16 July 2012 : Column 1

House of Lords

Monday, 16 July 2012.

2.30 pm

Prayers—read by the Lord Bishop of Newcastle.

Schools: Primary School Places

Question

2.36 pm

Asked By Baroness Jones of Whitchurch

To ask Her Majesty’s Government what action they are taking to create 450,000 additional primary school places across England before the next general election.

The Parliamentary Under-Secretary of State for Schools (Lord Hill of Oareford): My Lords, while it is the responsibility of local authorities to manage the supply of primary places, we have doubled the rate of spending on primary school places from the levels we inherited. In addition, we have allocated a further £1.1 billion over the past year, bringing to £2.7 billion the total we have given to local authorities so far to support additional places. We are working closely with local authorities and will work to reduce costs so that every pound spent goes as far as possible.

Baroness Jones of Whitchurch: I thank the Minister for that reply. Can he assure parents that sufficient, properly designed classrooms will be provided to meet all this extra demand? Does he agree that it is unacceptable for teaching to take place in temporary buildings that are not designed for this purpose, as increasingly seems to be the case currently? Do the Government now accept the folly of cancelling the Building Schools for the Future project without having a comparative school-building programme in place? Why are they continuing to give priority to funding new free schools when are not necessarily sited in places of greatest demand and there still remains a shortfall in funding for the more urgently needed extra primary places?

Lord Hill of Oareford: My Lords, trying to work backwards, first, so far as free schools are concerned, of the primary schools that we announced on Friday with proposals to come forward for 2013, nearly 90% of those are in areas of basic need where there is a shortage of places. I agree that good design is important but do not accept that temporary buildings cannot be part of a solution. Local authorities need to be free to make the judgments that they think are best to respond to the pressures that they have locally. Generally, as I said with the figures that I have set out, we have doubled the funding we are putting into primary school places. The birth rate started to rise in 2002; it peaked in 2008; so the Government are trying to address a serious challenge in the problem of the growing numbers that we have inherited.

The Earl of Listowel: My Lords, is the Minister concerned about the number of primary school head teachers now nearing retirement and how to replace them? Are the Government looking closely at the pilot of 20 school leaders from primary schools in the Future Leaders charitable trust this year, which was so successful for secondary school leaders? Will the Government be looking at that and thinking carefully about how we secure sufficient highly skilled head teachers for primary schools for these 450,000 children?

Lord Hill of Oareford: Yes, my Lords. The quality of teaching in primary schools is obviously hugely important and I was encouraged to see today that, for the first time, the number of men applying to teach in primary schools has increased. I think all sides of the House would find that a welcome development. I agree with the noble Earl on the importance of the kind of example that he cites and I am sure we can learn lessons of the kind that he sets out.

Lord Tope: My Lords, is the Minister aware that the Greater London Authority’s population prediction shows that there will be more than 150,000 additional primary-aged children living in London in 10 years’ time? Is he further aware that, in addition to funding all the extra places necessary, a particular problem in London is

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where to put the new classrooms and the new schools? What will the Government do to help access to sites for new schools in London?

Lord Hill of Oareford: The noble Lord is right that there is a particular challenge in London with the availability of sites. We intend to work with local authorities to give them capital and to help identify sites. The responsibility for that resides with local authorities, but I agree that the Government must work with them and help to find ways of making sure that we can find as many sites as possible.

The Lord Bishop of Newcastle: My Lords, given the continued popularity of church schools, and noting that many are oversubscribed, will the Minister ensure that local authorities have regard to the balance of denominational places in an area by involving diocesan boards of education in decisions about where to target the extra funding that he has mentioned?

Lord Hill of Oareford: It is important that local authorities should make sensible decisions about where places are needed, irrespective of the type of school. The Government have made it easier for good, popular schools to be able to expand. Church schools, typically voluntary-aided schools, are their own admissions authorities and so have the ability to expand, but local authorities should address decisions about where to increase places irrespective of the school type.

Baroness Farrington of Ribbleton: My Lords, does the Minister agree that it would not be right for an academy to expand to take in primary school pupils, taking away sports facilities from that academy, in an area where the local authority, in Pimlico, says that there is not a need for more primary school places?

Lord Hill of Oareford: My Lords, I know the case to which the noble Baroness refers. With regard to new primary provision, in many cases where there is new free school provision coming in, there is a basic need. In the specific case to which she refers, it is also the case that we are trying to increase the supply of excellent places and the academy that is seeking to open a primary has done a brilliant job in turning around a school that was previously failing. It became a sponsored academy under the previous Government. If it can extend that to primary school children, I think that it will be doing a good job.

Baroness Sharp of Guildford: What proportion of children in primary schools, given the pressure on places, is likely to be in classes of more than 30 in the next few years?

Lord Hill of Oareford: I am not able to give my noble friend precise figures, partly because we are working with local authorities to get a better understanding of the particular pressures at a very local level. I am advised that the number of classes of more than 30 has been falling, but we will need to keep an eye on that and the legislation dealing with it remains in place.

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Georgia: Public Services

Question

2.44 pm

Asked by Lord Harries of Pentregarth

To ask Her Majesty’s Government what lessons they are learning from the introduction of “one-stop shops” for public services in Georgia.

