In my view, the necessary powers should at least include the ability to fine retailers for major—I stress the word “major”—breaches of the groceries supply code of practice. Without that power, I fear that the adjudicator will have limited impact. One example of where a properly empowered adjudicator would make a real difference in the supply chain is the current plight of the dairy industry. Over the past few years, many dairy farmers have been unfairly penalised by what can only be described as unfair, inflexible contracts that have sought to take advantage of the product’s perishable

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nature. There is hope on the horizon, following the agreement of a voluntary code of practice for milk supplier contracts between UK dairy farmers and processing firms. However, getting the voluntary code agreed required substantial political pressure and lengthy negotiations, with dairy farmers sadly going to the wall in the meantime. This is a perfect example of where a strong groceries code adjudicator could make a difference, intervening in such disputes with authority at an early stage.

In conclusion, this Bill is welcomed across the country by the independent suppliers who need the reassurance and support of an independent watchdog. Moreover, a strong groceries code adjudicator would encourage strong links between all parties in the supply chain, benefiting those at each level and ultimately the consumer too. It has to be in the interests of consumers that we have a thriving agricultural sector in this country supplying high quality products, while at the same time reducing our reliance on imports, at a time when food security will undoubtedly become one of the big issues of the future. However, the Government have grasped the nettle on a groceries code adjudicator, and they should be applauded for doing so. This is a good Bill, but the question throughout its legislative journey will be about its strength. I encourage Ministers to show strength by adding the powers required to make the groceries code adjudicator a real success.

7.25 pm

Ms Margaret Ritchie (South Down) (SDLP): I will be supporting this long-awaited Bill, and I am in favour of the primary motivation behind it: to create a dedicated and impartial adjudicator. However, we must ensure that this does not become a missed opportunity to introduce lasting reform of the regulation of the relationship between producers, suppliers and consumers.

The broad coalition of signatories to the letter in The Sunday Telegraph yesterday, which included the NFU, ActionAid and the Federation of Small Businesses, is testament to the depth of feeling on this issue. I represent a rural constituency in Northern Ireland, where farming, fishing and tourism are the main economic drivers, and there is a growing need to sustain the current economic base at a time of low economic growth. Producers of food and consumers are facing daily economic and financial challenges. If handled properly, this Bill affords an opportunity to redress the balance in the supply chain.

I do not want to paint an entirely negative portrait of the relationship between suppliers and the large supermarkets. I know that often they work together extremely well—I know that is true of Sainsbury’s—and many examples of good practice can be found that are central to the development of a sustainable supply chain. However, it must be acknowledged that the regime for dealing with bad practice is not even close to what it could be. To provide that stability and protection to farmers and producers, we need to introduce a groceries code adjudicator that possesses the necessary statutory and legislative teeth to correct unfair practices that have been apparent for some time in the food market chain. There is broad support in the farming community for this Bill and the implementation of its provisions without delay following Royal Assent. Farmers and their respective representative bodies have argued for years for action to prevent retailers from treating their suppliers, particularly

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smaller producers, unfairly. The establishment of the ombudsman or adjudicator to monitor and enforce a code of practice has been the central part of the campaign in recent years, and to this end the Bill is welcome.

Having accepted that such an adjudicator is necessary, it is vital that it should be adequately empowered and not become a paper tiger. The adjudicator must have robust powers of investigation and enforcement to hold to account the organisations engaged in bad practice. A primary concern is that we should endow the adjudicator with the capacity to accept representations, appeals and complaints from a range of interested parties, including trade associations. Not doing so in this Bill is a missed opportunity, which we will be looking to address through amendments at later stages. Empowering the adjudicator to receive representations from trade associations would create a much needed buffer between suppliers and supermarkets. Too often, suppliers fear that making complaints will prejudice their future business with large, dominant retailers and are hesitant to initiate complaints under the existing dispute resolution mechanism. A buffer could enable a more harmonious relationship between suppliers and supermarkets. Furthermore, the involvement of trade associations or representative bodies would allow a wider scope of analysis that could take in a wider picture of market practices, in contrast to cases that just focus on one supplier and one retailer.

I also support the Competition Commission’s call for the adjudicator to have the capacity to implement fines in cases of serious breach or malpractice. A naming and shaming system will simply not be strong enough to hold retailers to account. Large retailers would be delighted if the adjudicator did not have the power to levy fines. I appreciate that the Government could introduce a fining system at a later stage through secondary legislation if the watered-down approach were to prove inadequate, but I strongly contend that the adjudicator must be able to fine retailers from the outset if the code is breached. No doubt the Minister will address that point when he winds up the debate. We must have learnt by now, whether in relation to energy market regulation or banking regulation, that a regulator must have real teeth and real power if it is to have any influence or impact. Let us not make the same mistake again with the groceries code adjudicator. I want to see an emboldened Government here tonight saying that they will ensure that the adjudicator has real teeth.

From a devolved perspective, it is regrettable that the adjudicator will not be tasked with addressing the producer price differential that exists between Northern Ireland and Britain, or with overseeing the practices of processors or intermediaries. Many of the food producers in Northern Ireland feel that there is a dysfunctional food supply chain, and that what the consumer pays for food produce bears no resemblance to what the farmers receive for the product from the processors or retailers.

The Minister will recall that I raised this issue with him when we met several weeks ago. It needs to be addressed, to ensure that the primary food producers in Northern Ireland are protected. I suppose that that might fall outside the scope of the Bill, but I will take the matter up with the devolved Minister and with DEFRA. It is important that this dysfunctional relationship should be investigated and that measures should be put in place to remedy the situation. The hon. Member for North Antrim (Ian Paisley) has already raised the matter

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today. The Ulster Farmers Union has been lobbying us to a significant degree, although my approach to the question is slightly different from his, in that I believe that we need a partnership rather than a fight. Fighting will not resolve the situation.

It is clear that the Bill offers the potential for real, lasting reform of the groceries market. If we set up a weak adjudicator, however, we will have undermined the new regime before it has been in operation for even a day. If we do not grant the adjudicator the necessary powers, on a statutory basis, to fine and to investigate without prejudice, we will have missed a golden opportunity to rebalance the supermarket supply chain and provide support to our farmers and producers. It is in everyone’s interest—the supplier, the farmer and the consumer—that we create a sustainable food supply chain that is profitable for all, and not just for the dominant players.

As the Bill makes its passage through its Committee and Report stages, I hope that the Government will table amendments to ensure that it is made stronger through greater enforcement measures and a greater capacity to impose fines. I hope that it will be suitably amended to provide remedies that will further protect the primary producer and the consumer.

7.34 pm

Mr Mark Williams (Ceredigion) (LD): It is a privilege to follow the hon. Member for South Down (Ms Ritchie). Like her, I represent a rural constituency, and I can testify to the great passion that many people there, including those in the Farmers Union of Wales and the National Farmers Union, attach to this issue. I can think of no meeting that I have held in the past 12 years or so as I have fought elections in Ceredigion at which the issues of an ombudsman, an adjudicator and the overwhelming power of the supermarkets have not arisen.

There has been consensus in the House today. We have resisted some of the partisan points made in the earlier stage of the debate. Reference was made to a quote from the noble Lord Grantchester in the other place about the fingerprints of the previous Labour Government being all over the Bill. The fingerprints of this Government are all over it as well, in the form of those of the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for East Dunbartonshire (Jo Swinson), the Minister of State, Department for Environment, Food and Rural Affairs, my hon. Friend the Member for Somerton and Frome (Mr Heath) and, critically, my hon. Friend the Member for St Ives (Andrew George), who has done so much work on this subject. Also, my hon. Friend the Member for Ynys Môn (Albert Owen) put a huge amount of effort into his private Member’s Bill, to which I was privileged to be a co-signatory, towards the end of the previous Labour Government.

We are where we are, and we need to be clear about what the Bill will achieve—which I think will be commendable —as well as what I hope that it should achieve. I share the concerns that have been raised here today and by the Business, Innovation and Skills Committee and the Environment, Food and Rural Affairs Committee. Before I address those concerns, however, I want to add another test, which I shall call the Ceredigion test. The test asks how the Bill will impact on the large number of small family farms across my constituency in west Wales. The

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truth is that, as the Bill stands, it might not have as robust an impact as it should, but I am sure that we will have an opportunity to table amendments to it as it continues its passage.

We have heard today about toothless dogs sitting on ministerial ledges waiting to be dusted down if necessary. We have heard about tigers with a proliferation of gums but no teeth. The hon. Member for North Antrim (Ian Paisley) talked about kicking supermarkets where it hurts. An important theme in today’s debate has been the power to impose fines. We have also heard about a lengthy list of signatories to a letter from the interest groups that have urged the Government to think again about fines. They include the Farmers Union of Wales, the National Farmers Union, ActionAid UK, the British Independent Fruit Growers Association, the Campaign to Protect Rural England, the Church of England, the Country Land and Business Association, the Federation of Small Businesses, the Forum of Private Business, the Tenant Farmers Association, Unite the union, the World Society for the Protection of Animals, the Worldwide Fund for Nature and the National Federation of Women’s Institutes. We ignore the Women’s Institute at our peril, as others have found out in the past.

So long has been the gestation period of the legislation that expectations are running very high indeed. As the Bill stands, however, fines could be enforced only if an order by the Secretary of State under schedule 3 was in force. The Government have stated that such an order could be made, if it were deemed necessary, and that the power to fine could be enacted in six months. It must be said in the Government’s defence that that represents an advance, which was the result of deliberations in the House of Lords. That was a step in the right direction, and I hope that we can have further such discussions during the Bill’s passage through the House of Commons. On Second Reading in another place, we heard complaints that the proposed process was too cumbersome and laborious. I agreed with that at the time, and I would hazard a guess that six months will still prove lengthy and cumbersome, given the enormity of the complaints that are sometimes made against our supermarkets.

The Government have argued that naming and shaming is disincentive enough for retailers, and that having the ability to fine from the outset could create hostility in the industry. I agree that naming and shaming can influence consumers on where to buy. Had the Minister of State’s predecessor—my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice)—not brokered a deal in the dairy sector, an elaborate and effective campaign against certain supermarkets would have been launched. We must be realistic about how far this can go, however, and I question whether naming and shaming is disincentive enough in comparison with having the capacity to levy those fines from the outset.

I know the Minister is aware of these concerns—as will be his colleagues in BIS after this debate. At the very least, I would like to hear a response from the Minister to the question posed by the Chair of the DEFRA Committee about the circumstances in which an order in the Bill should or should not apply.

I wish to raise some points about the accessibility of the adjudicator to everyone in the industry. Two weeks ago, the Welsh Affairs Committee, of which the hon.

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Member for Llanelli (Nia Griffith) and I are members, visited my constituency and took evidence on the status of the dairy farming industry in Wales. We took evidence from the Farmers Union of Wales and the National Farmers Union, as well as from the Welsh Assembly’s Rural Affairs Minister, Mr Alun Davies. There was a consensus from all groups that the adjudicator must be accessible to everyone throughout the chain. As the FUW argued, the adjudicator should not be just about the relationship between two parties—the 10 supermarkets and their suppliers—because in a Welsh context, the majority of farmers operate on a much smaller scale and are not in direct supply contracts with those 10 supermarkets.

The argument is that the adjudicator must be able to intervene throughout the entire chain. It needs to be easy to lodge a complaint, but this is not helped by the fact that the supply chain is not transparent, so it would be unreasonable for a producer to be able to lodge a claim that requires a lot of evidentiary support. The adjudicator needs to be accessible for all producers, including the small family farms in rural Wales. This is impeded, of course, by a code that is laudable but by nature defines the relationship between 10 large supermarkets and their suppliers.

Does the Minister accept that there is a case for the powers of the adjudicator to be extended to cover all powerful companies—big and small—within the supply chains or at least that the adjudicator can be charged with gathering evidence relating to any abuses? I concur with what the NFU said in its briefing, suggesting that the adjudicator should be able to recommend changes to the code, which is the foundation of what we are discussing today. Is the adjudicator able to recommend changes to the code? I also ask the Minister to clarify the extent of the changes that could be recommended. If the plight of primary producers continues to be problematic, the adjudicator may be the best person to make a request to extend the code and possibly extend its remit to others in the supply chain, should they receive complaints of this nature.

