Public Bodies Bill [HL]

Lord Cameron of Dillington Excerpts

Wednesday 9th March 2011 Lords Chamber

[Lord Borrie]

My Lords, I have been very happy to put my name to all the amendments standing in the names of the noble Earl, Lord Sandwich, and the right reverend Prelate. I should declare that I was the director-general of the Office of Fair Trading for 16 years, but that was some time ago. There is a certain shadow over the Office of Fair Trading at the moment through other parts of the Bill.

Leaving that aside, for some years there has been concern about the growing power of major retailers, especially supermarkets, in relation to their suppliers. It is worth providing a bit of balance. Supermarkets have done a great deal for consumers over the lifetime of noble Lords in the Chamber. They have made available to consumers a wide range of groceries and other goods with the emphasis on good value, quality and a pleasant shopping experience. Yet this has often been at the expense of small retailers who cannot match the lower price of supermarkets. As these small retailers have gone out of business, other businesses in the high street suffer the erosion and reduction of the number of visits paid by shoppers. People have gone instead to the supermarkets, usually on the outskirts of town, with their substantial car-parking space.

The rise of supermarket power has also been, as the right reverend Prelate emphasised, at the expense of suppliers, particularly farmers, who lack the clout to ensure that they can secure a fair price for their products. Supermarkets can play off one supplier against another. The Office of Fair Trading and the Competition Commission have wrestled with this problem in a number of references and studies in recent years. In 2009, the Competition Commission first proposed the appointment of a groceries ombudsman to assist fair dealing between farmers, suppliers and supermarkets.

Both the Labour Government and the present coalition Government have broadly accepted the need for such an appointment. Consultation concluded on 30 April last year; Members of the Committee will appreciate the significance of that date, because the matter was clearly left for the coalition Government coming into office in May to determine. They determined—it is in the coalition agreement—that there should be a groceries ombudsman within the Office of Fair Trading to enforce the groceries code of practice, of which the earlier speakers have spoken, and to curb the abuses of power that undermine farmers and are against the long-term interests of consumers.

In response to the right reverend Prelate the Bishop of Wakefield, on 7 February, the noble Lord, Lord Henley, whom I am delighted to see in his place on the government Front Bench and who has already been quoted in part, said:

“It is important that large retailers cannot abuse power by transferring excessive risks or unexpected costs onto their suppliers. We therefore propose to establish a groceries code adjudicator to monitor and enforce the groceries supply code of practice”.—[Official Report, 7/2/11; col. 1.]

That was the noble Lord a month ago. These amendments seek to put the Government’s own propositions into legislative form. The Government may of course have plans that have not yet borne fruit for some other legislative vehicle to carry forward these proposals. The suggestion of those putting forward the amendment is that the Government might find it convenient to use the Bill before us now as a convenient vehicle already available to them. The amendments are here for the Government to run with as they wish.

[Lord Cameron of Dillington]

My Lords, I support this series of amendments. It is a pleasure to be speaking on this Bill in the early hours of the evening rather than in the early hours of the morning.

All three political parties have committed themselves to putting in place a groceries code adjudicator, and this seems to be a golden opportunity to do so. It would make the Government popular with farmers, consumers and at least three of the supermarkets, which have agreed the appointment of such a person or body if it was to apply across the board. Some of the free marketeers among you might question why an ombudsman figure is necessary in an open and free marketplace. You might say: surely in a free market where there is more than one buyer, the seller can go elsewhere. However, that equal balance of interest implied in the phrase “willing buyer, willing seller” simply does not exist where the buyers are so big and the sellers are so small.

More importantly, that balance of interest does not exist when the seller and supplier has to plan his cropping as much as 18 months in advance, within probably a five-year rotation, and organise the acreage, and buy the seed, the fertiliser and the spray, often with the seed variety and the treatment being specified in detail by the particular buyer. The farmer has to have his whole farm often audited and inspected by the particular buyer. Without this audited inspection he cannot sell his crop, or the buyer will not buy it. Furthermore, each buyer or supermarket has a different auditing system in place, so the farmer cannot easily change the buyer; certainly not without a long notice period. The farmer also may have to invest in specified capital and machinery. All this takes place 18 months to a year before the crop is sold and before a price is agreed.

