Lord Borrie
Main Page: Lord Borrie (Labour - Life peer)Groceries Code Adjudicator Bill [HL]
Lord Borrie Excerpts
Lord Knight of Weymouth
My Lords, the amendment in my name and that of my noble friend Lord Grantchester relates to the role of Parliament in respect of the new office of the groceries code adjudicator. In pushing the amendment which we discussed in Committee and bringing it before the House today, we do so, believe it or not, in the spirit of the coalition agreement. I remind noble Lords that the coalition agreement stated:
“We will strengthen the powers of Select Committees to scrutinise major public appointments”.
In Committee, I reminded noble Lords that that followed manifesto commitments from both the Conservative Party and the Liberal Democrats at the election.
Since we met in Committee, a letter from the noble Baroness’s ministerial colleague, Norman Lamb, to my colleague in the other place, Ian Murray, has to some extent further clarified the Government’s position. Mr Lamb writes that,
“the Government believes that posts which should be subject to pre-appointment hearings will generally be senior non-executive roles which either: play a key role in regulating Government; play a key role in protecting and safeguarding the public’s rights and interests particularly in relation to the actions and decisions of Government; or where it is vital for the reputation and credibility of the public body in question that the post holder, and is seen to be, independent of Ministers and Government”.
I think that the Government need to reflect on whether the BIS and EFRA Select Committees should have a role in confirming the appointment of the groceries code adjudicator, given what the Government are saying. The new office that we are establishing in the Bill is important. It is something which has to have a certain reputation and credibility, and which has to be independent of Ministers and government. I think that this office passes the tests that Mr Lamb sets out in his letter to Mr Murray, although I know that the Minister himself does not agree. He goes on to say:
“The Government does not consider that the groceries code adjudicator, though very important to the groceries sector, would fall within these categories”.
I think that the Government need to reflect on this. I am not going to push this to a vote today, because this is the sort of concession that the Government should want to make to the other place as it is their Select Committees that will have a role in confirming the appointment. However, I would strongly advise, if the Minister is willing to take advice, that this amendment is entirely in the spirit and wording not only of what the coalition agreement, her party’s manifesto commitment and her coalition partner’s manifesto say, but of what, in effect, at least one of the tests that Mr Lamb sets out in his letter to Ian Murray says. I therefore beg to move, for the sake of the debate.
Lord Borrie
My Lords, I support my Front-Bench spokesman who has just introduced this amendment. I hope I am right in thinking—the Minister will no doubt correct me if I am wrong—that the Bill currently going through the other place requires that the head of the proposed Competition and Markets Authority should be appointed by a Minister with the approval of the appropriate departmental committee. If that is so, and I am glad to think that it will be so, it emphasises the point that the Minister made in relation to the last amendment—namely the need to firmly establish the competition authorities’ independence of Ministers. She kindly said that this followed the Enterprise Act of the previous Government in their efforts to emphasise the independence of the competition authorities. It seems to me unduly subtle to say that the head of the Competition and Markets Authority, which is to be created shortly, is of a higher calibre of significance and importance than the groceries adjudicator. It is true that the groceries adjudicator’s role is narrower than that of the Competition and Markets Authority but, none the less, it is significant in its field. Indeed, the Government’s whole introduction of the Groceries Code Adjudicator Bill is based on the notion that, in a certain area of significance to the consuming public—supermarkets—the independence to be achieved by the appointment of this adjudicator is of some importance. I therefore hope that the Minister will agree with my noble friend who has introduced this amendment.
Lord Cameron of Dillington
My Lords, I am not so certain about this amendment—in fact, I think that I oppose it. If your Lordships have ever been involved in the appointment of a public post you will know that the criteria are very strict and there are many hurdles to be jumped, with independent assessors sticking strictly to the criteria and two or three interviews. I therefore think that this extra hurdle is an unnecessary piece of red tape. I know that it is common practice in the United States, for instance, to throw candidates for this sort of posts to the wolves before they have even got their feet under the table—the wolves, by the way, are the Select Committee—but I think that this is unnecessary. We want someone who is rational, methodical and good at making judgments in a legal or semi-legal context. We do not necessarily want someone who is used to the hurly-burly of political life and who might have to understand that when an MP is being rude to him he does not mean it. He is either showing off or trying to make a name for himself and just getting carried away.
I am opposed to the amendment. Perhaps that is simply because I do not have a particularly high opinion of MPs’ ability to take the right sort of decisions in this instance. It is better to leave it up to the usual channels to appoint a valid candidate who will really be able to do a good job.
Viscount Eccles
My Lords, following on from the noble Lord, Lord Whitty, I do not understand,
“information that is publicly available”
as stopping anybody doing anything. The only thing a trade association, for example, has to do is to make its report on an alleged breach of the code public; it does not have to quote the names of companies. It cannot just go to the adjudicator with verbal information. It has to take the trouble to find out where the problems are.