I have two final points. First, I welcome what the Government have said about the anonymity of complainants. This has been a prevailing theme through all these deliberations over the last few years—the constraint that the fear factor has placed on a number of potential complainants.

Secondly, to raise a point touched on by my hon. Friend the Member for St Ives, what resources will be available to the adjudicator? Will he be able to look at issues arising since the origins of the code, which are immense, and will sufficient resources be available for him to do so?

The Food and Drink Federation has said that

“abuses of retail power by retailers damage suppliers’ confidence, and their ability to invest and innovate”.

This has led to a reduction in choice and availability, and it increases costs for consumers.

This Bill is designed to protect suppliers from unfair breaches of contract, but as we have heard, it does not address all the issues of fair pricing to farmers and producers. In the context of the dairy industry, we look to the voluntary code to help us in that respect. Sometimes, as I have found in going to agricultural meetings across my constituency, this has been characterised as the

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panacea or great solution to all the problems and challenges that the farming industry faces. Somebody—in government or, implicitly, there is a responsibility on all of us—has to talk earnestly and honestly to constituents and remind them that this is not the only way in which we are going to assist and support a vibrant agricultural sector. The Bill is one important part of the process, but it will not achieve everything. It is a critical step towards fair treatment for all producers and it has the potential to do much more. In Welsh there is the phrase “Chwarae Teg”, which means “fair play”. That is what I believe this Bill is out to achieve. With further consideration and further amendment, too, I hope it can achieve that.

7.45 pm

Nia Griffith (Llanelli) (Lab): I am delighted that, at long last, we have reached the Second Reading of the Groceries Code Adjudicator Bill. Its gestation period seems to have been longer than that of an elephant. Before I proceed any further, I pay tribute to my hon. Friend the Member for Ynys Môn (Albert Owen), who brought forward a private Member’s Bill with a rather long title—the Grocery Market Ombudsman Bill—back in 2010. He has since worked hard to lobby for a grocery adjudicator—or, as he much prefers to call it, a supermarket ombudsman. I pay tribute, too, to the hon. Member for St Ives (Andrew George), who chaired the Grocery Market Action Group and was active in pushing forward the agenda from the early days of the Competition Commission inquiry in 2006.

I have already put on record my support for a grocery supermarket adjudicator, so I shall confine my comments to the areas where I feel that the Bill could be improved. It is, above all, about fairness—about ensuring that the groceries supply code of practice is properly adhered to. That code came into force in February 2010, but without an adjudicator it is very difficult for any individual supplier to challenge a retailer who breaches the code. A complaint has to be brought under the dispute resolution procedure or go to court.

Having an adjudicator is about ensuring fair play, having a referee and ensuring that everyone plays by the rules. It is important to stress that the Bill is not an anti-supermarket measure. Any retailer who respects the groceries supply code of practice has nothing to fear from the establishment of the adjudicator’s office. It is about creating a level playing field and tackling any attempts to breach the code which, if left unchecked, can damage suppliers, rival retailers and ultimately customers.

We should not underestimate the intimidation and difficulties that suppliers face if they are being badly treated by retailers. It is frightening to hear from the Farmers Union of Wales and the NFU about some of the sharp practices to which suppliers are subjected—varying supply agreements and decreasing the price paid for milk retrospectively. There is no doubt that this type of treatment can have a devastating effect on farms, particularly small family farms, and the driving down of prices by these retailers is certainly threatening to put some farmers out of business. We have already lost many farms from the dairy industry, and this type of driving down of prices, particularly when there is little flexibility from the banks, is threatening to put even more farmers out of business.

I very much welcome the fact that the Bill will now allow the adjudicator to accept complaints and evidence

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from third parties such as trade associations and trade unions. It can be extremely intimidating for any one supplier to bring a complaint, and trade associations and trade unions can offer help and support, and they are often in a position to see patterns of behaviour emerging—if, for example, there is a systematic breaking of the code.

The very fact that such organisations can bring issues to the attention of the adjudicator will in itself act as an incentive for retailers to abide by the code, but it worries me that clause 15(10) gives power to the Secretary of State completely to rescind that power. If we are serious about giving the opportunity to third parties such as trade unions and trade associations to bring issues to the adjudicator’s attention, why on earth do we have such a provision that would allow the list of the adjudicator’s powers to be deleted completely? As I say, that worries me considerably.

The question of the safeguarding of anonymity is extremely tricky. Several Members have given instances in which it would be easy to identify suppliers when their number is very small. That is one reason why the adjudicator’s power to undertake proactive investigations is so important. It might be possible for an adjudicator with both the power to work with trade associations and unions and the power to undertake proactive investigations to keep an ear to the ground, look out for examples of sharp practice, and take up complaints in a broader context. That could help to protect anonymity.

Like other Members, I am disappointed that the adjudicator will not have the power from day one to impose fines on those who breach the code. The Government propose that the adjudicator must make the case for such a power to the Secretary of State. That process would be very convoluted, and would involve further delay—the Minister herself spoke of a delay of at least six months—but, more important, it would convey the message that the adjudicator was powerless. It would make far more sense to give the adjudicator the power to levy fines from the outset, enabling him to exercise discretion and impose fines if that seemed appropriate.

Mr David Hamilton (Midlothian) (Lab): If the adjudicator were given the power at the outset, would not companies be more likely to self-regulate, because they would know that action could be taken at a later stage?

Nia Griffith: As the hon. Member for North Antrim (Ian Paisley) pointed out, the stronger the adjudicator is from the outset, the more likely everyone will be to fall into line. If it is made clear that the adjudicator has powers that can be used immediately, there will be no need for us to faff around for six months trying to introduce some other piece of legislation that puts the power in the right place for the adjudicator.

It is crucial for the power to be there from the start. That would give everyone far more confidence in the role of the adjudicator, and would undoubtedly make the adjudicator much more effective. It would enhance the status of the adjudicator in the minds of the public, the supermarkets and the suppliers. We have already heard many Members and many organisations issue a plea for the adjudicator to have the power to fine from the outset, and I hope that the Government will listen to it.

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Many Members have mentioned intimidation and suppliers’ fear of victimisation. The adjudicator should also have the power to fine retailers who discriminate against suppliers on the basis that, rightly or wrongly, they are suspected of providing evidence for the purpose of investigation. In other words, there should be some protection for the whistleblower. Otherwise, it will still be incredibly difficult for people to come forward and expose some of what is going on.

I warmly welcome the Bill and hope that it will make excellent progress in Committee, but I think that if we do not grab the opportunity to give the adjudicator the teeth that the office deserves, it will be a wasted opportunity.

7.53 pm

Mr Mark Spencer (Sherwood) (Con): Let me first draw attention to my entry in the Register of Members’ Financial Interests. As a farmer, I am in the fortunate position of not supplying one of the major supermarkets, but I do, of course, know plenty of people in that position, including many of my constituents.

I broadly welcome the Bill. It is fantastic, it is timely, and the Government should be congratulated on the way in which they are addressing the current problem. It was with some frustration that I listened to the criticism from the Opposition Benches that it had taken two and a half years for legislation to be presented, given that, when in government, they presided over the rise of the supermarkets and the power that they gained.

Fiona O’Donnell: Rather than referring to “criticisms”, perhaps, in this new atmosphere, we could refer to suggestions for improvements—which, in all fairness, have come not just from Opposition Members but from Government Members.

Mr Spencer: I shall be talking about possible improvements. I think that there is a fair amount of cross-party agreement on the way in which the Bill can be improved. However, I also want to talk about some of the good practice that we see out there. We have heard a great deal of criticism of supermarkets and the way in which things work, but there are plenty of examples of supermarkets and farmers working closely together to improve the supply chain, add wealth to both businesses, and bring employment to rural areas. I think we should recognise that there is more to be celebrated than there is to be criticised, although we need to ensure that when things go wrong, there is a way of stepping in to sort them out.

When I embarked on my business career, my grandfather told me that the definition of a good deal was “a bit for me, a bit for you, and then another deal”. I think that we have reached a stage at which the supermarket sometimes wields too much power in the relationship, to the extent that I almost feel obliged to make it absolutely clear that some of the practices that I intend to highlight bear no resemblance to the activities of any of my constituents. There is a genuine fear out there of blacklisting and being removed from the stocking lists of supermarkets, such is their power.

I think it worth examining the practices that have gone on in the agriculture industry and its relationship with supermarkets. The first that springs to mind, which

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no one has mentioned so far today, is the operation of payment terms, which the supermarkets have stretched to a point at which big business is being financed by little business. That applies not only to agriculture, but to many other UK industries in which little suppliers are delivering products to big suppliers. The big suppliers do not pay for more than 90 days, and the smaller producers are forced to borrow from their banks in order —in effect—to lend the money to them.

One of the most shocking practices, to which other Members have referred, is the practice of rejecting loads of products when the price of the market goes through the roof, when there is over-supply, or when the weather changes, as in the case of the strawberry industry. There is real abuse of the system when supermarkets are able to reject a load that is perishable and cannot be returned without giving any recompense to the primary producer.

I am told that when a contract is being negotiated with a supermarket, the first line of the negotiation relates not to the retail price, the production price or even the wholesale price, but to the margin that returns to the supermarket. The primary producer must guarantee that margin. That cannot possibly apply to any other relationship between supply and retail. Whether the product is cauliflowers, carrots, plimsolls or widgets, if the supermarket decides to arrange a promotion and reduce its retail value, the primary producer will lose out while the margin of the supermarket will be protected and never squeezed.

Huw Irranca-Davies (Ogmore) (Lab): Does the hon. Gentleman agree that those margins are seen not only in the direct relationship between producers and major retailers, perhaps on contract terms, but throughout the supply chain? Sometimes a retailer will say “Well, it’s nothing to do with us, guv”, but somewhere along the line an intermediary will be saying, “We want those margins.”

Mr Spencer: That is a valuable point. There have been a number of references to the dairy industry, and to small dairy farmers all over the United Kingdom. It should be borne in mind that very few small dairy farmers deal directly with the supermarkets. They nearly always negotiate through a dairy producer, someone who is making cheese or yoghurt, or even a bottling plant. The hon. Gentleman has made an important point, and we shall probably need to consider it once we have sorted out the Bill.

Another important topic is that of promotions. Many consumers will no doubt think that “buy one, get one free” offers and other promotions show supermarkets’ generosity, as they must be shrinking their margins. The truth, however, is that it is the primary producers who pick up the tab for the reduced price of the product, and they are often also asked to increase the supply of that product.

Earlier in the year a series of adverts ran on TV promoting asparagus at half price. The weather had been so shocking that I do not think there can have been a single blade of English asparagus on the market at that time. I almost shuddered for our asparagus producers. Many of them had obviously signed a contract to supply a supermarket, and an advertising spot had been booked six months in advance, without regard to the weather. When that time slot in the calendar came, the

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adverts rolled out and asparagus producers were probably having to buy asparagus from Mexico or Spain to meet their contracts to supply that promotion. There is no flexibility in the system, or common sense from some supermarket buyers.

The worst practice, however, is backdating. A primary producer can supply a supermarket for two years, let us say, and then the supermarket can suddenly say to that producer, “By the way, we’re backdating the price of all that product you’ve supplied to us for the last 12 months, and you owe us £50,000.” That primary producer is then faced with the prospect of either finding that money from somewhere—borrowing it or taking it out of their bank account—or reneging on the contract and never being dealt with again. That truly is an abuse of power. I hope the grocery ombudsman will be able to stop such practices.

Key issues are what tools will be available to the ombudsman and how he will make sure the code of practice is adhered to. That brings us to schedule 3 and the subject that has been dominating the debate: if the adjudicator cannot fine supermarkets, will he have sharp enough teeth to ensure that the code is adhered to? I do not ask the Minister to commit to anything in his winding-up speech, but I ask him to assure us that he will have an open mind and will consider the Committee’s deliberations, and be willing to make an amendment if he feels that that is the right thing to do.