Unfortunately there is ample room for the big boy to manipulate the sale to his advantage when the little man has nowhere else to go when the buyer’s terms or the buyer’s price turn against him. If the farming venture has involved borrowing the large sums of capital for irrigation, cold stores processing and the like, the smallholder farmer probably has nowhere else to go for the next year either.

The supermarkets may claim that an adjudicator is not necessary. In that case, there is no danger to them or to the consumer if one is put in place. In my view, it will be a great insurance policy for the farmer—and for the consumer—if one is put in place. Therefore, I urge all three parties to use this opportunity to fulfil their election promises. It is crucial for the future of UK agriculture and the fair balance that we need to achieve.

[Baroness Quin]

My Lords, I, too, welcome these amendments and am glad that they have been tabled. I welcome the comments that were made by the noble Earl, Lord Sandwich, in introducing the amendments and the helpful background that he gave us. I also welcome the comments made by my noble friend Lord Borrie and by the right reverend Prelate, who I know has taken a great interest in this issue. Like the noble Lord, Lord Cameron, I welcome the fact that on this occasion we are dealing with this important issue at a civilised hour rather than in the early hours of the morning.

I believe that the amendments are necessary to try to clear up the confusion surrounding where in government machinery the adjudicator, formerly the ombudsman, will reside. In answer to a question by the noble Earl, Lord Sandwich, on 7 February, the Minister said that he did not know where the adjudicator was going to be situated. That might have been a commendably honest reply, but now that we have had the chance to return to this subject today, I hope that we will be able to get more information about the Government’s exact intentions.

My noble friend Lord Sewel on that same day asked if the adjudicator could be part of this Bill. That is another reason why I welcome the amendments. Given all the controversial inclusions in this jumbo Bill, it would have been good to have something in it on which there is such clear, cross-party support.

When the Government announced in August last year that they were going to establish the adjudicator, the original expectation was of a draft Bill coming forward this past autumn. Given the strong cross-party support for this measure, the delay is regrettable. However, the Minister has said that the intention is to bring in a Bill this Session. In the other place, in Answer to a Written Parliamentary Question, mention was made of a draft Bill coming forward before Easter. Will there be a draft Bill first, and what will be the timing of the draft Bill and the full legislation to get the adjudicator’s role and work up and running?

The establishment of a supermarket ombudsman was favoured and initiated by the previous Government following a recommendation from the Competition Commission. From these Benches, I reiterate our strong commitment to that, as the Minister will be aware. One issue that has surfaced in recent debates in this House has been the scope of the adjudicator's remit. I notice that the adjudicator is called the groceries adjudicator, and I assume that his main function concerns food. But I was interested that in a debate that we had a week or so ago in this House on the ethical clothing industry, the Minister said that consideration could be given to widening the adjudicator’s remit. I welcome the fact that the Government are prepared to look at that, because supermarkets sell a great deal these days and have a strong position on their suppliers, whoever those suppliers happen to be. At the same time, while I welcome the Government’s openness on this matter, I would not want to see that as the cause of any further delay in the establishment of the adjudicator, because a very clear message has come from this debate that speed is extremely important and uppermost in people’s minds. Obviously, if there is a draft Bill, the scope and remit could be looked at—and perhaps the Minister could comment on that point.

The powers of the adjudicator, including naming and shaming and what further sanctions might be possible as a result, were mentioned by the right reverend Prelate. Again, any clarification from the Minister about that would be welcome.

This Bill must seem like a Christmas tree Bill to the many departments, with various items of business that they wanted to lumber on a jumbo Bill of this kind. However, while it might be a Christmas tree Bill for departments, it is a nightmare Bill for parliamentarians. I was very much taken with the phrase used by the noble and learned Lord, Lord Howe of Aberavon, who described it as a nuclear Bill. It abolishes and changes so many bodies, some big and some small, and rides roughshod over parliamentary procedures. However, this matter is one on which there is agreement between Parliament and Government and for which there is cross-party support, so I hope that the Minister will respond positively to the points that have been made.