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House of Lords

Wednesday, 29th November 2000.

The House met at half-past two of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Lichfield): The LORD CHANCELLOR on the Woolsack.

Supermarkets: Competition Commission Report

Baroness Miller of Chilthorne Domer asked Her Majesty's Government:

    What importance they attach to the recommendations in the Competition Commission's report on supermarkets, published in October, that a code of practice should be drawn up to counter adverse practices that supermarkets inflict on suppliers and that an independent third party should be established to report breaches to the Office of Fair Trading.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Hayman): My Lords, the Government have welcomed the Competition Commission's report, the recommendations of which have been accepted by my right honourable friend the Secretary of State for Trade and Industry. We are keen to establish effective relationships within the supply chain and have pursued this aim as part of our long-term strategy for agriculture. We therefore attach particular importance to the development of a code of practice with suppliers.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for that Answer. I am pleased that her Ministry will attach particular importance to relationships with suppliers. Does she agree that one of the difficulties for the public is that they do not know what price farmers and growers receive from supermarkets and it is confusing for them to hear that farmers are receiving almost nothing for their produce when consumers are paying a fair price for it? Does she further agree that farmers' markets are popular because that link is obvious? Will she ensure that the code is drawn up in a way which helps small producers and co-operatives, and that it will include a requirement on supermarkets to publish figures of the amount of local and British produce sold and the percentage of the price that farmers receive for that produce? Does she further agree that it is very important that the code does not deter supermarkets from buying British produce by driving them to buy overseas?

Baroness Hayman: My Lords, I agree with much of what the noble Baroness said, in particular with regard to the desire of consumers to have the opportunity to buy British food and local food, which has advantages for both the environment and local producers. The rise in the popularity of farmers' markets confirms that. As

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to the code, it will follow very closely the specific concerns about competitiveness identified in the commission's report. It will require that supermarkets' standard terms of business are available on request; that supermarkets do not delay payments to suppliers; it will outlaw retrospective price reductions and prevent supermarkets from seeking payments as a pre-condition of supply--many of the things that suppliers were concerned about. The OFT will seek the views of suppliers on the draft code when it has been drawn up.

Lord Borrie: My Lords, does my noble friend recall that the National Farmers Union told the Competition Commission that very few individual farmers were willing to give details of the bullying tactics to which they had been subjected by supermarkets because they feared reprisals? Bearing that in mind, does the Minister feel that a code of practice will be effective if it is dependent upon individual farmers and other producers making complaints to the Office of Fair Trading? Indeed, what will be the sanctions if supermarkets ignore the requirements laid down by the Competition Commission and the code?

Baroness Hayman: My Lords, there are often difficulties in going from the anecdotal to the evidence. I have outlined the areas that the code will cover. They represent exactly the kinds of situations that one has heard farmers complaining about, such as retrospective price reductions and the imposition of unfair penalty payments and so on. I should make clear that the code of practice will be binding. The supermarkets will be expected to give legally binding undertakings to comply with these remedies, which will include provision for independent dispute resolution. So there will be legal remedies. The Secretary of State has made clear that he wants the code finalised quickly and has asked the Director-General of Fair Trading to report back to him on progress by mid-January.

Lord Mackie of Benshie: My Lords, is the Minister aware that yesterday I received a reply from one of her colleagues saying that the age of the marketing board was over? Does she not agree that under the marketing board--and possibly subsequently under Milk Marque, which has now been broken up--the price of milk for consumers in this country was the lowest in Europe and the farmers got a fair return? Does she think that the new body will have any effect whatever?

Baroness Hayman: My Lords, we are all aware--and the noble Lord, Lord Mackie of Benshie, will make sure that we remember--of the problems there have been recently in the dairy industry. We welcome the recent announcement of price increases for the autumn of around 2p per litre and that both the international commodity market and UK production point towards more optimism, in the short term at least. The noble Lord will also be pleased about the setting up of the Milk Task Force, announced on 23rd November, which has been welcomed by the NFU. Its membership will reflect the key areas of the

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dairy food chain, from production to retail. It will ensure greater efficiencies and greater long-term stability in the dairy industry.

Baroness Byford: My Lords, does the Minister agree with her noble friend Lord Borrie that some producers showed great hesitation in giving evidence to the commission? If she does agree, is she not equally concerned that they will also hesitate to report supermarkets to whom they are suppliers? This is part of the difficulty. Does she agree that it is important that we should revisit the issue of labelling? We currently have the "red tractor" promotion, but we are still unable to label our products as UK products. Now that our beef has to be labelled "UK" for French purposes, is it not high time that all UK-grown produce should be "UK" labelled as well?

Baroness Hayman: My Lords, it is perfectly possible for people voluntarily to label produce with its country of origin. That can be done very distinctively. The red tractor mark, which covers a variety of issues about quality assurance, is important for consumers. As to the reluctance of people to give evidence, the importance of the code is that it will lay down that legal undertakings must be given by the supermarkets to abide by its terms. It will address the practices that have been of concern to suppliers and enable them to take action against supermarkets. It will also provide for independent arbitration, if necessary, when there are disputes.

NHS and the Euro

2.38 p.m.

Baroness Knight of Collingtree asked Her Majesty's Government:

    Whether they will postpone instructions to the National Health Service to incur expenditure on preparations for Britain joining the euro until such time as Britain decides to do so.

The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, NHS bodies were asked to undertake a measure of pre-planning for possible UK entry to the single currency. This has been a limited management exercise and resources have not been diverted from patient care.

Baroness Knight of Collingtree: My Lords, can the Minister tell the House who authorised health authorities and trusts not to tell MPs how much money was being spent on this exercise, and why the instruction was given? Is this not taxpayers' money? Can he further inform the House of the volume of trade carried on by the NHS with the 11 countries mentioned by the noble Lord, Lord McIntosh of

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Haringey, during Questions on 25th October? Why is it thought that the NHS is incapable of carrying out currency conversions?

Lord Hunt of Kings Heath: My Lords, we do not have specific information on trade with other countries. It is thought that most trade with such countries would be through wholesalers. I understand that the National Blood Authority mentions trade with foreign countries in its annual accounts.

As regards the implications of potential entry into the euro, if this were to happen the NHS could expect to receive euro invoices under the "no compulsion, no prohibition" rule and would need to be covered by a multi-currency financial system. However, I assure the noble Baroness that no expenditure has been diverted from patient care to undertake what has been a very limited pre-planning exercise. Information has been made available in Answers to parliamentary Questions, or could be made available centrally. Thus, we sought to ensure that 500 different NHS bodies did not have the bureaucratic burden of responding individually.

Lord Marsh: My Lords, perhaps I may help the House on this matter. Clearly, the National Health Service must import drugs and equipment from Asia and North America and from various parts of Europe, in and outside the European Union. Why should it have difficulty in adding one more currency to the large number in which it already deals?

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