be brought across through the European Union (Withdrawal) Act 2018 and placed on a UK statutory footing. It is therefore not the case that, in the absence of immediate action by the Secretary of State, there will be no marketing standards. In the absence of any action under clause 20, the position would be that retained EU law on marketing standards endures and remains after we leave the EU as it was when we were in it. Paradoxically, if there were a requirement that he “must” introduce regulations in all areas, the Government might be forced to change retained EU law that they were perfectly content with and not in a hurry to change.
Jenny Chapman
Let me reassure the Minister. I am not saying that we should keep things as they are and never, ever change anything. I just think that, if he intends to change these things, he ought to introduce an environment Bill or a consumer protection Bill so that we can decide where the country is going, and not just leave it to the Secretary of State.
George Eustice
Of course, at the moment it is just left to the European Union, and we have no input at all. The hon. Lady will note that the set of regulations set out in clause 20 will be subject to the affirmative procedure. We recognise that these are important issues and that retained EU law may be replaced—there is the option to do that—so we have made them subject to the affirmative procedure. Parliament will have a role.
Amendment 83 is about the duty to consult, which we have covered on many occasions. I say again that DEFRA loves consultations. We have consultations on all sorts of matters. I can give the hon. Lady an undertaking that, before making any changes under clause 20, there will indeed be a consultation—not only because we always consult on matters of this sort anyway, but for another reason: as I explained, on issues of food standards, and food safety in particular, there is already a statutory requirement to consult. It is currently contained in article 9 of EU regulation 178/2002, which requires consultations on changes to food law. That EU regulation will come across in the retained EU law. In addition to my normal argument, there is an even stronger argument, which is that there is already a statutory requirement for changes in many of these areas, because they relate to food standards.
Having addressed hon. Members’ concerns and explained that retained EU law will be the starting point, and that we need not be in a hurry to change these things if we do not want to, I hope that the amendment will be withdrawn.
The Chair
Order. I am looking at you, Ms Chapman, in case you want to speak before Mr Drew winds up. I was not able to allow you to speak last time because he had wound up the debate.
Kerry McCarthy
I thank my hon. Friend for bringing the debate back to a more serious note. Basically, consumers are being misled. They would like more information, and farmers would like to give them more information so that when they have put more effort into producing their produce, they can be rewarded for that. That is all the new clause is about.
George Eustice
This group contains two important amendments that have touched on some interesting issues, on which I will update the Committee. The first is amendment 118, tabled by the shadow Minister, which relates to an incredibly important issue. As he pointed out, the problem of allergens leading to deaths has been in the news most recently with the tragic story of 15-year-old Natasha Ednan-Laperouse, who died due to an allergy to sesame in a baguette that she bought from Pret a Manger. This is an important area and we are going to look closely at the review of food law, particularly for the labelling of allergens. We intend to publish our proposals around the turn of the year, to update colleagues further.
It is important to say that there has been a growth in food allergies in recent decades. Nobody is quite sure why that is, but it is real. If we look at the number of people who have allergies, particularly to nuts and sesame, we see that it has grown considerably in the past 20 to 30 years. Another change is that chains such as Pret a Manger, and many others, are increasingly making their sandwiches on-site, which is a relatively new model. That has happened in the past 15 to 20 years. The combination of the growth in the prevalence of allergies and the growth in the practice of preparing sandwiches on-site means that there is a gap in the law. A simple, small derogation that was intended to be used by small family bakers, for instance, so that they did not have to label foods being produced, is now being used on a much larger scale, which had not been envisaged at the time.
The Chair
Order. That is about the third time, and the hon. Gentleman is not the only person to have done so this afternoon. We really must work in the third person, please.
George Eustice
As I said a moment ago, we are currently reviewing this. We intend to publish the results and our thoughts on how the law should be changed in this area early in the new year. We can make the amendments we need through secondary legislation. Obviously, because there is now a food safety issue, given the problem with allergies, once we have decided what is necessary we intend to move quite quickly.
New clause 15 relates to another important area. The Government have already signalled that we are keen to look at this issue further. Before addressing method of production labelling, I draw the attention of the hon. Member for Bristol East to subsection (2)(d) and (g) of clause 20. Paragraph (d) refers to
“the presentation, labelling, packaging, rules to be applied in relation to packaging centres, marking, years of harvesting”,
and so on, and paragraph (g) stipulates
“the type of farming and production method”.
Taken together, those two provisions already give us the powers we need to do all the things the hon. Lady is seeking to achieve with her new clause. Although this is an important area, and one that we want to look at, I do not think that this specific new clause is necessary. I hope that it is a probing amendment, given that the Bill already covers this in subsection (2)(d) and (g).
However, I would like to touch on the substance of the issue. The debate that we have had, with its many interventions—as I said, the hon. Lady is here to lighten the mood of the Committee—highlights how important this is, but also how complex. There are lots of descriptors: we have “grass-fed”, which is not necessarily the same as “pasture-fed”; we have “pasture-fed systems”; we have “outdoor-bred” pigs or “outdoor-reared” pigs; there is “organic” and “free-range”—and often those terms mean different things. It is quite an undertaking to try to define all those in one bound. Probably the more likely thing would be to pick something, such as “pasture-fed livestock”, just as we have done for free-range eggs, where we can draw the criteria and roll out these types of descriptors on labels as we are ready to do so effectively, rather than bite off more than we can chew. The regulations would enable us to do that, so we could bring in schemes as we were ready to roll them out.
