Jo Swinson: I understand the right hon. Gentleman’s point, which organisations such as Traidcraft have put forward forcefully. Of course, in my duties as Minister I have met Traidcraft and other organisations to discuss the matter, but I am not persuaded that it is necessary to have the fining powers from the start, and I will outline why. I think that the sanctions that are in place and that will be available immediately are robust and will be sufficient to achieve the change we require. The adjudicator will be able to take one or more of three possible

19 Nov 2012 : Column 333

measures, two of them from the beginning: first, to make recommendations; secondly, to require large retailers to publish information, the “name and shame” power; and thirdly, if we do not think that the other remedies are working sufficiently well, to impose financial penalties.

That range of measures will mean that the adjudicator can tailor his or her action to the nature of the breach in order to enforce the groceries code most effectively. For example, in the case of a minor or unintentional breach, the adjudicator might decide that a recommendation to change behaviour might be sufficient to bring the retailer back into compliance. In the event of a severe breach that had caused serious harm to suppliers, the retailer could also be required to publish details of its breach prominently in the trade or national press. If it is deemed necessary, they could then incur financial penalties, if the Secretary of State has granted that power to the adjudicator. It is also important to remember that the Bill allows the adjudicator to take more than one measure if that is appropriate in a particular case.

Andrew George: Although I appreciate that the adjudicator will have the power to recover their investigatory costs, fining is very much the issue for debate, as the Minister has already identified. If either the adjudicator or the Secretary of State recommends that a fine should be applied, how many months would it take to implement such powers?

Jo Swinson: I thank my hon. Friend for his question. If the Secretary of State decides that an order needs to be made to allow financial penalties, it is important to know that that would grant the power generally, not on a case-by-case basis, and, as a result of the amendment accepted in the other place, we believe that that could be done within six months. It would be fairly rapid if it was determined that things were not working.

I know as a result of interventions and, indeed, correspondence with the Department that some stakeholders and Members feel that financial penalties should be available immediately. What I would say is that the supermarkets operate in a fiercely competitive marketplace, so major supermarkets are, rightly, very careful about their reputations. As an illustration, in 2010 the four biggest supermarkets—Tesco, Asda, Sainsbury’s and Morrisons—spent £385 million on advertising, which is an indication of the importance that they attach to their brands and what they have to invest to promote them. They are fiercely protective of them and I think that they are likely to take very seriously the impact on their reputation of having to publish their breaches or take out an advert in the trade or national press.

Kerry McCarthy (Bristol East) (Lab): Is it not the case that the Competition Commission inquiry back in 2008 found that more than a decade of adverse media reports on supermarket supply chains had done little to prevent them from engaging in unethical practices? The media are already reporting the abuses, so I do not see how naming and shaming would make much difference.

Jo Swinson: It is important to bear in mind that this will be an independent adjudicator who will conduct an investigation that will consider all the evidence before

19 Nov 2012 : Column 334

coming to a conclusion about specific supermarkets and what they have or have not done. General concerns about the supermarket supply chain have not left consumers in quite the same position of being able to take action, unless, for example, they decide to stop shopping at supermarkets altogether. The Bill is likely to drive change. Consumers have been involved in a variety of movements whereby their concerns about certain issues have driven change in the behaviour of suppliers. Indeed, that was the case with milk prices this summer. Drawing on my personal experience, before I was a Minister I took complaints about misleading advertisements to the Advertising Standards Authority, so I know very well the power of a negative finding, the publicity that goes with it and how companies take it seriously and are very keen to avoid such an occurrence.

Michael Connarty (Linlithgow and East Falkirk) (Lab): Does the Minister not realise that the code makes absolutely no reference to the need to address the supply chains of the major supermarkets in order to prevent modern-day slavery, such as that in the Noble/Freedom Food eggs case? I have written to her about the need to incorporate into this Bill the principle in my private Member’s Bill, the Transparency in UK Company Supply Chains (Eradication of Slavery) Bill. Nothing in this code addresses supply chains, but surely one of the ways to get a level playing field is to prevent major supermarkets from exploiting labour brought into the country as a result of human trafficking to undercut the competition.

Jo Swinson: The hon. Gentleman raises serious issues, not least that of legality and human trafficking. If there is evidence of law-breaking, it should be taken to the appropriate authorities so that it can be followed up. I appreciate his concern, but the adjudicator’s role and the groceries code have been developed in response to the Competition Commission report of 2008. Notwithstanding the serious issues that he raises, the way to proceed is to focus tightly on the report, which provides the clear basis for addressing the problem and consumer detriment that we are trying to solve. Although I have explained to the House that the code is not a panacea that will solve every possible problem, it does mean that we can continue with a strong degree of consensus and cross-party support.

Peter Luff: I reassure the hon. Lady that the Gangmasters Licensing Authority is doing a first-rate job at addressing the concerns of the hon. Member for Linlithgow and East Falkirk (Michael Connarty). If he has evidence of such abuse, he should take it to the authority urgently and it will be addressed effectively and well. That is a tribute to the previous Government’s action on this important question.

Jo Swinson: I thank my hon. Friend for his contribution. He makes his point forcefully.

I believe that the threat to supermarkets of recommendations and requirements to publish details will be enough to drive cultural change. Hon. Members should note that imposing a financial penalty would confer a full merits right of appeal, which would potentially be costly and time-intensive for all parties. It is important that the adjudicator is able to focus on investigations, rather than being distracted by appeals. I am sure that

19 Nov 2012 : Column 335

all constituency Members recognise that where there are appeals procedures, such as in planning, they tend to be used. We do not want the groceries code adjudicator to be tied up in appeal after appeal, but want them to be able to get on with their investigations. That is why we think that it is helpful to proceed with the range of sanctions in the Bill.

Roger Williams (Brecon and Radnorshire) (LD): I welcome the Bill’s focus on the role of the adjudicator in enforcing the groceries code. If the adjudicator, in carrying out that work, came across evidence of serious criminal offences, for example in the field of competition or human trafficking, it would surely be up to them to refer that evidence to the appropriate authorities.

Jo Swinson: Absolutely. Morally, it is incumbent on anyone who comes across evidence of appalling crimes, such as human trafficking, to ensure that it is presented to the appropriate authorities so that they can take action.

Even without fines, there are financial consequences for retailers who breach the code. There may be internal costs of complying with an investigation, such as the cost of sending senior executives to give evidence to the adjudicator. The adjudicator will have the ability to make a retailer who has breached the code pay the costs of the investigation. It is also our intention that the retailers who cause the adjudicator the most trouble should pay a greater share of the levy. Taken together, those factors will reward good behaviour and discourage non-compliance.

Mr Spencer: Will the Minister give way?

Jo Swinson: If the hon. Gentleman will forgive me, I will make a little progress, because he has already intervened.

It benefits no one to reach straight for fines before we have exhausted the other options. We seek to impose a proportionate and effective solution. A move straight to fines would risk creating an unnecessarily adversarial environment, which would ultimately detract from our key objective of achieving long-lasting change in the culture of retailers.

Nia Griffith (Llanelli) (Lab): Will the Minister give way?

Jo Swinson: I will give way to the hon. Lady, although I am aware that other Members wish to speak.

Nia Griffith: Under what circumstances would the Secretary of State consider bringing in the power to raise fines?

Jo Swinson: I hope that the hon. Lady will understand that I am not going to give an exhaustive list. If the groceries code adjudicator felt that the remedies were not sufficient and were not being adhered to and if there were repeated breaches or if the recommendations made by the adjudicator were not being followed up on, those things would weigh heavily in the balance.

There has been a lot of lobbying on this issue, not least from hon. Members. As I am discovering, ministerial

19 Nov 2012 : Column 336

life brings with it a variety of interesting experiences, one of which happened last month, when I accepted a petition from a giant dog.

Ian Murray (Edinburgh South) (Lab): Was it an actual dog?

Jo Swinson: It was a man in a dog suit, rather than an actual dog. The event was organised by Traidcraft, ActionAid and War on Want to highlight their message that they want the groceries code adjudicator to be a watchdog with teeth. To further press the point, they left me with my own watchdog, which has brightened up by ministerial office. I assure the House that I have declared the gift appropriately. I appreciate that the decision not to have immediate fines will be disappointing to some supplier and campaign groups, but the dog remains on my office shelf as a reminder that, should we find that stronger sanctions are needed, the Secretary of State will be able to bring in fines quickly. I assure the House that we will have no hesitation in doing so if they are needed.

Albert Owen (Ynys Môn) (Lab): Will the Minister give way?

Jo Swinson: I am coming to a conclusion, so I hope the hon. Gentleman will understand it if I do not give way.

I greatly value the role that campaigners up and down the country have played to ensure that pressure was kept up to deliver a groceries code adjudicator. I particularly acknowledge the work of my hon. Friend the Member for St Ives and the Grocery Market Action Group and that of many Members of all parties in championing the issue.

We ultimately want the same thing: for the adjudicator to be as effective as possible. The Bill helps deliver a grocery sector in which suppliers and retailers can deal fairly and openly with one another to provide real benefits for consumers, business and the UK economy. I commend it to the House.

4.50 pm

Ian Murray (Edinburgh South) (Lab): I did not realise that we could bring toys to the Dispatch Box. If I had known, I might have brought my bear, Frosty, which I have had since I was a child, for everyone to see. Perhaps we can do that next time, or maybe a Scalextric for the Table would be exciting.

I pay tribute to those in the other place who have diligently gone through the Bill and sent it here. It is a significant measure, but it has been a long time coming. Labour Members can rightly claim some ownership of it. As Lord Grantchester said, the Bill

“has Labour’s fingerprints all over it.”—[Official Report, House of Lords, 22 May 2012; Vol. 737, c. 728.]

In government, we gained cross-party support for a supermarket ombudsman to ensure a fair deal for farmers and food producers from the major retailers, and to monitor and enforce the code of practice in the form of the groceries code. We were therefore pleased that the Bill was included in the coalition agreement in the heady days of May 2010.

19 Nov 2012 : Column 337

However, the Government have dragged their feet on creating the adjudicator, and on the powers to help food suppliers. As the hon. Member for St Ives (Andrew George) said,

“we look as though we don’t understand the urgency of this matter. Every week the Government fails to act, farmers are finding themselves in more difficulty.”

Andrew George: Of course, I also used those words when Labour was in power because, as the hon. Gentleman knows, the Competition Commission reported in April 2008, and for two years there were excuses and consultations, and a variety of reasons were given for the Government’s inability to go ahead at the time, despite the excellent private Member’s Bill that the hon. Member for Ynys Môn (Albert Owen), who is in his place, introduced.

Ian Murray: I am delighted with that intervention because we introduced the code, on which the adjudicator will now adjudicate. We are two and half years into the coalition Government, and the right hon. Member for Arundel and South Downs (Nick Herbert) said when he was a shadow environment Minister at an Oxford farming conference just before the 2010 election that,

“Conservatives are clear: we will introduce an ombudsman to curb abuses of power which undermine our farmers and act against the long-term interests of consumers”.

However, we are on the cusp of 2013, and the Bill has just been introduced.

Andrew George: I do not want the debate to degenerate into a party political spat, but to put the record straight, the Competition Commission had the power to introduce the code, and it, not the Labour Government, introduced it.

Ian Murray: The code is there for everyone to see, and was introduced before the general election. The next paragraph in my speech pays tribute to the hon. Member for St Ives for all his work. If I had my pen handy, I might cross that out, but I would not be so churlish. I therefore pay tribute to the hon. Gentleman, who chairs the Grocery Market Action Group. He has harnessed the support of organisations such as the Rural Shops Alliance, the Association of Convenience Stores, the National Farmers Union, the Farmers Union of Wales, the National Farmers Union of Scotland, the British Independent Fruit Growers Association, the British Brands Group, Traidcraft, ActionAid UK, Banana Link and many others in pushing the agenda from the early days of the Competition Commission inquiry, which he mentioned, in 2006 through to the establishment of the new groceries supply code of practice. He deserves great credit for continuing the fight, and I hope that he will support the Opposition in wanting to create a robust adjudicator.

I also take the opportunity to put on record thanks to my hon. Friend the Member for Ynys Môn (Albert Owen), who is in his place and has long championed the establishment of an adjudicator. It is now more than two years since his private Member’s Bill—the Grocery Market Ombudsman Bill. In the debate on Second Reading of that measure, he made it clear that the concept of a grocery ombudsman or adjudicator was not about being pro or anti any particular interest

19 Nov 2012 : Column 338

group, but about fairness, and the Opposition echo that sentiment. Nevertheless we are here now and, in a sense of cross-party support, we wish the Bill a swift passage on to the statute book. It is important, however, to get the legislation right, and although the Opposition are generally pleased with the current Bill, we will seek to strengthen it so that the adjudicator has the powers it needs to be effective from day one.