I reiterate that there is much more good than bad in this Bill and it represents a great step forward. With the will of the House and a fair wind, I think we can get to the right place for the primary producers, and also for our consumers, who want good quality food in our supermarkets at the right price, and, crucially, at a price that is sustainable.

Small dairy farmers begin the process of producing milk by choosing an animal to breed. They then breed that cow, which takes nine months, bring that heifer to full production, which takes two years, and then, finally, they get milk from that animal. It takes four years of hard work and investment to get to the point of supplying any milk, therefore. In that time, supermarkets can change their contract on an hourly basis. The whole of the risk is with the primary producer, and at present there are occasions when the whole of the reward is with the retailer. I sincerely hope that we can start to redress the balance in that relationship, to the benefit of supermarkets, primary producers and consumers.

8.4 pm

Dr Eilidh Whiteford (Banff and Buchan) (SNP): I am very pleased to be able to contribute to this debate, and I commend the Government on introducing these measures and making such good progress with the Bill.

There is general agreement among Members that effective measures to protect producers in supermarket supply chains are long overdue, and that the groceries code adjudicator is a step in the right direction. The issues we have to grapple with now are whether the Government’s proposals will achieve what they set out to achieve and whether the adjudicator will have sufficiently sharp teeth to be an effective regulator.

If I have one overarching concern about the Bill it is that the establishment of a groceries code adjudicator will not serve to address the underlying problems of the

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concentration of power in groceries supply chains and the dominance of a handful of large supermarkets. Indeed, it is not designed to do that. The groceries code adjudicator will not tackle in any fundamental way the huge power imbalance in these supply chains between producers, processors and retailers, but it could, perhaps, tackle some of the symptoms of these underlying issues, and redress some of the worst imbalances, at least to some extent. The adjudicator will only be able to do so, however, if it has real sanctions at its disposal and the confidence of producers.

These are not new problems. Farmers and food producers have complained for years about the way in which supermarket supply chains operate. The specifics change, but the refrain has been the same for at least 20 years: smaller-scale producers, including some farmers in my constituency, secure a contract with a large supermarket and invest in creating jobs and new equipment, only to find that the goalposts shift very quickly. As the hon. Member for Sherwood (Mr Spencer) just recounted from his own experience, as time goes by an unsustainable squeeze is put on them, whether through the imposition of lower margins or changed specifications, or through late payments, demands for the producer to fund promotions or retrospective changes to the terms and conditions of their contract. In short, the risks and the costs are pushed down the supply chain. Those at the sharp end of primary production find they have little negotiating power in a supply chain in which a handful of large retailers and processors reap a disproportionate share of the profit.

I am glad that the proposals will tackle discretionary pricing and the shifting sands in supplier contracts, but the measures need to be enforceable. This evening’s debate has rightly focused on the efficacy and enforcement of the code of conduct and whether reputational risk will be a sufficient deterrent to curb the worst excesses of retailers’ behaviour towards suppliers. I appreciate that any new powers may have unintended consequences, and that we need to ensure that any new scheme does not backfire on consumers, but we must also acknowledge that this has been a long-standing problem. We must appreciate, too, that it is a structural problem. These imbalances have not arisen just in the last couple of years. They have existed for decades, and we must not miss this opportunity to tackle the problems in the supply chain.

We must recognise that these problems have already done considerable damage to our farming communities, and that they are continuing to do damage and are making our processing sector very vulnerable. If we are serious about food security and enabling our primary producers to continue to farm and produce the food we need, we must understand the pressures they face and take them a lot more seriously.

The disturbing and disappointing news breaking this evening that Vion is pulling out of the UK illustrates all too keenly the fragile nature of our food supply chains and the pressure our food producers and processors face in the current economic climate. Some 13,000 people across the UK work for Vion, including more than 130 in my constituency at Strath of Brydock. I know Members across the House will share my concern about the uncertainty facing the employees of Vion, and I ask the Minister to give us an assurance this evening that everything possible will be done to ensure continuity

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in those Vion plants across the UK, and that the Government will be working very hard to find buyers for the businesses.

The problems in the supply chain are one of the factors that give rise to the problems food processors face, and addressing them is one of the objectives of the Bill. This evening’s news about Vion is very unfortunate, but it should serve to concentrate our minds on why we so desperately need an effective groceries code adjudicator. This is not a debate about an abstract topic; real people’s jobs and lives are at stake.

We should not forget the negotiations on the common agricultural policy. Many farm businesses in my constituency would not be economically viable were it not for pillar one support. Many jobs in the processing sector would be completely unsustainable without that support. I gather from debates in recent weeks that the Government think that there is a case for reducing CAP support to our farmers. Unless we have effective measures to influence supply chains, that is not viable and it will put undue pressure on our rural communities and farmers who are going through difficult times, given the wider economic context in which they are trying to trade. An adjudicator needs proper powers if they are to be able to rise to the challenge of sustainable food production in the years ahead.

Many people say that the problem with voluntary codes is that they do not stand the test of time, and tend to be eroded or watered down once media attention disappears. As public attention wanes on issues such as the situation of dairy famers, reputational risks diminish for the retailers and it is back to business as usual. That is why reputational risk measures on their own will not be enough to enforce the role of the adjudicator, and we must look at more substantial financial sanctions. Dairy farmers’ success over the summer badly needs to be consolidated. Dairy farmers in my constituency cannot spend every Saturday afternoon on the high street at Drummer’s corner with petition boards. Young farmers do not want to have to dress up in cow outfits to get attention: they just want to be able to do their job. They cannot rely on being able to generate public sympathy all the time.

Without doubt, retailers value reputations and brands, but without sustained, concerted action by suppliers to keep public attention on their own product the story quickly dies. Retailers employ highly paid, very professional public relations executives, whereas working farmers do not necessarily have that public affairs expertise at their disposal, and do not have the money to pay for it. The loss of reputation for supermarkets does not necessarily translate into sufficiently meaningful change in consumer behaviour and consequently supermarket behaviour. Earlier in the summer, allegations of tax avoidance were levelled at a number of large corporations, including supermarkets such as Tesco and Asda, but that has not translated into a customer exodus, so I caution the Minister against relying too much on reputational damage to enforce the role of the groceries code adjudicator.

Supermarkets insist that price and quality are the key drivers of customer satisfaction, and my own view is that financial penalties are likely to be the most meaningful sanctions, and they should be available from the outset. Responsible retailers do not have anything to fear from that. Indeed, it might encourage them to develop better,

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more progressive and responsible supply chain models. To give credit where it is due, Morrisons supermarket has used a different supply chain model for its meat producers. It has a meat processing plant close to Turriff in my constituency, and farmers are much happier about that model than about previous models. There is a bit of learning still to do in the process, but there is a chance to incentivise good practice in the Bill, rather than simply hold a sword of Damocles over the supermarkets.

Another issue that has been debated this evening is accessibility and whether third parties, trade associations, non-governmental organisations and others should be able to provide evidence to spark an investigation. I am glad that the Government have recognised the valuable role that those third parties can play in the process. From my point of view, it is the veracity of the evidence that matters, regardless of its source. If there is credible evidence that the code has been breached, it should not matter where the evidence comes from. One of the main reasons why the effectiveness of voluntary codes has not been sustained is that suppliers, as has been said, are scared to put their head above the parapet and challenge manifestly unfair supply chain practices by the major retailers because they fear retaliation. They worry about losing their contract, and about getting a reputation as a troublemaker. That is one reason why others need to be able to raise concerns on their behalf.

As has been said, there is a global dimension to the Bill. The retailers who will be affected by the groceries code adjudicator all have extensive overseas supply chains, including in parts of the world where there is scant regard for labour rights, where pay is abysmal and exploitation is widespread. Pushing the costs and risks of production down the supply chain on to producers causes real hardship for our own farm businesses, food producers and processors, and other suppliers. At an international level, however, that squeeze is felt by some of the poorest people in the world, who have no social protection whatsoever. For the most part, they are not in a position to act as advocates for themselves, which is why it is important that others not only highlight the problems in the supply chain—ActionAid, Oxfam and others have done so for years—but can do so with a reasonable hope and expectation of securing meaningful change in practices.

I hear a lot of complaints from farmers in my constituency, but very few of them are willing to go public and put their head above the parapet. The hon. Member for Sherwood was careful not to identify any of his constituents for fear of the consequences. Anonymity and confidentiality are essential, but for suppliers who produce a unique product that no one else produces or a niche product that only a limited number of suppliers produce there is nowhere to hide, because they can be easily identified. I urge the Minister to respond and take on board the important role both of third parties and of the adjudicator in being able to initiate investigations.

I want to conclude by sharing with the House an advert that appeared in the Scottish press in the summer. Tesco, which posted UK profits of £2.5 billion this year, advertised for a buyer to operate in the Scottish islands among some of the most marginal farmers anywhere in the British isles. The job advert asked for candidates who would

“achieve…savings/income target through the 4 ways of buying: Buy for less; Someone Else Pays; Use less; Re-engineer”.

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I find that quite shocking, as it is a naked admission from the retailer of what its supply chain model really is. Beneath all the hype and the glossy corporate responsibility literature, the supply chain model is to squeeze small, marginal producers as much as possible to maximise profits. That should be challenged, and when we debate the careful balance of these issues we must absolutely understand that those retailers have been ruthless with small farmers, and have made it increasingly non-viable for them to farm and to produce the food on which we all rely.

We have waited a long time for effective sanctions. Financial penalties will send a signal not just to the retailers but to farmers and producers that the Government are serious about helping them. It would improve confidence in the adjudicator as the post is established. We hear a lot that “Every little helps.” Perhaps it does, but we do not want just a little at this juncture. We want the measure to be a first step, and we want a robust Bill with solid sanctions. The Committees that have produced reports on the issue have said that the Bill needs to go further, and that proper financial sanctions are required. I hope that Ministers will listen and take that on board, and that we will see an effective groceries code adjudicator.

8.18 pm

Roger Williams (Brecon and Radnorshire) (LD): It is a great pleasure to follow the hon. Member for Banff and Buchan (Dr Whiteford), who speaks with great knowledge of and expertise in agriculture, and she knows the contents of the Bill. Her comments about pillar one were particularly well made. The subject has received poor press, but it is absolutely essential to the well-being of many farmers who farm on hill and other remote areas of these islands.

I declare an interest, as I am still responsible for an active farm that sends most of its products to a major supermarket via a slaughterhouse operated by Vion which, as we have heard, announced today that it was going to pull out of the UK. It employs nearly 1,000 people in the constituency next door to mine, and many of the farmers I represent use that facility to market their livestock. I hope that the Minister will take note of that, because it is a particular issue for us.

I commend and congratulate the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for East Dunbartonshire (Jo Swinson), on how she moved Second Reading. She did it with enthusiasm and panache. Not only is she able, but she is lucky, too. She was in the right place at the right time to pick up the Bill, which has support across the House and is one we have been waiting for for a very long time. She is not only able and lucky, but standing on the shoulders of giants who have taken the business forward in the past. Mention has already been made of Colin Breed, a former Member of this House, who was the first person to produce a report that put in print what many people believed—that is, that supermarkets, because of the way in which they had grown and now dominated the marketplace, were taking an unfair advantage. That led to the first Competition Commission report on the subject.

This is a failing market. Many of us believe that if markets are working properly they need light regulation, but this is certainly an example of a failing market in which the people making the purchasing decisions are so large and dominant in the market that they can

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adversely affect it to the detriment of the small producers. We need regulation, and I believe that the Bill is a fine piece of legislation that will contribute to resolving the problems.

Let me make a few suggestions about what we could consider in Committee when the individual clauses are debated. Mention has already been made of the ability of the adjudicator to implement fines. I certainly support that and would support a debate on the subject in Committee. It seems to me that just because an adjudicator could impose fines, fines would not necessarily be imposed or have to be imposed. The fact that the power was available to the adjudicator would make the job a lot easier and would put pressure on the supermarkets to take every opportunity to ensure that their dealings with their suppliers were fair.

