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5 Mar 2010 : Column 1129

Andrew George: I entirely acknowledge that that needs further investigation in Committee, but my response now is that if the OFT had been using such powers, we would not be here discussing the need for an ombudsman. I am critical of the OFT and its attitude towards such matters, because it does not wish to look beyond satisfied customers at the checkout and through the supply chain. That has always been a problem for those of us who are concerned about supermarkets' suppliers. However, the hon. Gentleman makes a perfectly fair point. Legislators need to be aware of, and to monitor continually, such matters, so that we do not end up absurdly over-regulating or engaging in heavy-handed interventions.

There are tremendous advantages in the Bill for the larger retailers. If at the end of each year they can be seen to have been exonerated by the ombudsman, they could shout about it and use it in their publicity. It would be good for supermarkets' public relations if non-governmental and campaign organisations congratulate them when an ombudsman's report proves that they have treated their suppliers fairly.

Nia Griffith (Llanelli) (Lab): Does the hon. Gentleman agree that the ombudsman's approval could be like fair trade flags? Supermarkets could gain a similar kudos and display a similar badge to show that they are proud of what they are doing.

Andrew George: That parallel is entirely right. In previous debates on the matter, I proposed that a food trade regulator-that is what I proposed to call such a body-should be able, at the end of each year, having undertaken proactive investigations, to provide such a charter mark or badge to a retailer and give them that level of exoneration.

That would also reassure retailers' customers. The National Federation of Women's Institutes is concerned about the future of the dairy industry, but many other bodies are informing their members-millions of people-about the impact of the relationship between supermarkets and suppliers. People are concerned, but when they go into supermarkets, they are not always aware whether their purchases are a good or bad thing or whether they are sending the right signals. The transparency and reassurance of an ombudsman would be welcome for both consumers and supermarkets, which the latter should embrace.

Mr. Roger Williams: Another benefit for supermarkets and large retailers is the ability to plan for a continuity of supply. That is important for both them and their customers. Agricultural support used to encourage supply, but we have now moved away from that. If we are to have continuity, we must have profitability right the way along the supply chain. A regulator could achieve both that and continuity of supply.

Andrew George: I strongly agree. That is one reason why the National Farmers Union of Scotland and the Farmers Union of Wales support such a measure-I pay tribute to the latter, which has pursued this line for longer than the other farmers' unions. One beneficial outcome, which I would have thought British-based large retailers would have acknowledged, is that a supermarket ombudsman would provide and underpin stability to British growers and producers. That can
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only be good thing. Many people in this country are concerned about the self-sufficiency of the UK production and supply base. The uncertainty created by the relationship between supermarkets, suppliers and producers has in turn created a climate in which growers and producers frequently go out of business-the margins are so small that the viability of many sectors is in question. Greater stability and certainty within the market will improve British production and self-sufficiency.

John Penrose: I am concerned by the hon. Gentleman's last couple of remarks. Will he clarify that there is a distinction in his mind-because there certainly is in many other hon. Members' minds-between the proposal for a grocery market ombudsman and his party's wider proposal for a food industry regulator? The Bill is for a smaller, more circumscribed body, and if the hon. Gentleman wished to push it a little further he might find that the cross-party unity starts to fray rather rapidly.

Andrew George: That is a fair intervention and one that might be probed further in Committee. One issue that is very much open to debate is how far up the supply chain this measure would go. The Competition Commission originally suggested in its recommendations in 2008 that the supermarket ombudsman should concern itself with the ultimate supplier to the supermarkets, but many of the primary producers see those ultimate suppliers as being in the pocket of the supermarkets as they pass on the demands of the supermarkets down the supply chain. The ombudsman should have the ability to take complaints from primary producers, and I hope that we will have the opportunity to investigate that issue further.

I have spoken for longer than I intended, but I have taken several interventions through which we have been able to explore the issue. This is an excellent measure. I know that the Government have been consulting on it since 4 February, and I hope that responses are coming in thick and fast. There is strong support from my party for the Government's move on this issue-albeit that it is late in the day. We want to see the measure on the statute book and the ombudsman in place as soon as possible.

10.32 am

Mr. David Drew (Stroud) (Lab/Co-op): I am delighted to speak in support of this excellent Bill. I know that the eyes of the world may not necessarily be on us this morning, but that is a great shame, because we are doing something worth while that will bring fairness into the lives of producers and consumers. Most people I talk to believe in the need for fairness in the food chain in particular, as well as in all other aspects of consumption.

I pay tribute to my hon. Friend the Member for Ynys Môn (Albert Owen) for introducing this Bill. It brings to a head the campaign that the hon. Member for St. Ives (Andrew George) has led admirably, and I am pleased to add my support today. It is wonderful that we are doing the work for the three Front Benches. I hope we can make some progress today, given that consensus has broken out-

Mr. Chope indicated dissent.

