Secondly, more effort needs to be put into educating people so that they are equipped with the information and knowledge to make informed decisions. The potential for negative consumer outcomes arising from disengagement, low awareness of retirement risks and poor financial capability is likely to be compounded by supply-side failures. The FCA thematic review and retirement income market study identified continued failures: 60% of defined-contribution pension customers did not switch providers when they bought an annuity, despite the fact that 80% could get a higher—in many cases, significantly higher—income on the open market. The FCA found that 91% of those purchasing enhanced annuities could have got a better deal by shopping around. It also found that consumers are highly sensitive

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to how options are presented to them. Savers reaching retirement face a much more complex landscape than previous generations, and they will need support to make sense of their options and to make sensible choices that match their needs and preferences.

Even before the announcement of the pension reforms, the pensions industry was still working through many issues, despite seven years of heightened scrutiny and regulatory oversight. As many will know, lack of information has been a problem for some time. Given the lack of data on how pensions are being affected now, it is important to look at some of the few statistics that we do have.

Ian Blackford: Does my hon. Friend agree that one issue consumers face in the landscape of choices she eloquently describes is that they often do not consider their own life expectancy—that they might live for another 30 or 40 years or even longer? When people look at their experience of annuities, that is often part of the problem: they might consider they are getting a poor deal from their annuity, but that is because they are not taking into account how long they might live and how long they might have to fund their lifestyle for.

Mhairi Black: I thank my hon. Friend for that intervention—I was actually about to get on to that point.

In terms of the few statistics we do have, the Social Market Foundation has looked at the lessons the UK can learn from overseas experiences. My hon. Friend spoke about the different stereotypes in terms of how people engage with their pensions—the cautious Australian, the quick-spending Australian and the typical American. One of the report’s key findings was that UK retirees are at risk of pension pot exhaustion specifically because they underestimate how long they will live. In fact, those who follow the typical American path or the quick-spending Australian path would, on average, exhaust their entire pot by retirement years 17 and 10 respectively.

Retirees are at risk of low replacement rates. Retirees who over-consume in the early years of retirement might well enjoy a decent income for a good few years, but if they live a lot longer than they predicted, they find themselves on much lower rates later on in life and may completely exhaust their pension, putting the responsibility on to the state to fill the gap.

We should also consider the fact that the number of income drawdown contracts sold by ABI members during 2015 increased by 64% over the previous year, from 6,700 to 11,500. The number of annuities sold has continued to fall, with 20,600 sold during that quarter, compared with 28,700 the previous quarter and 74,100 in the same quarter in 2014. There was an 80% increase in provider call volumes during the first six months, compared with the same period in 2014. As has been mentioned, £2.5 billion was paid out as cash to customers in that period. Some 60% of all cash lump sums have been paid out to people younger than 60—those who have a considerable time left to live, given that life expectancy is now 80-plus. In 80% of cases, those who have taken out cash lump sums were under 65. In 95% of cases where cash lump sums have been accessed, the entire fund was withdrawn. As for evidence that people have engaged with Pension Wise, whether face to face, over the phone or by email, the reality is that fewer

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than one in 10 of those accessing their pension pots have used the service. It is clear that more can be done to educate people adequately.

My last point relates to the Government’s position. Concerns about rates of exhaustion of pension savings and the subsequent impact on retirement income led the Australian Government, which we look to for at least some idea of where pensions are going, to commission an independent review of their retirement system. The resulting Murray inquiry published a range of recommendations for the Australian financial system, including that schemes set in place a default comprehensive income product for retirement. On 20 October, the Australian Government announced their intention to implement the inquiry’s retirement income default recommendation, and a consultation is expected later this year.

It seems only reasonable and responsible, therefore, for the Government to tell people, “Look, the choices are there for you. It is not for us to tell you how to spend your money, but we recommend that you use your pension for the exact purpose it was created for and that you consider how long you will live for and how much money you will have, so that you engage with your pension appropriately.”

I welcome the debate, and I hope the Government take heed of some of the concerns that have been raised by myself, my colleagues and the relevant independent bodies.

3.16 pm

Nick Thomas-Symonds (Torfaen) (Lab): It is a pleasure to serve under your chairmanship, Mr Betts. It is also a pleasure to appear before the Economic Secretary to the Treasury for the first time.

I congratulate the hon. Member for Ross, Skye and Lochaber (Ian Blackford) on securing this timely debate. I agree with much of what he said. This is the time to take stock of the pension freedom reforms. The idea of monitoring and identifying risks is important, and I will return to that in a moment. The concepts of supporting society and planning for the future are also vital.

My hon. Friend the Member for Coventry South (Mr Cunningham) and the hon. Member for East Lothian (George Kerevan) made good points about choice and protection. My hon. Friend also made a crucial intervention about pensioner poverty, and it is important that we monitor that issue.

The hon. Members for Kirkcaldy and Cowdenbeath (Roger Mullin), and for Kilmarnock and Loudoun (Alan Brown), raised the issues faced by women born in the 1950s due to the increase brought in by the Pensions Act 2011 in the state pension age. In that respect, I have a question for the Minister about transitional provision. On 20 June 2011, the Secretary of State for Work and Pensions said:

“Let me simply repeat what I said earlier—it is a bit like a recording, but I shall do it none the less: we have no plans to change equalisation in 2018, or the age of 66 for both men and women in 2020, but we will consider transitional arrangements.”—[Official Report, 20 June 2011; Vol. 530, c. 52.]

What has happened on transitional arrangements since 2011? What meetings have been held on them? What proposals do the Government have to put such arrangements in place to assist women who lost out by

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virtue of the date on which they were born in the 1950s? I sincerely hope the Minister can deal with that issue today.

I congratulate the hon. Member for Airdrie and Shotts (Neil Gray) on his contribution. He made a good point about the problems that will arise in the future if the Government do not deal with these issues now. I also congratulate the hon. Member for Paisley and Renfrewshire South (Mhairi Black)—we can safely say that every Member of the House is closer to retirement than she is. She made a good point at the start of her speech, and the scrutiny and constructive criticism she mentioned throughout her contribution are precisely what needs to be brought to bear on these reforms in the months and years ahead.

The debate has been extremely useful in highlighting a number of issues that the Government need to deal with. The issue of scams came up, and it is crucial. In that respect, I quote the recent Work and Pensions Committee report:

“The pension freedom reforms have increased the prospects of people being conned out of their life savings.”

That should be a warning to the Government. The report also treats the promotion of awareness as a crucial weapon against those scams, and the Government should seriously consider paying more attention to that.

The hon. Member for Paisley and Renfrewshire South brought up the issue of Pension Wise. To deal first with take-up, the first set of statistics we have had seem to suggest that only about 18,000 people—fewer than one in 10—have accessed the guidance. Clearly, more needs to be done to flag up the availability of Pension Wise. Other criticisms in the Work and Pensions Committee report also need to be dealt with. The website has been described as not fit for purpose; the Government should attend to that damning criticism. The guidance has also been criticised for being too general on the one hand, in that it pays insufficient attention to people’s individual circumstances, and too narrow on the other, in that it deals with pensions but not the other things that people need to cope with in retirement. Pension provision is a crucial part of that, but people will have varying interests, such as property that they own, or their care needs. Those other things need to be taken into account in the guidance provided by Pension Wise.

Another issue is the advice gap. Someone whose pension pot is enormous will have access to expensive financial advice on it, and that would be proportionate. However, there is an enormous gap in the middle between people who have access to the free guidance, and those who obtain specialist advice at the top. Many people with pension pots will be in the middle, where such advice is not available. This is a two-way street: we want to increase demand from people who want advice, but on the supply side, we need a regulatory framework in which advisers feel comfortable and confident in giving advice, and about the liabilities to which they open themselves. In that regard I look forward to the results of the financial advice market review, but there is action that can be taken now, certainly as far as improvements to Pension Wise are concerned.

The hon. Member for Ross, Skye and Lochaber mentioned the Social Market Foundation’s recent “Golden Years?” report. That, too, should warn the Government about what can happen in these situations when policy

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is not managed appropriately in the short and medium term. He mentioned, of course, the cautious Australian, the quick-spending Australian and the typical American, but the statistics from Australia make sobering reading. It seems that about 25% of people exhaust their pension pots by age 70, and the figure is about 40% by age 75. Those numbers are highly significant, particularly in an age of increasing life expectancy. Our cautious Australian would decumulate by less than about 1% a year, which would be a more optimistic statistic; but we might compare that with the decumulation rate of about 8% a year for the typical American. That would be a far more worrying statistic to deal with.

There is a broader point to make. Advice and guidance are obviously important at the age of 55, but we must move away from the view that this is exclusively about making sure that people have the appropriate information at the start of their retirement. The reality is that people’s needs between the ages of, say, 55 and 65 are different from their needs between 65 and 75, or 75 and 85. Life expectancy is of course rising, and their needs would be different between 85 and 95 as well. I suppose that that point goes to the heart of what the debate is about: a guaranteed income—that is the phrase used in the title of the debate—throughout retirement. We must look beyond what happens at age 55, although that is highly important, at structured ways through retirement, in which people have access to the advice and guidance they need to make informed decisions. It is vital that the Government do that.

Overall, we can see today’s debate as a marker for the need for action. No one wants people to exhaust their pension pots at age 75. We want action now, to ensure that people will be protected from scams, and that they can get the advice and guidance they need.

3.25 pm

The Economic Secretary to the Treasury (Harriett Baldwin): It is a pleasure to serve under your chairmanship, Mr Betts. I am not quite sure what the sporting achievements mentioned earlier are, but I look forward to hearing about them.

Mr Clive Betts (in the Chair): I think the word “achievements” might be stretching it a little bit, but we will pass over that for the time being. [Laughter.]

Harriett Baldwin: I congratulate the hon. Member for Ross, Skye and Lochaber (Ian Blackford) on securing the debate and making a thoughtful, constructive contribution to our national debate on securing a guaranteed income for retirees. Perhaps I should not confess this, but if Wikipedia is correct, I am the one who should declare an interest as being closest to retirement age of all those speaking in the debate—but perhaps Wikipedia may not be accurate. That has happened before.

Roger Mullin: I should thank the Minister very much for her comment.

Harriett Baldwin: The hon. Gentleman wears it well.