Naming and shaming can have a big effect on supermarkets. I have been told that during the summer, when the dairy industry was in turmoil, the straw that broke the supermarkets’ backs, making them increase the prices they paid to farmers and enter into the voluntary code that a former Agriculture Minister was so instrumental in introducing, was the huge Twitter and Facebook campaign about the supermarkets that were the worst in abusing their suppliers. That was the turning point. Obviously, the farmers were protesting on the streets, but the campaign among consumers made a difference. Naming and shaming has a powerful impact on supermarkets, but the ability to impose a fine would give extra power to the adjudicator.

One question that has been asked is what role the adjudicator would have in the voluntary code that the supermarkets have entered into with their suppliers, which is something that the Minister should consider. I know that a number of people have written to the Department and not received an answer. Are we dealing just with the grocery code or with other codes that have been entered into voluntarily by the producers and the supermarkets?

Food chains are rather complex, and rarely does a farmer supply a supermarket directly. That does happen, but it is not the usual way in which food moves along the chain. Often, there are other people between the producer and the retailer. In the milk industry, farmers supply dairies that either bottle the milk and send it off in liquid form or produce dairy products such as cheese, yoghurt and so on. In the meat industry, the chain will often include slaughterhouses and meat processing plants. There are also other parts of the food chain, such as wholesalers and distributors. The systems are very complex, and I hope that the Bill will ensure that their complexity will be considered by the adjudicator and that the adjudicator will be able to intervene when he thinks the market is failing.

All in all, I believe the Bill addresses many of the problems that small producers have experienced over the past 20 years in dealing with massive purchasing organisations such as supermarkets. The Bill can be improved, and I ask the Minister to consider the ability to impose fines as well as whether the adjudicator will have a role to play in any codes that are entered into voluntarily between producers and supermarkets.

8.26 pm

Fiona O'Donnell (East Lothian) (Lab): I am pleased to have the opportunity to speak in the debate and, in particular, to follow the hon. Member for Brecon and

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Radnorshire (Roger Williams). For Jenny-come-latelies like me, it is particularly valuable to hear about the journey the Bill has travelled before bringing us here today.

It is also not only a pleasurable experience but a unique one for me, as this is the first time my constituents have urged me to speak up in the Chamber in favour of something the Government are doing. I do not know whether that says more about my constituents or the Government. I hope that we are seeing a coming of age moment for this Government. Let me take my first opportunity to welcome the new Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson), to her position. I hope that this is a coming of age moment when the Government realise that the market when left to its own devices does not always work in a way that allows them to sit back and turn a blind eye.

The hon. Member for Banff and Buchan (Dr Whiteford) spoke about just how dysfunctional the relationship has become among the major supermarkets, the food producers and consumers, which means that it is time for the Government to act and intervene. The balance of power is so out of kilter that it is legitimate even for this Government to intervene to regulate. I hope that the new Minister—well, the relatively new Minister—will keep that feeling in her heart and consider it when it comes to the big energy suppliers and the payday loan companies. There is always a point at which her Government can say that enough is enough and that it is time for them to intervene.

East Lothian has some of the most beautiful and fertile agricultural land in the whole of this nation. The farmers in my constituency are facing a particularly difficult time after the bad summer that we had. Many of the crops will not yield what farmers had hoped for, and I hope for them that the Bill will offer some hope. We will judge the Bill on how it delivers for many of the hopes that we have. As well as a better future for farmers, I hope it will give them the opportunity to innovate, and that they will have the confidence to do that, now that they know there will be fairness in the supply chain.

The hon. Member for Banff and Buchan spoke about the importance for her farmers of having pillar 1 funding from the common agricultural policy. I hope farmers, especially smaller food producers, will see the Bill as an opportunity to plant for the future with some certainty. As farming is a major employer in my constituency, I hope this will lead to the creation of more jobs and improve the working conditions and pay of many of those who work in the agricultural sector and who, with the abolition of the Agricultural Wages Boards, have lost the security that they have enjoyed for decades as a result of the intervention of a previous Labour Government.

I pay tribute to the many Members who, over the years, have succeeded in building a consensus across the House. There is a very different feeling in the Chamber tonight. I was impressed, as I often am, by the words of the shadow Business, Innovation and Skills Minister, my hon. Friend the Member for Edinburgh South (Ian Murray), when he said that we have an opportunity to make a good Bill a better Bill. I very much hope that the Government will take that opportunity in Committee and that they will be open to opportunities to improve

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and strengthen the Bill. I stress to my hon. Friend that this is not a pitch to join him on the Public Bill Committee. One can have too much of a good thing. I previously sat with him on the Committee that considered the Enterprise and Regulatory Reform Bill, where the many valuable contributions that he brought to the debate in that forum were unfortunately spurned by the Government.

We have already seen attempts to improve the Bill, some of which the Government have responded to positively. I hope we continue to see that spirit. I spoke about how we are to judge the Bill. I wish that on Report in the Lords, the Government had accepted an amendment that would have built into the Bill a point at which the Government will review progress. I hope both Ministers were listening to the Chair of the Environment, Food and Rural Affairs Committee, the hon. Member for Thirsk and Malton (Miss McIntosh), when she said that her Committee believed that that would strengthen the Bill.

We have heard from various Select Committees and many organisations. I particularly thank ActionAid and Oxfam for the briefings that they have provided on the general debate about food security. I hope Ministers will realise that not just in this place, but out there in a variety of organisations, there is concern about the need to review the Bill and consider further powers for the groceries adjudicator.

I came this evening not to bury the big four supermarkets, but more to praise them. There have been real tensions in communities in my constituency. We are a constituency of small communities and the arrival of out-of-town supermarkets has threatened the future of the town high street and the marketplace. The community has responded positively by innovating, but it will be another test of the Bill if it brings further benefits to high streets that are struggling to compete with the big supermarkets. We have some wonderful specialty shops in East Lothian, in places such as Haddington, North Berwick and Dunbar—some up-market delicatessens where it is a pleasure to browse and shop. It is one of the strengths of East Lothian and why people visit it.

However, there is also a place for the supermarkets and I want to put on record my support for them. Many of my constituents need somewhere on their doorstep where they can buy a cheap school uniform and get the basic range of food and provisions. I do not deny that there is a role for supermarkets, but I want to see the balance maintained in my constituency. Many others in the House no doubt have a similar situation and want to see our town centres grow, thrive, innovate, contribute to the local economy and create jobs.

I welcome the fact that the Government have changed their mind and listened to the concerns about third-party evidence. Will the Minister give us a little more detail? Many producers fear for their future if word gets round. We see blacklisting in other professions. What is the meat of the Bill that will protect those food producers? A little more detail on that would be useful, as would any plans the Government have for improving clause 18.

We have talked about trade associations and trade unions being able to provide evidence, but we have not yet heard whether campaigning bodies will be able to do so. It is very reassuring and I welcome all that, so I wonder why the Government bothered to include in the Bill the power to rescind that, a point made by my hon. Friend the Member for Llanelli (Nia Griffith)—I hope

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I have pronounced the name of her constituency correctly; the guttural Scots tongue comes in useful at times. The Government can send some important messages by setting out certain provisions in the Bill. What message do they send the big retailers if the Government are not sure whether or not to include that power? It is a bit of a hokey-cokey clause.

I also have concerns that I am sure Ministers will recognise. We have heard from Members on both sides of the House and from all parties about the effectiveness of naming and shaming. The Minister tried to press Opposition Front Benchers on the size of proposed fines, so I will now press for some detail on what form the naming and shaming will take. She spoke about the possibility of retailers having to place notices in the national press. Will the adjudicator be able to specify the size of those notices and what newspapers they should appear in? Will it just be national newspapers, or will it include local newspapers, which are struggling to raise revenue in the current economic climate? Also, local people often trust more what they read in their local press. It would be good to hear a little more detail about where the retailers will be named and shamed.

Furthermore, what evidence do the Government have that naming and shaming actually works, because we seem to see the opposite? One example is this House. We have come through the expenses scandal—I hope—although it does not always feel that way, but when we ask people on the street which party is worse when it comes to the abuse of MPs’ expenses, the reaction is pretty much this: “You’re all the same and all as bad as each other.” I wonder whether that could be consumers’ approach to the retailers. They might not distinguish between the supermarkets, all the information would simply be lost in a blur and there would be an overall perception that there is something rather fishy going on. I really do not think that consumers will use that power and information to hurt an individual major retailer where it hurts—in the pocket. If there is evidence to the contrary, it would be good to hear it.

The Minister spoke about where we have seen consumer power, but that has often been in relation to a single product range or an unethical issue. In the meantime, supermarkets have continued to enjoy large profits. In my constituency the choice is between only two major retailers. Because of the distance between the Asda store in Dunbar and the Tesco store in Haddington, consumers have to travel quite a journey to exercise that right. I will say at this point that Sainsbury’s is coming to Haddington. I am not plugging them so that they sponsor my Christmas card, like that of my hon. Friend the Member for Edinburgh South, but perhaps that is a negotiation I might enter into after the debate. Sainsbury’s has shown good practice in working locally to build a vision for Haddington town centre, so that conflicting concerns can be balanced and the livelihood and sustainability of a town centre can be preserved while the out-of-town option is there.

Sheila Gilmore (Edinburgh East) (Lab): Given the clear balance in the speeches that have been made today across the House, would not it be good if Ministers, rather than just waiting for the Bill to go to Committee, said now that they would table the kinds of amendments that everyone seems to be asking for—for example to introduce fines at an early stage?

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Fiona O'Donnell: My hon. Friend, as ever, makes an excellent contribution. The Government have a track record in this regard. They accepted some of our amendments to the Health and Social Care Bill, but only after they had branded them as their own, so perhaps our suggestions will morph into Government amendments that will result in an improved Bill.

A message has to be sent. There is no more important issue on which we can send a message to the big retailers than that of fines, and I make that appeal to Ministers. The point has been made by hon. Members of all parties during this debate and by Select Committees and organisations outside this place that we need, at the outset, to give the groceries adjudicator the power to impose fines. That would set a strict limit. We do not want to be like a parent who tells their child, “I’m going to let you out, not give a curfew and see how it goes.” It would be better to set a benchmark at this stage—a line that the big retailers cannot cross—rather than let them see how far they can push us.

Some companies irritate many of us by constantly phoning to offer to represent us if we have been mis-sold payment protection plans that we did not know we had signed up to. The reality is that only now that they are beginning to be hurt in their wallets are some of those companies desisting from such practices.

In summary, I see hope for this Bill, but we have offered Ministers the opportunity to improve it. Although I do not expect that to happen this evening, I hope that they will take that opportunity in Committee so that the Bill can be all it can be.

8.41 pm

Neil Parish (Tiverton and Honiton) (Con): It is a great pleasure to speak in this debate and to follow the hon. Member for East Lothian (Fiona O'Donnell), whose remarks I echo. This has been a great cross-party debate and Members want to make sure that the Bill is good and right. I also welcome the fact that Ministers from the Departments for Business, Innovation and Skills and for Environment, Food and Rural Affairs are at one on this. Even the Select Committees are united. There is parliamentary unity on the Bill, so this must be one of the greatest moments of all time.

I say to the Ministers that the Bill will need to have real teeth, for the simple reason that one of this country’s retail traders has more than 30% of the trade, a larger turnover than many small countries, and huge powers. It is a great idea to name and shame retailers, but we need to have the powers to fine them and to keep fining them. If they do not adhere in the first instance, there must be real pain, by which I do not mean tuppence ha’penny from the billions of pounds of turnover; the fine has to mean business. We have to turn this situation around.

I am not here to slam the supermarkets—they do a great deal of good—but we have to make sure that enough money cascades from what the consumer pays for his or her product at the supermarket back down to both the producer and the grower.

Guy Opperman (Hexham) (Con): I endorse what my hon. Friend is saying and I know that the growers and producers in Northumberland will support this Bill wholeheartedly. What robust measures does he think would genuinely hold the supermarkets to account?