Another slight complication is the nervousness I have always had about going too far down the line on method of production labelling, because there could be unintended consequences. For example, at the moment there is a substantial market for outdoor-reared bacon, because people look for that on the packet. They are less inclined to do so if they are buying a pork pie, for instance. Some manufacturers of pork pies might buy from high-welfare farms parts of the carcase that are not used for bacon and that are maybe outdoor bred, but they might also buy pigs from other, more commercial producers.
We have to be careful that, by having onerous labelling requirements for some of those sectors where people are less inclined to seek out the descriptor, we do not create an unintended barrier to high-welfare producers accessing the market for parts of the carcase that they would not necessarily market on the high-welfare brand. I am attracted to moving in that direction, but there are complexities and difficulties around the definitions and potential unintended consequences. I hope that the hon. Member for Bristol East will agree that the intentions behind her new clause are already reflected in subsection (2)(d) and (g) of clause 20.
Dr Drew
I am partly assuaged by what the Minister has said. I hope he will commit to ensuring that there is an overt process by which the statutory instrument comes forward, so that we can allay the fears of those who clearly now have worries. That is why it is so urgent, and why we have provided an opportunity to make this amendment. People literally do not know what to eat because of their particular allergens. The Minister says that nobody knows quite why this has taken off in the way it has. I suspect that it is because we have become more susceptible to particular foodstuffs. Maybe it is because we know a lot more about why people have difficulties when they eat certain substances. It is right and proper that we give them the protection they deserve.
I will not push my amendment to a vote, but I will hold the Minister to account on this. We seem to have a very busy end of the year, and all manner of things will be coming forward. My hon. Friend the Member for Darlington might wish to take a slightly different course of action; I think the Minister has given certain assurances, but we will not let go of this, because people’s lives are threatened. We feel that, at the very least, it is important for people to know that what they eat is safe and will not affect them adversely. I know from various correspondence that Government Members feel the sam.
I hope that the Minister has heard what I have said and will act on it, and that he will bring the SI forward as a matter of extreme urgency. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 82, in clause 20, page 16, line 2, at end insert—
“(2A) Regulations under this section may not amend or repeal any part of retained EU law (within the meaning of section 6 of the European Union (Withdrawal) Act 2018) relating to—
(a) the protection of the environment, or
(b) consumer rights.”—(Jenny Chapman.)
Question put, That the amendment be made.
Martin Whitfield
Aware of your earlier comments, Sir Roger, I shall be relatively brief. I rise merely by way of seeking an indication, or an answer to my question, from the Minister, or indeed the hon. Member for Edinburgh North and Leith, who moved the amendment, if they find chance to do so. I reiterate what NFU Scotland asked for, which is that the Governments on both sides of the border should sit down, discuss this and sort it out. That is what should happen. It is not a case for politicking. As my hon. Friend the Member for Darlington said, stuck in the middle is a very important industry in Scotland, England, Wales and Northern Ireland. The agricultural industry is desperate for certainty and understanding, and needs it sooner rather than later.
On the amendments, will the Minister confirm the evidence that he gave to the Scottish Affairs Committee? Some elements clearly affect the devolved settlement. With the greatest respect, more attention should have been paid to the consequences of that earlier.
I am concerned about the question of recognised producer organisations that cross the borders of the four nations. Yes, the amendment takes account of that, but there is the question of what happens if there is an argument about certification. If one side says yes and the other says no, who will take precedence?
The other point I want to make is about Government amendment 10. What sort of legal entity does the Minister envisage? Is it, or might it be, a collection of simple individuals? In that case, the Government might it challenging to find a legal entity to pass down those rights.
George Eustice
Following your steer, Sir Roger, I will reserve wider discussion of the scope of the Bill, or parts of it, for a later debate.
Amendments 56 to 64 are all linked, and many are the same. In essence, they would all delete references to the Secretary of State and instead insert “relevant authority”. I appreciate that behind this whole group of amendments is a belief, put forward by the hon. Member for Edinburgh North and Leith, that this is a devolved and not a reserved matter. I want to explain to her why we are very clear that that interpretation is incorrect and potentially based on a misunderstanding.
We have to look at the context of the clause, where we are recognising producer organisations. What are we recognising, and why are we recognising them? In this context, it is for one purpose only, which links to clause 23, which we will come to: we are recognising producer and inter-branch organisations in order to make them exempt from elements of competition law. It is incontrovertibly the fact that competition law is a reserved matter. That is absolutely the case. Clause 23 points to schedule 2 to the Bill, which amends schedule 3 to the Competition Act 1998 in a way that is advantageous to organisations that are recognised under the provisions of clause 22. Clauses 22 and 23 are fully reserved because they relate directly to competition law.
Some of the misunderstanding arises because of the possibility for joint ventures, or groups of farms or bodies coming together, to qualify for grant aid from the Scottish Government, if they put in the right legislation in future. Under clause 1(1), the UK Government for English farmers, or the Welsh Government for Welsh farmers, will be able to give a grant to a co-operative group of people who have come together. They have the power to do so. However, the power to recognise a producer organisation in this context for the purpose of exempting it from competition law must be done UK-wide because it is a reserved matter.
