Groceries Code Adjudicator

Rebecca Long Bailey Excerpts

Tuesday 3rd June 2025 Westminster Hall

[Rebecca Long Bailey (Salford) (Lab)]

It is a pleasure to serve under your chairmanship, Dr Allin-Khan. I thank the right hon. Member for South Holland and The Deepings (Sir John Hayes) for securing today’s debate and for his impassioned and articulate speech, which I very much associate myself with. I am quite staggered at how regularly our minds meet on the crisis of capitalism, although we do have different answers to it from time to time. I place on record my role as the chair of the Bakers, Food and Allied Workers Union parliamentary group, and thank them for their extensive work on this issue over the years.

As we have heard from the right hon. Gentleman, the groceries supply code of practice and the adjudicator, despite being well intentioned, miss the mark by quite a large margin in terms of protecting those whom they were designed to protect. The code applies only to designated grocery retailers whose annual turnover is more than £1 billion. It does not apply to indirect suppliers, cover pricing or consider the protection of workers throughout the grocery supply chain; and even with its limited powers, it has not issued a single fine.

Sustain, the alliance for better food and farming, agrees with the right hon. Gentleman that as a result of those deficiencies, the UK’s food system is on a precarious footing. It says that most suppliers producing and processing the food that ends up on our supermarket shelves are vulnerable to unfair purchasing practices, which can send competent businesses into bankruptcy, undermine competition and lead to a worse deal for consumers. As the bakers union says, there is a limit to suppliers’ ability to keep prices down through productivity increases from automation or sourcing cheaper inputs—a key factor in the horsemeat scandal. As a result, there is relentless downward pressure on labour costs, leading to attacks on the pay and conditions of workers employed in and across supply chains.

In the four weeks to 18 May, grocery price inflation has jumped to 4.1%—its highest level since February last year. Of course, the reasons for that are complex, ranging from wholesale costs, to energy and ecological issues, all the way through to problems with the supply chain, but that does not mean that the Groceries Code Adjudicator can continue to ignore the important issue of excessive pricing. Sometimes there is a reasonable cause, beyond the control of the supermarket or supplier, but sadly, sometimes it is a result of aggressive cost cutting, asset stripping, and unsustainable leveraging strategies.

There are long-running accusations that some of the big retailers and manufacturers have been using reduced competition  and market leverage to set prices and, in turn, make excessive profits. For example, in 2023 wholesale food prices started to fall, with the World Bank saying they were expected to drop by 8% by the end of the year; but those falls were not reflected on supermarket shelves for some considerable time, which led to accusations of “greedflation”. Even the Tesco chairman suggested that suppliers might be at fault, telling the BBC at the time that it was “entirely possible” they were using high inflation as an excuse to raise prices unnecessarily. Of course, the major retailers and suppliers refute that, and the Competition and Markets Authority said there was nothing to find—nothing to hang their hats on—but large profits and record executive pay and shareholder payouts were juxtaposed against a backdrop of high food inflation and food insecurity.

Most people were perplexed, and rightly so. The Competition and Markets Authority might not have found widespread market abuse per se, but there remained a fundamental issue of fairness. Is it right to report bumper executive pay and shareholder dividends at times when consumers and the wider supply chain are struggling?

Last November, interestingly, the Competition and Markets Authority’s second report on pricing suggested that manufacturers had been raising the cost of first infant formula milk higher than was necessary to cover inflationary costs. It was not the Groceries Code Adjudicator that instigated action. Some supermarkets themselves responded by slashing the cost of formula, but the fact is that the Groceries Code Adjudicator should have had the powers to intervene earlier and to regularly monitor price fluctuations to identify emerging issues. It should not have taken a one-off CMA investigation to uncover that unscrupulous price hike.

If the Groceries Code Adjudicator cannot investigate and robustly intervene to protect suppliers, producers or consumers when it is clear that the pricing structure of a supermarket or a major supplier pricing structure is putting the short-term interests of shareholders above the wider public interest, and if it cannot respond to emerging issues, outline measures to help families facing hunger and protect the sustainability of the UK grocery supply chain, what is the point of the Groceries Code Adjudicator?