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Neil Parish: I would like to see fines incorporated into the Bill—I am sure that the Government will listen when it is debated in Committee—so that there is real pain. I believe that the threat of fines, as well as that of naming and shaming, will help make sure that not too many of the large retailers will have to go before the adjudicator. If they have nothing to hide and if their retail trade practices are right, they will have nothing whatsoever to fear, either from the Bill or from potential fines.

It is not only the producer who is at risk in these trades. Many of the direct contracts that the supermarkets have with farmers in the dairy and meat trades are excellent. However, supermarkets may decide to have a price war and to reduce their prices, perhaps by using these products as loss leaders. That is wonderful for consumers, provided that it is the supermarkets who pay for those loss leaders, and that they do not go back down the chain and squeeze not only the producer, but the processor.

Guy Opperman: I know that my hon. Friend is a champion of the dairy industry. The Minister who will respond to this debate is the Minister who responded to the dairy debate in Westminster Hall. Does my hon. Friend agree that the dairy industry is the biggest example that we can cite of a price compromise affecting the farmer and the producer such that they effectively go out of business?

Neil Parish: My hon. Friend makes an excellent point. Much work was done by the previous farming and food Minister, my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice), to get voluntary dairy codes in place. The Minister of State, Department for Environment, Food and Rural Affairs, the hon. Member for Somerton and Frome (Mr Heath) is carrying on that good work. The hon. Member for Brecon and Radnorshire (Roger Williams) said that we need to be sure that the groceries code adjudicator will be able to look at the voluntary codes and contracts. I repeat that it is essential that a share of the money that the consumer pays for his or her product goes to the processor and the producer.

We are moving into a world of some 7 billion people. That world does not have oceans of cheap food. In many ways, that is a good thing, but it is also difficult for consumers across the world. There are people in this country who are struggling to buy food and it is essential that they get a good deal. However, in order to get a good deal, we must ensure that the producer, be it of milk, beef, lamb, carrots, potatoes or other vegetables, gets a return. If they get a return on their investment, they will produce more food and do so efficiently. That is the way to ensure that we can deliver products at a good price on the supermarket shelf.

Some of the ways in which large buyers and retailers have abused their position over the years have made food prices higher rather than lower. In the short term, when the supermarkets have a price war that drives prices down, it seems like the consumer is getting a good deal, but it drives many people out of business, meaning that there is less production than there was before.

Until now it has been possible to go around the world and bring in the extra product that is needed. However, to take the meat sector, where is the beef that is out

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there in the world? Forty years ago, the Chinese were eating 500,000 tonnes of beef a year. Now, they are eating 5 million tonnes of beef a year. The UK produces about 1 million tonnes of beef, so one can see that instead of eating half as much beef as we produce, China is now eating five times that amount. All the beef that used to be sloshing around in Brazil and Argentina, which could once be bought cheaply and used, dare I say it, to drive down the price of beef in this country, is no longer there. That is why it is important not only to get things right for the consumer and the trade, but to ensure that we will have reasonably priced food in the future.

In the summer, 3,000 dairy farmers protested outside Westminster, and we had a huge meeting. It was absolutely right for the farmers to protest. They had some of the worst weather that I have seen in my lifetime, and the cost of producing milk went up while the price went down. However, is it right that those farmers with family farms have to march up the hill every time and show how desperate they are to make a fair living? Is it right that we have to use social media to name and shame supermarkets? Again, the hon. Member for Brecon and Radnorshire made that point. It is not right. There is something wrong with the process of trade in this country, and that is why the groceries code adjudicator is so important.

We set much store by the Bill. Other hon. Members referred to the common agricultural policy and the single farm payments. All Members want farmers to get more money and more of their income. Farmers would much rather have more of their income from the market—from what they produce—than from what they receive in the single farm payment. They would thus not be so vulnerable to the politics of not only Britain, but the European Union.

The rising population, the need to produce more food from the same amount of land throughout the world, global warming, and the fact that northern Europe and Britain will need to produce much more food, mean that we should be able to get a good price for that food. However, if we have not got the market right, the price of food will not go back to the producer, and we will not produce the amount of food that we need.

There is a need for food security, and a moral issue about producing food. Some people in the world cannot afford to eat and it is therefore important that we produce more food—sustainably, and in an environmentally and animal-welfare friendly way. That is what our consumers want: to be sure that, when they go to a supermarket or a small retailer, they get they get a fair deal, and that that also applies to the producer and the grower, not only in this country, but in developing countries. Our supermarkets often do not give producers throughout the world a fair deal. Let us hope that the groceries code adjudicator can do that.

We have rightly talked a lot about the retailer and the producer today, but we must remember that nearly 500,000 people in this country are involved in food processing, and 80% of the food that they process is grown and produced in this country. The Bill is therefore good not only for the producer but for the processor and I believe that, in the end, it will be good for our supermarkets.

Much as one would perhaps enjoy a major war with the supermarkets and the big retailers, it is ultimately not a war that we want because where do 70%, 80% or

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even 90% of the population buy their food? They buy it in supermarkets—they want to shop there. We must be sure that, when they shop, the groceries code adjudicator will have enough teeth to ensure that the consumer, the producer and the processor—everyone in the food chain—get a fair deal.

Mr Spencer: Does my hon. Friend acknowledge that farmers need to bear some of the responsibility? Many dairy farmers, instead of selling to a co-operative, decided to trade direct. If they stuck together, they would be much stronger. Some farmers almost pay gate money to obtain those direct contracts, and steal contracts from other farmers, thereby contributing to their own downfall.

Neil Parish: I welcome my hon. Friend’s intervention. I often say that farmers’ great strength is their independence, although that can also be their great weakness. I welcome the deal between Milk Link and Arla Foods because this country now has a co-operative that controls some 25% of the milk, giving it real clout in the marketplace. It is right for farmers to come together and co-operate, and the Bill will help such co-operation within the farming, processing and retail sectors. As I said, no retailer has anything to fear from the groceries code adjudicator if they have the correct practices, and that is right. Finally, I say again that the Government welcome this Bill, but the Business, Innovation and Skills Committee and the Environment, Food and Rural Affairs Committee must look to put real fines in place so that those who abuse the grocery trade can be brought to book, and not only named and shamed, but properly fined.

8.56 pm

Mr William Bain (Glasgow North East) (Lab): I seem to be falling into the rather pleasant habit, in both this Chamber and Westminster Hall, of following the hon. Member for Tiverton and Honiton (Neil Parish) in debates on food policy. That is agreeable because he speaks with a great deal of authority and good sense, and I broadly concur with his remarks.

I represent one of the most urban constituencies of all Members who have contributed to the debate so far. There is farm land in the northern tip of my constituency, along the boundary that I share with the Under-Secretary, but the contribution made by my constituency to the food industry comes primarily from the major fruit trading market in Blochairn, two major bakers and bread makers in Lambhill and Sighthill, two major supermarkets in Sighthill and Robroyston, and the hundreds of constituents who work in the food retail, manufacturing and processing industries on modest, if not relatively low, wages. They make a huge contribution to the food that ends up on our plates.

I was struck by a point made by the hon. Member for South Down (Ms Ritchie) who reminded the House that in the past, weak regulation and regulators with insufficient powers have created problems in the markets. She emphasised the problems that have emerged in the energy markets—we all hear from constituents who are struggling with soaring electricity and gas bills—and the same may prove true in the media sector. This debate has shown that parties across the House do not want the same thing to happen in the food production and retail sectors, and I hope that Ministers will pick up on the need for the groceries code adjudicator to have proper powers, including the power to fine. We have

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seen in the home of capitalism—the United States—that in markets where there has been price fixing, the primary sanction used to bring companies engaged in that to account has been the use and imposition of fines.

With rapidly rising food prices becoming one of the biggest pressures on the living standards of millions of people across the country, our consideration of this long-overdue Bill to introduce a groceries code adjudicator is not before time. It is important that we continue to bear down on anti-competitive practices within the large food retail sector and food supply chains, which were so clearly identified in the Competition Commission’s 2008 report.

The Bill matters because food is the largest part of the UK’s manufacturing sector. It has a turnover of £76 billion a year and accounts for 16% of all manufacturing output. However, the grocery market is dominated by four major retailers, the sales of which totalled 85% of the £143 billion industry turnover in 2009; Asda, Morrisons, Tesco and Sainsbury’s accounted for two thirds of the total.

As the hon. Member for Tiverton and Honiton and other hon. Members have said, the economics of sustainable food production will be crucial in resolving the problem of increasing food prices and ensuring that producers and consumers get a fairer deal. In 2008, the Competition 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”.

I agree. On the impact that that has on food prices, Office for National Statistics data published last week show that, since 2005, the price of fruit has risen 28%; the price of vegetables is up by more than 40%; and the cost of fish has increased by 56%. Real wages are falling at around 4% a year, but food costs are going up by much more than the headline consumer prices index of inflation, so action to make supply chains more efficient to bear down on rapidly rising bills will be a key indicator of the success of the new adjudicator. Big supermarket chains have expanded into the convenience store market and compete directly with smaller chains and independent stores. It is important that the new adjudicator roots out any anti-competitive practices.

The purpose of the Bill is welcome. Its provisions owe a great deal to the work of my right hon. Friend the Member for Leeds Central (Hilary Benn) and his team from their period in government, and my hon. Friend the Member for Ynys Môn (Albert Owen), who spoke earlier in the debate. However, as has been said, both Back-Bench Members and Opposition Front Benchers have concerns about the details, which we believe should be amended in Committee. The major concern is the lack of an independent power for the adjudicator to fine from day one for serious breaches of the code—a step that was recommended by the Competition Commission in 2008. In its report of that year and in its 2000 report, the commission identified two major breaches of the code by large retailers, but the Bill permits the adjudicator to levy fines only with the consent of the Secretary of State following an order, and further consultation and review. As many hon. Members have noted, there might be a delay of a year or 18 months before the power to fine is activated. What other public official in the nature of an ombudsman, which the office

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of groceries code adjudicator surely is, has such weak powers of enforcement and such a lack of independence from Ministers?

The code of practice applies only to supply contracts between individual suppliers and major retailers with a turnover in excess of £1 billion a year. It does not deal with supply chain abuses at more intermediate levels, such as regional wholesalers and processors. The Bill should be amended to allow the adjudicator to monitor fair dealing throughout the supply chain, and ensure that suppliers are protected from the threat of retaliation if they produce evidence of unfair practices.

Hon. Members have referred in the debate to the practice of below-cost selling—my hon. Friend the Member for Hayes and Harlington (John McDonnell) referred to it in an intervention, and I suspect he might do so again in his speech proper. The practice involves a retailer selling an item for less than its input costs, as illustrated by the notorious example of supermarkets selling loaves of white sliced bread for 7p. The practice, which has been prohibited in France, Germany, Spain and Portugal, can force suppliers out of business, and has also caused huge pressures in other sectors, such as the dairy industry.

The Select Committee on Environment, Food and Rural Affairs and the Select Committee on Business, Innovation and Skills have called on the Government to increase the powers available to the adjudicator, to widen the range of those who can bring forward complaints, such as trade associations, trade unions and pressure groups—I welcome the clarification we have received on that point—and to put more detail in the Bill on the power to fine. Those are all reasonable and constructive suggestions by two influential Select Committees. I do not believe I have heard a single hon. Member from the Back Benches, or from the Opposition Front Bench, who has dissented from those views, so I hope that the Government will reflect on the unified outcome of the debate and announce that when the Bill goes to Committee today they will accept and table amendments that reflect the will of the House as expressed today.

Although clause 7 affords the adjudicator the power to recommend changes to retailers, there are no powers for the adjudicator to compel action by retailers who do not take remedial steps at first instance. Similarly, clause 11 permits, but does not require, the adjudicator to provide advice to suppliers and large retailers on matters relating to the code. It seems somewhat counter-productive for the adjudicator, as part of his or her statutory duties, not to be required to publish guidance on how retailers can best comply with the terms implicit within the code.