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Mr. Drew: Well, as with all consensus, there are those who choose to break it. We might be able to win them over with the power of our arguments and the clarity of our rhetoric.

I declare an interest, as a Co-operative MP as well as a Labour MP, and I have lobbied the Co-operative Group for some time on this issue. I like to think that it will come off the fence eventually and support the idea of an ombudsman. It is a democratic organisation, and sometimes it takes time to get a decision on a particular issue. The Co-operative Group has more to gain than most from this Bill, because of its belief in mutuality, fairness, justice and openness, so I hope it will support the measure and help to move towards a strong ombudsman that does the job properly.

This has been a long fight, and as in all long fights, it is very satisfying to be almost within sight of the end of the road, although we will not know how it will work until it is tried. I do not want to count my chickens when it comes to this bit of the food chain until we have seen whether the ombudsman-if and when set up-has not only the power, but the willingness to perform the activities we would like to see. As both my hon. Friend and the hon. Gentleman said, it is pleasing that the Bill would give the ombudsman the ability to be proactive, but the office holder has to be willing to use that power.

I pay tribute to the coalition led by the hon. Gentleman, who has brought together a good group of organisations-listed by my hon. Friend-representing a wide range of interests. That variety of interests has been a useful argument against those who claim that this is a narrow, sectarian Bill on behalf of narrow, sectarian interests. In fact, if we were to add up the millions of people represented by the organisations in question, it suggests that we are on the side of the angels, and I am proud to be on that side of the argument. It takes a brave Member to take on the Women's Institute, as a former Prime Minister knows only too well. Certain hon. Members need to tread very gently.

The hon. Gentleman made it clear that we have been dismayed by the lack of action by the Office of Fair Trading and the Competition Commission. This proposal is the culmination of the latest review, but there have been previous reviews and some of us were unhappy with the outcomes, which were unclear and did not help our cause. We are pleased that the statutory code of practice will now be overseen by the ombudsman, apparently.

Another important issue-although it is not within the purview of the Bill-is the planning arrangements that affect supermarkets. That is another area of dispute and, without making allegations, I can say that there is a degree of anti-competitive practice. As I say, that is not part of this Bill, but it is part of the overall context in which we have seen a growing coalition around the introduction of an ombudsman.

Some three years ago, I conducted a survey to look at why it was so difficult to achieve clarity in the relationship between the suppliers and the supermarkets. It was an anonymous survey and the aim was to try to elicit information from the 100 leading suppliers-by size-so that they would be encouraged to give evidence to the Competition Commission inquiry that was then in progress.

I shall explain why the basis of that inquiry had to be one of anonymity. I wrote to 100 leading suppliers asking for anonymous replies, but received only four,
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three of which said that it was not worth their while commenting. The one that did comment, however, was interesting. I cannot say who it was, of course, because I do not know-it was sent back anonymously-but the comment concerned a classic abuse well known within the trade but probably not among most consumers. One hears about it when one asks a supplier how retailers retaliate if they feel that the supplier is not playing by the rules of the supermarket's game.

The products of those 100 suppliers are well known, so it would be foolhardy for supermarkets to take action against them. If a customer says he wants a tin of so-and-so, a bottle of this or a packet of that but does not get it, he might go to a competitor, so supermarkets never take action against a main product line. However, if they feel that a supplier is being difficult or not meeting their requirements-the supplier might be bringing undue pressure to bear-they could take action against the secondary product lines or, in particular, the new ones that the supplier might wish to introduce. How a supplier introduces a new product is entirely dependent on retailers-where they put them, what deals are done and how willing they are to buy them-so suppliers live in fear of the supermarkets' ability to exact retribution.

We have to talk about that culture of fear. We are here to build bridges, but we must consider the context. Even the biggest suppliers live in fear of what could happen to them. This is not about corner shops or small producers facing difficulties if they lose a contract, but about the big guys still fearing the even bigger guys. I thought the rugby referee analogy, used by my hon. Friend the Member for Ynys Môn, was a good one, so I shall take it further. Were this about the odd trip, a push in the line-out or a ball being chucked into touch when it should really have been kept in the field of play, all I would say is, "Well that, I'm afraid, goes on." However, that is not what we are talking about; we are talking about the intricacies of the front row-the odd bit of eye-gouging and the occasional use of the boot to make it clear who is in control of the game and who stands to lose if they push their luck too far. That might have gone on in the old days of rugby, but in these days of cameras and so on, people are less inclined so to behave, particularly given that they could end up with a fine after the game or-dare I say it?- a ban. [Interruption.] We have not got on to the ear-biting-we will leave that for another day.

That is what the ombudsman would do. It is about introducing fairness, justice and transparency to the operation of the food chain and, more generally, the supply chain.

Philip Davies: To continue the rugby analogy, does the hon. Gentleman not fear that, with a potentially proactive ombudsman, some suppliers might fake blood or an injury?