The debate is timely, because we are just over six months into the pension freedoms, and are beginning to get data on what pensioners or retirees have been doing

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with those freedoms, and about use of the free and impartial guidance from Pension Wise, which was set up by the Government. As we speak, life expectancy is growing by about five hours a day in this country, which makes it all the more important that we have this debate and agree on the aspiration to ensure that hard-working people are in a position to fund a comfortable and, we hope, increasingly lengthy retirement.

Against the background that I have set out, the Government introduced radical reforms giving people freedom and choice in how they access their own hard-earned retirement savings, replacing an effective obligation on pensioners to purchase an annuity—a product that often they did not shop around for and that may not have been right for their circumstances.

Julian Knight (Solihull) (Con): The hon. Member for Ross, Skye and Lochaber (Ian Blackford), whom I congratulate on securing this important debate, mentioned at one point reinstating the requirement to annuitise. The old open market system failed many vulnerable consumers, as my hon. Friend the Minister mentioned, and many with impaired life expectancy were shunted by providers into poorly paying and inappropriate annuity contracts. Will she comment on that?

Harriett Baldwin: My hon. Friend is right; the world where we obliged people to buy an annuity income with their retirement savings was not perfect. Often they did not shop around—the data from the Financial Conduct Authority suggest that about eight out of 10 consumers could have got a better deal by shopping around—so I cannot agree with what I believe was SNP policy. That seems to be to end the current situation where there is more flexibility, and once again to require people to buy an annuity. However, I recognise that Members across the House have concerns about customers and how they are supported as they make perhaps their most important long-term financial decision, other than purchasing a home.

Ian Blackford: I just want to clarify something. I absolutely share the concern that the annuity market was not working properly. Where there is a difference of opinion is that we believe that the market should be reformed. We need greater choice in the annuity market: for example, we need to think about how we explain index-linked products in the annuity market, and circumstances such as lower life expectancy must be reflected. We must consider those things in the light of experience of what has happened with pension freedom.

Harriett Baldwin: I thank the hon. Gentleman for that clarification. I agree that we need to evaluate the measures, which is why this is such a timely debate. It is extremely important that, as people take advantage of the new pension freedoms, they have the right information and the tools they need to make an informed and confident decision about their financial future. I recognise that there is a range of different circumstances and that one size does not fit all.

It might be helpful if I summarise some of the changes made over the past five years to the pension landscape to strengthen the finances of people in retirement. They include ensuring that there is no enforced retirement age at 65, and strengthening the first pillar of retirement

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income, the basic state pension, which now rises with a triple-lock—increasing by the greater of 2.5%, earnings or inflation every year. That has been very important cumulatively over the past five years—the income replacement of the state pension is now at its highest level since 1992—and we have pledged to continue that throughout this Parliament.

Nick Thomas-Symonds: I refer back to the Hansard quotation from 20 June 2011 that I cited about the transitional provisions for women born in the 1950s who have lost out under the new state pension provisions. Can the Minister update the House about what has happened with that policy and how the transitional provisions will be introduced?

Harriett Baldwin: I assure the hon. Gentleman that I am just setting out the background. I will address the points that colleagues raised later in my speech.

The changes we are making to simplify the state pension are also important, because they are going to set a new level for the state pension that is higher than the means-tested threshold that we have had in this country historically. That is very important, because we do not want those who draw down their retirement savings to be thrown on to means-tested benefits. I believe I am right in saying that that is a crucial difference from the situation in Australia. We have also safeguarded support for older people in other ways, such as providing free bus passes, eye tests, television licences and so on.

The changes we made in April are an integral part of the whole landscape. I will describe for the benefit of all hon. Members what we think success for the reforms looks like: a vibrant and competitive retirement income market with a range of different products that give people the flexibility and security that is right for them, and well informed, engaged consumers who can access the guidance and advice they need. As more people are automatically enrolled in employer schemes, more people engage with the process. More than 5 million more people are now saving for a retirement income than were in 2010, and by the full roll-out in a couple of years’ time, we will have almost 9 million additional new savers through automatic enrolment, saving £15 billion a year more in aggregate.

Ian Blackford: I am grateful to the Minister for giving way; she is being very gracious with her time. As I said, we fully support auto-enrolment. It is fantastic that there has been an increase in saving and that both employers and employees are contributing, but will she reflect on the situation that could develop? People will have a greater ability to access the pension pot that they are saving into and take out cash at 55, but I am concerned that employers may be disincentivised from contributing to the pension scheme if they see that those who benefit from it can walk away with a cash pot at 55.

Harriett Baldwin: Methinks the hon. Gentleman is worrying too much. At this point, I think we will just welcome the fact that £15 billion a year more is going into pension saving in this country. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) can say to her generation that the earlier they start, the better, given the cumulative impact of the wonders of compound interest. Nevertheless, I take on board the point the hon. Gentleman made.

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The hon. Gentleman said that providers may not have time to get ready and may not have the right kinds of products. In fact, providers have stepped up to the challenge: the systems requirements were admittedly very challenging, but more than 90% of people are now being offered flexibility within their existing scheme and something like a quarter of the largest firms are planning to launch new products in the next six months, so there has been real innovation and engagement with what customers want. We have moved away from the inflexibility of the old annuity market.

The hon. Gentleman highlighted the recent data from the ABI stating that £4.7 billion was paid out in the first six months. The first six months will not necessarily be representative of the settled state of the market, because obviously there has been a lot of pent-up demand, but it is fair to say that in that six-month period £2.5 billion has been invested in income drawdown products and £2.2 billion in annuities. That does not suggest that people are shying away from the annuity market, which we hope continues to be successful and an important part of people’s retirement planning. I am delighted that so many people have already taken advantage of the freedoms and that many providers have stepped up to deliver for their members.

Many hon. Members asked about Pension Wise, the Government’s free and impartial guidance service. It, too, is playing an important role. There have been more than 30,000 guidance appointments and 1.7 million hits on its website so far. Hon. Members alleged that only one in 10 people are making use of Pension Wise, but we dispute that in the sense that people will be getting financial advice, sometimes from a regulated adviser, or they may get information, guidance or advice through their provider. There is a range of different ways in which people can inform themselves; Pension Wise is one of them. It is free, impartial and backed by the Government.

Pension Wise prompts users to consider their life expectancy and any health issues and lifestyle factors they have, and it links to the Office for National Statistics life expectancy calculator, which I am sure everyone in the room has visited. All in all, that is excellent news, but we are always on the lookout for ways to make the service more useful. Last month’s report from the Work and Pensions Committee, of which the hon. Member for Paisley and Renfrewshire South is a member, was welcome. It noted the progress we have already made in ensuring that the reforms deliver for consumers, but made it clear that the job is not yet done.

In line with the Committee’s recommendations, we are considering a number of developments to make Pension Wise even more useful. For example, we are looking at how appointments can be tailored to individuals. In the summer Budget, we opened it up to people from the age of 50 onwards, and we are developing more online tools for the website and calculators that people can use to see how the new pension freedoms relate to their particular circumstances. We are trying to make the website more interactive, and the team has done a fantastic job in delivering that to such a tight timeframe. We are looking to amend the content of Pension Wise appointments to ensure they are more tailored to people in the 50 to 55 age bracket, who are not yet able to take advantage of the pension freedoms but want to start thinking about the options available to them.

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The hon. Member for Torfaen (Nick Thomas-Symonds) rightly mentioned the financial advice market review. I am delighted to hear that he supports the initiative. The Treasury and the Financial Conduct Authority are reviewing what he called the advice gap—the fact that between guidance and paid-for financial advice, there is a gap for ordinary people who do not want to pay for a financial adviser or are not able to afford one at their stage in life. The aim of the review is to come up with a package of reforms, along the lines of those that the hon. Gentleman outlined, to ensure the financial advice market works for everybody. I hope he will write to the review with his recommendations.

Advice, in and of itself, is not enough. It is important that we supplement our guidance provision and review it on an ongoing basis. We must ensure that we make the most of Pension Wise, which focuses on pension freedoms, the Money Advice Service, which focuses on some of the other aspects of financial markets, and the Pensions Advisory Service, which is run out of the Department for Work and Pensions. We must make those services more effective for consumers. Alongside the financial advice market review, we are also looking at the guidance and hope to have some findings ahead of next year’s Budget, so that people get the help they need to take such important long-term decisions.

Several hon. Members mentioned scams, and the Work and Pensions Committee report also flagged that risk, which we recognise is not new. Pension scammers were previously trying to get people to take money out of their pensions before the age of 55, causing a lot of harm in the marketplace, but I agree that it is an important matter. Given that consumers have been given unprecedented freedom and choice in how they access their retirement savings, we appreciate that fraudsters will use that as an opportunity to try and exploit people. An effective strategy to target scams must bring together all the relevant parts of Government and work with providers to focus on both the prevention and the disruption of scams. That is what we are doing and will continue to do. We have set up Project Bloom, a multi-agency taskforce led by the National Crime Agency, which is joining up the various Departments involved, the regulators, anti-fraud groups and police forces to tackle scams. It is worth reiterating here how important it is that we remind consumers that they should never engage with anyone who telephones them out of the blue offering help with their pension. I encourage all hon. Members to get that message out widely in their communities. I emphasise that Pension Wise will never call without a consumer having previously asked them to.

The pensions regulators have their own pension scam campaigns to raise awareness of the issue. The FCA runs ScamSmart and the Pensions Regulator runs Scorpion. Warnings are sent out with paperwork from pension providers and both of them give advice to businesses and consumers on how to protect against scams. Pension Wise also alerts customers to the risk of scams during guidance sessions and on its website, and firms have a duty to flag the risk of investment scams, when appropriate, to their members as part of the FCA’s retirement risk warning rules. The hon. Member for Paisley and Renfrewshire South, who asked me about this during a Work and Pensions Committee hearing, wanted to know

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about some of the numbers. So far this year, since the pension freedoms were launched, incidents reported to Action Fraud are lower than the year before, but I completely agree with her that we must remain on top of this. To be frank, we have to be tough, because one scam succeeding is one too many.