Lord Wallace of Saltaire: My Lords, the Government are always willing to learn from examples of good practice from overseas. I compliment the noble and right reverend Lord for highlighting the Georgia case. He may be aware that US Secretary of State, Hillary Clinton, has just made some very complimentary remarks about the Georgian public service halls. The wider public sector in the UK has already done a great deal on one-stop shops, working across organisational boundaries and making it easier for customers to access services in a more joined-up fashion. The implementation of the Government’s Digital by Default agenda will provide government information and services online and in one place that will be simpler, clearer and faster for users.

Lord Harries of Pentregarth: I thank the Minister for his reply. I am indeed aware of the Government’s desire to reform public service provision. As he has mentioned, the example of Georgia is truly remarkable. While driving to one such public service hall when I was there recently, our escort asked us for our details. When we arrived only 15 minutes later we were all presented with replica Georgian passports. This was just one example of their speed and user-friendly approach. Will the Minister encourage different government departments to look at the actual design of these halls, because whatever we have in the way of digital provision, there will still need to be a place where some people can go? Secondly, will he see if they can work together, perhaps with the Post Office, in such public service halls?

Lord Wallace of Saltaire: I congratulate the noble and right reverend Lord, Lord Harriesvili, on his new citizenship. On the question of design, I have looked at the pictures of some of these new public service halls in Georgia—they are magnificent buildings, on a scale that I do not think would be easily accepted by the media in this country; it is easier for a country that is coming out of a socialist era in the way that Georgia is doing. The Government are aware, however, that the Georgian provision depends heavily on using new technology, and that parallels exactly what we are attempting to do with the Digital by Default exercise.

Lord Haworth: My Lords, Georgia is a small, faraway country about which we tend to know very little, although today we now know a little more. The question raised by the noble and right reverend Lord, Lord Harries of Pentregarth, about the way in which Georgia has developed one-stop shops is extremely important. I was with him on the visit to the facility in Rustavi and I was also issued a passport by the Georgians in

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double-quick time. I also went to a similar facility in a small community high up in the Caucasus, where exactly the same provision is being extended. The modernised interface between public and state that these facilities embody is highly impressive. The Minister may not want to take it from me but he has already mentioned Secretary of State Clinton, although he did not quote her words about,

“very creative and impressive advancements”,

and “modern technological wonder”. Will the Minister reflect on this and possibly consider inviting a delegation of Georgians to come to this country to share best practice with us?

Lord Wallace of Saltaire: My Lords, I received a detailed briefing from the Georgian embassy this morning, as they discovered that I was due to answer this Question. We are doing a number of things that work in the same direction: we are looking at the provision of the public service estate, and the capital assets pathfinder exercise, working between central and local government, is looking precisely at how you can bring offices together so that services are integrated. In Hampshire, the new Havant public service village, which is the furthest along in this development, is a project that will bring together Hampshire County Council, Havant Borough Council, Hampshire PCT, Hampshire and Isle of Wight police, Capita, Citizens Advice and other voluntary sector partners in the same building. The aim is to transform public service delivery in Havant. That is very much the sort of thing that we have in mind and, incidentally, will save a considerable amount of space by the time it has finished.

Lord Cormack: My Lords, has G4S been to Georgia, and if not, why not?

Lord Wallace of Saltaire: My Lords, G4S is an international company but I have absolutely no idea whether it has yet been engaged in Georgia.

Baroness Hayter of Kentish Town: My Lords, we are about to have elections for police and crime commissioners, with material only on the web and no leaflets. Digital by Default, which the Minister has mentioned, will do for some, but there are a lot of people who need all sorts of things such as passports, licences and debt advice. Could the Minister go to Georgia himself or possibly send Francis Maude there to see what we could learn about people still needing face-to-face advice?

Lord Wallace of Saltaire: My Lords, I have been to Georgia three times in the last 15 years and would love to go there again. The speed at which our population is moving towards using digital services is quite remarkable and I find, as someone of the older generation—like everyone else here, if I may put it tactfully—the estimates of how many people will use digital services by preference in 10 years’ time very encouraging. However, as in Georgia and the Havant exercise, people who do not find digital access quite so easy will still need assistance to help them use facilities that are more easily available online.

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Lord Shipley: My Lords, does the Minister agree that the £4 billion new investment programme announced today for our rail network needs to be accompanied by a more streamlined planning system and that following the abolition of the Infrastructure Planning Commission, the Secretary of State has become the one-stop shop for major projects? Will the noble Lord confirm that the planning process will be better as a consequence?

Lord Wallace of Saltaire: My Lords, that is a little wide of the Question. However, I did book my train tickets for the next two weekends from London to Saltaire online this morning so I am moving in the right direction in using digital means. In terms of planning, all I have done in respect of railways this morning is to check exactly what the Castlefield corridor, part of the new northern hub, is.

Baroness Knight of Collingtree: My Lords, is my noble friend aware that there is absolutely no need for him to go to Georgia, nor indeed for visitors to be brought over from there, when they have an excellent ambassador, from Georgia, here in London? I suggest that he talks to the ambassador.

Lord Wallace of Saltaire: My Lords, I am embarrassed to admit that I taught the current Georgian ambassador in 1995 and 1996.

Gibraltar

Question

2.52 pm

Tabled By Lord Hoyle

To ask Her Majesty’s Government what has been their response to incursions into the British sovereign waters off Gibraltar by the Spanish Guardia Civil.

Lord Anderson of Swansea: My Lords, on behalf of my noble friend Lord Hoyle, and with his permission, I beg leave to ask the Question standing in his name on the Order Paper.