As the House will be aware, competition authorities have held two major inquiries into the grocery market. The first, by the Office of Fair Trading in 2000, led to the creation of the code of practice to regulate the relationship between the largest supermarkets and their suppliers. In 2006, the Office of Fair Trading referred the market to the Competition Commission, which completed a second inquiry in 2008. At the time, the commission said that,

“the transfer of excessive risk and unexpected costs by grocery retailers to their suppliers through various supply chain practices if unchecked will have an adverse effect on investment and innovation in the supply chain, and ultimately on consumers.”

It recommended a strengthened and revised code of practice to be enforced by an independent ombudsman—an unambiguous case for an adjudicator. As a result, in February 2010 the Labour Government brought in the groceries supply code of practice—GSCOP—to replace the supermarket code of practice, with the intention of putting the adjudicator on a firm statutory basis.

I am sure Members across the House will appreciate the work of the Business, Innovation and Skills Committee, which is brilliantly chaired by my hon. Friend the Member for West Bromwich West (Mr Bailey) who I see is in his place. He did a diligent job on the Bill during pre-legislative scrutiny—I should perhaps declare an interest as I was on that Committee at the time and have probably just patted myself on the back a little.

In its report, the Committee raised two concerns about the way the adjudicator’s office would operate. First, it was anticipated that the office would be able to launch investigations based only on evidence supplied by retailer or suppliers. The Committee argued that third parties such as trade associations or whistleblowers should be able to submit complaints about retailers. I am pleased that the Government made changes in that respect prior to Second Reading in the other place. They are to be commended on that alteration which the Opposition consider key to ensuring that individuals have the confidence to come forward with complaints under the cover of an industry group to protect anonymity and secrecy.

Secondly, the draft Bill allowed the adjudicator to impose fines on retailers that had breached the code, but only if the Secretary of State made provision for that by order. The Committee rightly argued that the adjudicator should be allowed to impose fines from day one—I shall return shortly to that crucial point.

There is little doubt that this legislation is necessary, and it is important to emphasise that supermarkets and retailers support the adjudicator in principle. One such retailer wrote to me privately earlier this week and stated:

“The groceries code adjudicator will encourage fair and robust regulation of supplier-retailer relationships.”

That speaks volumes.

19 Nov 2012 : Column 339

We will scrutinise the Bill to ensure that it delivers on three key tests—that it promotes innovation and investment in the supply chain; ensures a fair deal for farmers and producers; and delivers better outcomes for consumers in terms of prices, quality and service.

Michael Connarty: As my hon. Friend will have heard in my earlier intervention, having read through the code it seems there is absolutely nothing in it to protect the labour factor in the supply chain. Will my hon. Friend take on board the need to raise that issue in Committee and table amendments so that people who use gangmasters cannot hide behind them if those gangmasters then use crooks, as recently happened in the Noble/Freedom Food eggs case, which I believe is now going to court?

Ian Murray: I know that my hon. Friend has worked on the Gangmasters Licensing Authority, and we will take that debate forward to Committee. The Gangmasters Licensing Authority has been downgraded under this Government—indeed, the Beecroft review recommended that it be scrapped. We must be vigilant and ensure that the great work done by that authority in saving lives and stopping exploitation continues, and we can debate that in Committee. If I look towards the Whips, perhaps my hon. Friend will join us on that Committee to make those points—his name is being jotted down as we speak.

I was talking about the huge impact and value that supermarkets bring to our economy. The groceries market was worth nearly £157 billion in 2011, and it provides significant choice and good value for customers, which is vital. A number of supermarkets in my constituency do a tremendous job through investment in our high streets, job creation, and supporting community projects, and I am grateful to them for that positive role. I also place on record my thanks to Sainsbury’s at Cameron Toll in my constituency for its continued support for my schools Christmas card competition. Likewise, farmers and small suppliers play a critical part in achieving economic growth. It is an incredibly difficult time to be a farmer or small supplier in the UK—there have been increases in feed prices, not to mention the difficulties that many small and medium-sized enterprises have experienced in accessing finance. We should set retailer abuses against that backdrop.

We should acknowledge that retailers have done much to clean up their supply chains, but we know that abuses by retailers against suppliers still occur, and that evidence supports the need for a groceries code adjudicator more than ever. FoodDrinkEurope, the European federation, surveyed businesses from around Europe anonymously. It asked whether businesses had been confronted by various situations, and the survey gives us a picture of the situation in the UK. Seventy-seven per cent. of businesses said they had experienced non-respective contractual terms; 75% said they had experienced de-listing threats to obtain unjustified advantages; and 60% said they had experienced unilateral deductions to invoices. Only a very small number of the businesses interviewed—3%—said that they had done something other than discuss the situation with their customers. When asked why, more than half said they did not believe in the effectiveness of the remedies by public or legal authorities, and 44% said they were afraid of commercial sanctions. In one case of which I am aware, the supplier—a salad grower based in Yorkshire—said:

19 Nov 2012 : Column 340

“The retailer has reneged on a commitment to cover the costs of packaging should they terminate dealings with me at short notice—despite this being confirmed”

on numerous occasions in e-mails.

Ian Paisley: Given those statistics, does the hon. Gentleman believe that food producers will feel emboldened to come forward and make their complaints if no financial penalty is front and centre in the Bill?

Ian Murray: The hon. Gentleman is absolutely right. We need proper sanctions—we need to take the carrot-and-stick approach. Without proper fines in the Bill, the adjudicator could, as the Minister said, be a toothless dog or tiger. I will come to that shortly.

There are times when a market needs intervention to make competition work well, particularly if players in that market become too powerful. Roughly 3.6 million people are employed in food production in this country, and making competition in that market function more fairly through the introduction of the adjudicator is ultimately good for growth and for those jobs. It will undoubtedly also be good for consumers in the long term. Because the choice of products is supported, small suppliers and products will not be driven from the market by anti-competitive practices, which hon. Members have mentioned. The choice of retailers will also be supported, because small retailers will not be driven from the market by the disparity in buying terms, which can be exacerbated by anti-competitive practices. Suppliers will be better able to plan their businesses, yielding efficiencies. Critically, they will be able to invest in innovation, new products and product quality. Finally, more competition will hopefully bring down prices.

The benefits of a strong adjudicator are clear, but fundamentally the Opposition’s major concern is that the adjudicator will be toothless. The adjudicator must have teeth to tackle the breaches of which all hon. Members are aware.

Glyn Davies (Montgomeryshire) (Con): The only contention between the Government and Opposition is whether fines should be available at the beginning or whether they should be introduced at the behest of the Secretary of State. Does the hon. Gentleman agree that to supermarkets, which are massive businesses, reputation and name are the most important things of all? Naming and shaming and reputational damage will therefore probably have more force in pressurising them. If that fails, even in the medium term, new primary legislation would not be necessary, because we could introduce fines.

Ian Murray: The hon. Gentleman brings a great deal of experience of the sector to the House. I am not convinced that the public will be surprised if a major retailer engages in a particular practice and is named and shamed in a national newspaper or trade magazine. If the adjudicator does their job properly, we would hope there would be no one to name and shame. It will help the system to operate properly if we can use the stick and say that retailers could be hit with financial penalties. If they can be hit with such penalties, naming and shaming become almost irrelevant.

Daniel Kawczynski (Shrewsbury and Atcham) (Con): Certainly, when I have spoken with supermarket chief executives I have challenged them. They sometimes take

19 Nov 2012 : Column 341

out full-page newspaper adverts to highlight fair trade for third-world growers. Does he agree that we want to get to the stage where supermarkets are highlighting the fair trade they are doing with British suppliers?

Ian Murray: Absolutely. The hon. Gentleman makes a critical point, but the point is the full plethora of sanctions in the Bill. All we are talking about is what is in the Bill; we are not saying that fines could not exist in the short to medium term at the behest of the Secretary of State, but if he thinks that fines might be required in the future, why not just put them in the Bill?

The Minister of State, Department for Environment, Food and Rural Affairs (Mr David Heath): Just so we know the terms of debate, will the hon. Gentleman outline how big a fine he thinks would be appropriate to deter inappropriate behaviour on the part of, say, Mr Tesco?

Ian Murray: That should be in the hands of the adjudicator. We are asking the adjudicator to do a job to assess whether someone has breached the code. The adjudicator should therefore be given the power to determine the sanction. If the sanction is to seek recommendations, then that is the sanction. If the sanction is to name and shame, then that is the sanction. If the sanction is a fine, we should leave that in the hands of the adjudicator to determine. That could be a debating point in Committee. The Minister is chuntering from a sedentary position, but the argument is whether financial penalties should be in the Bill. If they are, the Secretary of State could then propose that fines be within certain parameters, or up to the adjudicator, or a proportion or a multiple of the loss achieved by a particular supplier. There are a plethora of ways for an adjudicator to determine a financial penalty. [Interruption.] The Minister says, “I don’t know,” but the Government have not told us what they would propose. Yes, we do not know how much the fine should be. That would be up to the adjudicator, within parameters applied in respect of the Secretary of State, to determine how much a fine should be, and that should be in the Bill.

Mr Spencer: Does the hon. Gentleman agree that those charged with the responsibility for spreading the message of the naming and shaming will be the same publications taking the advertising revenue? I wonder how much enthusiasm to naming and shaming there will be from those publications, when that might put their own advertising revenue in jeopardy.

Ian Murray: That is a wonderful point, and I think we now have our second candidate for the Committee—or given that helpful comment, perhaps not. The hon. Gentleman is right: there is a conflict of interest. The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) mentioned the large full-page adverts that supermarkets produce relating to fair trade. Indeed, if it is about advertising revenues, there will be a conflict of interest, and I hope that the adjudicator would take that into account. If fines were included in the Bill, an adjudicator could balance up what would be the best punishment for a particular crime and deal with it in that way. By hamstringing the adjudicator from day one on fines, we are merely pushing down some of those routes by which questions would have to be answered.

19 Nov 2012 : Column 342

Let me run through some of the issues relating to the adjudicator potentially being toothless, which is why we are calling for fines to be available to the adjudicator from day one. We are not the only people who are calling for that. In January 2009, the hon. Member for Somerton and Frome (Mr Heath)—the current Minister with responsibility for agriculture and food, who has been chuntering on about fines for the past few minutes—said, when he was an Opposition spokesperson all those many months ago, that there must be “an ombudsman with teeth” to ensure that farmers get a fair deal. I wonder whether he and his colleagues will support our amendments in Committee to give the adjudicator such powers, because they did not support them in the other place. He is not the only one. The hon. Member for Tiverton and Honiton (Neil Parish) said last year:

“I agree with my hon. Friend and other Members that the adjudicator must have real teeth so that they can take action to stop abuses.”—[Official Report, 5 April 2011; Vol. 526, c. 240WH.]

Just this weekend, a host of stakeholders wrote an open letter to The Sunday Telegraph. It is worth my quoting from it, because it touches on the crucial part of the Bill:

“Sir, Having got the Groceries Code Adjudicator Bill this far, the government will be scoring an own goal if it denies the supermarket watchdog the one tool that will make it effective: the power to levy fines from the outset. The evidence of supermarkets’ unfair treatment of suppliers—which includes farmers both here and in developing countries—is all too clear. Watering down the bill so that penalties only go as far as ‘naming and shaming’ will not be a sufficient deterrent and the Adjudicator risks failing in its job to hold supermarkets to account.”

That letter was signed by ActionAid UK, the National Farmers Union, the Federation of Small Businesses, the Campaign to Protect Rural England, the National Federation of Women’s Institutes, Traidcraft, the Tenant Farmers Association, the Country Land and Business Association, the Independent Fruit Growers Association, the Catholic Agency for Overseas Development, Friends of the Earth, War on Want, RedOrange and Great Glemham Farms. Clearly, then, there is a great movement to provide for fines in the Bill, and I cannot understand why the Government have not listened to the letter.

We are in danger of creating this toothless tiger—I have “tiger”, but it could be a dog, I suppose. Let us imagine an old-fashioned circus act. Where is the fear in a circus clown putting his head into a tiger’s mouth, only to have his neck viced by the tiger’s gums? There is no way we can put fear into the hearts of the supermarkets with an adjudicator that does not have the power to fine. Providing for fines in the Bill does not mean that fines should be imposed on retailers randomly—I hope there would never have been sufficiently serious breaches to require the invoking of the power—but allowing the adjudicator to have the power easily to hand might influence the retailers’ actions and go some way in preventing serious breeches of the code.

Clause 9 gives the adjudicator the power to fine retailers, subject to permission from the Secretary of State. Even if the adjudicator decided that the power to fine was necessary, several considerable hurdles would have to be jumped. First, the adjudicator, who would be best placed to decide whether fines were appropriate, would have to publish guidance in deciding the amount of financial penalty—a point that goes back to the Minister’s intervention. Secondly, once that had been given to the Secretary of State, he would have to consult

19 Nov 2012 : Column 343

stakeholders on the guidance. Finally, a statutory instrument would have to be presented to Parliament and passed by affirmative resolution. This hugely drawn-out process will do nothing to instil much-needed confidence in farmers and small businesses that might have been severely affected by a breach of the code by a retailer that the adjudicator thinks merits a fine.