Martin Whitfield
Could that work not be done within Wales or Scotland for the UK Government to rubber-stamp, much as the Minister has indicated the European Union do at the moment?
George Eustice
That is broadly what would happen, and it is quite possible that the Scottish Government, Northern Ireland Administration and Welsh Government will already sometimes be involved in giving advice or supporting individuals who want to bring forward those designations. However, the assessment and designation of them has to be done by the UK.
I hope that, having been given this clear explanation as to why clauses 22 and 23 are reserved, the hon. Member for Edinburgh North and Leith will accept that there has perhaps been a misunderstanding about the difference between the ability to award grants and the process of recognition for the purposes of an exemption from competition law, which is reserved, and will withdraw her amendment.
Deidre Brock
I am sorry to disappoint the Minister but I will be calling for a vote. We believe part 6 and clauses 22 to 24 in particular require the Scottish Parliament’s consent as they are for a devolved purpose, namely the promotion of an effective agricultural market. The fact that in order to do this it is necessary to exempt producer organisations from the Competition Act 1998 regime does not mean that the provisions relate to competition law. Their purpose is not to regulate anti-competitive agreements, which is the precise element that is reserved. I am afraid we have to disagree with the Minister on that.
I understand that new clause 5 will be voted on later, but I want to tackle one thing. I did not realise that some of these things will be discussed when we look at new clause 34 later.
The Chair
By virtue of the arcane process we follow there is a sequence and the hon. Member for Edinburgh North and Leith is not in it at the moment, because we must move on to Government amendments 9, 10 and 11. After that, I will return to the hon. Lady if she decides she wants to move any of her other amendments.
George Eustice
I beg to move amendment 9, in clause 22, page 16, line 33, leave out “a single agricultural sector” and insert “one or more agricultural sectors”.
This amendment changes one of the conditions for applying to become a recognised producer organisation so that the condition is met if each member of the organisation is an agricultural producer operating in any one or more of the agricultural sectors listed in Part 2 of Schedule 1 to the Bill (rather than each member being required to operate in the same sector).
George Eustice
All three amendments relate to trying to reduce some of the burdens that existing producer organisations have mentioned to us, and restrictions that they regard as unnecessary. Some of the EU rules on which we modelled the initial clauses, for instance, require all producers to be from a single agricultural sector, when actually we think there may be circumstances where groups of producers want to come together that span more than one sector. We think that is an unnecessary restriction that does not achieve anything.
In amendment 10, we propose to delete paragraph (d) from clause 22(2) in its entirety, so that a body corporate with legal personality is not necessary; we believe that to recognise a producer organisation there may be other models, including joint venture arrangements, that may stop short of being a body corporate. Again, we do not believe that that requirement is necessary; some might choose to do it but we think there should not be a requirement on them, and that they could convene themselves in other ways. Amendment 11 is linked to amendment 9 and also removes the reference to a “single agricultural sector” to allow there to be members from more than one sector.
On the EU fruit and veg regime in particular, we have had issues with Angus Growers in Scotland and with other producers in England too. Although fruit and veg producers welcome the grant support that they get through the fruit and veg producer organisation regime, many of them tell us that there are lots of problems with it. We frequently end up in litigation with the European Union because of poor or imprecise drafting or requirements that serve little purpose. The feedback from the people who have to deal with the schemes is that we should take the opportunity to sort it out, declutter it and make sure we have an equivalent scheme to offer them the support that they want, but with some of the frustrations removed. That is one part of what the Government amendments seek to achieve.
Martin Whitfield
Referring to my earlier point, does the Minister envisage the recognised producer organisations being made up of people from different legal entities? If so, how will he ensure the appropriate payment with regard to some bodies that will not be pursuable and some that will?
George Eustice
There are lots of other conditions. Subsection (2)(e) requires that the constitution of the organisation meets certain requirements. There are other such provisions as well, so we do not have to define them as a body corporate in law in order to have express conditions that mean they would all be jointly and severally liable were something to go wrong.
Dr Drew
My hon. Friend the Member for East Lothian has covered one of the points that I was going to raise. Can the Minister give us some examples of the actual changes that mean that he sees the amendment as necessary? I think I understood the original way in which it was placed in the clause, but what representations has he received, apart from the one he mentions? Are we changing the legislation because of one piece of representation or have others come up with cogent points for a necessary change?
George Eustice
I can tell the hon. Gentleman about that. I have had experience of the EU scheme in the past and there have been instances where, for instance, some growers have said to me that they would like to come together for a purpose other than just marketing, and they would like the freedom to be able to do that. That is quite restricted in the new scheme. On the amendments, the representations came from Co-operatives UK. After we published the Bill the co-ops told us that some of the provisions were unnecessarily restrictive and might stop some of their members from being able to have a recognised body for the purposes of clause 23, so we responded to those representations, which made salient points, and we were happy to acknowledge them and table the amendments.
Amendment 9 agreed to.
Amendment made: 10, in clause 22, page 16, line 39, leave out paragraph (d).—(George Eustice.)
This amendment removes the condition for applying to become a recognised producer organisation relating to the legal form of the organisation.