The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford): My Lords, the Royal Navy challenges Guardia Civil and other Spanish state vessels whenever they make unlawful maritime incursions into British Gibraltar territorial waters. In such cases, we also make formal protests to the Spanish Government through diplomatic channels, making clear that such behaviour represents an unacceptable violation of British sovereignty.

Lord Anderson of Swansea: My Lords, the Minister is well aware that in spite of the fact that Gibraltar territorial waters are recognised by the UN Convention on the Law of the Sea, there has been a considerable increase in incursions by Guardia Civil vessels into Gibraltar territorial waters. There were none in 2009, eight in 2010, 280 in 2011 and well over 160 this year. In light of that escalation, and to avoid any further

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increase, will the Government join the Gibraltar Chief Minister, the honourable Fabian Picardo, in challenging our good ally Spain to refer the matter for determination by the International Court of Justice or by the International Tribunal for the Law of the Sea? Otherwise, on behalf of Gibraltar, will we take the matter to those international courts ourselves for final determination?

Lord Howell of Guildford: The noble Lord is quite right about the increase in the number of these incursions. The problem about referring the issue to the International Court of Justice is that of course it requires all involved parties to agree to it, which does not appear to be in prospect. We believe that the right way forward is the one we are adopting, which is that the response should be measured, we should continue to press the Spanish Government very carefully and there is no point raising the temperature or tension in these matters, as they can be resolved by discussion. We would like of course to go back to the trilateral talks based on the Cordoba agreement, if we could. They were progressing, but that route, too, seems blocked. The way forward is, as I have described, to insist that these are unlawful maritime incursions and should not be accepted. We raise them in the strongest possible terms with the Spanish Government at every opportunity.

Lord Luce: My Lords, is the Minister aware that some 12 years ago, when I was governor of Gibraltar, we faced similar problems, and that there are lessons to be learnt from all this? In welcoming the setting up of the working party by the Government of Gibraltar to work with Spanish fisherman and environmental experts to try to find a way forward, will the Minister nevertheless assure the House that the British Government are providing whatever naval presence is needed to uphold sovereignty?

Lord Howell of Guildford: Yes, I can give that assurance, and there have been no complaints from the Gibraltar Government about the lack of adequate resources. There is the Gibraltar squadron, which has two patrol craft, some rigid-framed inflatable boats and crews. The responses they work out can be preceded by radio warnings, but they are effective and will continue, so I can give that assurance.

Lord Kilclooney: My Lords, has the increase in these incursions not really arisen since the European Union decided that, as regards environmental matters, the waters around Gibraltar were Spanish and not British? Is this being challenged and are the Government doing anything to expedite the court case?

Lord Howell of Guildford: I am not sure that that is the right analysis. That case, which continues, is about how these waters are designated as a European Union special site of community importance, and it is being disputed. The immediate pattern seems to have been that with the new Gibraltar Government the informal agreement which allowed Spanish fishermen certain opportunities to fish, entirely on an informal basis,

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has ended and the resultant tensions have been fostered by the fact that Spanish fishermen now come accompanied by Guardia Civil vessels, which obviously raise the tension further. That is the cause of the difficulty now. The other issue that the noble Lord raised continues to be disputed vigorously because these are British sovereign waters and any designation as an EU site will be the responsibility of the British and Gibraltar Governments.

Lord Roper: My Lords, will the Minister tell the House what other steps are being taken to resolve practical problems between Spain and Gibraltar?

Lord Howell of Guildford: There are a range of detailed practical problems that can and should be arranged and should be discussed. We would like to see a move back to the previous trilateral arrangements, which included the British Government, the Spanish Government and Gibraltar and were a good forum for making progress. At the moment, that is not encouraged and does not seem to be favoured by the Spanish Government, so I have to report that the linkages to deal with these smaller matters are really either informal or in small groups. No general strategy is being successfully carried forward, and we would like to see one developed.

Lord West of Spithead: My Lords, does the Minister agree that this escalation in events is quite worrying and that while one understands efforts to defuse the situation, we need to do more to get the message across that this is unacceptable? We might otherwise find ourselves in the position we were in on 15 July 1798, when HMS “Lion” took on four Spanish frigates, capturing one and sending the rest running—a position we would not like to be in again.

Lord Howell of Guildford: The noble Lord is absolutely right that it could develop seriously, but from the point of view of the Spanish fishing community, the Spanish Government, ourselves or the people of Gibraltar there is no interest in escalating this to the point of any kind of physical action. Therefore, we think that dialogue is the best way forward. We have good relations with the Spanish Government. My right honourable friend the Foreign Secretary met the Spanish Foreign Secretary on 29 May and discussed it, and we think this is the right channel through which to develop a better dialogue and to meet all these detailed issues, including the fishing incursions. Once we have solved them, we would take a broader view about whether Spain is going to co-operate closely with us and Gibraltar on the kind of trilateral regime we had before, but the first thing is to solve the fishing dispute.

Lord Swinfen: My Lords, what is done with the vessels that are caught illegally operating in Gibraltarian waters? Are they destroyed?

Lord Howell of Guildford: They are escorted and moved out of British sovereign waters by our patrol craft. They are asked to go and they go.