Moving on to women who have been affected by the change in pension age, I am probably one of the few women affected who actually welcomes the fact that I will be able to do this wonderful job for longer, but I realise that not everyone feels that way. To respond to the questions from the hon. Member for Torfaen about the number of meetings that have been held, the number of updates and the transition protection and his Hansard reference, which shows what an effective researcher he is—he is a published biographer—I will defer to my colleague Baroness Altman, who will write to him with the details.

The hon. Member for Paisley and Renfrewshire South also asked about the Pension Wise data and when it will be published. In ministerial speak, I believe that the word is “shortly” so it should be up on the website soon. We will write to the Chair of the Work and Pensions Committee as soon as that happens so that he is the first to know.

I have responded to most hon. Members’ points, but I will remain on my feet in case anyone feels that they have not had a chance to ask their question or to get one answered.

Roger Mullin: I thank the Minister for giving way at this late stage. Does she agree that, as I mentioned earlier, women face particular risks and therefore require particular additional support and guidance to ensure that they make the most of their futures?

Harriett Baldwin: I am sure that, like me, the hon. Gentleman is a passionate feminist and thinks it important that men and women have the same pension age. I appreciate, however, that the process of transition from the much earlier age at which women were retiring will, depending on people’s circumstances, have posed a range of challenges, of which the Government are well aware. As a constituency MP, I am also well aware of such issues. I will write to the hon. Member for Torfaen and the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) with more specific points from my noble colleague.

Shall I conclude with my impassioned concluding remarks, Mr Betts, or is everyone happy to stop there?

Mr Clive Betts (in the Chair): It is up to you, Minister. You have time if you wish to impassion us.

Harriett Baldwin: I will say something in conclusion as we have time.

I thank all hon. Members who have participated in the debate. How people access an income in retirement is an incredibly important question. It is also an issue of huge international importance. I have summarised a range of changes that have been made over the past five years. The more recent pension freedoms are major changes and it is important that we get them right, which is why the Government and the regulator will continue actively to monitor the post-reform retirement landscape closely.

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Mr Clive Betts (in the Chair): I was only too pleased earlier that, as I was in the Chair, I was not able to join in the competition about who was nearest to retirement age. We will move on to Mr Ian Blackford winding up briefly.

3.46 pm

Ian Blackford: I thank all hon. Members who have participated this afternoon. We have had a good debate on the issues as we see them. I thank all who have contributed and expressed legitimate concerns about the consequences of the pension freedoms.

We all share the view that we need to architect a pension structure conducive to people having the best outcomes possible in their elderly years. I encourage the Government to look at the evidence of the first six months. I accept that some of the pension drawdown of the first six months was pent-up demand. None the less, as the Minister has conceded, £2.5 billion is a considerable sum to be drawn out of pension pots—50% of all the cash that was exorcised from them over that period. We have to look at that closely.

I remain concerned that pensioners will be put in a position of some financial hardship if they expose themselves fully to running down their pension pots. We accept that over the past few decades considerable moves have taken place to eradicate pensioner poverty, which we are all delighted about, and that there is little likelihood of pensioners falling below the threshold of 60% of median income, which we used to use to define relative poverty, but none the less, on the evidence from the Social Market Foundation, we can see that pensioners would fall below the 80% and perhaps even 70% income thresholds. That should concern us. It is right to continue to debate such matters and we should see if we can work together to provide more certainty and security for pensioners.

Question put and agreed to.


That this House has considered Government policy on guaranteed income for retirees.

3.47 pm

Sitting suspended.

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Court Charges (Access to Justice)

[Mr James Gray in the Chair]

4 pm

Tulip Siddiq (Hampstead and Kilburn) (Lab): I beg to move,

That this House has considered court charges and access to justice.

I want to consider the effect that the criminal courts charge has had on access to justice. In the past five years, whether in criminal or civil law, access to justice—the ability to secure legal representation or to maintain one’s innocence—has come under repeated attack. While the Conservative party is apparently so adamant about imposing British values through the Ministry of Justice’s output, I can think of no other British Government who have attacked the principles of Magna Carta in such a manner.

The debate focuses on the criminal courts charge. While I am relatively new to the House, other Members—[Interruption.]

4.1 pm

Sitting suspended for a Division in the House.

4.15 pm

On resuming

Mr James Gray (in the Chair): As a result of the Division, the debate will run until a quarter to 5. The Member in charge might perhaps wish to leave a quarter of an hour or thereabouts for the Minister to respond.

Tulip Siddiq: To pick up where I left off, the Government are attacking the principles of Magna Carta. I am relatively new to the House, but other Members will have been concerned about previous legal reforms by this Government. The focus of the debate is criminal court charges, which have attracted widespread criticism from all parts of the legal world, from magistrates to the Lord Chief Justice.

Wayne David (Caerphilly) (Lab): My hon. Friend has mentioned magistrates; does she share my concern about the fact that at least 50 magistrates have resigned since the implementation of the charges?

Tulip Siddiq: My hon. Friend has anticipated a point I will come on to. As he said, 50 magistrates have resigned, and in one case highlighted by the Howard League, a magistrate felt inclined to pay the court fee from his own pocket because of his sense of injustice.

Nick Thomas-Symonds (Torfaen) (Lab): It is a pleasure to serve under your chairmanship, Mr Gray, and I congratulate my hon. Friend on securing this debate at a very timely moment. Does she agree that a major risk of the charges is that they will have a disproportionate effect on the poorest defendants, which is unfair?

Tulip Siddiq: Absolutely. I secured the debate because I am worried about access to justice for people from poor socioeconomic backgrounds. I will touch on that later.

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The court charges were introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012. They have had a dramatic impact on the number of cases going to court. I am particularly worried about tribunal numbers, which have plummeted, and the number of discrimination and unfair dismissal cases, which seems to be going down. I am concerned that the charges are in effect an attack on the most vulnerable in our society. I say the most vulnerable, because statistics show that sex discrimination cases brought by women have gone down by 80%. Similarly, if we compare the first few months of 2014 with the same period in 2013, the number of race discrimination cases has gone down by 60%.

Access to the court system is not, as the Government have put it, part of the welfare state. I prefer to agree with the Law Society, which said that the court system should be seen as

“part of the…rights and duties that give…resilience”

to the society that we live in. I do not doubt that our centuries-old court system needs some reform, but we need to think carefully before proposing those reforms. The Government would do well to remember their responsibility to enable every citizen to be treated equally before the law, whether they are a defendant, a victim or another party.

It is important to consider the effect that the criminal courts charge is having on poor defendants, as my hon. Friend the Member for Torfaen (Nick Thomas-Symonds) mentioned. Despite the lack of quantitative data at my disposal, a lot of anecdotal evidence has been brought to light, especially by organisations such as the Howard League, revealing that this charge is not only intolerable in its consequences but will in no way recover the money that the Government talk about.

Keir Starmer (Holborn and St Pancras) (Lab): In the light of the failure to consult before the criminal charge scheme was introduced; the clear concerns of judges, magistrates and the whole legal profession; and the likelihood that this will add to the problem, rather than solve it, does my hon. Friend agree that this scheme should be reviewed this autumn, as the Howard League argues, rather than in three years?

Tulip Siddiq: I absolutely agree with my hon. and learned Friend, who has a lot of experience in this field. That is something I raised with the Justice Secretary when I asked him in the Chamber a few weeks ago why this absurd policy had been signed off in the first place, and he said that it was under review. We should not wait three years, while the reform has dramatic effects on the most vulnerable in our society. We should move the review forward; if the scheme is under review, that should be done immediately, and we should not procrastinate.

Let me highlight what I find most concerning about this charge and what has struck me. This charge will put pressure on people to plead guilty because they are worried about financial costs. If someone pleads guilty early on, they are less likely to incur costs than if they say and then maintain that they are innocent, and are found guilty later down the line. That will inevitably put pressure on people to plead guilty. I want to read out

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some of the figures, to hammer this home. The charge rises from £150 for a guilty plea for a summary offence in a magistrates court to £520 for a conviction after a not-guilty plea. The charge at Crown court is £900 for a guilty plea and £1,200 for a conviction after a not-guilty plea. Think about the constituents who live on the estates of Hampstead and Kilburn, the constituency I am so proud to represent in this House. They would not be able to afford those fines.

Christina Rees (Neath) (Lab): Does my hon. Friend agree that one aspect of this issue is the fact that courts are given no discretion to take account of an individual’s ability to pay?

Tulip Siddiq: I will touch on that later, but there is a lot of anecdotal evidence, as I have said. The Howard League and other organisations have highlighted that people on benefits or people who rely on social security are being expected to pay fines that we know they will not be able to pay. It is unrealistic to expect those people to pay these charges, and administratively, it probably costs taxpayers more.

Wayne David: The figures I have seen underline the point my hon. Friend just made. My understanding is that some £5 million in court charges has been issued, but less than £300,000 has been collected. Does that huge gap not show how ridiculous this policy is?

Tulip Siddiq: Absolutely. If we look at the money we have managed to claw back, it shows why this policy should be scrapped. It should not take three years to review it, because we have the evidence, as my hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) said.

I rarely agree with Conservative Members of the House, but I agree with the Chair of the Select Committee on Justice, the hon. Member for Bromley and Chislehurst (Robert Neill), who said on Radio 4 that the charge

“does seem to be distorting the way in which people behave in court…defendants might plead guilty to save the cost of the charge when otherwise they would not have done”.

That is from a member of the Conservative party. I could not agree more with him.

In 21st-century Britain, we should be appalled by the miscarriage of justice, especially when defendants are foregoing their freedom due to financial constraints. To pick up on a point made by my hon. Friend the Member for Torfaen, in some magistrates courts about 80% of defendants are dependent on state support to meet basic living costs, which makes this issue even more pressing. The charge means that poorer defendants are likely to make a different decision from the one they would have ordinarily made. That means we risk their voice being at best constrained, and at worst shut out from our justice system.

Keir Starmer: Does my hon. Friend agree that this cuts across the principle we have had in our criminal justice system for many years of being willing to reduce a sentence for an early guilty plea, because we are setting our face against increasing the consequences for not pleading guilty?

Tulip Siddiq: Again, I draw on my hon. and learned Friend’s experience in the legal world. I absolutely agree with him, and I hope the Government will listen to his

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interventions today, because I do not think anyone could be better equipped to help the Government at this point than him.