We must trust the adjudicator to issue remedies fairly. By not providing in the Bill for the power to fine, the Government are in danger of scoring an own gaol, as said in The Sunday Telegraph letter from ActionAid. Indeed—if I may continue with the footballing analogy—a red card could be issued. It would be available to the adjudicator in the case of a penalty, but it would not be in its breast pocket, where it could be issued fast and effectively against the offender if necessary. Essentially, we are saying in the Bill that if the referee wants to issue a red card, he will have to ask the Football Association, after which the FA will consult on its use and then pass a new law to allow it to be used. I much suspect that the match would have finished many months before the decision is made.

The Business, Innovation and Skills Committee and the Environment, Food and Rural Affairs Committee have also said that the power to fine should be provided for in the Bill. Furthermore, in a recent joint statement, the Grocery Market Action Group, ably chaired by the hon. Member for St Ives and made up of 23 organisations from across the farming, international development, environmental and small business lobbies, called on the Government to give the adjudicator the power to levy fines. I ask the Minister, again, why she is not listening to the entire industry when it comes to fines.

I turn to the intermediaries. At the bottom of all this lies the nagging doubt that many of the alleged abuses will not be resolved even by the presence of a perfectly functioning adjudicator, because the problem is in the code itself, not its implementation. Central to this idea is the code’s limited scope—this point has been raised by voices across the sector—as much of the bad practice occurs at the level of intermediaries not covered by the code and therefore the adjudicator. For example, let us imagine that a supermarket has a ready meal supplier, but decides it wants fewer carrots in the ready meal and goes through the proper GSCOP processes to remove carrots. The supermarket can do that legitimately under the code, and that is only right. However, the ready meal supplier will buy those carrots from a carrot supplier, and could therefore dismiss one of its suppliers of carrots or change the terms of the contract without any recall to the groceries code. In that example, nothing would have gone wrong according to the groceries code, so we could see suppliers further down the chain being harmed quite considerably by the decision of an intermediary.

Equally, that binary view of the market seems inappropriate when the supplier is a huge manufacturer of branded goods, such as Unilever, Kraft, Nestlé or Coca-Cola, whose turnover may exceed that of even the retailer. We are protecting the relationship rather than the carrot producer further down the chain. The adjudicator will be required to recommend changes to the code to the Office of Fair Trading, yet the British Retail Consortium claims that the OFT has taken no action to offer feedback on the annual reports that its members have already submitted under GSCOP on their implementation of the code or even to publish them.

19 Nov 2012 : Column 344

Many farmers and growers are currently not covered by the code, as they do not directly supply the 10 largest retailers. Nevertheless, they are often the ultimate victims of unfair behaviour and the transfer of risks and costs. We hope that ensuring that retailers comply with the code will resolve those issues. If, despite the adjudicator’s best efforts, those problems persist, primary producers will continue to struggle to make a fair return for their enterprises and consumers will continue to suffer from the subsequent lack of investment. That is why it is critical that the adjudicator should have the power in the Bill to keep the code live, to enable such issues to be dealt with if the adjudicator deems that to be necessary. May I ask the Minister what consideration she has given to those concerns and whether she will come back to us in Committee with an assessment of the issues affecting intermediaries?


Daniel Kawczynski: The hon. Gentleman, who appears to be moving towards the end of his speech, mentioned carrots. The British carrot industry is actually doing quite well, but I very much hope that he has spent some time thinking about how the adjudicator will help our British dairy industry, which is on its knees, with many farmers going out of business every month. In the last Parliament I set up the all-party group on dairy farmers in order to fight for them. Our main report suggested that we should have a grocery adjudicator Bill. Will he spend a few moments talking about our dairy farmers?

Ian Murray: The hon. Gentleman raises a critical point, because naming and shaming did not work for the dairy farmers. What worked were blockades and sanctions in getting their points across to the Government. I will perhaps highlight the dairy industry and how the groceries code adjudicator should be able to help, but he makes a critical point about how the Bill could be seen as toothless, because the dairy industry had to blockade and withhold its services to get any action on how the supply chain worked. It neatly follows that the debate needs to be on where the code sits in the legislative framework.

Glyn Davies: It concerns me that the hon. Gentleman has just said that the improvement in the dairy farmers’ returns was based on just direct action. There was a serious debate in this House and a serious debate in central London, and the normal processes of politics had a great influence. It is not just direct action and blockading properties that are needed to have an influence on businesses.

Ian Murray: I take the hon. Gentleman’s point. The point I am making—I think his hon. Friend the Member for Shrewsbury and Atcham was making it too—is merely that we can draw a parallel between the code in the Bill and how it could work in the example I gave involving carrots in a ready meal, and what happened with the dairy industry. We are merely drawing parallels. I am not denying the actualities of what the hon. Gentleman has said; I am saying that having an adjudicator without teeth—one without the power to deal with the issue—could lead to exactly the same examples with many other industries.

19 Nov 2012 : Column 345

To finish, my noble Friend Lord Knight—I pay tribute to the work he did on the Bill in the other place—speaking on behalf of the Opposition on Second Reading in the Lords, said:

“It is fundamentally odd that while Parliament is entitled to debate and scrutinise the function and powers of the referee, we are denied the opportunity to give the same scrutiny to the rulebook itself.”—[Official Report, House of Lords, 26 June 2012; Vol. 738, c. GC80.]

I appreciate that the Minister said that the code has a footing, in that the adjudicator can use it to compel supermarkets and retailers to comply, but there is a question whether it should be put on a statutory footing in this House to allow that to occur, rather than be dealt with through executive order.

The code must be a living document that is open to continual improvement in order to ensure that the framework is responsive, and that it ultimately works in the best interests of all businesses as well as consumers. The National Farmers Union has raised concerns about the status and enforceability of the code, because it is contained in a schedule to an order under the Enterprise Act 2002, rather than in a statute of its own. We would consider going further, and we will explore the ways in which the code could be a matter for Parliament to consider on the basis of recommendations from the adjudicator, who is best placed to evaluate the code. The code needs to be capable of responding to changing market forces, and to be as durable as the adjudicator who will referee it.

I mentioned extending the scope of the code to intermediaries, and hon. Members have already raised the recent issues surrounding the dairy industry. Cuts to farm gate prices mean that dairy farmers are being paid less for milk than it costs them to produce it. That is not a sustainable model. We welcome the news that there is agreement on the terms of an industry code of practice that will lay the foundations of a new deal between farmers and retailers. For too long, dairy farmers have put up with wholly unbalanced terms and have been struggling to cope in an increasingly unworkable financial situation. It cannot be right that supermarkets use milk as a loss leader while farmers are being paid less for the milk than it costs them to produce it.

Ministers need either to ensure that the voluntary code on dairy contracts works for farmers, or to bring in regulation to fix the dysfunctional supply chain in that marketplace. I believe that the adjudicator could fit that role if necessary, and I would be interested to hear the Minister’s thoughts on whether their role could be extended into areas such as the dairy industry when problems arise. That would be part of keeping the code as a living document.

Stephen Timms: Traidcraft and others have raised a point relating to the confidentiality of those who report their concerns. The Minister referred to that matter in her speech. Is my hon. Friend satisfied that the Bill will provide enough protection for those reporting breaches of the code?

Ian Murray: We will have to explore that matter in detail in Committee, because there is confusion in the industry and among trade bodies. They are uncomfortable

19 Nov 2012 : Column 346

with the current requirements, and I hope that the adjudicator will offer recommendations on the level of evidence that will be required to set up an investigation. A balance will have to be struck involving anonymity and confidentiality. That could be difficult in the circumstances in which a product could be uniquely indentified as coming from a particular supplier, and care would have to be taken to ensure that that supplier’s identity was not disclosed in the course of the proceedings.

This is a good Bill, but it could be a great Bill. The situation was best summed up by the hon. Member for South Staffordshire (Gavin Williamson), who said in the House in April 2011:

“None of us wants a weak, ineffectual, pointless adjudicator which will cost everyone something but achieve nothing.”—[Official Report, 5 April 2011; Vol. 526, c. 236WH.]

The adjudicator could and should be strengthened through the various proposals that we have heard this afternoon, and we will seek to achieve that in Committee. I give the Minister a commitment today that the Opposition will work constructively with her. Similarly, I hope that she will be open to giving due consideration to the amendments that we will table in the weeks ahead. I also hope that Hon. Members on the Government Benches who recognise that the Bill does not quite fulfil its potential will look at our proposals in detail in Committee. We look forward to playing our part with the Government in establishing an effective adjudicator as soon as possible.

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): Order. We will start with a time limit of 15 minutes on Back-Bench speeches, with the usual injury time for up to two interventions. Clearly, hon. Members do not have to take the full 15 minutes, however. There will be no penalties if they do not speak for that long. Stranger things have happened.

5.23 pm

Miss Anne McIntosh (Thirsk and Malton) (Con): It is a great pleasure to follow the hon. Member for Edinburgh South (Ian Murray). I should like to congratulate the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for East Dunbartonshire (Jo Swinson), on starting this Second Reading debate so eloquently. I want to make some comments as the representative of growers and farmers in Thirsk, Malton and Filey, and I want to share with the House the evidence that the Environment, Food and Rural Affairs Select Committee has heard on these matters.

I welcome the Bill’s Second Reading. I have some common ground with the hon. Member for Edinburgh South on these issues, but probably more with my hon. Friend the Minister. I also have common ground and differences with the hon. Member for West Bromwich West (Mr Bailey), who chairs the Business, Innovation and Skills Select Committee.

We should perhaps pause for a moment to consider the marketplace in which some of the growers we hope will benefit from the Bill are operating. They tend to be very small producers of each vegetable or form of produce, and they are often small in number. There is absolutely no comparison with the size, volume and financial weight of supermarkets.

19 Nov 2012 : Column 347

I welcome the fact that we have reached Second Reading and I welcome the useful amendments made in the other place, but there has been a long gestation period from the Competition Commission report of 2008. I would like to record the thanks of the DEFRA Committee to those who gave written evidence and, more specifically, oral evidence in the context of our brief inquiry. We shared our conclusions with the Business, Innovation and Skills Committee. Some of the points we made have been adopted, but it is worth repeating them today.

We welcome the fact that an adjudicator is going to be established, and we believe that the adjudicator should have the power to accept complaints from indirect as well as direct suppliers. Will the Minister confirm that suppliers will have the ability to make anonymous complaints, which we believe will be fundamental to the success of the groceries code adjudicator?

In a limited market—in Lincolnshire, for example, and other parts of the country—where there are very few leek growers, if one of them wished to make a complaint against a particular supermarket, it would be too easy for the supermarket to identify that particular grower. It is therefore vital that the grower has the safety of knowing that an anonymous complaint can be made to the adjudicator—either directly or, as forcefully expressed by our Committee, through an indirect route via the National Farmers Union, the Country Land and Business Association or the Tenant Farmers Association. They are membership organisations that will represent the individual grower, who will then be able to make a case, safe from persecution and safe from the possibility of having the contract terminated at an early stage.

Ian Paisley: The hon. Lady makes a vital point. If a potato processor or person producing potatoes in Northern Ireland were to make that sort of complaint, it would in effect be one of three people, so a middle way of getting the complaint through must be found.

Miss McIntosh: The hon. Gentleman reaffirms my point very eloquently. He would probably share my view—and I hope that Ministers and shadow Ministers will grasp it—that the security of tenure of some of these growers is absolutely shocking. That is in stark contrast to—albeit another woeful situation—what happens in the dairy industry. A cheese producer in my area contacted me to say that some of the milk supplies for cheese production—a liquid production that we are so good at in this country—are being threatened. The growers that I believe will benefit more directly and more specifically than dairy farmers and others sometimes have only three months’ security of tenure or certainty of contract—not even a year. I do not know—perhaps the Minister can help me—whether the Bill will address this disparity between producers of, for example, milk and potatoes, and others. With the groceries code adjudicator, will these producers and growers gain greater security of contract than the three months or less than a year that they have at present?

Let me explain what I believe to be the sticking point. I hope I heard the hon. Member for Edinburgh South correctly as I think he said he would favour the power to have proactive investigations. I believe that that is vital. I should declare my interest—I know that what I say here will not go further than this Chamber, but I also

19 Nov 2012 : Column 348

know that if someone wants to tell a secret, this is the best place in which to share it. I served for six months—in 1978, I am afraid to say—in what is now called DG Competition but was then the Directorate General for Competition, dealing with investigations of complaints brought directly to the European Commission. I understand that the Competition Commission is based on the same philosophy, as it were, as DG Competition.