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Syria: Olympic Truce

Question

3 pm

Asked By Lord Hylton

To ask Her Majesty’s Government whether they will propose within the United Nations that steps be taken to apply the Olympic Truce in Syria during at least the period of the 2012 Games, and if possible for the traditional 100 days.

The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford): My Lords, we are committed to the Olympic Truce’s ideals of conflict prevention and peace. In the case of Syria, the six-point plan of the joint special envoy, Kofi Annan, sets out clearly the steps to a ceasefire. This has not been implemented by the Syrian regime, despite its undertaking to do so. We are therefore pressing for full implementation of the Annan plan to stop the terrible violence in Syria and allow a Syrian-led political transition.

Lord Hylton: My Lords, I thank the noble Lord for his reply. It seems that the Annan plan has not been accepted in any way by the Syrian Government. Will Her Majesty’s Government consider barring access to this country for the Olympic Games to Syrian athletes, officials and even spectators unless they agree to a truce?

Lord Howell of Guildford: Anyone applying to enter the United Kingdom is treated according to our Immigration Rules. If an individual is currently the subject of a European Union or UN travel ban, they will not be able to come to the Games. However, I emphasise that this is a matter that relates to individuals, not to teams generally, groups or nationalities. I repeat: accreditation to the Olympics will be refused to any individual who may present a safety or security risk, or whose presence at the Games or in the UK would not be conducive to the public good.

Baroness Falkner of Margravine: My Lords, my noble friend mentioned the Annan plan. Amnesty International reported today that Syria is in a state of civil war. In his Statement to the House of Commons on 11 June, the Foreign Secretary said that if there was a full civil war the Annan plan would be set aside and the United Kingdom would move to a resolution in the Security Council. Are the Government co-operating with the French to do so next week?

Lord Howell of Guildford: My understanding was that it was the International Red Cross that raised the concept of civil war, although whether it is qualified to establish an accepted viewpoint is debatable. The British Government are looking at the issue in the light of what has been said and the continuing, horrific and totally unacceptable level of violence. I cannot say more than that at the moment. We have not reached a clear view on the point that my noble friend raised.

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Baroness Symons of Vernham Dean: My Lords, the Question of the noble Lord, Lord Hylton, is topical for the worst of all possible reasons—we have heard of another appalling atrocity this weekend. I am sure that the Government are very concerned about these terrible reports of slaughter after slaughter, but will the noble Lord tell us whether, the Annan plan notwithstanding, any thought is being given to the creation of safe havens on the borders of Syria, where people can go when they feel that they are in such appalling danger? I am sure we all feel that this is a terrible situation, but we seem utterly stuck in it.

Lord Howell of Guildford: I can understand the noble Baroness’s feelings. On the broad issue, Kofi Annan is now in Moscow pressing the Russians who—with the Chinese—are a key part of this story, so that we can move to a Chapter 7 UN resolution. As for safe havens, of course thought is being given to these matters, but the noble Baroness knows that for them to be policed and operated on Syrian soil means the involvement of personnel and conditions inside Syria which simply do not exist at the moment. They would involve much higher risks and many more dangers than we face even at present. As to safe havens, the authorities in Turkey have created some refugee havens and areas to which many people have crossed the border and entered. However, safe havens and corridors within Syria have been considered but are not a realistic possibility as we see it at the moment.

Lord Bates: Although I share my noble friend’s revulsion at the events in Syria, the fact is that Syria is a co-sponsor of the Olympic Truce resolution which this Government have done so much to promote, and which this Government proposed to the UN General Assembly last year. These are desperate times and there is a case for desperate measures. Could not one of those measures be to use the Olympic Truce which comes into force on 27 July as the basis on which a delegation involving the previous proposers of the Olympic Truce, China, and the next proposers of the Olympic Truce, Russia, could go to Damascus under the auspices of the UN and the IOC to plead for Syria to honour this important commitment?

Lord Howell of Guildford: First, I acknowledge and salute my noble friend Lord Bates’ work in promoting the Olympic Truce ideal, which is widely supported. Of course, the British Government took the lead in co-sponsoring UN Resolution 66/5 on, “Building a peaceful … world”. The question that my noble friend rightly poses, through some very creative thinking, is whether we could not somehow involve China and Russia in joint action to mount more pressure on Damascus—indeed, on both sides in Syria—to cease their appalling and violent activity. A short while ago my right honourable friend the Foreign Secretary agreed with Mr Lavrov, the Russian Foreign Minister, a joint statement on co-operation on the ideals of the Olympic Truce. There is a basis there for further discussion. I am also sure that Kofi Annan will be raising the matter in Moscow now while we are discussing it here. The basic ingredients are there for something along the lines that my noble friend mentioned. However, I

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am afraid that it is a long haul ahead and there are many difficulties in the way. But the truce is a potential asset in trying to move forward and get a grip on this horrific situation in Syria.

Legislative Reform (Annual Review of Local Authorities) Order 2012

Motion to Approve

3.06 pm

Moved By Baroness Garden of Frognal

That the draft Legislative Reform Order laid before the House on 10 May be approved.

Relevant document: 1st Report from the Delegated Powers and Regulatory Reform Committee, considered in Grand Committee on 12 July.

Motion agreed.

Further Education Institutions and 16 to 19 Academies (Specification and Disposal of Articles) Regulations 2012

Motion to Approve

3.07 pm

Moved By Lord De Mauley

That the draft Regulations laid before the House on 24 May be approved.

Relevant document: 3rd Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 12 July.