What is even more frustrating is that we are unable to place a specific figure on the increase in the proportion of guilty pleas at first hearing at the magistrates court. Until recently, quarterly criminal court statistics routinely included that figure. While the Government may be reticent about taking on board demands for revision, they must strive to make those figures available so that the extent of the recent phenomenon can be made public. I urge the Minister to be transparent about the impact this reform is having.

My hon. Friend the Member for Caerphilly (Wayne David) mentioned that 50 magistrates have resigned since the implementation of this policy. Let us listen to the experts and judge them by their actions. The Magistrates Association claimed in written evidence to the Justice Committee that

“the lack of judicial discretion means that the charge…is not in accordance with the principles of justice.”

My second concern is that the charge is producing fines that are disproportionate to the minor offences for which defendants are often charged. For generations, magistrates imposed financial penalties in accordance with how severe the crime was and the defendant’s ability to pay, which my hon. Friend the Member for Neath (Christina Rees) mentioned. The mandatory charge can account for 50% or more of the total, placing enormous anxiety and stress on individuals who sometimes have been driven, in despair, to commit crimes. I am not saying we should not punish criminals, but the importance of judicial discretion cannot be underestimated.

I would like to give one example from Highbury Corner magistrates court, where a lot of Hampstead and Kilburn’s constituents are tried. The defendant in question had no savings, no income and a drug addiction. He was put in the docks of Highbury for stealing a couple of steaks and 70p lollipops. He was told he should plead guilty, because the charge would be £150, whereas if he was found guilty further down the line, it would rise to £1,000. Of course, he pled guilty. The reporters at the case wrote that he sat there with “sunken cheekbones”, his shirt falling off his back, and he knew that he would in no way be able to pay the court fees imposed on him. The charge was £150, with a £65 victim surcharge and further costs of £85, which came to £295 for a man who the judge said needed 12 months of rehabilitation and community service. There is no way he will be able to pay that back. Is this a system that works for people? Should we not be looking at these vulnerable people who cannot afford to pay the fees we are imposing on them? Is this the future we want for our criminal justice system? It is surely time the Government realised that this policy is not fit for purpose and needs to be reviewed.

I want to ask the Minister a few questions. First, we have been told that the Government are listening, which is a good sign, but can we ensure the review is brought forward? May I have an answer to my original question to the Justice Secretary: how did this absurd policy get signed off in the first place? Secondly, in the medium term, will the Government disaggregate the statistics that are due in December, so that we can see exactly how little is being paid back and how much the policy is costing taxpayers in administrative costs?

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A lot of Members in this House and in this Chamber today came into politics because they believed in the values of equality, fairness and social justice. If we carry on in this way, we will create a legal system in which people with money will have access to justice and those without will be shut out. That is not the kind of society we want to live in; we want to live in a society that has equal access to justice, and we need to be very careful, because we are in danger of hitting the most vulnerable people in our society with the legal reforms that are being proposed. I ask the Minister to respond to my questions, and I urge him, once again, to listen to all the Opposition Members who have made points.

4.30 pm

The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara): May I say what a pleasure it is to serve under your chairmanship this afternoon, Mr Gray? I congratulate the hon. Member for Hampstead and Kilburn (Tulip Siddiq) on securing the debate and on so eloquently and passionately putting forward her views. I also commend all the other colleagues who have joined the debate, which shows the importance that colleagues attach to this very important subject.

The Government believe that convicted adult offenders should take responsibility and contribute towards the costs that they impose in the criminal courts. The criminal courts charge has made it possible to recover some of those costs from offenders, which in turn is reducing the burden on law-abiding taxpayers.

Broadly, the levels of the charge cannot be more than the relevant costs reasonably attributable to a particular type of case, in line with the limits of the primary legislation. This means that when the costs of running the courts change, such as when efficiencies are made and running costs decrease, we will need to be able to change the levels of the charge to reflect that. As we have specified the levels of the charge in secondary legislation, we can review the charge levels and will change them when necessary.

The criminal courts charge framework means that it is imperative that offenders are given a fair and realistic opportunity to pay the charge. It is important to remember that, in setting payment terms, the court has the discretion to consider the offender’s means—a point that the hon. Lady considerably expanded on. The court may make sure that payment terms are set at an affordable rate. Offenders can also contact a fines officer at any point to request variations in payment rates if their circumstances change and they are no longer able to pay at the rate initially set. At those points, the court and fines officer will have an opportunity to take existing debts into account, making sure that repayment is reasonable and affordable, given the offender’s individual circumstances.

Mr James Gray (in the Chair): I call Lisa Nandy.

Melanie Onn (Great Grimsby) (Lab): It is Melanie Onn.

Mr James Gray (in the Chair): I beg your pardon; I blame my hon. friend.

Melanie Onn: Thank you, Mr Gray; the Minister referred to me as Liz Saville Roberts yesterday, so I am not doing very well.

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On the point about people who are unable to pay the costs, for some, a financial penalty is utterly meaningless. Those without the means to pay are without the means to pay, and reducing the cost will not make a difference if they are already severely indebted. If they are not in a position to earn any additional funds, does it not add to the burden of an administrative system to seek to reclaim costs from somebody who clearly is never going to be able to pay them?

Mr Vara: I am grateful to the hon. Lady for intervening; she gives me the opportunity to explain an important issue. The criminal courts charge is payable only after, first, the compensation has been paid; secondly, the victim surcharge has been paid; thirdly, the prosecution costs have been paid; and, fourthly, fines have been paid. A judge imposes those, and only when all four have been paid does the criminal courts charge come along; and, although set at a specific rate, it is nevertheless assessed by the court’s officers on the basis of ability to pay. That means that the other debts, income and all other such financial factors are taken into account; and then, based on what the officer feels is an acceptable way for the charge to be paid, the money is paid, after the other four impositions have been dealt with. I might add that if an individual has made all reasonable efforts to make the payment and they have not reoffended, then after two years whatever is left is scrapped.

Keir Starmer: Does the Minister agree that it is highly unusual for a number of magistrates to resign over an issue such as this? When they do so, what is the level of concern in the Department, ranked between one and 10?

Mr Vara: We have some 20,000 magistrates. At any given point, there are always some who are resigning. It is regrettable that some have felt it necessary to resign on that basis, but I will say that magistrates do hugely beneficial work. It is an important role in society and they give up valuable time of their own to do a good service. Of course, it would be wrong for me to comment on individual circumstances, but it is regrettable that some have felt it necessary to resign on that basis.

Carolyn Harris (Swansea East) (Lab): Does the Minister not agree that the fact that only a fraction of the imposed costs has been recovered indicates that those charged with repayment are unable to repay, and that this therefore makes the whole court charge untenable?

Mr Vara: It is not yet known how much has been recovered, because those statistics will be forthcoming in the December quarterly statistics. Just to explain, they were not in the September quarterly publication because, although initial data from the first three months of operation—the change having taken place in April—were included in the regular September quarterly statistics, it was not possible to provide separate figures on the charge in time for that publication which met the data quality standards required for published management information. Detailed figures will, however, be published on 17 December.

I note the comments made about the effects on the offender’s plea decision and the issue of access to justice. The Government are committed to ensuring a fair and

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effective criminal justice system that is accessible to all, and we are assured in the knowledge that the coalition Government carefully considered the compatibility of the criminal courts charge provisions with the European convention on human rights, on article 6 “access to the court” grounds. Article 6 of the European convention on human rights has an implicit right of access to the courts, and the charge does not interfere with that right in any way. In particular, it should be remembered that the charge is imposed at the end of proceedings. Defendants facing trial are not required to pay the criminal courts charge and the charge is not a condition of an offender being able to access the courts. A person will be subject to the charge only if convicted following a court hearing that will have taken into consideration all the available evidence. Therefore, those who are innocent and should be found not guilty by the courts will not be required to pay the charge.

We should also remember that our justice system already creates a number of incentives for those who enter early guilty pleas to ensure that the wheels of justice run more smoothly. For example, if defendants who are guilty enter a guilty plea as early as possible, the courts recognise the benefit to victims, witnesses and the criminal justice system as a whole by means of a reduction in sentence. I recognise, however, the need to ensure that any incentives are proportionate and I note the concerns expressed about the matter.

Keir Starmer: I spent many years working on proposals for early guilty pleas and I support them, but the underlying principle was always that the sentence or consequences were reduced for an early guilty plea, not increased for not pleading guilty. Does the charge not offend that principle, and was the Sentencing Council consulted before the charge was brought forth?

Mr Vara: I am not sure I follow what the hon. and learned Gentleman is saying. It seems pretty straightforward that at the moment we have a system whereby if somebody pleads guilty, it assists the criminal justice system, the witnesses, the victim and so on, and proper due regard is taken of that. In this instance, if a person pleads guilty, due regard is taken, but they should not plead guilty if they are not guilty. They should allow the court process to take its course.

Keir Starmer: Will the Minister give way?

Mr Vara: I will happily give way, but I hope the hon. and learned Gentleman is mindful that this is a time- limited debate and I will have less time to respond.

Keir Starmer: I will be brief, and I accept that the debate is time limited. The point I am making—it is a point of principle—is that the courts have always fixed the penalty and then reduced it for an early guilty plea. The penalty has never gone up because someone did not plead guilty in the first place. That is the fundamental principle that is being offended.

Mr Vara: The charge is not part of the sentencing process, and that has been made abundantly clear to magistrates and the judiciary. It is a contribution to court costs and is not intended to be taken into account for sentencing purposes. There has been confusion, and I want to put on the record the fact that it is not intended to be a means of sentencing.

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Given the financial imperative to bring down public spending, the Government must ensure that the courts are adequately funded in the long term in a way that allows the budgetary challenges ahead to be met. There is a high level of consensus across the justice system that the current system is unsustainable.

Christina Rees: Can the Minister say whether the revenue collected from the court charges goes towards the legal aid fund?

Mr Vara: The legal aid fund is one of the most generous in the world, after the reductions, at some £1.6 billion. It was previously over £2 billion. We have made reductions and we still rank among the top countries in legal aid provision. It is important to remember that point, which also addresses some of the comments of the hon. Member for Hampstead and Kilburn about access to justice. Let me remind her that, notwithstanding the reductions made by the Government in the past five years, we remain one of the most generous countries in the world for legal aid payments.