The Chair
In sequence, amendment 57 is effectively the same as 56, 58 and 60, so I am not minded to call those. However, once we have disposed of amendment 11, which will be the next item on the agenda, if the hon. Member for Edinburgh North and Leith wishes to move either 59 or 61, which are different, I am prepared to allow that. So we will proceed on that basis.
Amendment made: 11, in clause 22, page 17, line 9, leave out “a single agricultural sector” and insert
“one or more agricultural sectors”.—(George Eustice.)
This amendment changes one of the conditions for applying to become a recognised association of producer organisations so that the condition is met if each member of the association is a recognised producer organisation operating in any one or more of the agricultural sectors listed in Part 2 of Schedule 1 to the Bill (rather than each member being required to operate in the same sector).
Amendment proposed: 59, in clause 22, page 17, line 31, at end insert—
“( ) An application under subsection (1), (3) or (5) is to be made to and determined by—
(a) the appropriate authority for the part of the United Kingdom in which the applicant has its registered office or principal place of business, or
(b) where the applicant is made up of producers, producer organisations or, as the case may be, businesses operating in more than one part of the United Kingdom, the appropriate authority for any of those parts.”—(Deidre Brock.)
This amendment would require organisations of agricultural producers, associations of recognised producer organisations, and organisations of agricultural businesses to apply for recognition to the appropriate authority in the country of the UK where the applicant is principally based.
Question put, That the amendment be made.
Dr Drew
We are getting there, slowly, Sir Roger. I want to pick up the point made by the Minister on clause 22 about how organisations will be identified. I am a Co-operative MP; I put that on the record. The Co-operative movement has been somewhat wary of this part of the Bill—whether it is clause 22 or, in this case, schedule 2, on which I have the opportunity to make these points.
I welcome the amendments that the Minister has moved, at least recognising that the Co-operative movement has been unhappy to be labelled as purely part of the competition arrangements, given that co-operation is a key part of the agricultural sector. Many farmers and farm organisations are, by their nature, co-operative: whether it is NFU Mutual, equipment changes or buying feed or pesticides, they tend to act in a co-operative organisation. I am raising the issue under schedule 2 to put on the record that there is still some unease. The Minister has recognised that, given the amendments that he tabled to clause 22. He has explained why he changed the wording, and I am very happy with that.
The issue is about the impact assessment on the Co-operative movement, given that the producer organisations, the associations of producer organisations and the inter-branch organisations—all lovingly acronymed —are by nature not just competitive organisations. They are also co-operative organisations. The Co-operative movement has felt that there has been increasing uncertainty and regulatory risk. Having agreed to the amendments that the Minister brought forward to clause 22, I am asking him also to say something in our discussion about schedule 2. That clearly relates to clause 23, given that one follows from the other.
Established co-operatives fear that they might find themselves outside the new settlement. They are likely to manage most of the uncertainty well, but they want to know that the Government have heard what they have been saying. In a sense, they want the Government to mount a robust defence of where co-operation comes within agriculture.
The biggest risk is where established co-operatives feel uncertainty about how the Competition and Markets Authority might interpret the joint selling arrangements. That is an important issue for those who want to protect co-operatives, one of whom is myself. At the very least, the additional challenge they might be faced with will put a cost obligation on them, increasing the transactional costs of collaboration. They want reassurance from the Minister about how they should handle the situation.
Will co-operatives be subject to those types of challenges, if the legislation is passed as it is currently drafted? Will it at least make farmers less inclined to co-operate, given that the nature of the Bill is to look at different ways in which environmentally-inclined changes could lead to new ways of working? This is a very old way of working, but it may be given an enhanced status if and when the Minister can clarify whether co-operation would be a key element of how the Competition and Markets Authority would see the matter. The co-operatives did look at various amendments. The Government have listened, and the co-operatives are happy with what they have done through amendments 9 and 11 to clause 22. However, they want further reassurance, as the same logic applies to schedule 2.
This is a probing amendment, but it is important because the message the Minister gives will reassure or cause further doubt in the minds of those who wish to look at new forms of business organisations in terms of how they do their agricultural trade. Will the Government at least look again at the issue and ensure that what they have done with clause 22 will apply to schedule 2? If the Minister can assure me that the Government will do that, I will certainly not press the amendment, but we may have to revisit it on Report if the Government have not done what they should to ensure that the CMA can incorporate co-operation as well as pure competition.
Again, that is part of the current common agricultural policy arrangements and its interpretation of economic efficiency within the acquis. We want to know that it will be rolled over into British legislation and particularly how it will be rolled over into schedule 2.
George Eustice
I can give the hon. Gentleman that assurance. We have been in discussion with Co-operatives UK, which raised the issue about eligibility and the fact that the requirements for a corporate body and to have all members from one sector could affect some co-operative working. We listened to that and addressed it.
I do not think that there is a spill-over of that problem—for want of a better term—in schedule 2, because that schedule is essentially all the technical clauses needed to disapply what competition lawyers call “the chapter 1 prohibition”. In essence, schedule 2 determines and sets out in some detail the process by which producer organisations can come together to collaborate and co-operate in a range of areas and co-ordinate their activities in a way that would otherwise be considered a breach of competition law.