Motion agreed.

Nationality, Immigration and Asylum Act 2002 (Authority to Carry) Regulations 2012

Motion to Approve

3.07 pm

Moved By Lord Henley

That the draft Regulations laid before the House on 30 April be approved.

Relevant document: 1st Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 12 July

Motion agreed.

Smoke-free Private Vehicles Bill [HL]

Smoke-free Private Vehicles Bill [HL] 5th Report from the Delegated Powers Committee

Order of Commitment Discharged

3.08 pm

Moved by Lord Ribeiro

That the order of commitment be discharged.

Lord Ribeiro: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript

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amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.

Motion agreed.

Supply and Appropriation (Main Estimates) Bill

Supply and Appropriation (Main Estimates) Bill

Second Reading (and remaining stages)

3.08 pm

Moved By Lord Sassoon

That the Bill be read a second time.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time.

Motion

Moved by Lord Sassoon

That the Bill do now pass.

Lord Grocott: My Lords, I rise only to reflect that if this were a fully elected House, the proceedings that have just taken us about 30 seconds would probably have taken us three weeks instead.

Bill passed.

Groceries Code Adjudicator Bill [HL]

Groceries Code Adjudicator Bill [HL]

3.10 pm

Clause 1 : The Adjudicator

Amendment 1

Moved by Lord Browne of Ladyton

1: Clause 1, page 1, line 3, leave out “There is to be a Groceries Code Adjudicator” and insert “A Groceries Code Adjudicator is established”

Lord Browne of Ladyton: My Lords, as I explained on the first day in Committee, having set out to legislate in language that is,

“intended to be easier for everyone to understand”—[

Official Report

, 22/5/12; col. 761.]

that is, in plain English—it is arguable at least that the Government have failed that test in the first effective sentence, which is in the third line of the Bill. It reads:

“There is to be a Groceries Code Adjudicator”.

As I argued on the first day in Committee, I know no one who speaks plain English who uses that construction. This is not the most important issue that we will discuss in relation to this Bill but it gives your Lordships’ House an opportunity to discuss this issue of plain English, which occupied us intermittently throughout our debate in Committee. Unfortunately, we did not find a comfortable way in which to deal with all aspects of this and some of them may recur in our deliberations on Report.

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In order to make my point, I attempted to improve this sentence by simply amending it to read, “There will be a groceries code adjudicator”. I was told by the Minister that that changed the meaning of the sentence and that the construction I had chosen was a prediction and not a statement of fact. However, she graciously agreed to take this matter away and to think on it. Perhaps I may say that that was not surprising because, arguably, the sentence:

“There is to be a Groceries Code Adjudicator”,

also appears to me to have an element of prediction about it.

However, the Minister having graciously offered that opportunity, I grasped it. I too have thought about this sentence. With the assistance of a conversation with the Bill team, I now propose an amendment which reads:

“A Groceries Code Adjudicator is established”.

Now neither of us is in the prediction business. We are in the present tense and this Bill will now establish a groceries code adjudicator, which I hope will find favour with the Government. At this stage of my short life in your Lordships’ House, I should be delighted if I were able to improve a piece of legislation. This is an opportunity for the Government to accept this amendment. I beg to move.

Lord Knight of Weymouth: My Lords, this side is entirely supportive of my noble friend’s amendment. I simply ask the Minister if she could briefly update us on her conversations with the noble Lord, Lord True, and his concerns about plain English and the sense of the preambles in the Bill, which were raised in the last moments in Committee.

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox): My Lords, the issue of plain English was raised at Second Reading. It was revisited at some length in Committee. The Government have considered this further. Noble Lords will recall that we discussed the possibility of saying, “There will be an adjudicator” or “There shall be an adjudicator”. I am glad to say that the proposal in the amendment in the name of the noble Lord, Lord Browne, is consistent with previous Bills and, I hope, clearer for those reading the Bill. In the spirit of this, and having heard the positions of several noble Lords in Committee, I would be happy to accept the amendment in the name of the noble Lord, Lord Browne.

As to an update on my conversations with the noble Lord, Lord True, I have a fulsome response for him later in the proceedings. Perhaps the noble Lord, Lord Knight of Weymouth, will kindly leave it until then for me to respond.

Lord Browne of Ladyton: My Lords, I hope I do not spoil the achievement of having the Government accept this amendment, but I cannot resist the temptation to express how delighted I am that I have managed to effect change to legislation in your Lordships’ House. I am absolutely sure that as we devote a substantial part of the immediate future to discussing the immediate future of your Lordships’ House, this will be cited as a

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historic moment in which the revising powers of the Chamber were exercised to the benefit of the ordinary people of the country.

Amendment 1 agreed.

3.15 pm

Amendment 2

Moved by Lord Grantchester

2: After Clause 1, insert the following new Clause—

“The Groceries Supply Order

(1) The Secretary of State must make an order to establish the Groceries Supply Order by statutory instrument.

(2) The Secretary of State shall commission a review by the Office of Fair Trading, in consultation with the Adjudicator, into the effectiveness and scope of the Groceries Code to report no later than two years following the commencement of this Act.

(3) An order may not be made under subsection (1) until a review under subsection (2) is completed.

(4) An order made under subsection (1) is subject to the approval of both Houses of Parliament.”