There is a high level of consensus across the justice system that the current system is unsustainable. This means that the court system must undergo fundamental reform. Our justice system must work better to deliver swifter, fairer and more efficient access to justice for everyone.

Tulip Siddiq: Will the Minister give way?

Mr Vara: I will give way, but I will not be able to conclude my comments. Only one and a half minutes remain.

Tulip Siddiq: I would like to know whether the review will be brought forward or whether it will take three years.

Mr Vara: As my right hon. Friend the Lord Chancellor has said, the matter is under review.

Our justice system must work better to deliver swifter, fairer and more efficient access to justice for everyone. It must uphold the rule of law, the most precious asset of any civilised society. Changes to fees have occurred on the civil side, and bearing the burden of running the criminal courts cannot continue to be purely the responsibility of the taxpayer. Offenders must take responsibility for their actions, and the criminal courts charge is an important part of this. In reforming the courts and bearing down on the costs of running them, the Government are determined to make the justice system more efficient and to transform it into a modern public service.

I want to make it clear to the hon. Lady and to all other hon. Members present that I am aware of the concerns and various issues that have been raised, and I will certainly take on board all that has been said by her and other hon. Members. However, it is important to stress—I hope the hon. Lady will appreciate this—that in reviewing the charge, we must consider all the evidence to allow us to form an appropriate view and to help us to make sure that the criminal courts are run efficiently and fairly. I congratulate the hon. Lady again on securing this important debate.

Question put and agreed to.


That this House has considered court charges and access to justice.

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Groceries Code Adjudicator

4.44 pm

Julian Sturdy (York Outer) (Con): I beg to move,

That this House has considered the role and powers of the Groceries Code Adjudicator.

It is a pleasure to serve under your chairmanship, Mr Gray, while discussing a topic that has not yet been debated in depth this Parliament. Before doing so, I must draw hon. Members’ attention to my declaration of interest. Having been a Yorkshire farmer before becoming an MP, I have farming interests, but I do not have any commercial relationship that would be affected by the role of the Groceries Code Adjudicator.

I would like to place on the record my thanks to all the industry bodies and trade associations that have been in contact with my office to feed their views into this important debate. In kicking it off, I would like to voice the concerns that many in the food and farming industries share regarding certain aspects of the Groceries Code Adjudicator. The organisation has been broadly welcomed by many in the sector, but there has been some disquiet about issues concerning the adjudicator’s resources, powers, performance and overall remit, which I will discuss in turn.

As many hon. Members know, the adjudicator was established back in June 2013 to ensure that the largest supermarkets treat their direct suppliers lawfully and fairly. The adjudicator’s primary role is to ensure compliance with the groceries supply code of practice. It is worth mentioning that before the code was introduced in 2010, many farmers reported widespread unfair practices such as last-minute price cuts, being asked to guarantee the supermarket a minimum profit margin, and growers being expected to pay as a condition of being a supplier. Those unfair practices would all now be illegal under the code, but the impact of the code has been to force many food producers out of business. As a nation we have become increasingly reliant on imported food—a theme I will touch on later.

Mr Mark Williams (Ceredigion) (LD): I congratulate the hon. Gentleman on securing this important debate. I do not have the pedigree of a farming background, but I represent many farmers. An increasing feature of the market has been the development of voluntary codes, such as those in the dairy and beef sectors. When he goes on to talk about remit, will he be mindful of the need to encourage the adjudicator to have the power to look at where voluntary agreements are and are not working?

Julian Sturdy: The hon. Gentleman makes a good point. He is absolutely right that some of the voluntary codes are working well and are successful, while others need much more work. I would welcome the codes falling under the remit of the Groceries Code Adjudicator. As I will set out, there needs to be a much wider remit for the adjudicator, especially given that the Minister will review the remit in March 2016.

To go back to the history, the Groceries Code Adjudicator oversees a sector that is worth £177 billion and employs 3.8 million people—14% of the UK workforce or one in every seven jobs in the country. It is also our largest manufacturing sector, worth almost a fifth of our manufacturing output, which is more than our car and aerospace manufacturing sectors combined.

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Supermarkets are huge wealth creators in this country, and I am sure that many hon. Members present will have first-hand experience of the community work that supermarkets do in their constituencies, so this is not about being anti-supermarket, as they play a huge role in our economy and society. However, in the light of the sheer scale of the grocery industry, it is about fairness. Given the scale of the industry, it might come as a surprise that the adjudicator is employed for only three days each week and is assisted by a team of just five people. I have always been a champion of lean and efficient public bodies, but the current resources do not appear appropriate for the challenges at hand.

Chris Davies (Brecon and Radnorshire) (Con): May I echo the words of my friend the hon. Member for Ceredigion (Mr Williams)? I am delighted that my hon. Friend the Member for York Outer (Julian Sturdy)has brought this debate to Westminster Hall and highlighted this very important issue. While he is on the history, can we go back a little further? He will remember, as I am sure all hon. Members do, the great anticipation that there was for a Groceries Code Adjudicator. Various Governments had promised to create that role, but it never came about. When we brought it forward, there was great anticipation among the farmers and producers in my constituency of Brecon and Radnorshire that this organisation would have real teeth to deal with the situation with the supermarkets. As my hon. Friend rightly says, supermarkets are a very important part of—

Mr James Gray (in the Chair): Order. Interventions must be brief.

Chris Davies: Yes, Mr Gray. The supermarkets are very important, but so is this adjudicator and so indeed are suppliers. When we look at the history, we see that we need to strengthen—

Mr James Gray (in the Chair): Order. Interventions must be brief.

Julian Sturdy: I thank my hon. Friend for his intervention. He is absolutely right about looking back at the history. I remember, before the 2010 general election, attending many hustings and talking about a Groceries Code Adjudicator and how it was so important that we brought that forward. I remember, as I am sure a number of hon. Members here will, speaking in the debate on Second Reading of the Groceries Code Adjudicator Bill, and warning then that, while we had to bring that forward, we had to ensure that it had real teeth to act. I feel that it has been a good step forward, but there is much more work to do, and I want to touch on that.

Ms Margaret Ritchie (South Down) (SDLP): I congratulate the hon. Gentleman on initiating the debate. A number of us, including the Chair of the Select Committee on Environment, Food and Rural Affairs, the hon. Member for Tiverton and Honiton (Neil Parish), have already discussed some of these issues, but does the hon. Member for York Outer (Julian Sturdy) agree that the Groceries Code Adjudicator’s remit should be expanded in legislation to include fair and reasonable

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prices for producers? Many people—not solely in the dairy sector, which has a voluntary code—have been asking for that.

Julian Sturdy: The hon. Lady is absolutely correct. I will go on to pay tribute to the EFRA Committee and the work that it has done on this subject. I know that it has forthcoming inquiries on the topic as well. I entirely agree with her. I want to touch on the dairy sector later in my speech, but this issue goes right across the fresh produce sector, and we have to get fairness there.

I was making the point about the sheer scale of the industry and whether the Groceries Code Adjudicator has enough resources to do its job. Why does the adjudicator have a team of only five, and why is the adjudicator employed for only three days a week? Is that because there is not a real problem of the supermarkets using their massive size and resources to abuse their dominant market position? Or is the problem simply not being taken seriously enough, with the result that those are the resources available to the adjudicator?

The powers of the GCA have also been called into question. My hon. Friend the Member for Brecon and Radnorshire (Chris Davies) has touched on this. I remember making a contribution on Second Reading of the Groceries Code Adjudicator Bill, when it was not envisaged that the adjudicator would be able to fine companies from day one. I warned then that, without adequate teeth, the GCA would be like a referee without a whistle. I think that another Member in that debate said that it would be like a referee without a red card in his top pocket. The fear with all new regulatory bodies is that they are set up too cautiously and they become ineffective talking shops, unable to gain influence or authority in the sector. It was therefore a welcome development when, before the Bill’s Committee stage, the Government accepted the argument about giving the adjudicator the ability to fine retailers. Secondary legislation was introduced to give effect to the power to impose penalties on the large supermarkets of up to 1% of their annual UK turnover. That was another positive step forward—a step in the right direction—as the adjudicator requires teeth to send a strong message to the supermarkets that treating suppliers fairly is not optional.

It is deeply unfortunate, however, that the adjudicator’s ability to impose robust fines will come in after the GCA’s investigation into allegations that Tesco overstated its profits by £250 million. Should a breach of the code be found to have occurred, the only possible sanctions will be to name and shame the retailer, which is redundant at best, as the matter has already been widely reported in the media. In the light of the GCA’s limited resources and the late arrival of its powers, it is fair to ask what the adjudicator has achieved in the two years since it was established.

Rebecca Pow (Taunton Deane) (Con): I, too, congratulate my hon. Friend on securing the debate. We have discussed this issue at length during the EFRA Committee’s farm prices inquiry, and it is very pertinent. I wonder whether the adjudicator is working three days a week because she does not have enough powers to fill the other days. She is legally prevented from looking for evidence, and her remit extends only to direct suppliers, which leaves out the majority of farmer suppliers, which in turn does not encourage them to bring evidence forward.

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Julian Sturdy: I thank my hon. Friend for that intervention. She has hit the nail on the head: the Groceries Code Adjudicator does not have the powers to fill the whole week. But let us be serious about this. Ultimately, we must have a Groceries Code Adjudicator that has the powers to act on behalf of primary producers right across the sector. I am sure that if we deliver those powers, the Groceries Code Adjudicator will be able to fill her time right the way through the week.

To date, the adjudicator has not completed a single investigation, has not made any final decisions in arbitration cases and, as we have discussed, has not imposed any enforcement measures, financial or otherwise. The GCA is, however, to be commended for the transparent way in which it measures its own performance through the use of surveys. The key findings were that eight out of 10 suppliers said that they had experienced a potential breach of the code in the past 12 months. Unfortunately, only 38% of direct suppliers said that they would consider raising the issue with the adjudicator. Something has gone seriously wrong when the majority of suppliers have suffered problems with the code but most would not even consider raising the matter with the body in charge of protecting their welfare.