Mr. Drew: That is very good, so I shall continue the analogy. If people are found to have cried wolf, they will face even greater retribution, but this time, not only will the supermarket be having a go at them; they will face the full power of the ombudsman and could have their manager removed, their players banned and so forth.

I ask this question genuinely, as I always do: what do the supermarkets have to fear from the introduction of an ombudsman? Three arguments have always been
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used against it. The first is that the supermarkets do not need one, because there is nothing wrong, everything is above board and everybody is happy. Why, therefore, did evidence have to be given in confidence and anonymously? The reason, of course, is that that is not the case. The second argument is that an ombudsman is too expensive, but the hon. Member for St. Ives has exploded that myth. It is not too expensive; this is a minor cost, expected to be about £5 million shared among the biggest retailers and supermarkets. The cost is minimal.

The third argument goes, "We can best do this ourselves, and we don't need these terrible people from Government interfering and setting up this apparatus." As I said in an intervention to my hon. Friend the Member for Ynys Môn, however, supermarkets are divided on that. Some would welcome an ombudsman, because they have accepted that there is unfairness in the system and want to have their names cleared in the light of allegations that might swim around, and which might blacken their names along with those of retailers who clearly are offending. So I welcome what we are trying to do.

I welcome the fact that all three Front Benches have signed up to the proposal and that we have established, in setting up the ombudsman, some key principles, including transparency and the ability to investigate, with the possibility of clear action-including punishment-following. It would not have to include punishment or fines, however: there might simply be a need to consider how an aspect of the supply chain operates. Other key principles include fairness and proportionality. The latter point, which perhaps no one has touched on, is underestimated: we are talking about not the imposition of massive fines, but proportionate responses where malpractice has been established, and justice being exacted to ensure that those who have caused the problems learn from their mistakes.

I also welcome the international aspect of the proposal, because some of the greatest unfairness occurs against those who import, usually from the developing world, and are subject to all manner of restrictions and malpractice. I hope that we can identify that and try to restore fairness to the terms of trade. I hope, therefore, that there will not be any opposition to the measure. There might be criticism, but the right place for a critique of, and for improving, the Bill is in Committee.

I am pleased to be sponsoring three other private Members' Bills-somewhat foolishly, perhaps-which is why my time is even more valuable than normal. However, if I am chosen to sit on this Bill Committee, I hope that we can further improve the Bill, because that would be the right place for a critique and to put in place the detail necessary to make the Bill do what we want it to do. I hope, therefore, that the Bill gets a Second Reading shortly, and that there is, building on this unanimity, a desire to reintroduce greater fairness into a supply chain-what was a food chain-that has worked well in the past, but which in recent years has been subject to an imbalance between the supermarkets and suppliers.

10.49 am

Mr. Christopher Chope (Christchurch) (Con): I am against the Bill. It is wholly misconceived, and I shall, without shame, speak on behalf of the consumer. The
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Bill would give the right to suppliers to go to an ombudsman, but not to consumers to go to the ombudsman and complain that the consequences of its work were that the costs of products were rising and that they were having to pay more.

It would be bizarre if the House let the Bill pass on the nod, when it has been so strongly attacked by one of most successful entrepreneurs this country has ever produced-Sir Terry Leahy, the chief executive of Tesco. When he was interviewed by The Financial Times on 12 February, he said:

He asked:

He concluded:

Nia Griffith: Does the hon. Gentleman not agree that the profits made by the supermarkets are the motivation for such statements, and that, while the consumer will fare very well as a result of the Bill, the profits of the supermarkets may be adversely affected by it?

Mr. Chope: Some supermarkets are profitable and some are not. Those that are not profitable go to the wall. There is clearly enormous scope for new market entrants. Aldi and Lidl, for instance, saw the opportunity to push into the supermarket business, where there is currently a lack of competition, and they have exploited the gaps in the market. The successful supermarkets have grown. They are the ones that have kept in touch with their consumers.

We all know of examples of supermarkets that have failed. When I was a student, my local supermarket was Safeway. Safeway is no longer on the high street, because it failed. When I was a teenager being brought up in Cornwall, where my parents lived, there were no supermarkets there, and I recall the sense of excitement when Marks & Spencer opened one in Truro. As the hon. Member for St. Ives (Andrew George) will confirm, Truro now has an enormous Tesco, an enormous Sainsbury's and a very successful Marks & Spencer, and not far outside Truro there is a very successful Asda.

There was a time when the Cornish peninsula was starved of the competition and choice that comes with supermarkets. It is regrettable that, as far as I know, Waitrose has not yet extended its services to the peninsula, and I hope it will not be long before it does. I am delighted to be speaking immediately after the hon. Member for Stroud (Mr. Drew), who is a member of the Co-operative party. There was a great air of excitement in my constituency when the Co-op store in Christchurch closed and was replaced by a Waitrose. That is what happens in the real marketplace.

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