Lord Grantchester: My Lords, I declare my farming interests on the register. In moving Amendment 2, I am also speaking to Amendment 26. Having investigated the grocery market on two separate occasions, the Competition Commission found that abuses of market power by retailers damage suppliers’ confidence and their ability to innovate and invest. In turn, this can lead to a reduction in choice and availability and increased costs to consumers. The Competition Commission in 2010 set up a strengthened code of practice and the Bill sets up the adjudicator to enforce the code. We wish to see it enacted as soon as possible.

In Committee, we debated the anomaly that the Bill creates the office of an adjudicator to hear and rule on complaints brought under the groceries supply code of practice, which itself is not on a statutory footing. It was also brought to the House’s attention by the Delegated Powers Committee that the code may be altered or revoked without any parliamentary involvement. This amendment seeks to clarify that Parliament will be able to scrutinise the code’s workings.

Notwithstanding the strengthening of the code in 2010, my noble friend Lord Knight of Weymouth gave further examples of the complaints not covered under the code. The Food and Drink Federation has also given examples of further abuse, such as the unilateral deduction of invoices without sound business reasons or prior agreement. The amendment requires that the Office of Fair Trading, which has competence for the code, must set up a review in consultation with the adjudicator into the effectiveness and scope of the code, to report no later than two years after the Bill becomes enacted. It is vital that the workings of the code are updated and are relevant and responsive in an organic sense to changing market conditions.

Last Wednesday, more than 2,500 dairy farmers came to Parliament to make public the cuts and their concerns about a drop in prices of more than 10% on short notice this spring. At present, this situation is not covered by the code, which only covers the relationship between the top retailers and their immediate suppliers. The code does not cover the whole supply chain. The downward pressure from supermarkets is simply transferred from suppliers to their suppliers. The response

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of supermarkets to seeing their suppliers reduce prices down the supply chain is to immediately demand a share of the margin created—that is to say, a further reduction to their prices.

This is not the first or an isolated example in the dairy industry. In response to a similar situation in 2002, my noble friend Lord Whitty, when he was Minister of Agriculture, set up the Dairy Industry Supply Chain Forum to encourage relationships through the supply chain. That was 10 years ago. It is disappointing that the dairy industry has not improved over that time. The problems persist.

In response to the EU dairy package, the Minister of State in another place seeks a voluntary code, through Dairy UK, between processors and their suppliers. Indeed, in reply last Wednesday to a question from the noble Baroness, Lady Parminter, the Minister—the noble Lord, Lord Taylor of Holbeach—confirmed the situation. My understanding is that the issues covered are rather limited and unlikely to solve the problems. The Minister says that, without voluntary agreement, he will legislate, but my understanding is that that is not believed. He should legislate. This amendment gives him two years to make it work. If after a review we find that the situation has not improved—and we have seen no evidence over many years of any improvement—the OFT will be able to take effective action, highlighted by the experiences of the adjudicator.

I have highlighted the situation in the dairy industry. I am told that similar problems occur in other sectors. The amendment seeks to give the adjudicator and the OFT wide scope to make an effective code of practice work throughout the supply chain. I beg to move.

Lord Cameron of Dillington: My Lords, I first declare my interest as a farmer. I put my name to the amendment because it is important that we remain as flexible and light on our feet as possible in changing circumstances in this area. The effectiveness of the groceries code adjudicator is dependent on the effectiveness of the code. Both are equally important. It is surprising that while the adjudicator and his role are continually under review in Clauses 15 and 16, the review of the code is not given such emphasis.

Clause 13 in its simplicity is not sufficient. It sets out what the adjudicator could do but does not give me any confidence that anything will happen. It is important that as the adjudicator gains more experience, and as all the players inevitably try to push the rules to the limit, we should be able to review their roles and the rules involved. Circumstances change. The rules of rugby change from year to year and from time to time. The rules of Parliament relating to MPs’ and Peers’ expenses change. There are always new problems to be dealt with and overcome. We need to ensure that we can overcome the shortcomings in a structural way—hence subsection (2) of the proposed new clause.

The noble Lord, Lord Grantchester, mentioned the problems of the dairy industry. I do not know whether any review of the dairy code in the light of these recent developments would necessitate change, but the matter would certainly be worth looking at. It is vital that the

16 July 2012 : Column 16

groceries supply code of practice is not set in concrete. The amendment represents the necessary Kango hammer to free it.

Lord Whitty: My Lords, my Amendment 31 is in this group. I apologise to the Minister and the House that I was only a passive presence at Second Reading, and even more passive in Committee, despite my long-standing interest in the subject. I wish the Bill well and I am glad that the Government brought it forward.

I will resist the temptation to give my Second Reading speech now. I will say two things. First, as my noble friend Lord Grantchester said, it is 10 years since I started grappling with this issue and urging the noble Baroness’s predecessors, the competition authorities, to take this seriously. We have had the code since then and this begins to give it serious teeth.

Since I left office as a Minister I have also been a consumer champion. Occasionally I was leant on to say that it was not in the interests of consumers to have a go at the supermarkets by means of the groceries code. Supermarkets have made a very impressive contribution to consumer benefit, in terms of choice, price and convenience. However, it is not in the interests of consumers, even in the medium term, for part of the supply chain to be wiped out, or for supply at the retail end to be restricted in terms of competition if that is done by a large-scale operator. Consumers have benefited from supermarket activity, but they would not benefit from the supermarkets overstretching their ability to control the market.