This year, the surveys show some positive developments, with a drop in the number of suppliers reporting potential breaches and a rise in the number of suppliers who would consider raising the issue with the GCA. However, serious weaknesses remain. Despite an increase in confidence in the GCA, the majority of direct suppliers still would not have confidence in the adjudicator helping them when they are in need. The reasons for the lack of confidence are, sadly, all too clear: 68% of suppliers fear retribution by the retailer should they be identified, and 45% are not confident that the GCA will maintain their confidentiality, despite being bound to do so.

The surveys ultimately raise more questions than answers. How can we make sure that the majority of suppliers have confidence in the GCA to handle their complaint appropriately? What can we do about the apparent climate of fear that surrounds the reporting of potential breaches of the groceries code? I will be inviting the GCA to discuss those matters with my colleagues at a special meeting of the all-party group for rural business next year, which I hope the Minister might attend. I hope that she will at least address those concerns today. I know that she is very experienced in this matter and I look forward to her response.

Perhaps most important is the question of extending the remit of the GCA. That has been widely supported by many in the food industry, especially in the light of the plight of our dairy farmers. Although I appreciate that the Minister will review the role and powers of the adjudicator in March next year, the truth is that many of our dairy farmers cannot wait that long. It is to be welcomed that the EU support payments to help hard-pressed dairy farmers manage their cash-flow problems started arriving in farmers’ bank accounts yesterday, two weeks ahead of schedule. I am also pleased that the Government have secured from the European Commission more than £26 million—the third largest support package among member states—to help dairy farmers affected by the global volatility in milk prices. As the Tenant Farmers Association has argued for some time, however, the GCA could play a hugely positive role in helping dairy farmers by ensuring fairness throughout the supply chain.

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In January this year, I was greatly encouraged by the Prime Minister’s response to a question asked by my hon. Friend the Member for Montgomeryshire (Glyn Davies), who is here today. He enquired whether the powers of the GCA should be extended and strengthened to support the dairy industry. The Prime Minister agreed with him, saying, of the GCA:

“I also think it is time to look at whether there are ways in which its remit can be extended to make sure it looks at more of this vital industry.”—[Official Report, 21 January 2015; Vol. 591, c. 217.]

Sadly, nine months later its remit remains the same, and the plight of dairy farmers continues.

There are three crucial ways in which the remit of the adjudicator could be extended to help dairy farmers and those most in need in the fresh produce sector. First, as the British Poultry Council, the National Farmers Union and the Country Land and Business Association have made clear, the adjudicator must have the power to initiate its own investigations. Currently, it can act only on complaints. It has been suggested that in much the same way as Ofsted has the powers to investigate the performance of schools on its own initiative and at very short notice, the GCA should be able to investigate potential breaches of the code among the larger supermarkets at any time. At the moment, it appears that the adjudicator needs to be handed all the evidence and have a conclusive case against a retailer before an investigation can commence. Perhaps it would be better if the GCA could say, “I have heard enough from this area of the industry, and there is clearly a problem. I will open an investigation to make sure that the supermarkets are not abusing their dominant market position.”

Secondly, trade associations such as the Federation of Small Businesses and the Royal Association of British Dairy Farmers argue that the adjudicator needs to be able to examine the whole supply chain from the farm to the checkout. Currently, only direct supply contracts can be investigated. Although the vast majority of farm produce passes through a processor before ending up on the supermarket shelves, as the law stands the GCA cannot consider the impact of retailer activity on farmers, even though that is at the centre of the dairy industry debate.

Thirdly, although we do not want to give the adjudicator the power to fix prices, the GCA should have the power to investigate and report on the balance of pricing throughout the supply chain. That would ensure that all suppliers in the chain—the primary producers as well as the direct suppliers—were getting a fair deal. The information would also provide much-needed transparency, which would assist farmers and food producers in negotiating fair and sustainable contracts with the processors and, ultimately, the supermarkets that they serve.

I have briefly touched on the fact that there is widespread concern about the huge volatility in milk prices and the impact that that has had on the British dairy industry. As few dairy farmers sell direct to supermarkets, there have been calls, most notably from the Environment, Food and Rural Affairs Committee, for the scope of the GCA’s powers to be extended. I am sure that my hon. Friend the Member for Tiverton and Honiton (Neil Parish) will be able to update us on the Committee’s excellent work on the dairy industry and farm-gate prices.

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It is not only dairy farmers who come under the remit of the GCA. As the NFU “Catalyst for Change” report makes clear, fruit and vegetable growers up and down the country describe the current environment as a battlefield. There are concerns that because of the price wars among the largest supermarkets, driven by the increasing competition from discount retailers, supermarkets are up to their old tricks. Feeling the pinch from their new discount competitors, the temptation to attempt to claw back profitability from further down the supply chain is, sadly, all too real. That will have dangerous consequences, but the GCA cannot intervene because the vast majority of farmers sell their produce through processors. The impact of that poor practice, as in the past, has been to force producers out of business, increasing our reliance on imported food. The value of British fruit and vegetable production has fallen by 14% since 2010, and imports have never been higher.

Mr Mark Williams: I have been listening carefully to the hon. Gentleman’s excellent speech. Does he agree that we are talking about not only an economic argument, but confidence in the industry? The theme in my constituency has been the confidence of young people whom we desperately need—the age demographic of farming is going up—to join the industry. If they do not see fair play at its most basic, they will be less inclined to join the industry.

Julian Sturdy: The hon. Gentleman makes a good point. We are absolutely talking about confidence in the industry—confidence for primary producers to invest in the sector and move their businesses forward, and confidence for the younger generation to get involved in the industry. He is absolutely right that the age of people running the industry is getting higher and higher, and we desperately need younger people to get in.

Food security, which I have touched on, is so important to our country. Imports of fruit and vegetables have increased by more than 650,000 tonnes in the past four years, and further decline in British food production will have serious consequences for food security and the farming sector. The GCA could have an important role in preventing supermarkets from exacerbating the problem.

Although the introduction of the GCA is to be welcomed, two years on it is clear that there is potential for the adjudicator to do so much more. The Government review will take place in only four months’ time. Will the Minister assure me and other Members here that details of the review will be published as early as possible? As I am sure she will agree, it is essential that the entire food sector has the opportunity to feed into the review, and the trade associations need time to present a strong submission. Will she assure me that submissions will be accepted from indirect suppliers, not just from direct suppliers who are currently under the GCA’s remit? Will she assure me, as the Prime Minister indicated to the House at the start of the year, that she will look at extending the adjudicator’s remit to help those right across the supply chain, including dairy farmers and fruit and vegetable producers?

A properly resourced GCA that has the right powers and acts proactively in the market has the potential to be a powerful source of fairness in a cut-throat industry.

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Anything less would be a missed opportunity, and British food producers and, ultimately, the end consumer would be all the poorer for it.

Mr James Gray (in the Chair): Mr Shannon has inquired whether there is a time limit in this debate. There is no such time limit. None the less, I am keen to bring in the Chair of the Select Committee on Environment, Food and Rural Affairs in good time before the first of the three wind-ups. He might like to time his comments to allow that to occur.

5.9 pm

Jim Shannon (Strangford) (DUP): Thank you, Mr Gray; that is very helpful.

It is good to speak in this debate, and I thank the hon. Member for York Outer (Julian Sturdy) for giving us a chance to contribute. This is an issue for us in Northern Ireland, which is why—although my hon. Friend the Member for Upper Bann (David Simpson) is absent just now—we have three Members from Northern Ireland present. My hon. Friend and the hon. Member for South Down (Ms Ritchie) are members of the Environment, Food and Rural Affairs Committee so they have input to this issue as something that concerns them. I declare an interest as I chair the all-party parliamentary group for eggs, pigs and poultry. The APPG may dwell more on the issues of the laws that come from Europe, but one of the issues that came up at our launch just two weeks ago was that of fair prices. Although Members have referred to the dairy industry, many other sectors of agriculture and farming have problems with that as well.

It is nice to see the shadow Minister and the Minister in their places. We have been here together in debates on at least two different subjects—health and defence. We are now debating agriculture and the Groceries Code Adjudicator; the Minister has a wide interest.

Competition is a healthy part of society, contributing to economic growth, ensuring competitive prices and driving innovation, but sometimes the system that ensures competition is broken. Sometimes competition is not working as it should. That is a clear issue for us. With just four retailers taking 85% of the market, it is clear that competition in the groceries sector is not working. Farmers say that they are not getting their prices, they are working long hours and they are the ones getting squeezed. All the evidence indicates that that is the case. To break the domination and get competition working again, action is needed. Today is a welcome opportunity to discuss that potential action, and to ensure that we take action that works and does not have negative unintended consequences.

Recently across the country and across my largely rural constituency of Strangford, we have seen the impact of the abuse of purchasing power by major supermarkets. The major supermarkets are very important as they push out the product matter, but it is also important that they have local people to supply them. Many of those supermarkets claim, “We buy so much of our products locally.” It is okay to buy it locally, but they have to give the producer a fair price. Farmers are on the brink, with some even contemplating suicide—these are hard times—over the position they had been forced into by abusive monopolies. Unfair trading practices are referred to in the background notes. That is one of the issues.

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Ms Ritchie: My constituency neighbour will know, as I do, that agricultural produce is critical to our local economy. In that vein, does he agree with me, and with the conclusion of the Ulster Farmers Union, that the Groceries Code Adjudicator should have more power to tackle unfair trading practices, particularly in the dairy sector but also in the red meat and vegetable sectors? That would have an impact on his constituency.

Jim Shannon: As always, I am pleased to have accepted an intervention. I note the hon. Lady’s wise words, which outline clearly the issues for my constituency and her constituency, in referring to the unfair trading practices.

We have to value the benefits of supermarkets, as I said earlier. The Competition Commission views the country’s supermarkets as delivering

“a good deal for consumers”.

However, the commission did warn about the impact on suppliers if current practices were to continue—that continuing to produce a quality product at a cheaper than cheap price is unsustainable. It 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.”

In the background information sent to us by the National Farmers Union, there are three examples. Just last week on the TV—I think it was early on Tuesday morning last week—there was a clear illustration of this. A farmer, who I think was from Norfolk, was producing parsnips for Morrisons and had been doing so for years, but he was not getting his price and the company was continuously squeezing him. The problem for him was that it had got to a stage where it was unsustainable. Last week a TV programme carried the story. Morrisons had not replied over a six-week period. Ultimately, he was saying, “I cannot continue after years of the product being purchased at low profit.” This had an impact on him, as he had young sons. He needed to ensure that everything for him was beneficial and cost-effective, but it was not. Whether it is Morrisons, the Co-op or Tesco, those issues need to be addressed. Action must be taken. Relevant powers need to be given to the new ombudsman or eventually to a body that takes responsibility for this issue.