I should like to know what good reason the Government could have for not introducing a power for the groceries code adjudicator to launch a proactive investigation. It could be based on evidence received by word of mouth, or on material in trade journals. Journalists working in the specialist press often hear things at conferences to which others are not privy.

Jo Swinson: Clause 4 makes it clear that the adjudicator can conduct an investigation

“if the Adjudicator has reasonable grounds to suspect that…the retailer has broken the Code”.

Obviously that could result from a specific complaint made by a supplier, but the adjudicator might become aware of the existence of reasonable grounds through, for instance, press articles or investigatory television programmes. Proactive investigations will indeed be possible as long as such grounds exist.

Miss McIntosh: That is most welcome, although obviously, under the new powers that Select Committees have, we shall analyse the Bill very carefully to establish whether it can be improved. Perhaps the Minister will be good enough also to confirm that anonymous complaints can be made, that indirect as well as direct complaints can be made and that third parties such as trade organisations will be able to make complaints, and will tell us whether the Bill contains provisions relating to the recovery of investigation costs.

We are anxious for the adjudicator to have the power to levy financial penalties without the need for an order by the Secretary of State. That has been mentioned a number of times already in interventions. Having waited since 2008, when the Competition Commission first reported, we would find it unacceptable for the adjudicator not to be fleet of foot and able to levy such penalties without the need for an order. I believe that the Bill allows that in some circumstances, but perhaps the Minister could give us a nod.

Clause 16 refers to the transfer of adjudicator functions to a public body, and states:

“The Secretary of State may by order abolish the Adjudicator”.

Even a cursory reading sets alarm bells ringing. Does that mean that within two or three years of the establishment of the adjudicator, his functions could be abandoned? Would they simply pass to another public body, or would the whole process grind to a halt? Some clarification would be helpful.

Obviously we were briefed by outside bodies before the debate. I should like the Minister who responds to the debate to comment on the views of the National Farmers Union, which is keen for the adjudicator to be able to impose fines as swiftly as possible without waiting for an order from the Secretary of State. Also, can the Minister say whether there will be an ongoing review of the effectiveness of the groceries code itself? There would be some merit in having an independent

19 Nov 2012 : Column 349

body look at the effectiveness of the code after some cases have been addressed by the adjudicator, and I am sure my Committee—or, indeed, the Business, Innovation and Skills Committee—would stand ready to do so. Do the Government plan to follow that course of action?

The National Farmers Union has said it would welcome an assurance from the Government that compliance with the code will be mandatory for the retailers it covers. I ask the Minister to set out precisely which retailers it will cover. Will the Minister also state whether the code will be legally enforceable by the adjudicator?

We on the Environment, Food and Rural Affairs Committee are keen to ensure that the new adjudicator will adequately protect farmers and food producers from large retailers. We see this as a good opportunity to restore the balance between the mighty supermarkets and the considerably less powerful growers, who provide the food we eat. I hope we can continue to move towards self-sufficiency in their products.

There has been a climate of fear in the grocery supply chain for many years. We therefore welcome the provisions to allow the adjudicator to receive anonymous complaints —that has, I think, been confirmed. We wish the Bill safe passage today, but, in the light of opinions and evidence heard by us and the Business, Innovation and Skills Committee, we reserve the right to continue to examine it closely as it progresses, with a view to improving it if we believe that is necessary.

5.36 pm

Susan Elan Jones (Clwyd South) (Lab): I am delighted to follow the hon. Member for Thirsk and Malton (Miss McIntosh), who, as ever, speaks with great authority and expertise in this area.

I welcome the Bill. The creation of the groceries code adjudicator is an important step, and it is vital that we get the best adjudicator possible. This issue is not about urban and rural communities; it is fundamentally about supporting producers who produce food in our rural areas. If we do not have that, there will be no locally grown food for markets in our country.

This Bill is about the creation of a level playing field for farmers, small retailers, supermarkets, and the hard-pressed consumer. I heard what the Minister—in consultation with the dog on her shelf—had to say about naming and shaming, and I understand some of the points she makes. However, she also suggested that under the groceries code adjudicator major retailers will probably end up paying different amounts of money proportionately and that she does not think that could incur the threat of legal action, so I find it difficult to understand why she has not considered the importance of fining. Let us have that power to fine now—not through order of the Secretary of State and following publication of guidance. We should listen to the Business, Innovation and Skills Committee, which recommends that the power to fine should be stated in the Bill and the adjudicator should be given the power to escalate penalties if code breaches continue. Surely that is sensible. It is not saying that every breach will result in a fine, but that the adjudicator should be able to use that power if he or she considers it necessary.

19 Nov 2012 : Column 350

A lady from Llangollen in my constituency made the point very well. She said that she shopped at supermarkets but also bought fresh produce and meat locally at shops and markets, and that she was increasingly concerned about issues relating to the developing world. This is not about purism or being against supermarkets and the like; it is about being aware that if we do not support food production in this country, more and more food producers will go out of business, which will ultimately lead to a rise in the cost of food for the consumer. That will mean the end of much of our home-grown food industry, which is why the strongest possible action is essential.

I pay tribute to my hon. Friend the Member for Ynys Môn (Albert Owen), a pioneer who has championed this issue, because he knows how much it matters to the rural community in areas such as north Wales. Without family farms in north Wales we will see the end of rural communities. There would be a massive impact, too, on Welsh language and culture, which my hon. Friends the Members for Ynys Môn and for Llanelli (Nia Griffith), many other Members and I care about, and which are vital in this debate.

We have to think about the needs of our producers and consumers and, more widely, of local economies. I urge the Government to reconsider the issue of fining. It does not mean that if we have the carrot we cannot have the stick, or the other way round. We urge the Government to consider what groups such as farming unions, the Labour party, Select Committees and many others have said. The role of the adjudicator matters far beyond one type of constituency, one party and one part of the country. If we are to have serious, long-term, sustainable food production, we have to get this matter right. I urge the Government to listen to those diverse processes and include the right to fine in the Bill.

5.41 pm

George Eustice (Camborne and Redruth) (Con): I welcome this Bill’s Second Reading. As Conservatives, we believe in free and fair markets, but we rigorously oppose the abuse of dominant market power, which is why the Bill is essential.

Before entering politics, I worked in the farming industry for 10 years. We were a major supplier of strawberries to a number of supermarkets, and I experienced first-hand some of the sharp practices that the Bill is designed to deal with. They ranged from forcing suppliers to use third party contractors, for things such as packaging and haulage, who would then charge suppliers more than the market rate. I experienced the retrospective clawing back of costs resulting from wastage on the shelf. Supermarkets would claw back not just what they paid, but the margin that they expected from a product. Growers were frequently forced to participate, often unwillingly, in supermarket promotions, and were expected to sell their produce for below the market rate.

I saw many instances of supermarkets rejecting stock when they had simply made an error in orders. That was a particular problem with the strawberry industry, because a supermarket buyer would place an order for a batch of strawberries, unaware that it would begin to pour with rain the following day. When it pours with rain, strawberry sales collapse and supermarkets are reluctant

19 Nov 2012 : Column 351

to take the orders that they have placed, so they do all that they can to find an excuse to reject batches of fruit that have been supplied to them.

I have been out of the industry for 10 years, and I thought that perhaps things had changed, but other practices have crept in. Only last year, I was talking to a supplier who explained that he was required to show his annual financial accounts to the supermarket as a condition of supply. Ostensibly, that is to check that the business is financially secure, but we all know that in reality it is to see what its profit margin is, and how much further supermarkets can drive it down into the ground without killing it altogether.

Andrew Bingham (High Peak) (Con): The problem, as my hon. Friend sets out, is very serious—it is almost commercial bullying. Does he agree that that is why it is so important that the adjudicator can now receive referrals from third parties, such as trade associations and so on, to protect anonymity and stop future bullying?

George Eustice: I absolutely agree. One of the big improvements made to the Bill in the Lords was the extension of its scope so that that could happen—so that anonymous complaints could be made and so that whistleblowers and third party trade organisations could be involved in the process. The evidence we heard in the Environment, Food and Rural Affairs Committee made it very clear that many suppliers are incredibly fearful of the supermarkets they supply. They are conscious that it is easy for suppliers to be identified as there will sometimes be only a handful of them for a particular product line to a given supermarket. It is therefore very important that the Bill has that extra scope.

I also recently spoke to another supplier who told me about a problem that he had encountered with supermarkets putting him under huge pressure to fulfil the terms written into a contract and supply the volumes that he was no longer able to source due to bad weather or a crop failure. In negotiations, he was put under huge pressure by a supermarket to buy the product from abroad and sell it at a massive loss so that he could fulfil his contract. That is unacceptable behaviour. When prices change, supermarkets should also change their prices.

Mark Tami (Alyn and Deeside) (Lab): Does the hon. Gentleman accept that it also happens the other way? I have come across cases in which supermarkets have turned around and said that they do not want an order any more at very short notice. The supermarkets have the power to say to smaller suppliers, “Take it or leave it, because we can go elsewhere and you cannot.”

George Eustice: I absolutely agree, and that is why the Bill is so important. Over the past 20 years, there has been huge growth in the power of a handful of very powerful retailers who have huge market clout and have, frankly, abused their power. If we want proper market conditions back, in which people are paid a fair market price for their goods, the Bill and the groceries code adjudicator will be vital.

Let me move on to the issue of the financial penalties, which have featured heavily in the debate so far. As my hon. Friend the Member for Thirsk and Malton (Miss McIntosh), the Chair of the Environment, Food and Rural

19 Nov 2012 : Column 352

Affairs Committee, has said, our Committee concluded that there was a case for making those fines available to the groceries code adjudicator from the start rather than waiting for it to become necessary for another order to be introduced by the Secretary of State.

The question of fines is important and I agree with the Minister that naming and shaming might be adequate for some minor breaches, but I take issue with the claim that naming and shaming might be a more powerful deterrent than a fine. The British Retail Consortium might say that we should name and shame, because that is more powerful than a fine, but that is a bit of a clue. When the retailers say that what really scares them is naming and shaming, even though they do not want fines, the Minister ought to be a little more suspicious than she has been.

It is important to have an escalating scale of penalties. Why remove an important tool from the box? It would be possible for the Government to craft guidance on when a fine would be appropriate and what size that fine should be. It could stress that fines should be used sparingly and that other sanctions, such as naming and shaming, should be the preferred route. I think it is wrong, however, to rule fines out at this stage because of the question of what should happen if there is one persistent offender out of the 10 supermarkets caught by the groceries code adjudicator. What if that one offender, however many times they are named and shamed, sticks up two fingers to the adjudicator and says, “We really don’t care.”? That is unfair on the remaining nine, who might be abiding by the code, and it risks making the whole initiative unstable.

The groceries code adjudicator is more likely to succeed if the power to fine is there from the beginning and more likely to fail if it is not. For the adjudicator to work, we need to ensure that its introduction will change the behaviour of the supermarkets. It is not just about having investigations all over the place—we need people to be fearful of a fine, so that they moderate their behaviour.

There is a real problem in the serious mismatch between what a Minister might be told by the public affairs officers who work for the supermarkets and what she would experience if she was a carrot grower supplying supermarkets and dealing with buyers daily. The truth is that public affairs officers for the supermarkets will often strike a paternalistic pose and say, “It is not in our interest to upset our suppliers. We want happy suppliers,” and they will have pictures in their supermarkets of happy farmers’ children working out in the fields. It all sounds great, but the buyers have very different incentives that focus on margins, profit and exercising control over their suppliers. The Minister said that the market for supermarkets was fiercely competitive, and she is right. That is why my fear is that when Parliament’s back is turned, the incentives that motivate the buyers will prevail because it is ultimately their profit margins that they will seek to protect.

The possibility of third party complaints has been raised and is an important power. The industry has a part to play in this. Although it says that we need anonymity and that it is important for complaints to be made without the complainant being identified, the industry has to play its part in helping the supermarket adjudicator identify bad practices. One of the proposals that I have made to the NFU, which keeps telling me

19 Nov 2012 : Column 353

that it is under consideration, though I have not heard that it has been taken up fully yet, is the idea of what I have termed a farm-fair index. That would be based on a panel of 500 farmers and suppliers across a range of sectors. Each quarter they would be given a questionnaire asking a series of questions that measured the adherence of each of the 10 supermarkets to the groceries code. There would be a league table of the 10 supermarkets and they would be scored according to which of them abided by the code the most and which departed from it the most. If a particular supermarket was at the bottom of that league table for two consecutive quarters, an automatic investigation by the groceries code adjudicator would be triggered. That would be a good way of ensuring that vexatious complaints were filtered out. A broad panel—the same 500 farmers and suppliers each quarter—who could score the adherence of the supermarkets to their own code would provide an important tool to help the adjudicator identify bad practice.

In conclusion, I welcome the Bill. It is a positive step forward and will improve relations between farmers and their supermarket customers, but I wish the Government would take another look at the issue of financial penalties.