In particular, paragraph 9(1A) of schedule 3 to the Competition Act 1998 lists activities such as planning production, optimising production costs, concentrating supply, placing products on the markets and negotiating supply contracts. Schedule 2 gives licence to a recognised producer organisation to do all those things and to disapply those elements of the 1998 Act.
Simon Hoare
Would the Minister clarify a concern of mine? He has referred to sub-paragraph (1A), but I refer him to sub-paragraph (1C)(a), which says that condition B is that:
“in the case of a PO, none of the producers concerned are members of any other PO as regards the products covered by the activities”.
If someone had six dairy farms, one of which sold 55% of its produce through Arla, but they wanted to create a more local co-operative and the sixth Arla-related farm wanted to be part of it, would that bring the whole house down or would there be some scope and flexibility, perhaps based on percentages? That absolute restriction may need a bit of refinement.
George Eustice
My understanding is that that is effectively an anti-avoidance provision to stop people from being members of several co-operatives and having a genuinely dominant market position that goes above and beyond what is envisaged by producer organisations. Under the current EU scheme, one producer organisation can have a market share of up to 33%, but if there were overlapping producer organisations, it could create market distortion. My understanding is that the provision seeks to address that.
In conclusion, I am a huge supporter of bio groups, co-operative working and collaborative working. We all know that one of the challenges we face in the agricultural industry, as we think about the future, is that it is sometimes a fragmented sector and sometimes does not have the clout it needs in the market or the ability to do joint collective buying to get those costs down. We want to facilitate collaborative working; this part of the Bill and the particular schedule that the shadow Minister has raised go some way to addressing that.
Dr Drew
The Minister makes an interesting point. I thank the hon. Member for North Dorset for getting my little grey cells working. Let us take Arla, for example—a co-operative that operates across a number of countries and that is not likely to fall foul of the CAP by being seen as a monopoly with more than 33%.
I do not have the current figures for the percentage of the milk supply that Arla processes, but if the Competition and Markets Authority took it as a purely national organisation and it fell foul of that 33%, could this new legislation mean that it ended up having to be broken up? I will need some assurance from the Minister before we go any further, because that is a good example of a co-operative that everyone would support, but which could now be in a disadvantageous situation if we take this as a national definition of its market control. Will the Minister clarify?
George Eustice
There is already national competition law set out in the Competition Act 1998, enforced by the Competition and Markets Authority. In the past, for instance, that famously led to the break-up of Milk Marque, which led to the situation we have today. There have been instances of that in the past under existing national provisions on competition law. I know the hon. Gentleman said he might come back to this on Report; I am happy to give an undertaking to look at this issue further and explain in further detail exactly what each of those clauses delivers. The clause that my hon. Friend the Member for North Dorset mentioned is an anti-avoidance clause—[Interruption.]
George Eustice
Yes. My understanding is that we have addressed the issues he has raised about the schedule, which are linked to the concerns that Co-operatives UK raised, through our earlier amendments.
Schedule 2 agreed to.
Clause 24
Regulations under sections 22 and 23
Amendment made: 12, in clause 24, page 19, line 7, after “unless” insert “section 29(4A) applies or”—(George Eustice.)
See the Explanatory Statement for Amendment 2.
Clause 24, as amended, ordered to stand part of the Bill.
Clause 25
Fair dealing obligations of first purchasers of agricultural products
Deidre Brock
Thank you, Sir Roger.
I am minded to support the other Opposition amendments in this group, barring amendment 111, mainly because I am not entirely clear what its purpose is and I am a bit concerned that it could encroach on devolved responsibilities. Amendment 65 seeks only to ensure that the devolution settlement is respected. It would ensure that Scottish Ministers are able to exercise their powers under the devolution settlement. Agriculture is devolved, as the Secretary of State said in his most recent letter to the Scottish Government, and that should be respected.
Amendment 66 would ensure that those who are directly affected by the regulations are consulted. The Minister has made clear his liking for consultations and has said how much he values the input of those affected, so I am sure he will welcome the chance to put that into the Bill.
George Eustice
I shall begin by touching on amendment 48. Since the shadow Minister has not sought to remake an argument we have had many times, I will refrain from quoting from the Agriculture Act 1947 on this occasion.
I turn to the more substantive collection of amendments—93, 94 and 95—which seek to broaden the measure and to remove the requirement for it to apply to the first purchaser of agricultural produce. I understand the shadow Minister’s point, but I want to explain why we have adopted this approach. As he is aware, the Groceries Code Adjudicator enforces the groceries code for the 10 largest supermarkets—those with the largest turnover—and is funded by a levy on those retailers. It has been successful because it is focused on the key task of improving the relationship between the very sizeable retailers and their suppliers, which are often far smaller.
However, for a couple of years now people have raised concerns about the fact that some farmers do not directly supply the supermarkets. Indeed, although in sectors such as fruit and veg it is quite common for an individual farmer or grower to supply a supermarket, in other sectors—notably beef, lamb and dairy—farmers supply processors and abattoirs instead; they do not supply their produce directly to the supermarket. The point has been made that they do not benefit from the protection of the groceries code and the Groceries Code Adjudicator.