I have huge sympathy with the immense consternation that is going on among dairy farmers. It is an extremely uncomfortable process. If the NFU has reason to believe that the code is not being observed, there is a case for it to collect as much evidence as it wishes from its members, who stay anonymous, and put its report about these breaches of the code into the public arena, presenting it at the same time to the adjudicator. That is a tremendous protection to both the public and the adjudicator; otherwise we shall all be left with a suspicion that what is happening is rumour and hearsay. It seems tremendously important that people’s reasons for doubting whether the code is being adhered to become public.
Lord Borrie
The noble Viscount, Lord Eccles, seems to have forgotten that the whole requirement in this Bill is that the investigation can properly go ahead only if there is a reasonable suspicion on behalf of the adjudicator that an investigation is required. That is the essential requirement in the Bill and I do not think it appropriate, for many of the reasons mentioned by the noble Lords, Lord Plumb and Lord Whitty, and others, that it has been so difficult up to now because of the difference in bargaining power between the suppliers and the retailers. In addition to the requirements that are already in this clause, there is no need to establish that the information should be made public, for example by the NFU.
Lord Knight of Weymouth
My Lords, I was ready to give an impassioned speech to try to persuade the noble Lord, Lord Howard of Rising, that he was wrong, but I think we have heard enough really good arguments from all sides of the House, so I will not delay the House by doing so. I will simply use the opportunity to thank the National Farmers’ Union, the Food and Drink Federation and the Federation of Small Businesses for their robust position on this, in saying that we should oppose these amendments.
Lord Cameron of Dillington
My Lords, I put my name to Amendment 15 because I am very much in favour of the immediate application of financial penalties where, after due process, a clear breach of the code has emerged. I do not believe that merely naming and shaming will have any effect at all. Supermarkets know that, in the short term, their customers shop with them largely because they are local. Why would the supermarkets still be chasing a further 44,000,000 square feet of retail space in a recession if they did not believe that? They need more retail space nearer to more customers.
Shoppers stick to their habitual supermarkets either because they are local, as I said, or because they get to know where things are on the shelves and find it much easier to shop that way. It seems that very few supermarket customers actually make shopping decisions based on ethical or moral grounds. There are one or two but they are very few. I suspect that some supermarket staff believe that any publicity is good publicity, so I do not believe that naming and shaming will work. Supermarkets have to feel the effects of their misbehaviour in their pockets, or at least to know that they could.
Clause 9(1) seems to be merely a delaying tactic, which will put off the much-needed effects of this Bill for yet another year or so—maybe three, as the noble Lord, Lord Knight, said—until the Secretary of State grips the issue. I believe we should try to grip the issue now and that the introduction of an effective adjudicator has been delayed long enough. Frankly, there is no point in having an adjudicator unless he or she has the powers to be effective. Of course, we all hope that if they have such effective powers, those will in itself be enough to make it unnecessary for them to be used. However, the powers must be effective, and I do not believe that they will be without the ability to fine.
Lord Borrie
My Lords, I am delighted to follow the noble Lord, Lord Cameron. He has made a clear case and, of course, my noble friend on the Front Bench, Lord Knight of Weymouth, made a very powerful case, for a power to fine from day one—in other words, under the Bill itself—without having to wait for some subsequent statutory instrument which may come into force some year or so later. My noble friend Lord Knight made the powerful point that the Government’s commitment to this is lukewarm. Yes, we have the Bill—that is something and it is important; the Government have indicated that it is important—but then they draw back. They draw back from the possibility, among other weapons to be used by the adjudicator, of a fine.
Who might be subject to a fine? We are talking about powerful businesses. Not any supermarket, but only the 10 most powerful supermarkets in the country could possibly be subject to the Bill. Will they be frightened off doing what some of them have done up to now—which is why we have the Bill in the first place—by the other powers that are mentioned; naming and shaming and so on? I do not think so. Mind you, they may not, because of their power, be terribly put out by a substantial fine, but fines can be very effective as a deterrent and, after all, that is what we are mainly concerned about: not the actual imposition of a fine, two fines, or whatever, but the deterrent value of a fine. To have that deterrent value from now, from the moment when the Bill becomes law, rather than at some distant point in the future, is what makes a real difference, it seems to me. I trust that we may succeed in getting the Government to agree to this change.