The Competition Commission’s proposed ombudsman would enforce compliance with the groceries supply code of practice. Perhaps the Minister will tell us what extra powers the ombudsman will have to bring supermarkets into line and ensure that they do what they should do. We have to strike the right balance between addressing the abuses of purchasing power by monopolies and allowing legitimate businesses to operate with as little Government interference as possible. That is appropriate, given the serious detrimental impact to suppliers. As I have already outlined, the grocery retailers will be prohibited from making retrospective adjustments to terms and conditions of supply, which are issues that have a direct impact on them.

It is my understanding that the Groceries Code Adjudicator would not have to have, or seek to have, any role beyond what is necessary to monitor and enforce the code of practice. However, with the right approach, and with the teeth that Government can give it, we can, as the hon. Member for South Down and

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others have said, make the change, make farmers more profitable and help them, as they produce a quality product that in many cases leads the world. They need that profit and that money to continue to be producers.

5.16 pm

Neil Parish (Tiverton and Honiton) (Con): It is great to serve under your chairmanship, Mr Gray. I thank my hon. Friend the Member for York Outer (Julian Sturdy) for securing the debate—in fact, he could be considered a young farmer in this day and age. It is great to see him here fighting the corner for agriculture as well as for his constituency. It is good to follow the hon. Member for Strangford (Jim Shannon). Northern Ireland has particular problems because it needs to export much of its food. All products—dairy, beef, lamb and poultry—are under pressure, so this debate is timely. I will not go into the history of the adjudicator as my hon. Friend the Member for York Outer did that very well.

I am unashamedly going to make a speech that is pro-farming and pro-food production. We produce some of the best food in the world with some of the highest welfare standards, but that often adds cost to the food we produce. We have massive retailers, which are good for consumers. They can have a good war with each other and drive prices down, but as they drive the prices down, the suspicion is—it is not always the case—that the farmer and the processor pay for those low prices in the shop. If Tesco has a price war, the price comes down; I just wonder, for Wiseman or whoever supplies Tesco, whether the farmers are getting a good price from the Tesco direct milk contract. Are the processors then being squeezed? Are the other parts of that milk contract—cheese, butter and yoghurt—then being affected? All those things are appropriate and we need to look into them.

We want to produce more and more food in this country. We are becoming less self-sufficient every year, but we should be more self-sufficient every year. I have every faith in the Minister to ensure that we are more self-sufficient in food. The only way that will happen is if the farmer and the producer are paid a full price. The Groceries Code Adjudicator needs to be able to go into a retailer, whoever it might be—a bit like a spot check—and check that it is not using unfair practices to keep the commodity price or the price that is paid to the producer down. It could be milk, beef, lamb or perishable products. With perishable vegetables, the farmer or the grower is even more vulnerable because there is no way of storing much of that produce. Often the large retailers know that and they will drive the price down until it is uneconomic to produce.

The Groceries Code Adjudicator has powers. She appears before the Select Committee next month, so we will be able to put these questions to her directly. Five members of the Select Committee are here this afternoon, which shows the importance we attach to this subject. Is the Groceries Code Adjudicator using her powers sufficiently? Is she resourced enough? I echo my hon. Friend the Member for York Outer in saying that I do not usually come to Westminster Hall to demand more bureaucracy and more money, but if we are to take on these massive retailers, which have billions of pounds-worth of trade, we need someone who is resourced enough to be able to go in and stand up to them.

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Few processors are feeding milk, beef, lamb and poultry into Tesco, Sainsbury’s and Morrisons, or whoever it might be, so if there is a complaint, the retailer knows very well where it has come from. Suppliers are therefore not likely to make a complaint. Whistleblowers and people with a real complaint must be able to come forward and must be protected. If the big retailers are using their muscle unfairly, the Groceries Code Adjudicator should have the power to come down on them in an even heavier fashion, because 1% of the turnover of Tesco or Sainsbury’s is quite a fine. Such a fine would send a message to the rest of the retailers that they need to behave properly.

Rebecca Pow: Will my hon. Friend give way?

Mr James Gray (in the Chair): Order. I am keen for the wind-ups to start, so the intervention should be very brief.

Rebecca Pow: We have heard much about the 25-year plan for the future of great British food and farming, not just for Taunton Deane, where I come from, but for the whole of Britain. Is it not important that we give the Groceries Code Adjudicator teeth, so that she can be part of that 25-year plan and help to enable everything that we want for our home-grown food?

Neil Parish: I could not agree more. Greater production in this country would mean that we did not have to import so much food. That would be good for our balance of payments, and it would be good not only for farmers but for our processing industry—all this can help to build the industry. We are therefore looking forward to the Minister proposing greater powers and more resources for the Groceries Code Adjudicator so that she can look into more of these large retailers to ensure that the farmer, the grower and the processor get a fair deal.

5.22 pm

Stuart Blair Donaldson (West Aberdeenshire and Kincardine) (SNP): It is a pleasure to serve under your chairmanship, Mr Gray. I congratulate the hon. Member for York Outer (Julian Sturdy) on securing this debate on an issue that is important to many of my constituents and to the constituents of Members on both sides of the House.

I am sure all Members would agree that the Groceries Code Adjudicator is well intentioned but its powers do not go far enough. In particular, it is insufficiently responsive to a failing supply chain. Earlier this year, the Scottish Government’s Cabinet Secretary for Rural Affairs, Food and Environment, Richard Lochhead, wrote to the Secretary of State for Environment, Food and Rural Affairs, stating:

“I have long been pressing the UK Government to widen the Groceries Code Adjudicator’s remit and powers so that she can shine a spotlight on contracts between primary producers and processors, as well as processors and retailers.”

In conjunction with that, Mr Lochhead has continued to press the milk prices crisis with the adjudicator. There has been huge volatility in dairy prices over the past two years, and no fewer than 19 Scottish dairy farmers have gone out of business this year. Dairy is the most visible area in which the GCA’s remit does not go

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far enough. The GCA has no remit to investigate prices; it may investigate only the relationship between the largest supermarkets and their direct suppliers. The fact that the code extends only to retailers with a turnover of more than £1 billion and deals only with direct suppliers is unacceptably restrictive, as the vast majority of farmers supply the market through processors.

As few dairy farmers sell direct to supermarkets, consideration should be given to extending the scope of the GCA’s powers to provide a mechanism to tackle the problem. Dairy farmers who deal with large retailers often receive substantially less than the cost of production for their milk. Dairy producers cannot be expected to subsidise retailers in that way. It is not in the long-term interests of either our food security or our consumers to push dairy farmers out of business. That is why I echo the recommendation of the Environment, Food and Rural Affairs Committee’s report on dairy prices that the Government should give urgent consideration to how the GCA’s remit could be amended.

Expanding the role of the GCA would give it the powers that it should have, and indeed that many people already think it has. That is reinforced by the words of the adjudicator, Christine Tacon:

“I think very many farmers thought I was going to be there to get involved with price. I have been asked to get involved in the price of beef and milk and fleece. None of these can I get involved with: first, because I cannot get involved on price, and secondly they are very rarely direct suppliers themselves.”

That restrictive remit seems to be hampering the work of the GCA. Ms Tacon has also said:

“I continue to spend a great deal of my time explaining the remit of the GCA. This has hampered my ability to pursue important work that is within my remit…. The continued misrepresentation of my role is of great concern to me and I am keen to resolve this issue swiftly.”

I suggest that expanding the GCA’s remit would help to resolve that issue.

As has been mentioned, the GCA must have the power to initiate her own investigations, rather than only being able to act on complaints, as is currently the case, and she should be able to do so at any time. The GCA also needs to be given a role to look at the whole supply chain, rather than only being able to investigate direct supply contracts. That would finally bring the vast majority of farm produce into her remit. Finally, she should be able to investigate and report on the balance of pricing throughout the supply chain. That would bring transparency and help farmers and others in their negotiations with the retailers. Farmers across the UK are vital contributors to the rural economy and to the sustainability of our nation. They deserve a better deal and fairer pricing. I urge the Government to consider the points raised in this debate and broaden the remit of the Groceries Code Adjudicator.

5.26 pm

Bill Esterson (Sefton Central) (Lab): I add my congratulations to the hon. Member for York Outer (Julian Sturdy) on securing this debate, which has been remarkable because we have had unanimity across multiple parties. I am fascinated to hear how the Minister will deal with the overwhelming demand for improvement in the remit of the Groceries Code Adjudicator that has been clearly expressed by all Members who have spoken today. I can only agree with many of their comments.

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The Groceries Code Adjudicator was set up by Act of Parliament in 2013 following complaints by suppliers, smaller retailers and commentators about unfairness in retailing. A code of practice was introduced in 2001 and in 2008 the then Competition Commission recommended the creation of a statutory body to oversee and enforce a strengthened code. The Labour Government launched a consultation in February 2010, and the coalition Government responded by announcing plans for an adjudicator to enforce the groceries supply code of practice.

Many people raised concerns at the time about the watering-down of the role from the recommended ombudsman to an adjudicator, and those comments have been echoed by a number of Members today. It is perhaps no surprise that we have returned to that point because, as the hon. Gentleman said, an adjudicator working three days a week with a team of five will struggle to look after 300,000-plus suppliers in the retail supply chain. The expectations go way beyond the adjudicator’s ability to deliver.

Major retailers operate in a competitive market. To gain market share, the supermarkets loss-lead milk, bread and other products and they have promotions on many individual lines. When retailers cut prices, the question can arise of who pays and what the knock-on effect will be—a point made well by the Chair of the Select Committee, the hon. Member for Tiverton and Honiton (Neil Parish). Retailing runs on tight margins, so the pressure to cut costs in the supply chain is understandable. Ensuring that such pressure does not unfairly affect suppliers is a key responsibility of the adjudicator. There is a voluntary code of conduct in the dairy industry, and the Competition and Markets Authority also has responsibility to help smaller suppliers.