Anecdotally, there are sometimes problems with processors finding it easier to pass costs and breaches of the code on to the farmers than to have a difficult conversation with the retailer and tell it that it is in breach of the code, or to report it to the Groceries Code Adjudicator. For that reason, we said, “Let’s also address the problem at the other end of the scale.” The problem we are trying to address in the Agriculture Bill is that primary producers—farmers—are price takers and are often not sure what they will be paid until their animal has gone through the slaughter line. They can then end up with all sorts of costs that they did not expect and penalties that they could not have predicted. We therefore tried to address that unfairness by keeping the focus of these provisions on the first purchasers.
Sandy Martin
Does the Minister accept that large companies are extremely good at creating wholly-owned subsidiaries, often for fairly spurious purposes, such as avoiding taxes or legislation? If this measure is restricted to first purchasers, it is entirely possible that completely new and unnecessary organisations will be created to be the first purchaser simply to avoid the regulations that would otherwise apply to everybody along the food chain.
George Eustice
The only way that a processor could do that would be if they literally became a farmer. Setting up a sham subsidiary company that buys from the farmer and sells to a middle man would still be caught by these provisions, because the vehicle company would still be required to abide by the terms that are set out through these regulations. We thought about this hard and our conclusion was that if the challenge is the fact that farmers are too often price takers, are too fragmented and do not have sufficient clout in the supply chain, let us have a very targeted, focused approach to ensuring that we address that unfairness.
The problem with broadening the provision to anyone in the supply chain, so it could be a haulage company transporting lettuces or someone who has bought something and sold it on, is that it is broadened to many more relationships. Then it becomes difficult to justify all the requirements and purposes set out, because they are very much designed for farm businesses.
Mr Goodwill
We have heard about the case where milk crosses the Irish border on a number of occasions—it was almost like trying to hit a moving target. That is why these amendments are not really practical.
George Eustice
My hon. Friend makes a good point. We should remain focused on the challenge we are trying to address: why do farmers not get a fair price for the food they produce? Why do they end up too often being price takers and why do they need public support and subsidies in order to break even? The answer is often in the way the supply chain works to their disadvantage. Let us tackle the causes of that disadvantage and have an Agriculture Bill that is specifically targeted at agriculture.
Martin Whitfield
With regard to agricultural products, where does the Minister envisage timber to be covered?
George Eustice
Amendment 112, tabled by the hon. Member for Bristol East, sought to state “all agricultural products” rather than “agricultural products”. However, we believe that we have already addressed that through part 2 of schedule 1, which we will come to. That lists agricultural sectors relevant to the producer organisation and fair dealing provisions. It is pretty exhaustive, and for the hon. Lady it has the term “other plants” at the end, which will capture everything that might be of interest to her particular diet. [Interruption.] Timber is another issue, but part 3 of schedule 1 creates the power to add to that.
We based the list on the contours of EU law and tried to have quite an exhaustive list. Timber is not on that list at the moment but there would be nothing to stop us from adding it, although we would have to consider whether it is appropriate to do so. We are predominantly looking at farmers and their relationship with processors. We have a particular problem with the dairy, beef and sheep industries, and that is the primary purpose here.
Martin Whitfield
The process in the timber industry is quite complex and crosses a number of bodies. Will the Minister look at that sooner rather than later?
George Eustice
The regulations that we can make under part 3 of schedule 1 give us the power to add additional things. Although I am Agriculture Minister, I do not cover forestry and timber, so I will need to discuss that with my ministerial colleagues. It is certainly an option and the provision is there to enable us to add products.
Chris Davies
There are concerns on this side of the House—as well as on the Opposition Benches—about the forestry and timber industry. I doubly emphasise the need for the Minister to look at that.
George Eustice
I feel that this will be one of those unexpected issues that returns on Report. I will undertake in the meantime to talk to my ministerial colleagues responsible for the forestry industry.
Amendment 65 is a similar provision to that which we discussed in an earlier debate on producer organisations. It seeks to ensure that we could make measures in that area only with the consent of Scottish Ministers. We have adopted that approach because it is a competition matter that deals with the ability to have contractual changes linked directly to competition law—that is why it is a reserved matter. We are not doing anything new in that regard. The current Groceries Code Adjudicator is a UK-wide body; it operates UK-wide and the legislation that underpins it is UK-wide. The EU milk package is an example of a contractual fair-dealing provision under EU law. It applies UK-wide and can only be switched on and implemented on a UK basis. It is therefore a well-established fact that such issues, which pertain directly to competition law, are a reserved matter to be handled by the UK Government. That is why we do not accept that the provisions are necessary or acceptable.
Deidre Brock
I thank the Minister for his explanation but the Scottish Government do not agree with his interpretation of that; nor do I. We think that it requires the Scottish Parliament’s consent because it is for devolved purposes, namely the regulation of unfair contractual terms in commercial contracts by agricultural producers in Scotland. It does not relate to the competition law reservation, which is specifically directed at the regulation of anti-competitive agreements.
George Eustice
Although it might do so in a different way, it relates to competition law and is not an exemption from the chapter 1 requirements that we discussed earlier. The hon. Lady has not complained about the Groceries Code Adjudicator, which is administered on a UK basis and operates UK-wide; nor has she raised huge concerns about the way that the EU has always approached those matters, which is that they are a UK-wide competency and that switching on elements of the milk package is a UK decision and can be done only on a UK-wide basis. I hope that I have addressed the issues raised by the hon. Member for Edinburgh North and Leith about the role of Scotland in this reserved matter, and reassured the shadow Minister and the hon. Member for Bristol East that their amendments are unnecessary since they are provided for in part 2 of schedule 1.