5.52 pm

Ian Paisley (North Antrim) (DUP): The production of food is our most important industry. Let us pause and think about that for one moment. The production of food is our most important industry, not just for what it earns for our economy and what it achieves, but because of what it says about us as a nation and what we are prepared to promote to our people to eat.

Consumers are becoming more and more aware of food traceability and of the importance of our nation’s ability to produce good quality, tasty, traceable food with as little intervention as possible of chemicals, and a clear process chain for the production of that food so that we understand food stability, food security, and what real agricultural sustainability is all about. The Bill before the House is so important because it is about understanding the mechanisms and the balances that make up our most important industry.

I do not fear to predict that the production of food over the next few years will become the most important topic in our nation during this century. I say that because of the threat posed by huge cartels and their interests to the production of good quality, tasty food. Handling and protecting our most important industry and doing all we can to ensure that we continue to produce the best quality, tasty, traceable food that our people have come to enjoy and expect should be a key priority not just for the Government, but for everyone in the House.

When I made my maiden speech, the hon. Member for Ynys Môn (Albert Owen) spoke to me afterwards because I had focused on agriculture and the subject of creating a food ombudsman. I was delighted to learn from the hon. Gentleman about the pioneering work that he had tried to do under the previous Government, and it is a huge tribute to him that we have got so far that the House is on the verge of legislating on something so critical to our food security and our food interests. I congratulate him.

19 Nov 2012 : Column 354

I say all this in the knowledge that if we introduce a food ombudsman or a supermarkets adjudicator, there will be certain consequences. One is that we as a nation must educate our people that food can no longer be regarded as a cheap commodity. If we want good quality, traceable, digestible, beneficial food produced in a sustainable way that continues to employ people on a living wage, that will not be done cheaply. We must therefore ensure that the food chain is transparent and that people understand why a certain price must be paid.

Those who would undermine that by marketeering cheap food to our people and bringing cheap food in vast quantities from overseas undermine our ability to produce quality food, ruin the industry and hasten the day when we will have limited choice as a nation and be forced to pay the highest of high prices for food. That is why we must protect the primary and key producers of food in our nation.

The Bill is a good Bill but, as the Opposition Front-Bench spokesman, the hon. Member for Edinburgh South (Ian Murray) said, some improvements could be made to make it a brilliant Bill, and we should strive to do that. The Bill is not intended, for example, to deal with commercial issues such as the producer price differential which exists between Northern Ireland and Great Britain. That is particularly important for me in Northern Ireland because of two things. The first is water —17 miles of it between my island and your island, which adds to the price of food and food production, and the demands put on a primary producer in my country when he wishes to supply one of the 10 great supermarkets here on the mainland. The second is climate and the fact that it is considerably colder where I come from, which has a detrimental effect. I see that the hon. Member for Midlothian (Mr Hamilton) seems to think that it is colder where he comes from. Well, he can keep that cold, as far as I am concerned.

We could improve the Bill if we address those issues through the powers of the adjudicator. We should also deal with some of the practices of processors and other intermediaries in the processing of food. That is another critical area left out of the Bill, but it is an area that we should at least try to address. The inability to impose fines at the outset is another flaw that needs to be addressed. I was brought up in a political school which said, “If you want to deter someone, let that person know that if they get into a fight with you, you’re going to kick them where it hurts. That usually deters a person from having a fight with you, but if that person is so unfortunate that they still want to have a fight with you, then kick them where it hurts and they probably won’t fight with you again.” That just happens to be the school of political brawl I was brought up in. It usually works, and with some effect.

The president of the Ulster Farmers Union, Mr Harry Sinclair, wrote to all Northern Ireland MPs at the weekend, stating that

“we firmly believe that the ‘teeth’ necessary to secure compliance needs to be much stronger”

and that fining should therefore be set out in the Bill. I believe that the Government should listen to those words and deter the supermarkets.

I agree with a huge amount of what the Minister said, especially when she said that the supermarkets like to spend a lot of money on advertising. I was once told

19 Nov 2012 : Column 355

that 50% of all money spent on advertising works and 50% is completely wasted. The problem for the supermarkets is that they do not know which 50% is which, so they would spend less if they knew what advertising actually works. I believe that some of the supermarkets would not necessarily wear the publicity they got as a badge of shame, but they might feel honoured to wear it. We really need to move away from the nonsensical idea that bad publicity in itself will be sufficient deterrent for the supermarkets, because it will not be enough. We must let the supermarkets know that if they price-fix, because they are a cartel, they will be kicked where it hurts, and that will have an effect.

We must also ensure that we bring about a new relationship that rebalances the primary producers’ impact on the market with that of the supermarkets. The only way to do that is by ensuring that we reward the farmer for the sweat and toil that he or she puts into the land to make the best quality, most traceable and tastiest food we can get. I believe that the only way we can do that is by establishing a new relationship, not one in which the farmer is king, but one in which he is at least treated equally and feels that his sweat will be rewarded with a fair price. He should be able to encourage his children to aspire to be farmers, rather than having to tell them, “Go somewhere else, because there is no reward in this and you won’t be able to make a living, raise a family or spend money on the things you want.”

Therefore, we must establish a new relationship that at least treats farmers as equals and allows them to be regarded as such. Otherwise, over the next 20 years our agricultural sector will continue to be dashed and to fall and we will find ourselves held in the grip of outside interests beyond the shores of this nation that will sell us what they want, which will not necessarily be good, clean, traceable or tasty, and they will sell it at their price. Therefore, we have to get this right and get it right now, because, as I said at the beginning of my comments, it is our most important industry. It is about what we tell our people they should eat and what is good for them.

Although the adjudicator is an important part of the process of getting to that stage, I believe that it is only one part of a cocktail of necessary measures. We must have price transparency—having the adjudicator is, of course, one way of providing price transparency—so that the consumer knows why they have paid a certain amount for steak, poultry, pork or other products, what it has cost the farmer to produce, what it has cost the processor to process and make good for them and what it has cost the supermarket to retail. They must know each cost along the supply chain, because otherwise they are being robbed of a vital thing: knowledge about what they are being shown they should eat.

We should also have clear food labelling and ensure that we know whether a product has been made in the United Kingdom or was brought in from elsewhere. In many instances there is nothing wrong with food brought in from elsewhere, but we should at least have clear labelling so that we know where it is from. We should also ensure not only that we encourage our products to be sold here in the United Kingdom, through good procurement policies in our schools and hospitals, but that it is marketed abroad. All these issues can ensure that those involved in the most important industry in our land are encouraged to continue to produce the best, cleanest, tastiest and most traceable food possible.

19 Nov 2012 : Column 356

6.5 pm

Simon Hart (Carmarthen West and South Pembrokeshire) (Con): This is an eagerly awaited moment, and it is a very welcome one for Members from all parties. I suppose I should declare an interest, as some of my relations will benefit from this proposal. Certainly, many of friends will benefit, and most importantly, so will many of my constituents. The shadow Minister was perhaps a little unkind when he criticised the Government for a lack of progress, because progress has been pretty swift and there is a momentum behind the process, as has been recognised and is respected by all those who will, in due course, be on the receiving end of its impact, be that negative or positive.

I want to take a few moments to make two points. First, on the plus side, there has been some discussion of the confidentiality element, whose importance I do not think should be understated. It has concerned many people across different parts of the supply chain, but particularly in farming, where there is some nervousness, not necessarily about the content of the contract, but about its length, as was touched on in the most important contribution made by my hon. Friend the Member for Camborne and Redruth (George Eustice).

Confidentiality is very important, particularly in agriculture, where there is a large debate about long-term investment. There is real concern, particularly in the dairy industry, about entering into investment arrangements that will take, in some cases, 20, 30 or 40 years to reap the necessary rewards. Any degree of confidentiality that can be guaranteed for those producers will in turn secure a better contractual relationship with the retailers and enable them to invest properly in agriculture, which we constantly refer to in this House.

Secondly, I want to touch on the argument that has been made, albeit fairly weakly so far, about whether the proposal constitutes yet more regulation that our agricultural industry will have to put up with. Regulation is frequently misquoted in this House, particularly regulation relating to farming. No farmer I know is opposed to regulation; what farmers are opposed to is unnecessary regulation, poor regulation or regulation that fails to achieve its original objectives. I suggest that the proposal is a form of regulation that does exactly what it says on the tin. It is desired by the agricultural community and so provided that it migrates into law broadly in the manner currently proposed, it should give great reassurance. Therefore, I do not think that we should dwell too long alongside those who dismiss it simply as some kind of intrusive regulation, because it is not. It will make the business of farming and making a living in the countryside all the more secure.

Reference has also been made to the contrast between naming and shaming as a means of deterrent and fining. I must say that I think I am in step with everyone other than the Government when it comes to the view that naming and shaming alone will not be sufficient. If it was, why have I received only one piece of correspondence from any of the 10 supermarkets that might be affected? Waitrose is the only company that has bothered to write to me at all about today’s debate. I do not detect that those in the higher echelons of the so-called big 10 are quaking in their boots. The idea that naming and shaming a supermarket on some website or trade magazine will deter purchasers from going into their stores is, frankly, an exaggeration. If the proposal could provide the

19 Nov 2012 : Column 357

adjudicator, rather than just the Secretary of State, with a power to fine more urgently, that would undoubtedly chime with the evidence and submissions that have been provided to us all from countless individuals and organisations.

I hope that the Government will not fall into the trap —I am sure they will not, because this is a good proposal —of believing that they have a monopoly of wisdom on this particular point. I cannot believe that all the trade organisations, individuals, farming businesses and other observers of the process who have written to us are wrong and the Government right. Perhaps I am missing the point. If there is a clever reason why we should not go down this route, will the Minister who responds to the debate explain it in their winding-up speech? It seems to have bypassed not only me, but everybody else with an interest in the issue.

I also hope that we will be careful in managing expectations, particularly those of the agricultural industry. The original idea was for a supermarket ombudsman and it looked like they would have all sorts of powers that the adjudicator will not have. Some thought that that would be a means by which price could be manipulated or guaranteed, so I hope that we can continue to make it clear that this is not a mechanism, nor should it be, that will guarantee a particular price for a product. The measure has been announced in various manifestos and, over time, that red herring has been allowed to stick.

I hope that the Minister will refer to smaller suppliers who might suffer at the hands of retailers that do not fall under the top 10, or big 10, category. Plenty of the producers who are watching our progress with great interest do not supply the big 10, but they might supply the next big 10, so they hope that the measures may rub off in that regard.

Finally—I said that my contribution would be brief—I hope that further attention will be given to the funding model. Rather than continuing with the current model, which is a one-size-fits-all, across-the-board flat fee, a model that more accurately reflects the scale of offences that might be committed by the retailers might be a fairer way of securing the confidence of not only the producer, but the customer. As we all know, the brand is probably the most vital part of the big 10 retailers’ business, but the bottom line is also important, so the question is: what comes first—the brand or the bottom line? This debate has been helpful, particularly, as I have said, the contribution of my hon. Friend the Member for Camborne and Redruth, which I hope the big 10 retailers will take a long, hard and close look at when Hansard is published tomorrow.

In summation, this is a great moment. It proves that some of the things that we write in our manifestos resonate with the wider public. The issue addressed by the Bill certainly does. It was mentioned in the run-up to the last election and I am delighted that we have got on with it as quickly as we have. Its basis seems to attract widespread support throughout the House and, more importantly, among retailers throughout the UK, particularly in Wales, where this activity is being scrutinised. I hope that we will be able to deliver a result that will please the constituents of that country.

19 Nov 2012 : Column 358

6.13 pm

Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): I first declare an interest. I am a Labour and Co-operative Member of Parliament for West Bromwich West, and the Co-operative party is financed by and linked to the co-operative retail movement, which is both a major retailer and a major farmer, so it is involved in both sides of the argument.

I pay tribute to the many Members who have worked on the issue over the years and brought it to this point. As Chair of the Business, Innovation and Skills Committee, which played a significant role in making the recommendation that is being adopted today, I cannot but reflect on the irony that I, a Member who represents one of the most industrialised manufacturing constituencies in the country, have suggested proposals that are so significant to the farming and rural community. Perhaps that is a reflection of one of the strengths of our democracy.

I welcome the Bill. In paying tribute to those who have worked on the issue, I mention my hon. Friend the Member for Ynys Môn (Albert Owen), who promoted a private Member’s Bill, the Grocery Market Ombudsman Bill. It is also appropriate to mention the hon. Member for St Ives (Andrew George), notwithstanding anything he might say in response to my comments. The Chair of the Environment, Food and Rural Affairs Committee was also kind enough to do some work and feed it into our deliberations. I have also read the debate held in the other place, and its Members explored the issues thoroughly.