To be fair, since the Groceries Code Adjudicator was set up the number of suppliers saying that they have problems with retailers has fallen. The adjudicator says that she believes that being in post has on its own acted as a deterrent, and that the existence of the office has alone made a difference. However, many suppliers still say that they are unfairly treated by large retailers.

We have heard about anonymous complaints and suppliers’ concerns about retribution if they are identified. Again, the Chair of the Select Committee made the strong point that it is all too easy to identify who a complainant might be. The adjudicator has said that a lack of trust is a barrier to suppliers who might have complaints. Suppliers all want the ability to raise concerns free from the fear of reprisals. I am sure that the Minister would agree that minimising the danger of retaliation by retailers is essential if the adjudicator is to be effective. Will she comment on the adjudicator’s inability to investigate where there is a possibility that a complainant’s identity might become known to the retailer, and how she might improve how that aspect of the adjudicator’s role is carried out? The way the adjudicator is set up acknowledges that particular problem without solving it.

According to the Department for Business, Innovation and Skills, there are 7,000 direct suppliers, all of which are covered by the adjudicator, and a further 300,000-plus indirect suppliers, which are not. That issue has arisen again and again in this debate, and Members want it to be addressed, as those smaller suppliers are excluded from the remit of the Groceries Code Adjudicator.

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The adjudicator has made it clear that she has a small office and spends much of her time explaining what she can and cannot do. She has also made it clear that she cannot possibly cover the 300,000 suppliers in the supply chain, unless of course the scale of operations is dramatically altered, as is being demanded in this debate.

The Government said in their response to the previous Government’s consultation that they wanted to act in consumers’ long-term interest. I am sure that all of us agree with that now, when the adjudicator has been in post for some years, but the reality is that a system where there is quarterly reporting to the stock market and a very short-term approach, and where management are judged on short-term results, either quarterly or annually, leads to actions that can have drastic effects on suppliers throughout the supply chain. Short-term actions can also have long-term consequences. If producers are unable to stay in business due to unfair business practices by major retailers, main suppliers or both, we may lose good producers. If we lose good producers of quality goods, consumers will ultimately lose out.

The Chair of the Select Committee made the point that we have some of the finest food and standards in the world, and we want to retain those, but if our short-term actions threaten them, consumers will lose out in the end, which is no good to anyone. If the actions of retailers lead through the supply chain to that end, retailers will lose choice as well, thus losing out themselves. It is in nobody’s interest for such things not to be sorted out.

I will not go into the issue of dairy pricing in too much depth, other than to say that it is a particularly important issue. Only 3% of dairy suppliers supply direct to supermarkets, so there is a special case to be made. There is also a special case to be made for supporting the dairy industry in the longer term. In fact, the Secretary of State spoke in January of doing all that she could to ensure resilience in the dairy sector. If only the same vote of confidence and support had been given to the steel industry, I am sure that steelworkers would feel much better. [Interruption.] The Minister waves me away with that dismissive air she does so badly.

Glyn Davies (Montgomeryshire) (Con): You should have a response to that.

Bill Esterson: I am sure that the Minister will have a response.

What is needed in the sector is a level playing field that benefits consumers, suppliers and retailers in the long term. The Minister should ensure that the adjudicator and others, including Ministers, intervene in the short term to ensure long-term success. The adjudicator review is due in March. I hope, as I am sure do all Members who have spoken, that when the review is concluded, changes will be made that address the concerns raised here and by those in the supply chain on behalf of business and consumers. I look forward to hearing her response.

5.35 pm

The Minister for Small Business, Industry and Enterprise (Anna Soubry): It is, as ever, a pleasure to serve under your chairmanship, Mr Gray. I sat through some of the previous debate and was looking forward to this one on the basis that my job would not be as difficult as that of

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the Minister in that one. I fear that I was mistaken. As you have heard, Mr Gray, everybody has ganged up on me. [Hon. Members: “Aww.”] I am not complaining particularly, because I think I have robust rebuttals to some of what has been said.

Given that, as ever, I have 10 minutes, the usual rules will apply. My hon. Friend—he is my hon. Friend—the Member for Strangford (Jim Shannon) will know my rules, which are that if I do not answer any questions or points raised by hon. Members from whatever party, they will of course receive an answer in a letter. It is always good to say that, because I can simply put off the more difficult ones to another time by putting the answers in a letter.

Being serious, and with great respect to everyone who has spoken—particularly my hon. Friend the Member for York Outer (Julian Sturdy), whom I congratulate on securing this debate—I think that there are some fundamental misunderstandings about the Groceries Code Adjudicator. I will be even more controversial, and a little churlish, by saying that I am sure that the adjudicator is looking forward to appearing before my hon. Friend the Member for Tiverton and Honiton (Neil Parish) and his Committee. Clearly, nobody else here has met Christine Tacon. I have had the great pleasure of meeting her. She is a lady who takes no prisoners, and she is forthright not only in her views but in defence of the great work that she does. She is a formidable player, and in her we have an excellent first adjudicator.

I point out the following facts. The Groceries Code Adjudicator and her team are funded wholly by a levy on the 10 designated retailers, as outlined by my hon. Friend the Member for York Outer. The levy for 2015-16 has been set at £1.1 million, but the important point is this: the adjudicator decides for herself what her resource requirements will be for each year, based on her assessment of forthcoming work. They are approved by the Department for Business, Innovation and Skills, and then the amount is levied on the retailers. She is very much in charge.

I was looking at the Groceries Code Adjudicator website only today. I noted that in her report published today on her work over the last three months, she says, for example, that she has just appointed a new compliance officer. I urge hon. Members to read her three-monthly report to see the great advances that she is making. There is also scope to bring in additional resource if required, for example to help with investigation work. The adjudicator is satisfied that she has adequate resources and with the process for agreeing those resources with BIS. She has made that clear. It is up to her: if she is not satisfied, or thinks that she does not have enough, she can say so. If we agree, and there is no reason why we would not, she can increase the levy on those supermarkets. She has those powers.

The adjudicator also has powers to initiate her own investigations where she has reasonable grounds to suspect a breach of the code. That can be based on, but is not restricted to, information from direct and indirect suppliers, whistleblowers and the public domain. I argue that despite the complaints made by some, she has the ability to take complaints from other sources. In addition, it is clear from the Groceries Code Adjudicator Act 2013 and the guidance that the investigation threshold is

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determined by the adjudicator herself, which means she can be proactive in her approach.

Neil Parish: The point I was making was not so much about whether the adjudicator is able to take these complaints but that those who are making the complaints are too identifiable by the big retailers and therefore are not prepared to come forward.

Anna Soubry: I have a rebuttal for that somewhere, because I am told that regarding whistleblowers—the clue is in the title, I suggest—the adjudicator has a statutory duty to protect confidentiality. That addresses the fear factor among suppliers. Also, the National Farmers Union has a scheme that allows suppliers to make anonymous reports of code breaches via an online form on its own website. The NFU is exactly the type of third party that can take up a complaint on behalf of somebody in the manner that my hon. Friend would like. I thank my officials for that information.

Several hon. Members rose

Anna Soubry: I will get a barrage now, having shot a few foxes.

Chris Davies: I thank the Minister for giving way. May I say, very briefly, that the collective discussion we have had and the collective request we have made are not about making a complaint against the adjudicator? It is just that her powers do not go far enough.

Anna Soubry: I will deal with that one as well, if I may, because I am reliably informed that the problem for the adjudicator is that, as has been identified, she has no power to address matters falling outside the code, for the following reasons. First, the Government cannot change the code. As hon. Members have made clear in their speeches about the history of the establishment of the Groceries Code Adjudicator, the code came about from the work of the Competition and Markets Authority, arising from an investigation that it conducted into competition. Forgive me for saying so, but once again the clue is in the name and the history: it was all about unfair competition. I must say to the hon. Member for West Aberdeenshire and Kincardine (Stuart Blair Donaldson) that it was never about pricing. If there are to be changes to the code, they can be made only by the CMA.

Also, with great respect to everybody, the 2013 Act was passed by a previous Parliament; it was what Parliament decided. The Government could give the adjudicator additional statutory duties outside the code, but that would involve amending primary legislation and it would have to be debated in Parliament. There is nothing wrong with that, but just so everybody understands: new legislation would be needed.

Ms Ritchie: As part of such a review, would the Minister consider allowing the adjudicator more freedom within legislation to launch investigations on her own initiative?

Anna Soubry: The adjudicator already does that, as I have said, but it must be within the terms of the code, and those terms do not include pricing. I have huge sympathy for the dairy industry—in fact, I think it is important that I say that my mother’s family were dairy farmers and my partner is a non-executive director

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of Morrisons. I just want to put all my background on the table, so to speak, in case anyone listening to or reading this debate queries my own background. As everyone here knows, I am my own woman; nobody influences me—and some would complain about that. Of course, I always listen to hon. Members and the good arguments that they make, but I am my own woman, whatever my family’s interests may be. Although I am sympathetic to the plight of the dairy farmers, the Groceries Code Adjudicator is not the way to fix the problem.

Steel has been mentioned, but the problem with the steel industry is much the same as the problem with the milk industry at the moment: there is a flood of cheap steel and a flood of cheap milk, which is why prices have fallen. And of course, as everybody knows, when we make the case in whatever part of the agriculture sector it might be and we complain about tumbling prices and the problems that they create for our wonderful British farmers and their excellent products, the problem is that it means we go against the interests of many of our constituents and the other people who buy food at low prices. Of course, if prices were to rise for the farmer, the person who would pay the extra money is the

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consumer. And full credit to those supermarkets that have said, “We are going to put more money on, because we want to support our dairy farmers.”

Sadly the clock is against me, but it is really important that everybody realises that the Groceries Code Adjudicator’s remit cannot be extended without primary legislation, which would mean going into a different area. It was certainly thought at the time the adjudicator was established that this was the right route to go down.

I apologise that I have not been able to deal with all the excellent points that have been made, but I assure you, Mr Gray, that, as has been asked of me, we will publish details of the review. I look forward to Christine Tacon, who is excellent, giving evidence to the Environment, Food and Rural Affairs Committee, which can make a full inquiry into her work.

Question put and agreed to.


That this House has considered the role and powers of the Groceries Code Adjudicator.

5.45 pm

Sitting adjourned.