Providing sufficient protection of anonymity for those bringing complaints before the adjudicator will be crucial to enforceability. National Farmers Union Scotland has argued that the code has so far proven ineffective because of the fear that complainants may be identified. Its view, therefore, is that complaints should be capable of investigation on the basis of credible evidence, whatever its source. I hope the Ministers, in winding up, will respond to the views that NFU Scotland has put forward in its submissions on the Bill.

I hope the Bill will secure an improvement in the living standards of our dairy farmers, which have been under such pressure in recent years, particularly in Scotland.

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Although one of the major processors, Müller-Wiseman, has recently increased standard farm-gate milk prices to just over 30p per litre during this winter period, given the increased costs facing dairy farmers that is not far from the absolute minimum that farmers in Scotland need to make ends meet. I hope that the adjudicator, when set up with sufficient powers, will be able to deal with the pressures that cause significant hardship to dairy farmers in Scotland and, as we have heard, in every part of the United Kingdom.

This is a good Bill. As hon. Members have said, we wish it well in Committee. I hope, in conclusion, that Ministers will reflect on what has been a good-tempered and consensual debate, take the positive suggestions offered by the House and provide a system that allows abuses in the market to be tackled and rooted out at source. That leads to one conclusion: the ability of the adjudicator to fine, without an order from the Secretary of State—an ability that must be in the Bill.

9.8 pm

John McDonnell (Hayes and Harlington) (Lab): I chair the Bakers, Food and Allied Workers Union parliamentary group. The group supports the Bill, because we hope that it will address the issue, mentioned by my hon. Friend the Member for Glasgow North East (Mr Bain), of below-cost selling. We have been campaigning on this issue for a number of years by tabling parliamentary questions and early-day motions, and meeting Ministers, yet the problem continues. As my hon. Friend said, below-cost selling is when a retailer sells an item for less than its input cost—what is described as being sold with a negative gross margin. When the Competition Commission conducted an inquiry into items of known value, it identified that bread was a particular issue, as he said. It was not just one supermarket selling white sliced loaves for 7p—many others were selling bread at extremely low prices and low margins. As he said, other countries addressed the issue at the same time by introducing legislation to prevent the resale of goods at a loss. This area is regulated in several European countries.

My hon. Friend also quoted the Competition Commission. In the passage that he quoted, however, the commission went on to say that if the practice went unchecked,

“we conclude that this will ultimately have a detrimental effect on consumers, by leading to low-quality goods, less choice of goods, or less product innovation.”

That is exactly what has happened to the supply of bread. The loss of bread quality should worry all concerned—in many instances, it is now little more than water—and is contributing to the nation’s unhealthy diet. Price pressures are also having an impact on the working processes, so we are concerned about health and safety, particularly in relation to the preponderance of Baker’s asthma among workers producing bread for supermarket chains. As has been said elsewhere, the price pressures obviously result in firms closing, the loss of jobs and pressure on overall pay and conditions.

I want to refer to the three main points raised so far. The first concerns fines. The Bakers, Food and Allied Workers Union has been involved in campaigns to name and shame. As I mentioned earlier, however, not only have they not worked but they have had the contradictory result of giving publicity to companies providing products at extremely low prices. In some ways, naming and shaming actually boosts supermarkets’ sales, as we saw with the Competition Commission’s

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inquiry into the 7p loaf. Our experience is thus not only that large conglomerates can ride out a naming and shaming campaign but that some actually benefit from it.

From my reading of the Bill, it looks as though the fines order will be brought into play only on a case-by-case basis. [Interruption.] No, the Minister says it will be on a general basis. If that is so, it will still be left to the Secretary of State to designate in the order the size of the fine to be levied. I would welcome more information. Will a tariff system be established? Will the recommendation on a tariff system come from the adjudicator? The House could usefully discuss whether a tariff system would prove effective and have an impact on companies’ practices.

The second issue concerns third party reporting. We have all welcomed that provision and put on record the fact that it will include trade unions. That is incredibly useful, and I congratulate the Government. Having said that, trade unions are anxious that companies might take retaliatory measures against a union or individual members. That is a concern, given past victimisation and blacklisting, so I would welcome the Government’s revisiting the blacklisting regulations to ensure adequate protection for trade unions, trade unionists and individual workers who blow the whistle on some of the practices of the supermarkets, as they put pressure on individual companies.

I am extremely worried by clause 15(10). I have seen clauses that allow for a review of the implementation of legislation, and for that review to bring forward recommendations that the House can discuss and on the basis of which we frame further legislation. That is the rational process. I have never before seen in legislation, however, the actual proposed new clause to be introduced. That flies in the face of the rational process of review, assessment and recommendation, after which the House comes to a view. It would help if we could hear why the Government feel they need the draft clause on the shelf, within the Bill itself, to introduce readily. It smacks of defeatism over the effectiveness of the legislation. May I also have some clarity on the process for the order? Will it be the affirmative process or the super-affirmative process—or whatever other process—that the Government recommend? There would need to be quite a heated exchange in this Chamber if we felt that the Government were reverting to type and removing those provisions from the Bill.

Thirdly, the appointment of the adjudicator is very important. I am therefore keen that the Government should concede that there ought to be some form of pre-appointment process via the relevant Select Committee, but I worry sometimes about the timidity of this House. Other Select Committees now have the right to approve appointments, so why not in this instance?

Ian Murray: My hon. Friend is making an incredibly powerful speech. As he is talking about giving this House some input in the appointment to an important post, does he agree that we should go down the route outlined in the Conservative party manifesto from the general election, which said that the Conservatives would

“give Select Committees the right to hold confirmation hearings for major public appointments, including the heads of quangos”?

John McDonnell: This point coincides with a private Member’s Bill in my name on the appointment of the Governor of the Bank of England. I can understand

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that the Government—or rather, the Chancellor of the Exchequer—might have some anxieties about that, but I cannot see why anybody should have any anxieties about the adjudicator being appointed with the approval of the relevant Select Committee. In fact, that is exactly what happened with the Office for Budget Responsibility. The appointment of the chair—in fact, the members were there too—was subject to the approval of the Treasury Committee. The post of adjudicator needs to be given sufficient authority, which often stems from the process of appointment. If the appointment was subject not only to pre-examination and review and so on, but to approval by the relevant Select Committee, that would send a message to the supermarkets and anybody else that the Government were serious about this job, and the individual concerned would have the full authority of this House to do as he or she saw fit in implementing the legislation. That is not an awful lot to concede, really.

It is rare to find such unanimity on the Back Benches across all parties. I genuinely do not understand why the issue of fines has arisen. In the old days, an influential figure in a sector of industry would phone No. 10 and the Prime Minister would drag in the Secretary of State and say, “We’re not having it, so you’d better amend it.” I hope none of that has gone on. I hope we will get a rational process in Committee, an acknowledgement of the unanimous view on the Back Benches and a Government amendment on fines that we can all agree on. If the Government strengthened the role of the new body—with the unanimous approval of this House, which they would get, because they have had it so far, apart from on this one issue—they could put down a marker to show that the Government mean business on this issue, and so do all legislators in this House.

In that way, the proposal will prove to be effective; otherwise, I make this prediction. There will be rows. The adjudicator will come forward, there will be publicity about a particular instance, the supermarket might pull back for a few months, or maybe a year, then it will return to its practices and we will end up going round the cycle yet again, most probably in two years’ time. We will be kicking ourselves and asking, “Why didn’t we give the adjudicator powers to fine?” Rather than waiting and revisiting the issue, why not do that now?

As for the order being in place and the choice being between fines in the Bill and fines in a statutory instrument that would take six months to introduce, there are people here with more experience than I, but getting a statutory instrument through this House can be quite difficult to say the least. If there is a civil servant out there or someone lobbying, the fastest I have seen it happen is 18 months to two years, so I have some scepticism about getting an SI through in that time. There will be lots of vying for parliamentary time in discussions with the Leader of the House and something could crop up that sends this issue to the back of the queue. It is not just a matter of saying, “Well, if it doesn’t work, we’ll bring forward an order in six months.” Instead, we could be waiting beyond the next Parliament. Some elements in the industry could play on and exploit that as part of their lobbying practices.

Ultimately, if the ability to fine were put in the Bill and a fine were imposed that the supermarkets, or whoever, were unhappy with, they would resort to a court of law anyway. If they felt that there was something

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wrong with the process, they could ask for a judicial review of the Government or the adjudicator. They have all the facilities to do that anyway, so I am not completely sure what the Government are arguing about on that point. I am hoping that we can have a rational process, and that the Government will see reason and table the appropriate amendments in Committee. I also hope that the work that has been done over the years by all those hon. Members who have been congratulated today will come to fruition in an effective piece of legislation.

9.20 pm

Huw Irranca-Davies (Ogmore) (Lab): It is a great pleasure to follow my hon. Friend the Member for Hayes and Harlington (John McDonnell) and his appeal for listening, for unanimity and for constructive work in Committee. This very good debate has revealed common themes and shared aims on both sides of the House. It has also shown that there is a real will, which we share, to get the Bill on to the statute book as soon as possible in a form that is fit and proper and that will enable it to do the job that we and Ministers want it to do. We do not want to miss this golden opportunity to get this absolutely right.

I have a radical suggestion. Perhaps we should dispense with the need to find names for a Committee, and simply keep on sitting here now until we have put the Bill to bed. With such high levels of experience in the Chamber today, and such clarity on what is required of the Bill, we ought to strike while the iron is hot. I am not sure whether all right hon. and hon. Members would welcome my suggestion, but I shall go on to pull out some of the themes that have been raised in the debate. We often struggle to discern any themes coming out of a debate, as Members put forward different—sometimes very different—viewpoints, and it can be impossible to pull any sort of consensus out of the morass. Today, however, there has been utter clarity, complete consistency and even—dare I say it?—a striking degree of unanimity.

That unanimity centres on two specific issues. First, real congratulations have been offered to the Ministers on bringing forward the Bill, and I offer the ministerial team my own congratulations as well. There has been some criticism over delays, some of which has been knocked back to us for causing delays while we were in government, but the fact is that we are now here and we need to get this right. That is one area of consensus: we all want to see the Bill reach the statute book as soon as possible.

The second area on which there is consensus is that the Bill is not yet fully formed. It is not far off, but it is not fully formed. To extend the metaphor that many others have used today, it is something of a pup that is showing great potential, but it is not yet a watchdog. It is all bark—in the naming and shaming—but there is little bite. As the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson) suggested earlier, it is something of a fluffy and likeable little toy, rather than a trusty hound that can bare its teeth when needed and give the occasional nasty nip to the sensitive parts of a miscreant.

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Let me turn to the one matter on which I have heard not one dissenting voice throughout the whole debate from any Member in any party, except during the opening remarks. I hope that the Ministers will be open to what they have heard about fines, because there was a remarkable level of consistency and agreement around the Chamber on that point. The Under-Secretary opened the debate with some well-balanced comments, saying that the arguments were finely balanced. She went on to say that financial penalties should initially be a reserve power. I do not think that the arguments are that finely balanced; I believe that there is compelling evidence to the contrary, and I shall say more about that in a moment. If they are so finely balanced, however, I would urge her to listen to the voices that we have heard in the House today. One after another, Labour, Conservative, Liberal Democrat and Unionist colleagues from across the water have stood up to say, “Put those fines on the face of the Bill.” Putting them somewhere else in the back pocket or leaving them at home to get them when they are needed means that the message going out to major retailers will be quite different.

Quite honestly—my hon. Friend the Member for Edinburgh South (Ian Murray) and I have discussed this—should we ever soon be back in government, we would not want to have to go to look for the tools that have been carefully hidden somewhere; we would want them to be right in our hands so that we can use them if they are required—not as a first resort and perhaps not at all, but we want them there as an option. That brings me to the first point about the question being finely balanced. We need all the tools in the toolbox from the off—not one tool left at home or not even yet purchased from the shop, because a reserve power is one that risks not being used.