A lot has been said about the delay. I do not want to get involved in a party political argument, but the previous Labour Government were castigated by members of the current Government for deeming it reasonable to see how the grocery code would work in practice before legislating. Last year, the BIS Committee was invited, as a matter of urgency, to undertake its pre-legislative scrutiny, which we completed by the recess, and the delay in implementation since then has caused some bodies to raise concerns about the Government’s commitment to the measure. I am satisfied that they are committed to it, but they still need to examine some flaws closely; otherwise, those concerns may continue to prevail in some sectors of the industry.

On the Bill’s proposals, I am pleased to say that the Government have accepted about 80% of the amendments suggested by the Committee as a result of its pre-legislative scrutiny. It would be churlish not to recognise the Government’s willingness to listen to arguments and to take our proposals on board. I think that both industries will be strengthened as a result of the Bill. It is important to recognise that we are talking about two of our most successful industries. Our retailing industry is phenomenally successful and a model to be copied the world over. Similarly, our farming is among the most highly productive anywhere in the world.

It is undoubtedly true, however, that there has been an imbalance of power, and examples of the abuse of that power have been to the detriment of the producers, particularly the farming industry. Unless addressed, that in itself will have implications for the ability of that industry to introduce new products and innovate. By addressing the issue and redressing the balance, we will strengthen the supply to our retailing industry in the long term, and that will be to the benefit of both industries.

19 Nov 2012 : Column 359

Many hon. Members have already highlighted the main area of disagreement between the Committee and the Government, namely whether the Bill should include the power to fine. The Minister said that the Committee had acknowledged that the arguments for and against that power were fairly even, but what she did not say was that we came down on the side of advocating fines. Some of the arguments in favour of fines have already been made. I think the Government’s approach has been to assume that the publication of evidence that could damage a supermarket’s brand in a highly competitive market could mean that supermarkets risked losing trade and profitability.

It is difficult to work out what the precise implications of the publication of evidence of a breach of the groceries code would be. It might be published in a press release, in the retailer’s annual report or on the retailer’s website. However, I have the gut feeling that relatively few consumers, particularly in these hard-pressed times, will change their shopping habits as a result of a retailer breaching the groceries code. That just does not ring true.

Fiona O’Donnell (East Lothian) (Lab): In many constituencies, such as mine, which is predominantly rural, people only have a choice between two of the major supermarkets.

Mr Bailey: My hon. Friend makes an important point, which I was going to come on to. An individual’s shopping habits are determined by all sorts of factors. I do not know what evidence there is, but I would guess that the perception of value for money at different retailers is an important criterion. Other factors are accessibility and personal habits and traditions. I do not see that the publication of an adverse report by the groceries code adjudicator about a particular retailer would affect many people’s shopping habits and, therefore, the bottom line of that retailer.

Mr Spencer: Does the hon. Gentleman recognise that the opposite might be true, in that a supermarket whose brand is built around price point might gain kudos from squeezing its supply base so tight that it can deliver the lowest prices to the consumer?

Mr Bailey: The hon. Gentleman makes an interesting point. I am sure that one could develop an argument along those lines. I hesitate to do so because I have an innate faith in good will and do not believe that a supermarket would be so unscrupulous as to do that. Perhaps he does not share my innate faith in the good will of supermarkets.

John McDonnell (Hayes and Harlington) (Lab): The best example of that is that when the Competition Commission found that a supermarket was reducing the price of bread to 7p, which was below cost price, that supermarket gained a boost in sales.

Mr Bailey: That is a form of advertising that could, in certain situations, benefit a retailer.

It is simplistic to believe that the possibility that the Secretary of State will implement fines will be a sufficient deterrent. Even if the Secretary of State feels that it is appropriate to levy fines, the process for arriving at that

19 Nov 2012 : Column 360

point is slow and cumbersome. Under schedule 3, before the Secretary of State can make such an order, he must consult six bodies, plus any other body that he feels it appropriate to consult. That is a time-consuming and possibly self-defeating process. It is a slow and ineffective way to implement the deterrent on the retailer, which could be exploited considerably.

I also find the Government’s approach rather strange in respect of the escalation of penalties. The adjudicator can take notice of the failure of a supermarket to respond to highlighted breaches of the code, but seems to have no enforcement powers to do anything about it. There is no express sanction for non-compliance with a recommendation, but it may be taken into account when further arbitration is carried out. That is hugely time-consuming and amounts to an invitation to ignore the adjudicator. I cannot help but reflect on the danger identified by Murray Worthy of War on Want:

“A watchdog that is all bark and no bite won’t be able to stop supermarkets bullying their suppliers.”

I will move on briefly to a couple of other issues. The Business, Innovation and Skills Committee reflected on intermediaries at some length. We said that third parties, such as trade associations, should be able to give evidence to initiate an inquiry. The Ministers seem to have accepted that point and my intervention earlier elicited the sort of response that I wanted. I emphasise that this issue is extremely important and that there should be no delay in the adjudicator being able to implement such provisions.

Lastly, I have a request. Given the importance of the adjudicator, I hope that the Government will allow the Business, Innovation and Skills Committee to hold a pre-appointment hearing with the proposed adjudicator. Given that the Select Committee was entrusted with the pre-legislative scrutiny and given the concerns that have been echoed in all parts of the House, I feel that it is important for the Select Committee to have the chance to question the adjudicator to ascertain whether we feel that they will apply the rigour and forensic examination that are needed to deliver what everybody in the House wants.

There is a huge groundswell of support from all parties for the Government to consider fines. Although I recognise that the Bill is very significant as it stands, I hope that the Government will listen to the voices from all parts of the House and table an amendment at a subsequent stage to ensure that there is a power to levy fines. That would make a good Bill into a very good Bill indeed.

6.27 pm

Andrew George (St Ives) (LD): It is a pleasure to follow the Chair of the Business, Innovation and Skills Committee, the hon. Member for West Bromwich West (Mr Bailey). It was interesting that in his introduction he declared an interest as a Labour and Co-operative party Member. It has been my privilege over many years to chair the Grocery Market Action Group, which has been mentioned in this debate. Reflecting on the discussion about naming and shaming, I should perhaps name and fame the stores that indicated that they would support the measures proposed in the Competition Commission’s report of April 2008 when we wrote to the stores that would be affected. Marks and Spencer, Waitrose and Aldi were the three stores that indicated

19 Nov 2012 : Column 361

that they would support the measures, with some reasonable conditions. In spite of my efforts to talk to the Co-op, I was surprised that it was not prepared to sign up at that stage. However, the regulation has been in place since February 2010, and there are opportunities now for all those stores to reflect on that.

Like others, I want to commend many people who have been the architects of this extremely welcome measure. The hon. Member for Ynys Môn (Albert Owen) has already been mentioned—indeed, I mentioned him in an intervention. His private Member’s Bill did a great deal to pave the way for the measure. Former Members, too, made significant contributions. In 1998, Colin Breed, the former Member for South East Cornwall, made a valiant effort to put the matter on the agenda. He undertook an inquiry, which stimulated a further inquiry by the Competition Commission, entitled, “Checking out the Supermarkets”. He stimulated much activity, which is reaping the appropriate reward today on the Floor of the House. The former Member for Stroud, David Drew, was also a significant contributor to the debate, as was the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), who is not in his place, but was present earlier. I have had many conversations with the hon. Member for Tiverton and Honiton (Neil Parish), who has been a strong supporter of the proposal for a long time. I also commend the Minister for an excellent exposition of the purpose of the measure, and the Government’s strong support for what is now Government primary legislation, even though its origins were a private Member’s Bill under a previous Government.

I do not need to repeat much of the background to what we hope will be legislation in perhaps weeks—certainly not many months. It is worth reflecting on the fact that, when I was originally involved, and certainly when the former Member for South East Cornwall engaged in the work, there was no party political support for regulation, even among Liberal Democrats, who subsequently adopted the proposal in their 2005 manifesto. In those days, the proposal that there should be any regulation was advanced only against all the odds. Even the National Farmers Union proposed a buyer’s charter and set its face against regulation, even though I and others had proposed it. It has therefore taken many years and a glacial pace to achieve progress. To be in the position whereby the proposal had all-party support at the last general election was remarkable. The larger parties clambered on board at the last minute, only months before the election. However, we had almost created a “who blinks first” scenario as we went into the general election, and all parties came on board and supported the proposal.

Significant commendation should be given to Peter Freeman, chairman of the Competition Commission, and the whole commission, for an excellent inquiry, which commenced in 2006 and concluded in 2008. It considered all the evidence that many of us had been encouraging the competition authorities to scrutinise for many years. It reached the telling conclusion that, in some cases, as the Minister said, the supermarkets were guilty of transferring excessive risk and unexpected costs to suppliers, with the consequent detrimental knock-on effect on not only suppliers and their capacity to continue trading, but consumers and, indeed, innovation in the retail sector.

19 Nov 2012 : Column 362

I do not approach the matter from the position that supermarkets are wicked. Their activities are entirely rational. Had all of us been in the same position, and we had not maximised all our market muscle to advance the interests of our company, and we had therefore lost market share in a cut-and-thrust market, we would have failed in our duties. However, the question is, “When does effective, clever and successful use of power become abuse?” The Competition Commission rightly identified that we have long passed the point at which that use of power has become abuse, as the many examples that have been given today show.

The previous Government rightly supported changes to the common agricultural policy, which forced farming to become much more market facing. Price support policies were done away with, the protections that farming was so used to in this country were no longer in place, and the industry needed to live or die by the marketplace. However, how could farmers and growers succeed or survive in that climate? I appreciate that many growers, pig farmers and others struggled to survive long before those changes. Nevertheless, leaving that aside, how could farmers survive when, as Prime Minister Tony Blair said, the supermarkets had got them in an arm lock? One could argue that they had got them in an even more painful position at times. The supermarkets were able to control market conditions, which was a conclusion of the previous Competition Commission report.

What are we trying to achieve? It has always been my view that if supermarkets have nothing to hide, they have nothing to fear from embracing the Bill. I have said to the supermarkets that, if they are clever, they should embrace the proposal and see it as something good. The hon. Member for Camborne and Redruth (George Eustice) suggested that there should be a panel to review the supermarkets’ success in applying the code. My view is that, if the supermarkets are prepared to embrace and invest in the proposal, there would be a fair trade regulator, which could give a mark to each supermarket to show whether it was a fair trader and grade it accordingly. Supermarkets could then perceive the code as a promotional tool rather than a stick with which to beat them.

Fining has predominated today’s discussions and will doubtless do so in Committee. After all these years, I do not want to risk any further delay in implementing the proposal. I would not like any amendment to the Bill to cause such delay. Will the fear of reputational damage be sufficient to persuade supermarkets to apply the code effectively and not to engage in the sort of practices that got us into the current position? Of course, I am on the side of those who want fining on the face of the Bill, but I believe that reputational damage has an impact. I remember the days when genetically modified technology was introduced and available to the supermarkets. Non-governmental organisations undertook a lot of campaigning, which dissuaded the supermarkets from putting GM products on their shelves. If there were adverse reports, the campaigning bodies—if they were doing their job—would draw the attention of customers and the public to the failure of those supermarkets.

Mr Spencer: On that point, there cannot be a more passionately felt issue than animal welfare. Does the hon. Gentleman acknowledge that the British pork industry had much higher standards of animal welfare

19 Nov 2012 : Column 363

than its counterparts in Europe, but that that made no difference to whether consumers bought British or foreign pork?

Andrew George: There is evidence and evidence to counter it on all sides, and that takes us to a point that the hon. Member for North Antrim (Ian Paisley) made earlier. Providing that customers who are buying British are reassured that it genuinely is British and not some kind of subterfuge, the point about animal welfare is relevant. Customers understand that significantly higher animal welfare standards have been in place in the UK for many years, particularly in the pig industry, and that is one of those reassuring messages. I agree, however, that it does not always work, particularly when the message becomes confused.

When I intervened on the Minister, I said that there was likely to be a lot of evidence of contraventions of the code from the time it was first put in place on 4 February 2010. My concern is that the position of adjudicator will be such that they will operate for only one day a week from the Department for Business, Innovation and Skills, and when they are fully operational, they will work three days a week with three or four members of staff. I also understand that the Gangmasters Licensing Authority already wants to present 1,000 pieces of evidence to the adjudicator, and I am concerned about whether sufficient resources will be in place to deal with all the work, cases and evidence that may be brought forward.

Jo Swinson: Let me clarify to the House that the adjudicator will look at breaches of the code from when it comes into force. It may investigate evidence of problems that have been ongoing, but if a breach stopped before the adjudicator was established, it would not be able to impose sanctions. Because the code is already legally binding, other legal routes are open to suppliers that fall into that category. The Government want to ensure that this measure is successful, and we have outlined what we think will be its initial budget. We will, of course, keep that under review and work closely with the groceries code adjudicator when it is established.

Andrew George: I am grateful to the Minister for that clarification, although I am also disappointed. A lot of people—certainly suppliers—want to ensure that we have an adjudicator that can look at breaches of the code that have taken place from the introduction of that code, not from the point at which the adjudicator is established. I hope that we can explore that a little further in Committee. We want to ensure that the adjudicator has the time and resources to investigate matters properly.

