Groceries Code Adjudicator Bill

Lord Myners Excerpts

Wednesday 13th March 2013 Lords Chamber

[Viscount Eccles]

My Lords, Members of the House who are present will not be surprised to hear that I regret these amendments made at the other end of the Corridor. I will be brief.

I am speaking as the only member of Her Majesty’s opposition. There is always cause for pausing to think about legislation per se, but when all three Front Benches agree, we can be pretty certain that they have not really thought the matter through—there is no need to and it goes on to automatic pilot. You can also be pretty certain that there will be one or two unintended consequences. My starting position would be, despite my noble friend’s clear and completely comprehensible explanation—the only sign of grace in it being the affirmative procedure—that there are already far too many circumstances in which state functionaries can raise administrative fines. In this case, the groceries code is working. There are 10 supermarkets in hot competition with each other, and they report on complaints and how they have been dealt with. So far, there has been no problem with the speed and accuracy with which these arguments have been settled.

However, that is not why we have these fines. It is because it is said that what is going on now is only the tip of the iceberg due to a climate of fear, which means that many other things go on that do not get attended to, and we therefore need a third party to create a triangular relationship—the adjudicator, who now needs the power to fine. My problem with that is that I very much doubt whether the climate of fear, if it exists, will disappear. If it does, and fines are imposed, one has to question whether it is sensible to put in a state-funded and mediated procedure involving 10 highly competitive supermarkets and their suppliers. When we get into that argument, everyone says, “We understand. We are talking not about Nestlé or Kellogg but the small and medium-sized suppliers. We are also”—this is where we come to the heart of the matter—“talking about the dairy industry”. I fully accept that that industry has significant problems. This is not the time to analyse them but I hope that we would have the opportunity to discuss this issue in much greater depth in this House at an early date. I hope that my noble friend on the Front Bench will promote the suggestion that we discuss the dairy industry in some depth and detail. The supermarkets want to sell as much milk, cheese and other products containing milk as they can. That is their interest. It is not in their gift to solve the dairy industry’s problems. It is wrong for us, as a Parliament, to put it about to a certain extent that if you have a grocery code adjudicator it will be a cure-all for some of the undoubted problems that exist, not least in the dairy industry.

My view is that because the code works pretty well, the investigations that come outside the present practices under the code and arrive with the adjudicator will prove to be intractable or unnecessary. I am pleased that I am not looking for the adjudicator to be busy. It is a misapprehension to think that a lot of the things going on out there will give the adjudicator the opportunity for fruitful investigation and fining. I am pleased that the order that is to come is to be affirmative. I guess from what my noble friend said that it should be with us for debate in about nine months. I hope that we debate it seriously.

Finally, if investigations and fines were to become the practice, grocery prices would rise. That would surely be an unintended consequence.

[Lord Myners]

My Lords, I support the Bill and the amendments the Minister has presented today. However, I am left pondering that if we have a situation here where we are concerned about a customer abusing a supplier, should we also not be alert to the issue in banking where we have suppliers potentially abusing customers? Should there not be a similar mechanism in place in which customers of banks, and I think here particularly of small businesses, have the right to appeal to an independent adjudicator about the treatment they are receiving from the banks? It is right that we should be concerned about a situation of customer abuse but the potential for supplier abuse in the banking industry, which is even more concentrated than the supermarket industry, is clearly higher.

I know this goes beyond the Minister’s brief and I do not for one minute expect him to give a detailed reply, but I suggest to your Lordships’ House that if we are seized by the importance of this Bill and believe that it is the right and proper thing to do, most of the arguments on which we have drawn apply with even greater force to the banking industry.

[Lord Knight of Weymouth]

My Lords, my noble friend Lord Myners made a similar very interesting point at Second Reading. It was interesting then and it is interesting now, but it is not a point I am going to dwell on and he will understand that. I am very sorry to disappoint the noble Viscount, Lord Eccles, that as the lead for Her Majesty’s Opposition I am not opposing more on this Bill but the Government have found the right way of doing things. They have taken a policy that was developed by the previous Labour Government and have bought it forward in legislation. As the Bill has gone through Parliament, they have listened to voices, including from Her Majesty’s Opposition, pressing for the adjudicator to have teeth from day one with the right to fine. I am delighted that they have given concessions. Even before the introduction in the House of Lords, following the BIS Select Committee and pressure from my own party, they removed the restriction on third parties, such as the National Farmers Union, from submitting evidence. Then we had a concession from the Government on powers to fine. We had argued that right from the outset.

I am absolutely delighted and I pay tribute to the Minister, Jo Swinson, and her colleagues, including the Minister, for listening to the arguments made in both Houses. I also pay tribute to my colleagues Ian Murray and Huw Irranca-Davies in the other place for the work they did on this Bill and take this opportunity to thank the noble Baroness, Lady Wilcox, for listening to our arguments on accountability when we were debating this Bill in the Lords. She most graciously conceded the points so that there will now be an annual report before Parliament. A final concession with an amendment in the Marshalled List today will see a move from a negative to an affirmative procedure around the level of fines. That, too, is extremely welcome.

I am delighted with the Government’s approach. I would like to see that repeated in many other ways across legislation. We are looking forward to the Queen’s Speech. Perhaps in that we can look forward to the Government having listened to Labour policy and brought it forward in legislation, and then listening to the Labour Party and changing things as they go through. We have not got everything we wanted—we believe that the code needs to remain a live document. The noble Viscount, Lord Eccles, made a good point about the possible abuse of power in the supply chain by Nestlé, Kellogg and other intermediaries. We have concerns about that. Commercial pressure and bullying in the supply chain that can drive down food standards and health and safety remain a concern, even with the code and this adjudicator. Recent scandals around horse meat, pressures from the horticulture industry to abolish the Agricultural Wages Board and ease immigration rules to drive down the cost of wages to meet the demands of supermarkets are all evidence that this is an extremely competitive industry where competition can at times lead to abusive behaviour.

On balance, we are very happy with this Bill. We support the amendments made in the other place and those before us this evening and we look forward to its speedy implementation.