Secondly, naming and shaming can indeed be powerful on occasions, but it is not always the most appropriate tool for the job. If it is the only tool available, I guarantee to Ministers that it will fail. One after the other, Members of all parties have raised instances where name and shame has been completely ineffective. Name and shame was not a rip-roaring success this spring and summer in respect of the dairy crisis. [Interruption.] The Minister says it was, but no; I can tell him that it played a part, but it was not effective. There was plenty of naming and shaming from February, March and April onwards. It was in the newspapers and in our postbags—day in, day out—so we knew who was being named and shamed, but they did not move, adjust or go backwards. What made the difference was not the pure act of naming and shaming, but protests—protests that were painful and unwanted, such as blockading dairies. Thousands of farmers confronted a Minister across the road from here. He was doing his job by facing up to it, but he was confronted by angry farmers demanding action. The Minister then went away and banged heads together. It was not naming and shaming in the local papers or even naming and shaming every day on the front pages of The Daily Telegraph or the Daily Mailthat made a difference. What worked was farmers coming together to say, “This is not working; we have got to do more”. We should not have to resort to that, which is why I say in all honesty to Ministers, “Please do not rely on the single tool of naming and shaming. The message going out to the retailers is that you are not serious. You must have the tool in the back pocket ready to use in case it is needed.”

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The third aspect is the need to put the power to fine on the face of the Bill. This is supported not only by Members on both sides of the House, as we have said, and by many in the other place who debated the issue and argued strongly for it. I shall not read them all out, but the need for the power to fine is also supported by War on Want, Traidcraft, the world development unit, the Country Land and Business Association, the National Farmers Union, NFU Scotland, the Farmers Union of Wales, the Ulster Farmers Union, the Association of Convenience Stores—the voice of local shops—Fair Deal Food, Action Aid, Banana Link, CAFOD—the Catholic Agency for Overseas Development—the Campaign to Protect Rural England, the Church of England and the Women’s Institute. For goodness’ sake, work with us on this one. We will help Ministers to become heroes if they listen to those voices, as they cannot all be wrong, even if I am. Those organisations represent people right across the supply chain. They include the Federation of Small Businesses for goodness’ sake; it is everybody.

I will not read out the early-day motion that the Minister signed once upon a time. [Hon. Members: “Go on!”] No, I will not; it would be unfair. I know, however, that in his heart of hearts, the Minister believes that this is the right course of action, as we have had this discussion before in debating chambers. When we talk about teeth, it does not mean the beast in front of us at the moment. It means having those penalties on the face of the Bill.

Let me move on to the excellent contributions to the debate, as I think the case for having financial penalties is overwhelming, clear, compelling and unarguable. We began with the contribution by my shadow ministerial colleague, my hon. Friend the Member for Edinburgh South (Ian Murray). It was an excellent opening to the debate. In welcoming the Bill, he was consensual, but his speech was also challenging where it needed to be, which is what we as the Opposition should do.

The hon. Member for Thirsk and Malton (Miss McIntosh), the Chair of the Environment, Food and Rural Affairs Committee, delivered a powerful and, as usual, forensic analysis of the Bill. Like all of us she welcomed it, but she also drew attention to shortcomings which I hope we shall be able to explore in detail in Committee.

My hon. Friend the Member for Clwyd South (Susan Elan Jones) pointed out that if we got the Bill right, it would be good for consumers. The Minister will agree with her observation that it would promote best practice and fairness throughout the management of the supply chain, would allow for investment in the boosting of productivity and innovation, and, in so doing, would provide an opportunity to reduce costs for both producers and consumers.

We heard an excellent speech from the hon. Member for Camborne and Redruth (George Eustice), who has spoken about this and similar issues in other debates. Today, he spoke eloquently and with great experience about the need for the Bill to be strengthened. He has made that point consistently, not least when interviewed by the Daily Mail for an article published on 16 November. I commend him on that, although the Daily Mail is not my regularly reading material.

The headline above that article was

“Supermarkets that bully small suppliers will NOT face fines after ministers cave in to pressure”,

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but I do not believe that Ministers are caving in to pressure. I believe that they want to do the right thing, and to listen to what the hon. Gentleman and others have said today. I hope that they are open to his argument, and that the Government Whips will enable him to serve on the Committee, where his experience and insight will be welcomed. I loved his observation that naming and shaming was the preferred stand-alone option of the British Retail Consortium. He wondered, as we did, why that might be.

The hon. Member for North Antrim (Ian Paisley) spoke powerfully—as he always does—for food production and processing industries throughout Northern Ireland. He called for the payment of a living wage in agriculture, and we thoroughly agree with him about that, as we do about much else that he said. He noted the strong support of the Ulster Farmers Union, and the individual support of its president, Harry Sinclair, for a significant strengthening of the Bill. He said that if the price-fixing by major supermarkets was occurring because they were a cartel, they should be—I think that these were his words—kicked where it hurts, which I am sure, in his mind, is right in the adjudicator’s office.

The hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) said that the position of Government Members on regulation was often misquoted, and that they were not against regulation but in favour of better regulation. That, he said, was exactly what was required in this instance. Poor regulation was the problem, he said, but the Bill represented good regulation and—again—should be strengthened. The ability to make a living in the countryside must be preserved, and that included the living made by the small farmers in his area. He said that he had received only one piece of correspondence saying no to fines, but dozens expressing the opposite view, so why should fines not be levied?

My hon. Friend the Member for West Bromwich West (Mr Bailey), the Chair of the Business, Innovation and Skills Committee, welcomed the Bill and the fact that the Government had adopted about 80% of the Committee’s recommendations. However, he focused on the shortcomings of the Bill and the need for it to be strengthened further. He clearly felt that naming and shaming on its own, without additional penalties in the Bill, would be insufficient.

The hon. Member for St Ives (Andrew George), who has done so much in supporting the Bill’s progress and in marshalling a grand coalition of partner organisations throughout the supply chain both in the United Kingdom and internationally, rightly acknowledged those organisations in a roll of honour, but also acknowledged the many parliamentarians in all parts of the House who have brought us to this point. I think that that consensus-led approach should continue in Committee, but that we should aim not simply to let the Bill roll forward and accept whatever is presented, but to improve it so that we get it right this time.

My hon. Friend the Member for Ynys Môn (Albert Owen) had a private Member’s Bill that tried to introduce precisely this position, and he reminded us that his preference, as expressed in his Bill, is for the term “ombudsman” rather than “adjudicator”. He welcomed the Bill, but bemoaned the delay. He alleges that was fashioned by Government Whips; I am sure that is not true. He called for penalties to be stated in the Bill and for Ministers to name and shame those who have lobbied against strengthening its provisions. The Minister who

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opened the debate declined to try out the excellent mechanism of naming and shaming, however. The Minister who will conclude the debate can take the opportunity to try that out, and we will then see tomorrow morning whether it has any effect. Who is against strengthening the Bill? What are the names of those who oppose strengthening it? I would like to know, as I am not getting any letters to that effect. Instead, I am receiving calls from a wide coalition of people, including Members of this House, for us to work together and strengthen the provisions. I am convinced the Minister who will conclude the debate wants that as well, and I am trying to help him. Indeed, I am trying to help both Ministers.

My hon. Friend the Member for Ynys Môn highlighted the possibility of the entire supply chain being open to investigation and possible sanctions, and asked how we would handle that. Will the Bill result in that happening? After all, these issues involve not only the relationship between the big retailers and the individual producers, but a wide and complex distribution network across the supply chain.

I chatted briefly at the side of the Chamber with my hon. Friend about this evening’s very disappointing breaking news about Vion, and another hon. Member has raised that, too. It is a major employer and economic force in many constituencies, including that of my hon. Friend. I hope the Minister will be able to give us some assurances as to what role the Government can play in trying to protect these jobs at Vion and the economic benefits they bring to many constituencies.

The hon. Member for Carlisle (John Stevenson) chairs the all-party group on food and drink manufacturing. He saw the Bill as a positive encouragement for the supply chain, recognising good practice—of which there is, indeed, a lot. He made a forensic contribution. Interestingly, I noted that he supported the proposal that penalties should be stated in the Bill, and he agreed that the adjudicator should report on its success in respect of the code and whether changes to its scope and remit might be needed. I hope the hon. Gentleman finds himself serving on the Committee—although I do not know whether he shares that aspiration.

My hon. Friend the Member for Bristol East (Kerry McCarthy) reminded us about the new farming Minister’s previous stalwart support for an adjudicator with real teeth. The farming Minister, who will conclude this debate, was right then, as I have told him before, and he can help us strengthen the Bill to get the right policy now as well. My hon. Friend also talked about the important issues of food waste and food poverty, and explained how those topics tie in with the Bill. She made a worthy contribution.

The hon. Member for York Outer (Julian Sturdy) said the Bill would be undermined if the adjudicator lacked the teeth it needed, and he described it as a referee without a whistle or a red card in his—or, I should point out, her—pocket. He is absolutely right. He said an adjudicator will have little impact without the metaphorical red card in its metaphorical pocket, and he rightly raised the spectre of the dairy crisis. He encouraged Ministers to show strength and to strengthen the Bill.

The hon. Member for South Down (Ms Ritchie) said that the Bill needed to produce lasting reform, and that it must redress the imbalance in the supply chain so that there is long-term sustainability and a real economic

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boost throughout the supply chain. She called for statutory teeth as being a necessity. She spoke, too, of the need for robust powers of investigation and enforcement, and the ability to receive representations without fear of reprisal. Indeed, the issue of anonymity and people being able to come forward without fear of reprisal was another common theme. The hon. Lady also commended the idea of fines for serious breaches of the code. She said naming and shaming alone was not good enough because it was not strong enough. She called for an emboldened Government who will strengthen the Bill.

The hon. Member for Ceredigion (Mr Williams) has great experience in one of the great farming areas of Wales, and he raised the Ceredigion test, asking whether the Bill was robust enough. His answer was, “We like the fact the Bill is here, but it doesn’t yet pass the Ceredigion test.” I suggest to him that if we work together, we can make it pass that test. He cited the Women’s Institute’s support for strengthening the Bill; it is about not just jam and Jerusalem, but adjudication.

The hon. Gentleman made a good point about accessibility and the adjudicator’s remit, and I look forward to amendments being tabled on the subject in Committee. He called for “Chwarae Teg”—fair play. My hon. Friend the Member for Llanelli (Nia Griffith) said that supermarkets had nothing to fear from a levelling of the playing field, and she rightly criticised the retrospective varying of supply agreements. What is that all about? It is the idea that a retailer or an intermediary can go back to a producer and say, “I’m sorry, you have to find some cost-cutting measures after the event.”

The hon. Members for Sherwood (Mr Spencer) and for Banff and Buchan (Dr Whiteford) are particularly affected by the Vion decision, and I hope that the Minister will respond on that. I am afraid that I do not have time to respond to all the comments that were made. The hon. Member for Tiverton and Honiton (Neil Parish) welcomed the Bill, as did my hon. Friend the Member for Glasgow North East (Mr Bain). My hon. Friend the Member for Hayes and Harlington (John McDonnell) spoke up for people working in these sectors. The common theme that emerged time and time again was a welcome for the Bill but the fact that it would not be quite right until we strengthened it.

The Bill is good, but it is not yet quite good enough. It has cross-party support to get it on the statute book as soon as possible but, as we have heard, it needs cross-party support to go further and give it real teeth. It was rightly noted in the other place that Labour’s fingerprints are all over the Bill, but so are the fingerprints of hon. Members who serve on the Select Committees on Business, Innovation and Skills and on Environment, Food and Rural Affairs, as well as the fingerprints of Back-Bench champions such as the hon. Member for St Ives, my hon. Friend the Member for Ynys Môn and many others. I say to Ministers and to all hon. Members, not least those who might serve on the Bill Committee, let us take the opportunity to make this not just a good Bill but a great Bill, and work together to make it so.