Dr Drew
I hear what the Minister says and he will be pleased to learn that I will not press amendment 48 to a Division, but I am very concerned that the Bill has not been as clearly and cleverly scrutinised as it could have been because we were not able to meet a number of the organisations. I would have liked to ask the Groceries Code Adjudicator how the Bill could have made the authority more effective, but we did not get that chance. I do not know why she did not come; perhaps we were not as enticing as we might have been, or perhaps she did not get the push from Government.
It is important: this part of the Bill is about competition, fairness and accountability, yet we are in the dark, hoping that some of it will be carried through. The Minister has kindly given way on timber and we might see that somewhere in a schedule on Report, when he has talked to his colleagues. We are somewhat less than impressed by the Bill, and we need to nail down the legislation, in that we have producers believing that the Groceries Code Adjudicator is not able to function as effectively as she could, yet when we get the opportunity with some legislation to allow her additional powers those powers are not forthcoming.
Dr Drew
I hope not to delay us that much longer, because I think we are past the bewitching hour and we keep losing members—at this rate, the Whips are going to have to find someone non-existent to pair with—but it is important that we dwell on the issue for a few minutes.
Again, this amendment may not be that crucial to the Bill in the great import of things, but a number of organisations feel quite strongly about where this part of clause 25 is taking us. It is all about fair dealing and the obligations of the first purchaser of agricultural products. We have argued that that should not necessarily reside with the first purchaser, but should be across the food chain.
Amendment 86, which has the support of a number of non-governmental organisations, is about maintaining the confidentiality of complainants. That is vital, because they would not necessarily pursue a complaint without that confidentiality; evidence from the Groceries Code Adjudicator’s review highlighted that as an ongoing issue. The imbalances of power in many grocery supply chains create a climate of fear in which small suppliers are unwilling to speak out for fear of commercial reprisals. This reticence is understandable, because once a supplier is blacklisted regarding their ability to supply a particular food chain, that tends to become total and ongoing. Smaller players often rely on a single buyer for large proportions of their business—sometimes it is 100%. Even when a regulator is in place, suppliers still have concerns about coming forward. There is a need to ensure that there no single supplier is exposed to possible retribution by a more powerful mid-tier supplier and retailer.
Following an investigation, the new body should make relevant recommendations to deter poor practice, including penalising mid-chain suppliers or retailers found guilty of breaching the code. It is important to be clear that the confidentiality provided by this amendment is different from anonymity. We recognise that if the party bringing the complaint wants compensation regarding their specific case, they will of course need to be identified. It is not as though that confidentiality can be kept in place indefinitely, particularly where monetary compensation is required. The principle of the confidentiality of the identity of the complainants being waived only with their express consent is critical in ensuring that producers feel confident coming forward. That is exactly how the Groceries Code Adjudicator works, so we want to extend it along the food chain.
Amendment 87 would allow the enforcement body to undertake investigations without specific complaints, and again this is where we want to boost the power of the Groceries Code Adjudicator. An effective enforcement body must be able to hold the trust of suppliers and keep any evidence confidential until there might be some monetary arrangement, which would require going on the record. To achieve this, an enforcement body should also have the power to investigate potential transgressions under its own initiative, rather than require the submission of compelling evidence before it acts. My understanding is that that is what the Groceries Code Adjudicator has herself asked for. It would be surprised if she has not, because it completes her powers and responsibilities. The spotlight is taken away from suppliers and potential complainants, so it is on the Groceries Code Adjudicator herself to take those complaints forward. Without this clause we may see the enforcement body unable to identify issues that are either specific to one chain or one problematic behaviour activity, but where no single producer has been able to complain, directly for fear of delisting—that is a more appropriate term, I accept.
As I explained about amendment 86, there is a climate of fear. Therefore, we feel that proactive action by the regulator is vital. We want the Government to look seriously at this and use this legislation to enhance the powers of the Groceries Code Adjudicator, something that a number of us across the House have called for. We are seeking to use this legislation to do that because our producers feel that too often the Groceries Code Adjudicator is constrained by her inability to work across the food chain and to guarantee confidentiality and, when there is monetary consideration concerned, that this has been through due process.
I hope the Minister will give us the opportunity to consider how he can ensure that confidentiality is guaranteed, but also guarantee the enhanced powers of the Groceries Code Adjudicator. Again, this may not be the most important part of the Bill, but for producers who feel that they have fallen foul of the process and have, as my hon. Friend the Member for Ipswich said, felt bullied, intimidated or delisted from selling their products in the right and fair manner, we should use the Bill to put that right.
George Eustice
The amendments are linked to a common sentiment that we hear from farmers. There is no doubt that a number of people will say that they fear reprisals, consequences of being delisted or losing business if they were to complain. That has been recognised for some time. That is why we made changes early on to the remit of the Groceries Code Adjudicator, to enable her to receive complaints anonymously and pursue investigations when she had reasonable cause to believe there was a problem with a particular supermarket, and indeed to allow a trade body such as the National Farmers Union to pass on intelligence about the conduct of a particular supermarket that could inform an investigation. Even within the GCA, which is predominantly a complaints body, we have found the scope for anonymous whistleblowing and for third-party organisations to pass on concerns.