The Lord Bishop of Newcastle
My Lords, I, too, would prefer to have fines in the Bill from the outset, because I believe, like many noble Lords, that that is the most effective way of enforcing the groceries supply code and also that it will prevent the transfer of excessive risk down the supply chain. Nevertheless, like us all, I do not want to delay the Bill any longer than is necessary; I want to get it implemented as soon as possible. I am anxious that, if this power were to be given from day one, it would mean the creation of a rather complicated appeals system which could delay the passing and implementation of the Bill even further and for some considerable time. I would like to be assured about that, if any noble Lord can do so. I wonder whether naming and shaming is the crucial issue for the moment, providing, of course, that retailers are not to be given a statutory right of appeal. I would rather get on with this as soon as possible, even though my own preference would be to have fines in the Bill from day one.
Lord Borrie
My Lords, if there is a “naming and shaming” proposal from the adjudicator, according to Clause 8 he or she has got to give written notice specifying,
“what information is to be published … how it must be published… and… the time by which it must be published”.
Clearly, there has to be a response to that. While it is not called an “appeal”, none the less, because notice has to be given by the adjudicator as to what he intends and the supermarket can respond to that, there is a time factor, and there is in effect an opportunity for the supermarket to say further things that it wants to say.
The common-law rule of natural justice, which we all know about, is that everybody has a right to be heard before some decision is made which may be adverse to them. The rule of natural justice as I have always understood it is that you only have an opportunity to be heard once. You cannot call upon some right of appeal under that rule, because that would be giving you the right to be heard twice, and that is not the position. Of course, there is always judicial review but that is, I admit, limited in that you have to show something seriously wrong with the decision, and that no reasonable person would have made such a decision. It is fair enough that anybody should have a right of judicial review to have that checked, but no case for an appeal has been made out. The whole set-up of the adjudicator is meant to be fairly speedy and so on. Subject to the points I have mentioned—you have to be given advance notice about naming and shaming, and you have a right to respond to that—there is no call for any more than that.
Baroness Wilcox
My Lords, the question of appeals is important and I can fully understand the desire of my noble friends Lord Howard of Rising and Lord Eccles to return to it at this stage of the Bill. However, although we have considered the matter carefully, the Government’s position remains unchanged.
Financial penalties clearly deserve a full merits right of appeal and the Bill provides for this. However, the other sanctions, including the requirement to publish information, have no direct legal consequence against a retailer. A recommendation is just that and is not binding, and a requirement to publish is essentially simply about distributing and sharing information which will, in all likelihood, be in the adjudicator’s investigation report. For this reason, therefore, judicial review is sufficient.
Although a judicial review will not normally involve a reconsideration of all the factual evidence, it could consider whether the adjudicator had reached a decision which was not supported by the facts, or had taken into account irrelevant facts or had failed to take account of relevant facts. I draw a comparison with the Financial Services Authority. Under the terms of the Financial Services Bill currently proceeding through this House, the FSA—or, in future, the Financial Conduct Authority—may issue public warning notices about a specific firm. Before making such a notice, it must give the firm the opportunity to comment, but there is no right of appeal before publication. Issuing a public warning notice in this way is, given the potential impact on reputation of the financial services firm in question, similar in consequence to our requirement to publish information which also has the benefit of warning those who deal with a retailer that they have been found in breach of the code. The requirement to give the firm the opportunity to comment is similar to that provided in Clause 5(4) of this Bill. This is similar to what the noble Lord, Lord Borrie, has also said on this point.
Furthermore, as I said in Committee, a full right of appeal, requiring the repetition of a detailed fact-finding exercise, could seriously delay the requirement to publish and so substantially diminish its impact. In particular, we expect a full merits appeal of this kind normally to take significantly more time than a judicial review because it involves a reconsideration of all the facts. Taking these matters into account, the Government consider that a full right of appeal is needed only against financial penalties, and that otherwise the possibility of judicial review by the court would be sufficient.
On whether appeals should be in the CAT or the High Court, this is a finely balanced question and I have written to Peers on this matter already. We do not think it would be wrong for either the CAT or the High Court to hear such appeals, nor do we think there is likely to be a significant difference in speed. However, on consideration, we do not think using the CAT would make the best use of its expertise, which is, of course, in competition matters. This is because, although introduced on competition grounds, the context of the adjudicator’s functions concerns contractual and commercial relationships between retailers and suppliers. The expertise needed to address these practices can be found in the High Court, or the Court of Session in Scotland. We do not think that the particular specialist expertise of the CAT is needed in order to consider the adjudicator’s decisions.
A further practical issue is whether, if the CAT were to hear appeals against financial penalties, appeals against costs or judicial reviews of all decisions of the adjudicator were also to be referred to the CAT. To the extent any appeals or reviews remained in the High Court, one could see two separate appeals or reviews on related subjects being taken forward in different fora at the same time. On the other hand, if they all took place in the CAT, this could lead to the CAT making rulings on matters even further from its core competition remit. That is a difficulty which is avoided by the Bill as we have it now. Therefore, in conclusion, we consider that appeals should most appropriately be to the High Court. I therefore ask the noble Lords to consider withdrawing their amendments.