Clause 10 of the Bill concerns the power of the adjudicator to apportion investigation costs. I hope that will reassure supermarkets that the adjudicator can also apportion costs against those who make vexatious complaints or claims that are without merit. To a certain extent, that answers the point made earlier by the hon. Member for Camborne and Redruth—such powers already exist. I would be concerned about my hon. Friend the Minister’s proposal because the Bill is quite clear that such matters should be at the discretion of the adjudicator, and not at that of a self-appointed panel that might produce a survey report by which the adjudicator would then be bound.

19 Nov 2012 : Column 364

Overall, the Bill is extremely welcome and not before time. I would not wish to get involved in a discussion with the hon. Member for Edinburgh South (Ian Murray), whom I thank for his kind words earlier. There is no point in looking to the past for an explanation of why it has taken so long for the Bill to proceed. We must now ensure that it is implemented effectively and properly as quickly as possible, so that suppliers get the protection that they richly deserve.

6.45 pm

Albert Owen (Ynys Môn) (Lab): It is a genuine pleasure to follow the hon. Member for St Ives (Andrew George) on this issue. As many Members have rightly said, he has been a long and steadfast campaigner for a supermarket ombudsman—I will call it an ombudsman in my remarks, because I think that would have been the correct title.

I also pay tribute to Members of the previous Parliament who sponsored and helped me with my private Member’s Bill. The legislation that I put through Second Reading and Committee was supported by Members not only from the larger parties, but from some of the smaller parties and across the United Kingdom. Support came from the Social Democratic and Labour party and the Unionist parties in Northern Ireland, and from the SNP, Plaid Cymru and Members from the larger parties. The Bill had cross-UK as well as cross-party support, which was important when taking it forward. I know, Mr Deputy Speaker, that you took an interest in that Bill—I will refer to that shortly when you are not being disturbed. You may recall, however, that you actually sat on the Bill’s one Committee sitting. I do not know whether it was a record, but I managed to get that private Member’s Bill through in one Committee sitting with almost total agreement.

As right hon. and hon. Members will know, private Member’s Bills are an important vehicle and people become extremely popular when they are drawn in the top 10 in the ballot. As my hon. Friend the Member for Hayes and Harlington (John McDonnell) will testify, one receives hundreds if not thousands of letters and e-mails—he has done it twice so he will speak from experience. People probably become more popular than if they go out to the jungles of Australia, so Members should persevere and get into the ballot for a private Member’s Bill if at all possible.

I welcome the Bill—it would be churlish not to, having promoted a private Member’s Bill the main tenets of which are still contained in the Bill under discussion. However, as the hon. Member for St Ives said, there was not a lot of enthusiasm for this measure when I successfully won that ballot. In fact, I was popular not just with outside organisations that wanted me to take legislation forward, but with those in the Whips Office who had a number of Bills they wanted me to promote. As you know, Mr Deputy Speaker, I have never done anything the conventional way in this House—or, indeed, in my life—so I resisted the charm of the Whips Office at the time, and pursued this legislation because I thought it was the right thing to do. It brought together a broad coalition of farmers, suppliers, non-governmental organisations and many farming unions, and I pay tribute to the Farmers Union of Wales and the National Farmers Union in Scotland and England for their work. It has been difficult for any party to ignore this issue, and each of the larger parties put this legislation in their manifestos.

19 Nov 2012 : Column 365

This Bill has been a long time coming. I remember gathering support from other parties when I was pursuing this legislation through Parliament, and there was a division in each party between spokespeople from the Department for Environment, Food and Rural Affairs who were keen for the Bill to proceed, and those from the Department for Business, Innovation and Skills who were less keen to get it through—that is a nice way of putting it. When we were able to get all parties to concentrate their efforts on the Bill, they started to bid for who would take the legislation through Parliament the quickest once there was an election. I remember Conservative agriculture spokespersons of the time going to fairs, which all hon. Members go to in their constituencies, and saying that a supermarket ombudsman would be a priority for the next Conservative Government. I know they are in coalition, but I see no reason why the Bill was not introduced much sooner—all parties agree and there is a broad coalition of support.

The Minister of State, Department for Environment, Food and Rural Affairs, was a very good supporter of my private Member’s Bill and he is now a supporter of the Bill. If he were less conventional than he is, and if he, like me, was not a Minister, he would probably say, “I agree the Bill needs more teeth. I agree we need fines in the Bill.” He will not say that now—possibly for good reasons—but I see no good reason for not including fines in the Bill.

That is the argument I want to develop. Many groups have lobbied for fines to be included. Had the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson), taken an intervention, I would have had the opportunity not only to congratulate her on her promotion and new post, but to ask her to come clean and name the individuals and groups who have lobbied against including fines. It would be difficult for her to name any apart from those inside the British Retail Consortium. It is wrong that the Government have capitulated—they have not struck the balance—and not included fines in the Bill.

I do not believe that naming and shaming will be an adequate deterrent, for the reasons that hon. Members have given. A fine would appear on a company’s financial accounts, to which shareholders’ and ordinary members’ attention is drawn at annual general meetings. The large supermarkets might still make large profits, but shareholders’ attention would be drawn to a fine on those accounts, even if it is insignificant compared with the profits. That would be enough for many of the shareholders to say, “We need to do things better, and to work with the adjudicator.” In that way, the supermarket would not just sit back and wonder whether the news that day would mean that they would be named and shamed in a newspaper headline, or a retail magazine, which not everybody reads. I should like to concentrate the Government’s mind on that—the suggestion comes not just from Opposition Front Benchers

Although my hon. Friend the Member for Edinburgh South (Ian Murray) made a good, detailed speech on the measures in the Bill that the Opposition support, he also spoke about the differences between the Government and the Opposition. He did not do so for the sake of having differences, but so that we get the measures right

19 Nov 2012 : Column 366

at the first opportunity and legislate properly. We want a fair Bill, and we want an adjudicator, referee or ombudsman who has the tools from day one to do their job. They should not have to come cap in hand to Parliament for another measure.

The reserving of fines is nonsense. As the Minister said, they could take up to six months to set up, in which time there might be other priorities, as there have obviously been in the two and a half years when the Bill was not introduced, or there could be a lack of will on the Government’s part. The House has the opportunity to table an amendment in Committee. After the pressure of this debate, the Government may introduce a measure to give the adjudicator the ability to fine.

Roger Williams: The hon. Gentleman has a proud record. He condemns the Government for being slow to introduce the Bill, but does he agree that Governments are very often criticised for not having pre-legislative scrutiny? In this case, that has taken place, probably to the benefit of the Bill.

Albert Owen: The hon. Gentleman is a supporter of pre-legislative scrutiny, but he does not believe it delays Bills for two and a half years. The Government have not had a heavy work load on Bills. If we compare the number of legislative days in the House with the number in other Parliaments, we see that the Government have had a lot of time to introduce the Bill. With respect to the hon. Gentleman, I want to move on to whether we should have a fine or naming and shaming.

The only difference between the Government and the Opposition is on whether we have adequate sanctions for the big 10 supermarkets. Has the Minister or the Government considered not only the big 10, but the major suppliers in the chain, which are as big as the supermarkets? Will the adjudicator have the ability to name and shame them? That is important. Some of the major suppliers are multinational organisations, and put a lot of pressure on our growers and farmers. Will the Minister respond on that? I would have pushed for such a measure in my private Member’s Bill, because I want fairness right through the supply chain, and not just among the top 10 supermarkets, which have the ability to self-finance the measure so that all are treated equally. The supermarkets should also have the ability to complain to the adjudicator or ombudsman. That is important if we are to have a fully open system of recourse through naming and shaming. The supermarkets should be able to put their side of the argument if the boot is on the other foot, although that would not happen often. I should like the Government to take that on board.

The measure has popular support, not just in the House, but in the country. As I have said, it has brought together non-governmental organisations, lobby groups, and farmers and growers throughout the UK, because there has been an injustice in how the grocery market has operated. The Government and the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire, who is the third to take up the role in less than three years, have an opportunity. Her predecessor but one, the right hon. Member for Kingston and Surbiton (Mr Davey), who is now Secretary of State for Energy and Climate Change, said only last week at the Dispatch Box that it was essential to use

19 Nov 2012 : Column 367

sanctions to fine energy companies, which are alleged to be ripping off their customers. We must have consistency. The same should apply to large supermarkets that are alleged to be ripping off suppliers and consumers—at the end of the day, consumers pay the higher prices that filter through.

Rather than naming and shaming, we need fines in the Bill, and a real commitment to fairness in the system. The Bill will help, and I support it, but I hope that hon. Members on both sides of the House will vote for including fines in the Bill rather than just make speeches about it. The eyes of the consensus that the Bill has gathered will be on us, and we should show that we speak with one voice. Although the Under- Secretary would not take an intervention from me, I will take one from her if she wants to say who has lobbied her and why we should not include fines in the Bill. She has tried to make the case, but she does not want to take the opportunity I am offering her. Many of the supermarkets I have spoken to would not be that bothered if fines were included in the Bill, which has also achieved consensus among all the bodies I have named. As the hon. Member for St Ives has said, two or three supermarkets have come out in favour of the Bill. It will not be long before there is consensus among the top 10 supermarkets.

Jo Swinson: One key point the supermarkets have put to me was that there were no appeal powers for them in the Bill. Not going ahead with fines from day one means that we avoid the problem of miring the groceries code adjudicator in appeal processes. That is one reason why seeing whether naming and shaming is effective is a good way to proceed. The hon. Gentleman said that himself—he said he does not believe the supermarkets will be particularly bothered about fines, but they certainly were bothered about appeals.

Albert Owen: The Minister tells the House that we need to build in a proper appeals procedure, but hon. Members will work together to ensure that that happens.

Jo Swinson: The retailers argued for a proper appeals process. The challenge I outlined was that the adjudicator could end up running around in circles dealing with appeal after appeal rather than getting on with the important job of carrying out more investigations, which is what we want. Without the power to fine, we are convinced that a full merits appeals process is not required. That is one advantage of the Government’s approach.

Albert Owen: If, further down the line, serious breaches are identified by the adjudicator and the reserve power is used, we will be in that position anyway.

Jo Swinson: If.

Albert Owen: If. I am hopeful that if that situation arises the Government will bring forward their reserve powers, so we are only delaying the inevitable.

John McDonnell: If there is an adjudication that affects the trade of an individual company, it will resort to law anyway.

19 Nov 2012 : Column 368

Albert Owen: Absolutely. The House could come together, as it has on this measure, to find a way of short-circuiting some of the appeals procedures, if we felt that companies were dragging their feet. That is one of the powers we need to give to the adjudicator. Yes, the law currently allows them the opportunity to appeal, but there is a consensus here and I feel that we can do it. If the Government seriously want the Bill to have the proper teeth—the farming Minister and I have often argued for it—then we can work together and do it. Where there is political will, there is a way of resolving this matter.

This is a good Bill. It has many merits and it can be improved quickly and easily. Those on the Government Front Bench have got the message tonight, not just from Opposition Members but from all parts of the House and from the wider country, that the Bill needs to have the teeth to do the job. The adjudicator or ombudsman—or ombudswoman—who takes over the role will have the support of Parliament to ensure that the grocery market is a success. The Minister has the opportunity to go down in grocery folklore as the Minister who took a robust stand against the supermarkets. She will get my backing, and, I am sure, the backing of hon. Members across the Floor.

7.2 pm

John Stevenson (Carlisle) (Con): Much comment has been made about the farming perspective. I appreciate and understand fully that farmers welcome the Bill, but other groups are supportive of the Bill too. For the record, I chair the all-party group on food and drink manufacturing. Our group and the food and drink sector are interested in the progress of the Bill. The sector is the largest manufacturing sector in the country, with a turnover of approximately £75 billion. It employs 400,000 people and is a key part of our economy. Critically, the sector contains a lot of small and medium-sized enterprises dispersed across the country, whose commercial power is therefore greatly weakened.

The Bill should be seen in the right way—as a positive, and not a stick to beat the retailers with. It can be used to help relationships between suppliers and retailers, and help to rebalance the commercial power between the two groups. Our large retailers come in for a considerable amount of stick and criticism at times, but we should recognise that they have achieved a lot for the country and for the consumer. They are highly efficient organisations, with strong leadership, strong management and powerful brands. They pay their taxes in this country and make a valuable contribution to our economy. Up and down the country, they employ thousands of people, providing a livelihood for many families. They provide career opportunities for many and, in many cases, quality training. The consumer has seen a massive increase in choice. I look back to when I was a child and the choice that my parents had when they went to the shops compared with what we have today. There has also been a huge improvement in quality. I often wonder whether it should cause us some concern that kids wonder why we get carrots that are bent, rather than always straight. Finally, there is competitive pricing—food is remarkably cheap compared with many years ago, and we should recognise that the supermarkets have helped to contribute to that.