I draw the hon. Gentleman’s attention to subsection (5)(a) and (b). The specific issues he raises can be addressed through regulations. Subsection (5)(a) makes provision for regulations
“for complaints relating to alleged non-compliance to be referred to a specified person”.
And, crucially, subsection (5)(b) states
“as to how those complaints are to be investigated and how an allegation of non-compliance is to be determined”.
It is absolutely within the powers set out in subsection (5) for us to introduce regulations that would guarantee anonymity and enable complaints from third-party organisations, when they can hand on intelligence or create the scope for a regulator to investigate, when there is reasonable cause to believe there is a problem. I hope the hon. Gentleman will recognise that we think the particular issue that he seeks to address in amendment 86 is already provided for in subsection (5)(a) and (b).
Finally, although we hear a lot about this, Christine Tacon from the Groceries Code Adjudicator says that one of the most powerful things that can be done is for people working for processors and dealing with supermarkets to have assertiveness training, because we can put in place all the right regulations and have all the abilities in the world for people to report things anonymously, but there is a point at which people have to take responsibility and be willing to say to a supermarket buyer, “You know I cannot agree to that, because it is a breach of the code and what you are asking me to do is in breach of the law.” She said that when the GCA has placed people from those organisations’ sales teams on to assertiveness training, they have learnt how to use the code themselves without having to always run to her for an intervention.
Dr Drew
I find this quaintly interesting, because my experience of the milk trade is that they lack anything but assertiveness. There are more four-letter words in their way of trying to do business than could be heard on a football pitch on a Sunday morning. Sadly, it is not just about assertiveness, but fairness and the way in which this can be taken up by the Groceries Code Adjudicator. That is why a number of organisations—as always, at the top there is a whole series of different bodies—feel strongly that this needs additional powers to be vested in the Groceries Code Adjudicator. I hope the Minister has listened to that and will act on it.
George Eustice
As I said, the GCA already has the powers to receive complaints anonymously and to investigate, where she has reason to suspect a breach of the code. That is already in place.
My point is not that this is not a legitimate issue—of course, as I said, the regulations can provide for anonymity—but that at some time we need people to have the confidence and courage to say, “I will not agree with that. It is against the code—you know it’s against the statutory code—and you shouldn’t be asking me to do it.” For such things to work properly, we need the farmers and sellers also to hold people to what is a legal requirement. They can play their part and, where they are willing to do so, that can make all the difference.
Amendment 87 is similar—it is about being able to launch investigations when there are reasonable grounds to suspect non-compliance, rather than when there is a complaint. Again, we believe that we can provide for that. It is important to note that whatever is set out as a legal requirement in clause 25(3) will be a legal requirement whether or not there is a complaint. Subsection (5) deals predominantly with complaints and how they are handled, we do not envisage the body as simply a complaints-handling one; we see it as an enforcement body that will enforce all the legal requirements introduced under the Bill, specifically clause 25. It will not only handle complaints and pass them on.
Chris Davies
Conservative Members, too, have concerns about the powers of the Groceries Code Adjudicator. Farmers and suppliers tell me regularly that the GCA’s teeth are not sharp enough. Will the Minister reassure me, as he has the Opposition, that there are provisions not only in the Bill but in other places where the powers are strong enough, and that if we need to increase the powers there is a mechanism to do so?
George Eustice
The clause provides quite strong powers, including those to impose penalties for non-compliance on the first purchaser of agricultural products. If such a first purchaser happens to be a major retailer— perhaps one not currently covered by the groceries code, because it is below a certain threshold—it will be covered by the Bill. By addressing the problem from both ends of the telescope, we have a workable solution that means we can really deliver for the interests of farmers while not losing the successes of the Groceries Code Adjudicator model.
Having given that reassurance that the issues raised by the hon. Member for Stroud in amendments 86 and 87 can already be addressed through regulations under subsection (5), I hope that he will accept it and withdraw his amendments.
Dr Drew
I thought that the intervention made by the hon. Member for Brecon and Radnorshire was apposite. We are improving the legislative framework, including toughening up the powers of the Groceries Code Adjudicator, and specifically—in my amendments—we could ensure that people feel confident that there is a confidential arrangement between them and the Groceries Code Adjudicator so that they may pursue their actions.
As much as I like the Minister and hear what he says, this is how we improve legislation—we want to put something very important in the Bill. We know why so many producers do not choose to pursue a course of action against someone who has treated them unfairly: they are frightened. We will press the amendment to a vote—though we might not win—and the Minister is hearing from his own Back Benchers that this needs to be revisited on Report. We want to ensure that the Groceries Code Adjudicator can exercise all her powers, including along the food chain—because at the moment it seems to be very much a one-way street, which is why she is less effective than she could be. Also, producers feel that they are often let down, because they are not able to carry through regarding the unfair practices that they face.
This little amendment—it is very small—would dramatically change the power relationship. I hope the Minister will accept in good faith that we are pressing it to a vote so that he can reflect on it when it comes back on Report and strengthen this bit of the Bill.