There are a few recommendations that I have made to the Minister on which I would like an update. I hope he will take these points on board. First, a new groceries regulator authority with beefed-up powers should be established with a wider responsibility to protect the sustainability of UK suppliers and the interests of consumers. It must apply to the whole sector, not just to those with a turnover of more than £1 billion. The new regulator should be given the power to introduce price floors and ceilings to protect suppliers and consumers from aggressive pricing tactics and exploitative price gouging. There must be an investigation across DEFRA, the Department for Business and Trade and the Competition and Markets Authority into the impact of private equity acquisitions of UK groceries retailers and manufacturers on the security and sustainability of the UK food supply chain. We must restore and extend sectoral collective bargaining for workers employed in the UK food supply chain. Finally, we must introduce a statutory right to food in UK legislation and address the root causes of insecurity.

As the right hon. Member for South Holland and The Deepings rightly set out, consumers should not be forced to buy their goods from major retailers if they are the only retailers in town. We have to provide an economic framework that supports suppliers and producers and ensures that people enjoy a diversity of shopping experiences and diversity in pricing so that we have a sustainable UK food sector.

[Several hon. Members rose—]

Horizon Redress and Post Office Update

Rebecca Long Bailey Excerpts

Tuesday 8th April 2025 Commons Chamber

[Gareth Thomas]

I am grateful to the hon. Lady. She is absolutely right to reflect the view of the whole House that there is still much more to do on compensation. We as the Government are very clear about that ourselves, and we are working at pace to try to step up even further the rate at which compensation payments are made. We think that, in just the first nine months of this Government, we have made significant progress, increasing by three and a half times the amount of compensation that has been paid out. But I completely accept that there is more to do.

We think that the launch of the Horizon shortfall scheme appeals process will help to address a number of cases in the HSS where sub-postmasters are concerned about the offers they have had. The hon. Lady asked me when letters would be going out. I set out the broad timescale in my statement, and I simply say to her again—shortly. We want to get this up and running as quickly as we can.

The hon. Lady asked me whether new legislation would be required to implement the commitments on tax that I set out. No, it will not be required. On the issue of the duty of candour, I do not have anything to add to what my right hon. Friend the Leader of the House said. However, the hon. Lady’s question is an opportunity to underline that we expect a number of significant issues to arise from Sir Wyn Williams’s inquiry, and we as the Government—and, I am sure, the whole House—will want to reflect on the conclusions and recommendations that he comes up with.

The hon. Lady mentioned the issues about the decision to franchise the remaining directly managed branches. As I set out in my statement, I have heard the concerns from across the House—they were particularly significant on the Labour Benches, but I recognise those from the Opposition side as well—about the impact of losing post office services in the communities where those directly managed parties are. That is why we have made it clear to the Post Office that franchised post office services have to remain in those communities.

We expect the Post Office to work from the starting point of those services being what is called a mains franchise—a franchise that, as well as providing the more traditional post office services such as stamps and parcels, will also provide Government services such as passports and driving licences: the equivalent of what is available in those branches at the moment. I expect that, in the first instance, those franchised services will continue to operate in exactly the same place where they do at the moment, before decisions are taken about where they should be located in the slightly longer term.

The hon. Lady asked me what guarantee there is that services will continue to be provided in that space. She will know that access criteria have already been published that commit the Government to provide 11,500 post offices. The decision on directly managed branches does not change those criteria, and the Post Office is committed to continuing to provide a service in those communities. I would also expect the Post Office to talk to local stakeholders, including Members of this House, about the continued operation of post office services in their communities.

[Rebecca Long Bailey (Salford) (Lab)]

Salford precinct’s busy Crown post office is a vital lifeline for residents and businesses alike, especially for those who collect their pensions and benefits in person. Put simply, closing it in favour of a franchise would cause local economic and social devastation, especially if services are reduced and staff are let go. It would also put that service at the whim of the franchisee, which, as we know from the recent case of WH Smith, causes great uncertainty and insecurity. What is the Minister doing to guarantee that Salford retains all its existing post office services and staff in this geographical location, and what alternatives has he considered or will he consider in favour of shelving franchising?