To a certain extent, however, we have become victims of our own success and so have the supermarkets. There are increasing, and legitimate, concerns about the market

19 Nov 2012 : Column 369

dominance of the supermarkets, the commercial power of the retailers, and the effect that that has on suppliers. The impact on the supply chain, on innovation and, potentially, on investment should concern us all. I do not believe that the appointment of an adjudicator will solve all these issues—far from it—but it will undoubtedly go some way to help. It should complement the groceries code and give it more bite. Therefore, I welcome the creation of the adjudicator.

I want to touch on a few points relating specifically to the Bill. Clause 2 deals with arbitration. Arbitration is a cost-effective, practical way of resolving issues. I therefore welcome the fact that the adjudicator will be involved in any matters of arbitration between suppliers and retailers.

Clause 4 is the most central to the Bill, which deals with the power to investigate and request information. I welcome that, and particularly welcome allowing trade organisations to be involved. As I mentioned, the food and drink manufacturing sector is made up of a lot of SMEs. They will be concerned about their position when they are in negotiations with retailers. That is why having a trade organisation to represent them can be beneficial.

Clause 4 is linked with clause 18 and the duty of confidentiality. That must also be welcomed as it is clearly needed, particularly to protect smaller suppliers and organisations that would be concerned about the difference between their commercial strength and that of the retailer. Retailers should not be over-concerned; I do not believe there will be frivolous and unwelcome applications. Quite simply, the power of the adjudicator to award costs will be an incentive for those bringing forward issues and complaints to do so in a justified and proper manner.

Many hon. Members have talked about enforcement. The power to make recommendations is very sensible and clearly everybody would support that. On the power to require information to be published—effectively naming and shaming—many hon. Members have already commented that supermarkets would be nervous about that. They have powerful brands. They are, within themselves, in a competitive market and they will be concerned. However, I accept fully and acknowledge that ultimately some might ride roughshod over that or be quite happy to take the criticism that comes their way. Therefore, the ability to impose financial penalties is critical and must be supported. I think I am with most people in the House in believing that the power to do that should be given to the adjudicator, and that it should be included the Bill rather than given to the Secretary of State to introduce at a later date. I will be interested to see whether the Ministers go away and reflect on the views of the House when they consider amendments in Committee.

Finally, I welcome the review by the adjudicator of the groceries code set out in clause 13. Indeed, the adjudicator should take a proactive role. Arguably, the clause should be strengthened so that the adjudicator has a duty to report and comment on the success of the groceries code. Overall, however, I give a strong welcome to the Bill. I think it will help in a small way to rebalance the relationship between large retailers and suppliers, and ensure that we have a competitive and, most importantly, fair market.

19 Nov 2012 : Column 370

7.8 pm

Kerry McCarthy (Bristol East) (Lab): As has been said, it has taken a long time for the Bill to come before the House. It has recently been through extensive scrutiny in the other place and, before that, by the Select Committee on Business, Innovation and Skills and the Select Committee on Environment, Food and Rural Affairs. I am glad that we are now finally in the position to debate the Bill properly in this place. I have received many postcards on this issue going back as far as before the general election, during the time of the previous Labour Government. I remember the Minister of State, Department for Environment, Food and Rural Affairs, the hon. Member for Somerton and Frome (Mr Heath), in his previous role in the Liberal Democrats, urging the then Government to make great haste with the Bill, and perhaps criticising us for being a little bit tardy. I accept that we are where we are now, and I am grateful that we have finally got here, even if it has been rather slow.

As has also been mentioned, the Bill received considerable support from organisations such as the Fairtrade Foundation, Traidcraft, ActionAid, Friends of the Earth and even the National Farmers Union, which perhaps does not always sit in partnership with those other organisations. So there is a lot of public support.

In 2008, when the food and farming Minister, the hon. Member for Somerton and Frome, was official spokesperson for the Liberal Democrats, he called for an ombudsman with teeth. I share colleagues’ concern, however, that the Bill might not meet that test, particularly regarding the reserve powers provision giving the adjudicator the power to issue fines. Under the Bill, the adjudicator will not immediately have that power. It will be subject to future review. I agree with colleagues in the other place that in this respect the Bill is clunky, over-bureaucratic and drawn out. We do not want to wait several years for the adjudicator to have the power to issue fines. We have waited long enough. The evidence of compliance with the groceries code suggests that firm action—or at least the threat of firm action—against major retailers will be a useful weapon for the adjudicator to wield, so the Bill must enable the adjudicator to issue fines from the outset.

The Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson), talked about the power to name and shame, and seemed to place great faith in the power of negative findings to persuade supermarkets to change their behaviour. The competition inquiry in 2008, however, showed that more than a decade of adverse media reports on how supermarkets dealt with their supply chains and their relationship with farmers had done little to change their business practices or prevent them from engaging in what many would regard as unethical practices.

The Minister referred to consumer pressure, arguing that if a retailer was named and shamed, consumers might take their business elsewhere. I think that consumer pressure is incredibly powerful, as we have seen in the recent debate about whether companies such as Starbucks pay tax in the UK—it puts pressure on companies, makes them rethink their policies and sends their public relations machines into overdrive—but I am not convinced that a supermarket having a certain contractual relationship with its suppliers would be enough to send shoppers elsewhere, and certainly not in significant enough numbers to affect supermarkets’ business practices. I am unconvinced, therefore, that consumer pressure will play a major role.

19 Nov 2012 : Column 371

The power to fine ought to be reserved now, rather than invoked later. I might be wrong, but I think that the Department for Business, Innovation and Skills has accepted that compliance with the groceries supply code of practice would be less in the absence of fines, which are a standard measure in most regulated industries, and would be used only as a last resort and only with strong evidence. The argument, then, that fines would pass significant costs on to consumers or lead to a raft of long and burdensome appeals is greatly overstated.

I want to focus on the vital contribution the Bill can make to reducing food waste across the supply chain. As some Members will know, I introduced a Food Waste Bill earlier this year dealing with the other end of the supply chain—with consumers not wasting food and supermarkets making food available for donation and to organisations such as FoodCycle, FairShare and the many food banks that sadly have grown up around the country, rather than letting it go to landfill. Obviously, the Bill deals with the other end of the supply chain. None the less, this is a useful opportunity to flag up some of these issues again.

Retailers and manufacturers waste a staggering 3.6 million tonnes of food per annum. Some of that can be directly attributed to how supermarkets do business with their suppliers. The Competition Commission’s 2008 report concluded that supermarkets were guilty of transferring unnecessary risks and excessive costs on to their suppliers. One practice is when supermarkets agree a price for a product with their supplier but, when sales are less than predicted and prices need to be reduced, require the supplier to share the burden of reduced revenue.

Then there are the notorious take-back agreements, under which supermarkets return to the manufacturer or farmer produce they fail to sell, including when the former have made forecasting errors. When I was looking into the issue of food waste, I found that forecasting errors by supermarkets were a major factor. If supermarkets have supplies ordered from farmers sitting in their distribution centres, but the same produce is not selling in their stores, the produce ordered goes to landfill or, at best, is used in anaerobic digestion. A supermarket might tell a manufacturer a week in advance that it needs 100,000 sandwiches or however many pounds or kilos of potatoes, but if, on the day, it decides it does not need them because it does not expect to sell as much as it predicted, that leaves the supplier with a pallet-load of sandwiches or sacks of potatoes that it cannot sell.

Worse still, many of these products will already have been produced with the supermarket’s own brand. Supermarkets often forbid the manufacturers from selling on the food, insisting that it be sold to them exclusively. Neither do they allow them to give such food to charity, because of erroneous concerns that they might end up on market stalls, for example, which they think could damage the prestige of the brand. That is particularly an issue with premium products. All that pushes up suppliers’ costs

I want to touch on a matter that, as far as I am aware, the Bill does not deal with. The hon. Member for South Thanet (Laura Sandys) talked about “ugly food”. Supermarkets demand perfect vegetables and produce from farmers these days. This is an issue. It is entirely up to Tesco or Sainsbury’s whether they want to sell perfect apples, but the fact that farmers are not allowed to sell

19 Nov 2012 : Column 372

the remaining produce to other people—it is still a practice, I think—needs to be addressed. It is true that the groceries code prohibits some of these practices—for example, large retailers are not now allowed to vary supply agreements retrospectively, except in specific circumstances, or to make suppliers pay compensation for wastage or forecasting errors—but there is no specific duty on large retailers to comply. That is why we need a groceries code adjudicator to enforce the code. Otherwise, the only mechanism for redress is for an individual to bring a complaint under the dispute resolution procedure or to bring a case before the courts under contract law. As the British Brands Group concludes in its briefing on the Bill, which has been sent to most MPs:

“This simply will not happen in most cases, due to the prevailing ‘culture of fear’ and the high level of dependency of supplier on each of the large retailers”.

That is why the Bill is necessary and why it is important that third parties are able to report breaches under the anonymity provisions, which I am glad are now included in the Bill.

I want to touch briefly on low pay in supermarkets. A report this year from the Fair Pay Network has shown that the big four supermarkets—Sainsbury’s, Asda, Morrisons and Tesco—which collectively are the second-largest employer in the UK after the NHS, are paying their staff poverty wages, while making huge profits and raising executive salaries. Only one in seven supermarket workers earn the living wage, yet supermarkets award their chief executive officers between £3.2 million and £6.9 million a year. Given that differences are made up through in-work benefits, such as tax credits, supermarkets again find themselves in the morally hazardous situation of not having to take responsibility for their actions, which would otherwise have resulted in reduced spend in their supermarkets and would have hit their profits.

I appreciate that that issue needs to be taken up in another arena, but I wanted to raise it anyway. Nearly two thirds of children in poverty live in working families where the parents earn less than the living wage, and, as we have heard, many families who are in work still have to resort to food banks because of rising food prices. These issues are all interconnected. So, although I welcome the Bill, I consider it only a small part of tackling the issues around food production in this country. I shall not venture into the territory of the common agricultural policy—I am sure that the Minister and everyone else will be glad to hear that—but it is obviously another factor.

It is great that we have had the opportunity to discuss the matter and to put these issues on the agenda, but we have a long way to go and many more problems to address before we really tackle the issue of food production in the UK.

7.18 pm

Julian Sturdy (York Outer) (Con): I am grateful for the opportunity to speak in this debate. As a Member representing a series of villages linking the city of York to the distinct rural north and east Yorkshire countryside, I am always keen to speak in debates touching on the agriculture industry. Before my election to Parliament, I, too, was a farmer, and as such I have first-hand knowledge of some of the pressures facing many of the UK’s independent producers. I must therefore draw Members’ attention to my declaration of interests.

19 Nov 2012 : Column 373

Like many Members from both sides of the House, I congratulate the Government on introducing this Bill. Like many Members, I have long called for some form of adjudicator or ombudsman to ensure that our major supermarkets and retailers operate fairly throughout the industry’s supply chain. This is about treating farmers and suppliers fairly and lawfully. My representations have followed on from first-hand experience of dealing with constituents’ cases in many parts of York Outer, where small independent farmers or producers feel unfairly treated by the tactics of some national supermarket chains. However, it would be wrong to view this Bill simply as a reflection of a fundamental battle between big supermarkets and small producers. On the whole, our national supermarkets should be a source of great pride. They are massive job and wealth creators in our country, which is something the Minister touched on in her opening remarks. Many supermarkets undertake superb community work whenever they open a store. I am sure that, like me, Members from across the House will have first-hand experience of the community work that supermarkets do in their patch.

Nevertheless, as in all areas of industry, it is right that accountability, transparency and an independent watchdog should encourage and ensure fair practice for all involved. That is what a groceries code adjudicator will do. As such, I am pleased that the general principles behind the Bill seem to be attracting cross-party support, allowing today’s debate to focus on the powers and responsibilities that the adjudicator will have. Introducing a groceries code adjudicator represents a common-sense step in the right direction, but that will be undermined if the body lacks the teeth it needs to operate effectively.

It is worth mentioning that we have had a groceries supply code of practice in force for a few years now. As the president of the National Farmers Union, Peter Kendall, has said, it is

“essentially a rulebook without a referee.”

I would go one step further and suggest that without adequate teeth, the groceries code adjudicator would be like a referee without a whistle—or, as the hon. Member for Edinburgh South (Ian Murray) said, one without a red card in his top pocket. As a Leeds United supporter, I would not mind a referee at our next match without a red card in his top pocket, but we need a groceries code adjudicator with the ability to take action. The fear with all new regulatory bodies is that they are set up too cautiously, becoming ineffective talking shops, unable to gain influence or authority in the sector. To me, the idea of setting up an adjudicator now, before adding powers at a later stage, is frankly flawed. If we are going to do this, we must do it properly and equip the adjudicator with the necessary powers from day one.