Groceries Code Adjudicator Bill [Lords]

John Stevenson Excerpts

Monday 19th November 2012 Commons Chamber

[John Stevenson (Carlisle) (Con)]

Much comment has been made about the farming perspective. I appreciate and understand fully that farmers welcome the Bill, but other groups are supportive of the Bill too. For the record, I chair the all-party group on food and drink manufacturing. Our group and the food and drink sector are interested in the progress of the Bill. The sector is the largest manufacturing sector in the country, with a turnover of approximately £75 billion. It employs 400,000 people and is a key part of our economy. Critically, the sector contains a lot of small and medium-sized enterprises dispersed across the country, whose commercial power is therefore greatly weakened.

The Bill should be seen in the right way—as a positive, and not a stick to beat the retailers with. It can be used to help relationships between suppliers and retailers, and help to rebalance the commercial power between the two groups. Our large retailers come in for a considerable amount of stick and criticism at times, but we should recognise that they have achieved a lot for the country and for the consumer. They are highly efficient organisations, with strong leadership, strong management and powerful brands. They pay their taxes in this country and make a valuable contribution to our economy. Up and down the country, they employ thousands of people, providing a livelihood for many families. They provide career opportunities for many and, in many cases, quality training. The consumer has seen a massive increase in choice. I look back to when I was a child and the choice that my parents had when they went to the shops compared with what we have today. There has also been a huge improvement in quality. I often wonder whether it should cause us some concern that kids wonder why we get carrots that are bent, rather than always straight. Finally, there is competitive pricing—food is remarkably cheap compared with many years ago, and we should recognise that the supermarkets have helped to contribute to that.

To a certain extent, however, we have become victims of our own success and so have the supermarkets. There are increasing, and legitimate, concerns about the market dominance of the supermarkets, the commercial power of the retailers, and the effect that that has on suppliers. The impact on the supply chain, on innovation and, potentially, on investment should concern us all. I do not believe that the appointment of an adjudicator will solve all these issues—far from it—but it will undoubtedly go some way to help. It should complement the groceries code and give it more bite. Therefore, I welcome the creation of the adjudicator.

I want to touch on a few points relating specifically to the Bill. Clause 2 deals with arbitration. Arbitration is a cost-effective, practical way of resolving issues. I therefore welcome the fact that the adjudicator will be involved in any matters of arbitration between suppliers and retailers.

Clause 4 is the most central to the Bill, which deals with the power to investigate and request information. I welcome that, and particularly welcome allowing trade organisations to be involved. As I mentioned, the food and drink manufacturing sector is made up of a lot of SMEs. They will be concerned about their position when they are in negotiations with retailers. That is why having a trade organisation to represent them can be beneficial.

Clause 4 is linked with clause 18 and the duty of confidentiality. That must also be welcomed as it is clearly needed, particularly to protect smaller suppliers and organisations that would be concerned about the difference between their commercial strength and that of the retailer. Retailers should not be over-concerned; I do not believe there will be frivolous and unwelcome applications. Quite simply, the power of the adjudicator to award costs will be an incentive for those bringing forward issues and complaints to do so in a justified and proper manner.

Many hon. Members have talked about enforcement. The power to make recommendations is very sensible and clearly everybody would support that. On the power to require information to be published—effectively naming and shaming—many hon. Members have already commented that supermarkets would be nervous about that. They have powerful brands. They are, within themselves, in a competitive market and they will be concerned. However, I accept fully and acknowledge that ultimately some might ride roughshod over that or be quite happy to take the criticism that comes their way. Therefore, the ability to impose financial penalties is critical and must be supported. I think I am with most people in the House in believing that the power to do that should be given to the adjudicator, and that it should be included the Bill rather than given to the Secretary of State to introduce at a later date. I will be interested to see whether the Ministers go away and reflect on the views of the House when they consider amendments in Committee.

Finally, I welcome the review by the adjudicator of the groceries code set out in clause 13. Indeed, the adjudicator should take a proactive role. Arguably, the clause should be strengthened so that the adjudicator has a duty to report and comment on the success of the groceries code. Overall, however, I give a strong welcome to the Bill. I think it will help in a small way to rebalance the relationship between large retailers and suppliers, and ensure that we have a competitive and, most importantly, fair market.