[Gareth Thomas]

I know that my hon. Friend has always been a great champion of Salford. Like other Members, she has made it very clear to me how significant the post office is in her community. The vast majority of post office branches across the country are already franchised. Both main and local franchises are often open longer than directly managed branches.

My hon. Friend asked what guarantees there are. As I have set out, we have made it clear to the Post Office that we want every directly managed branch to ensure that there is a main franchised operation in those communities. I recognise that there will be concern while that change takes place, but if she or any other Members have concerns about aspects of that transition as it moves forward in their constituencies, I will obviously be very happy to meet them to discuss those.

Groceries Code Adjudicator

Rebecca Long Bailey Excerpts

Tuesday 25th February 2025 Westminster Hall

[Rebecca Long Bailey (Salford) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Twigg. I thank the hon. Member for Brecon, Radnor and Cwm Tawe (David Chadwick) for his fantastic speech. I draw the House’s attention to my role as the chair of the Bakers, Food and Allied Workers Union parliamentary group, which I thank for its helpful briefing.

As we have heard, the UK grocery sector is shaped to a large extent by the huge concentration of power in the hands of the major supermarket retailers, which are competing to achieve the lowest prices and the biggest profit margins on key goods, but there is a limit to suppliers’ ability to keep prices down through productivity, automation or cheaper input costs. The story that the hon. Member told was about the pressures faced by farmers, but there is also often a relentless downwards pressure on labour costs, which has led to attacks on the pay and conditions of workers employed across supply chains. This race to the bottom has resulted in a proliferation of low-paid and casualised jobs, and the growing exploitation of agency and migrant workers.

Surveys of food workers conducted by the Bakers, Food and Allied Workers Union show that in-work poverty has spiralled in recent years, with food workers worrying about feeding themselves and their families. At the same time, staggeringly, the supermarket chains have continued to report huge profits and dividend payouts to their shareholders. We have also seen rocket and feather pricing: because of wholesale cost rises, the price of key items is increased excessively, but when those wholesale costs come down, the price on the shelf does not come down in tandem.

The role of the Groceries Code Adjudicator is therefore an important one. The GCA has helped to tackle some of the most abusive practices, such as unreasonable short-notice terminations of contracts, abusive promotional practices and other failures of compliance with the code. But sadly, as it stands, the GCA cannot intervene to protect suppliers or consumers when it comes to supermarket pricing. This puts the short-term interests of shareholders above the wider public interest.

In this context, I have a few suggestions for the Minister to consider. First, the existing powers of the GCA should be incorporated within the remit of a new groceries regulatory authority, with a wider responsibility to protect the sustainability of UK suppliers and the interests of consumers. The new regulator should be given the power to introduce price floors and ceilings to protect suppliers and consumers from aggressive pricing tactics and exploitative price-gouging. Secondly, a sectoral collective bargaining framework for workers employed in the UK food supply chain should be restored and extended, to ensure decent pay and security. Finally, a statutory right to food should be introduced in UK legislation, to protect consumers and address the root causes of food insecurity.

I will finish by drawing Members’ attention to another matter of concern, which is the impact of private equity acquisitions on UK supermarket chains and food manufacturers. As FoodChain magazine recently put it,

“Under private equity ownership, the strategic focus often shifts towards short-term profitability, which can lead to decisions that are not always aligned with long-term market positioning. For example, cost-cutting measures may involve reducing staff, limiting store refurbishments, and cutting back on product variety.”

There are a couple of examples of major supermarket chains engaging in those practices recently, and many fear that it is just the tip of the iceberg. To that end, I would also be grateful if the Minister considered launching a joint investigation, across the Department for Environment, Food and Rural Affairs, the Department for Business and Trade and the Competition and Markets Authority, about the impact of private equity acquisitions of UK grocery retailers on the security and sustainability of the UK food supply chain.