It is also true, in defence of supermarkets, that it is not only they who could abuse their power in the supply chain and engage in the kind of activity that they are accused of, and which my noble friend and others referred to earlier in our debates on the Bill. As we know with the current situation of milk production, there is a question mark over the behaviour not only of supermarkets but also of large milk processors. My amendment does not seek immediately to broaden the scope of the code but it suggests that, were Amendments 2 and 26 adopted—in other words, were there to be a review—it may well be that it is not just the large retailers that should be included within the code’s provisions. In those circumstances the Minister would not have to wait another 10 years for primary legislation to extend the code and the adjudicator’s powers but, in the light of the reviews required by the other two amendments in this group, would be able by order to extend the provisions of the code to other large operators within the supply chain. That would be beneficial to the small suppliers; it would also give some clarity and restraint to those who were tempted to overuse their monopsonistic or oligopsonistic powers within the food chain. It would be an improvement to this Bill if the possibility of so doing were included in the primary legislation at this stage, rather than have to come back to it in a few years’ time.

Baroness Wilcox: My Lords, I understand that the noble Lord, Lord Grantchester, is eager to see a living code that will be responsive to the adjudicator’s experience of the groceries market. Other noble Lords have said

16 July 2012 : Column 17

they feel the same way, and I understand those concerns. I would like to discuss the noble Lord’s specific amendments but shall first address the issue of principle at stake here.

The adjudicator should clearly be responsive to needs within the industry, not only by prioritisation but by clarifying the code through advice and guidance. The adjudicator should also be able to use their front-line position to raise issues with the competition authorities, which are responsible for the groceries supply order and the groceries code contained within it.

As the noble Lord, Lord Grantchester, has said, the specifics of the dairy industry are being considered elsewhere in government. The adjudicator is not intended to address every problem in the sector, and the adjudicator’s role is clearly limited to the relationship between retailers and their suppliers under the groceries code.

Nevertheless, proposals in this grouping go beyond this natural evolution of the code’s interpretation, and risk undermining the basis for the code itself. Those involved in ensuring that this Bill reached Parliament—campaigners, Select Committee members or Ministers—have emphasised that the justification for this Bill lies in a rigorous market investigation and a finding by the independent competition authorities. This justification would be severely undermined if changes to the code were made without proper process through the competition authorities.

This principle goes beyond the issue of the groceries market and concerns the competition regime as a whole. It is a fundamental principle of the competition regime that remedying competition problems should be addressed by the independent and expert competition authorities, rather than directly by Ministers or Parliament. Oversight of these remedies is likewise the responsibility of the independent competition authorities.

This was at the core of the reforms introduced by the previous Government in the Enterprise Act 2002, which removed Ministers from competition decisions. As the then Secretary of State said at that Bill’s Second Reading:

“The Bill therefore provides that, in the vast majority of cases, with the exception of national security cases only, decisions will be taken by independent competition authorities, free from political interference”.—[Official Report, Commons, 10/4/02; col. 45.]

This principle is continued in the Government’s further reforms set out in the current Enterprise and Regulatory Reform Bill. Although the competition authorities are rightly accountable to Parliament for their overall performance, this is quite different from Ministers or Parliament debating or overseeing particular remedies.

In the case of the code, this means that responsibility for oversight of the code lies with the Office of Fair Trading under Section 162 of the Enterprise Act, not with the adjudicator, as Amendment 26 would have it, nor with the Secretary of State or Parliament, as Amendment 2 sets out. Equally, it is for the competition authorities to decide whether or not to amend the code—not, as the noble Lord, Lord Whitty proposes, the Secretary of State.

I remind noble Lords that the adjudicator has a statutory duty to make recommendations to the OFT if he or she thinks the code should be changed. This provides a flexible way for issues to be escalated

16 July 2012 : Column 18

whenever needed and therefore contributes to a truly living code, while respecting the existing structure of the Enterprise Act.

3.30 pm

I also want to reassure noble Lords that this does not mean that a full market investigation is needed for any change. As long as evidence is provided of a change of circumstance, the Office of Fair Trading will be able to recommend that the Competition Commission amends the code. For instance, if the adjudicator comes across a new practice among retailers that was not present when the Competition Commission carried out its investigation, it could make a recommendation to the OFT which could lead to a change in the code. This would be far quicker than a market investigation, but crucially it would still be a decision of the independent competition authorities. Both this Government and the previous one as well as many noble Lords on the Cross Benches are strong supporters of maintaining the independence of the competition regime. This is a crucially important principle and one that we should not break, despite the significance of the groceries market to many of us, especially when the Bill already contains provisions which allow us to have the living code the noble Lord has been asking for. I therefore ask the noble Lord to withdraw his amendment.

Lord Knight of Weymouth: I am struggling with the Minister’s argument that the amendment in my name and the names of other noble Lords jeopardises the independence of the decision-making. All we are seeking to do in Amendment 2 is have a review by the Office of Fair Trading. There is no presumption about what the outcome of the review would be; we are just suggesting that there should be a review. And in Amendment 26 all that is being suggested is a slight change in emphasis. I respectfully suggest to the noble Baroness that it ought to be a happy compromise for the adjudicator to report annually on the effectiveness of the code. If the adjudicator independently thinks that the code is working fine, he or she should say so. If he or she thinks that there is a problem, he or she should say so, every year.