9.41 pm

The Minister of State, Department for Environment, Food and Rural Affairs (Mr David Heath): It is a pleasant and, for me, unprecedented experience to speak at the Dispatch Box on a Bill that has received a welcome from Members from all parts of the House without

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exception, and I am very pleased that that is the case. I think it is because they share, to paraphrase the hon. Member for Tiverton and Honiton (Neil Parish), a desire to see a system in the supply chain that is fair to the producer, fair to the processor, fair to the retailer, and fair to the consumer. That is what we are trying to achieve in the legislation.

There is ample evidence, not least in the Competition Commission report that, in some ways, provides the origins of the legislation, of an imperfect market in the grocery trade. The hon. Member for Edinburgh South (Ian Murray) said that that there was a monopoly position for the big supermarkets. Strictly speaking, it is not a monopoly. Classical economics requires us to call it an oligopsony, but that term is not used very often. There are powerful players in the retail sector: there are a few buyers and many sellers, which produces an imbalance in the terms of trade. That is why I am pleased to introduce the Bill with the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for East Dunbartonshire (Jo Swinson), from our sister Department. It is wonderful to have two Departments thinking and acting as one in government in introducing legislation of this kind, not least, as the hon. Members for Ogmore (Huw Irranca-Davies) and for Bristol East (Kerry McCarthy), and many others said, because I campaigned personally for the provision for a long time. Other Members who have spoken have been equally assiduous, or more so, in arguing that case, particularly my hon. Friend the Member for St Ives (Andrew George), who has worked very hard on the issue, and the hon. Member for Ynys Môn (Albert Owen). I loved his contribution: it was amusing, and most of what he said was well founded.

The measure has united—this, too, is unprecedented—the Chairs of the Select Committees on Business, Innovation and Skills and on Environment, Food and Rural Affairs. Select Committees do not always agree on absolutely everything, but both those Committees have had an opportunity to look at the measure in pre-legislative scrutiny. The hon. Member for West Bromwich West (Mr Bailey) kindly said that the Government listened to what his Committee said, and that they accepted 80% of its suggestions to improve the measure. That is how it should be; that is the whole point of pre-legislative scrutiny.

Let me make one point to those who have criticised the timing of the Bill. As far as this Administration are concerned, I reject that accusation. The Bill was introduced as a draft Bill in the first Session of this Parliament, as we promised, and it was introduced as a substantive Bill as the very first Bill after the Queen’s Speech in this second Session of Parliament. I find it difficult to understand how we could have been more urgent in our approach. There was fair criticism of the time it took for nothing to appear under the previous Government, but I do not want to be partisan in my approach. It is important to maintain the coalition of interests on both sides of the House in support of the Bill.

The Chair of the Environment, Food and Rural Affairs Committee, the hon. Member for Thirsk and Malton (Miss McIntosh), mentioned a few significant points, some of which were picked up by others. The most important initially was the business of indirect complaints and the capacity for anyone to bring forward a complaint. Let me make it absolutely clear that the

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Bill provides for any party to complain. It does not have to be the producer who is involved; it could be trade organisations or non-governmental organisations. Anybody who has information to put before the adjudicator should do so. Those complaints will be treated with anonymity, because it is part of the job of the adjudicator to ensure that that is the case. Yes, the adjudicator can take forward proactive investigations. If there is good reason to believe that an abuse of the code is going on, the adjudicator can take forward a proactive investigation.

The hon. Lady also asked about the recovery of costs and clause 10 makes that clear. She asked a perfectly proper question about the provisions for the transfer of functions or abolition, which she thought were slightly peculiar, but they are part of the Government’s normal process of inserting sunset clauses so that bodies do not persist simply because they were set up in primary legislation with no opportunity to repeal it at some stage in the future. There might need to be a significant change, a renaming, a merging of functions or any of the many other things considered as part of the Public Bodies Act 2011, so that is a perfectly proper provision.

The hon. Lady asked what the list of designated retailers was and it might be helpful to the House if I simply say who the 10 are. They are Asda Stores Ltd, the Co-operative Group Ltd, Marks and Spencer plc, Wm Morrison Supermarkets plc, J Sainsbury plc, Tesco plc, Waitrose Ltd, Aldi Stores Ltd, Iceland Foods Ltd and Lidl UK—[Interruption.] I cannot quite catch what the hon. Member for Ogmore is saying from a sedentary position, but I thought it was helpful to give the list of retailers included in the proposals.

I thought that the hon. Member for North Antrim (Ian Paisley) made a very thoughtful speech.

Miss McIntosh: Now that peace and unanimity is breaking out, will my hon. Friend return to the vexed issue of fines being imposed? We are a little envious that the Business, Innovation and Skills Committee has had its amendments incorporated and we would like 80% of our amendments to be incorporated at the same time.

Mr Heath: I will inevitably return to that point a little later, as it was raised by so many Members. Let me first, however, cover the other specific points mentioned in the debate.

The hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) asked about companies outside the big 10. He is absolutely right that they are not specifically included in the Bill as levy payers, but let us recognise that the big 10 represents 95% of the grocery trade. If we are successful in the application of the adjudicator in improving standards of contract compliance, that will feed through to the rest of the sector by competition alone, if nothing else. The hon. Gentleman also mentioned length of contracts. That is not specific to the code of conduct, but the matter can be properly investigated in the context of an abusive relationship. Where such a relationship exists, that will be laid bare by the process.

The hon. Member for Bristol East made some good points about food waste. She knows that we have engaged with her on that issue and will continue to do so. I think I have a meeting with her in the near future to talk about that.

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A number of Members spoke with a great deal of experience of the sector from having worked on the producer side. The hon. Members for Camborne and Redruth (George Eustice), for York Outer (Julian Sturdy) and for Sherwood (Mr Spencer), my hon. Friend the Member for Brecon and Radnorshire (Roger Williams), and the hon. Member for Tiverton and Honiton all have direct experience of working in agriculture and could tell us about the sort of downward pressures that they know suppliers regularly experience. The hon. Member for South Down (Ms Ritchie) spoke about trade associations. I hope I have been able to put her mind at rest about that.

My hon. Friend the Member for Ceredigion (Mr Williams) raised a number of important points. He spoke about access to the code and, as I said, I hope I have given him some reassurance on that. He talked about changes to the code. That is an important point. According to the process set out in the Bill, the adjudicator can put forward for consideration changes to the code, but that proposal goes back to the Competition Commission for consideration before being put before the House. It is important that we maintain that linkage because fundamental to the Bill is the abuse that the Competition Commission identified between major retailers and their suppliers. It would be a great mistake for the House to substitute our opinion for the evidence adduced by the Competition Commission.

My hon. Friend also mentioned retrospectivity. Let me underline the point again. If an abuse is continuing at the time that the adjudicator is appointed, it is proper that he or she should investigate that abuse, but we have a strong principle in British legislation that we do not apply retrospectivity to something that occurred before the date that a particular statute comes into effect. Therefore it would not be entirely proper for the adjudicator to look at complaints within the terms of the code that pre-dated that appointment if they no longer continue.

Andrew George: My hon. Friend says that the code would not apply retrospectively, relative to the date of the statute. Of course, the statute came in on 4 February 2010. The Bill merely provides for the referee to enforce the code. Retrospectivity in respect of the statute therefore does not apply.

Mr Heath: I understand the point that my hon. Friend makes. If he would care to engage with Government lawyers on that point of law, I am sure we would be happy to engage with him. We can return to the subject in Committee or on Report.

The hon. Member for Llanelli (Nia Griffith) queried clause 15(10), and the hon. Member for Hayes and Harlington (John McDonnell) also thought it was a bit odd. Let us debate that in Committee. What is proposed there is a safeguard which we hope will not be used. It is designed to deal with the circumstances in which the adjudicator was swamped with spurious complaints which hindered him or her from doing their work. The adjudicator would be required to pare those complaints down to the categories set out there. It would not stop them taking information from any source, but it would stop them taking complaints from any source. As I have said, I do not envisage that that will be necessary and

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hope that it will not be, so it is a reserve power, but I completely understand the point made by the hon. Member for Hayes and Harlington that it is in some ways an unusual provision. It is certainly something we can discuss properly in Committee.

John McDonnell: The point I was trying to make is that if we have to amend the legislation in due course by statutory instrument, it would be better to design the new clause on the basis of the experience and recommendations of the review, rather than just reverting to type.

Mr Heath: I understand the hon. Gentleman’s point, and that is clearly something we can discuss.

The hon. Member for Banff and Buchan (Dr Whiteford) mentioned the very bad news about Vion UK, which I understand will affect not only her constituents in Strath of Brydock, but many others in Livingston, Portlethen and Broxburn, and my hon. Friend the Member for Brecon and Radnorshire mentioned the situation in St Merryn in Merthyr Tydfil. I can certainly give an assurance today that we will happily engage with colleagues in the devolved Administrations—most of those jobs are situated in Scotland or Wales—to see whether there is anything we can do to assist them in dealing with what will be a very significant event in the local economy. If there is anything we can do, I can give an assurance that we will do our best.

My hon. Friend the Member for Brecon and Radnorshire also talked about—

Huw Irranca-Davies: I would not want the hon. Gentleman to miss the opportunity to respond to the 20 Members who spoke in succession about strengthening the Bill by introducing fines, which was also referred to the hon. Member for Thirsk and Malton (Miss McIntosh), who chairs the Environment, Food and Rural Affairs Committee.

Mr Heath: I was about to move on to that, and it is a great shame that the hon. Gentleman took up some of the time I was going to devote to it.

Mr Bailey rose

Mr Heath: No, I will not give way.

I want to talk very briefly about the voluntary code in the milk supply chain, which I think is an important development. It would not be policed directly by the adjudicator, and I do not want to give the impression that it would.

Let us talk about sanctions. This is clearly a serious conversation we need to have in Committee and on Report. My hon. Friend the Under-Secretary set out the Government’s position on naming and shaming. I do not entirely agree with the hon. Member for Ogmore, because I think that naming and shaming played a significant part in events over the summer relating to the dairy industry. I think that several of the large retailers were directly shamed by consumers into changing their tune about their intended reductions in the price of milk.

However, I accept that many Members have indicated that they would prefer to see fines from the start. There are arguments about why that should not be the case,

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including the fact that it would introduce a new legal process of appeal that would not be there if it was not introduced ab initio. I want to make it absolutely plain that only one thing has to be done by order, which is for the Secretary of State to bring in a tariff system on the advice of the adjudicator, so it is not a separate process for each infringement.

Mr Bailey rose

Mr Heath: I am sorry, but I really cannot give way at 9.58 pm.

Let us discuss what the effective sanctions are and make sure that we have got them right. The Government believe that we have got it right at the moment, but of course we will listen to what every Member has to say on the issue and ensure that we have legislation that is fit for purpose.

In closing, I think that we have had a very important debate. It means that we can go forward, perhaps not as heroes, as the hon. Member for Ogmore suggested, or as characters from grocery folklore, as the hon. Member for Ynys Môn said, but with something that will contribute to the well-being of our farming and retail industries. I believe that is right and commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Groceries Code Adjudicator Bill [Lords](Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Groceries Code Adjudicator Bill [Lords]:


1. The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 6 December 2012.

3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

4. Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

7. Any other proceedings on the Bill (including any proceedings on consideration of any message from the Lords) may be programmed. —(Greg Hands.)

Question agreed to.

Groceries Code Adjudicator Bill [Lords] (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

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That, for the purposes of any Act resulting from the Groceries Code Adjudicator Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of—

(1) any expenditure incurred under the Act by the Secretary of State, and

(2) any increase attributable to the Act in the sums payable under any other Act out of money provided by Parliament.— (Greg Hands.)

Question agreed to.

Groceries Code Adjudicator Bill [Lords] (Ways and Means)

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Groceries Code Adjudicator Bill [Lords], it is expedient to authorise—

(1) the imposition of a levy on large retailers to fund the Groceries Code Adjudicator, and

(2) the payment of sums into the Consolidated Fund.— (Greg Hands.)

Question agreed to.

Business without Debate

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Contracting Out

That the draft Contracting Out (Local Authorities Social Services Functions) (England) (Amendment) Order 2012, which was laid before this House on 15 October, be approved.— (Greg Hands.)

Question agreed to.