Groceries Code Adjudicator Bill

Viscount Eccles Excerpts

Wednesday 13th March 2013 Lords Chamber

There are already safeguards on the use of the power; it can be exercised only after a recommendation from the adjudicator who must first consult about it. The Delegated Powers and Regulatory Reform Committee recognised that this would usefully serve to inform the Secretary of State’s exercise of the power. However, the committee has advised that because the upper limit of the penalty is not in the Bill the power to fix the limits should be subject to a significant level of parliamentary scrutiny. Amendment 14A will therefore ensure that the order will be subject to the affirmative resolution procedure, thereby ensuring that Parliament will be able to scrutinise and positively approve the order. I beg to move.

[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.