Baroness Wilcox: I hope that I have not been too wordy in my response. It is just that there was a real point of principle here. I felt it was worth going over the ground to make sure I had made it clear that we did not feel that these amendments were relevant at this time. I repeat that responsibility for oversight of the code lies with the Office of Fair Trading under Section 162 of the Enterprise Act, not with the adjudicator, as Amendment 26 would have it, nor with the Secretary of State or Parliament, as Amendment 2 seems to set out. Equally, it is for the competition authorities to decide whether to amend the code, not the Secretary of State, as the noble Lord, Lord Whitty, proposed. I hope that I have clarified the Government’s position.

Lord Whitty: We accept that the primacy of the competition authorities in these amendments could be clearer and that the precise wording may not be appropriate. Can the Minister not agree to take away these amendments and write them in such a way that

16 July 2012 : Column 19

makes the competition authorities’ role clear while establishing the principle of a review and the fact that that review might recommend an extension of the code? That is a point of substance. I take the point of maintaining the role of the competition authorities but a relatively minor amendment from the Minister at a later stage might help.

Baroness Wilcox: I am always nervous arguing with the noble Lord, Lord Whitty, given his experience as a Minister and the fact that he was head of the National Consumer Council, a role that I also held. I know the breadth of his knowledge on this subject, which is why I took such a long time to give my answer. This is as far as I can go. I hope that when the noble Lord reads in Hansard that the Bill already requires the adjudicator to recommend changes to the OFT, he will see that I have covered most of his worries and that he will withdraw his amendment.

Lord Grantchester: My Lords, we agree that the code is a responsibility for the OFT—that is not in dispute—but we believe that the Minister is getting involved in the EU dairy package between the processors and the dairy farmers. We think that makes her reasons for not accepting the amendment slightly disingenuous. It may be that at Third Reading we can further refine this amendment so that her officials are as happy with it as we are, but we wish to enshrine in the Bill a review, and one that looks into the possibility of an extension of the code throughout the supply chain. I thank the noble Lord, Lord Cameron, and my noble friend Lord Whitty for their support. I do not hear a large volume of support behind the Minister so I beg leave to test the opinion of the House.

3.36 pm

Division on Amendment 2

Contents 164; Not-Contents 195.

Amendment 2 disagreed.

Division No.  1

CONTENTS

Adonis, L.

Ahmed, L.

Anderson of Swansea, L.

Andrews, B.

Armstrong of Hill Top, B.

Bakewell, B.

Barnett, L.

Bassam of Brighton, L. [Teller]

Beecham, L.

Billingham, B.

Blackstone, B.

Blood, B.

Boateng, L.

Borrie, L.

Bragg, L.

Brooke of Alverthorpe, L.

Brookman, L.

Browne of Ladyton, L.

Cameron of Dillington, L.

Campbell of Surbiton, B.

Campbell-Savours, L.

Carter of Coles, L.

Christopher, L.

Clancarty, E.

Clark of Windermere, L.

Clarke of Hampstead, L.

Clinton-Davis, L.

Collins of Highbury, L.

Coussins, B.

Davidson of Glen Clova, L.

Davies of Oldham, L.

Dean of Thornton-le-Fylde, B.

Donaghy, B.

Drake, B.

Dubs, L.

Elder, L.

Elystan-Morgan, L.

Evans of Temple Guiting, L.

Falkland, V.

Farrington of Ribbleton, B.

Faulkner of Worcester, L.

Finlay of Llandaff, B.

16 July 2012 : Column 20

Ford, B.

Gale, B.

Gavron, L.

Giddens, L.

Glasman, L.

Golding, B.

Gordon of Strathblane, L.

Gould of Potternewton, B.

Grantchester, L.

Grenfell, L.

Grocott, L.

Hanworth, V.

Harries of Pentregarth, L.

Harris of Haringey, L.

Harrison, L.

Haskel, L.

Haskins, L.

Haworth, L.

Hayman, B.

Hayter of Kentish Town, B.

Healy of Primrose Hill, B.

Henig, B.

Hilton of Eggardon, B.

Hollick, L.

Hollis of Heigham, B.

Howarth of Breckland, B.

Howarth of Newport, L.

Howells of St Davids, B.

Hutton of Furness, L.

Imbert, L.

Irvine of Lairg, L.

Janner of Braunstone, L.

Jones of Whitchurch, B.

Kennedy of Southwark, L.

King of West Bromwich, L.

Kinnock, L.

Kinnock of Holyhead, B.

Knight of Weymouth, L.

Lea of Crondall, L.

Liddell of Coatdyke, B.

Liddle, L.

Lipsey, L.

Lister of Burtersett, B.

Lytton, E.

McAvoy, L.

McDonagh, B.

Macdonald of Tradeston, L.

McIntosh of Hudnall, B.

Mackenzie of Framwellgate, L.

McKenzie of Luton, L.

Mallalieu, B.

Masham of Ilton, B.

Massey of Darwen, B.

Meacher, B.

Monks, L.

Morris of Handsworth, L.

Morris of Manchester, L.

Newcastle, Bp.

Noon, L.

Nye, B.

O'Loan, B.

O'Neill of Clackmannan, L.

Ouseley, L.

Palmer, L.

Parekh, L.

Patel, L.

Patel of Blackburn, L.

Patel of Bradford, L.

Pendry, L.

Peston, L.

Pitkeathley, B.

Plant of Highfield, L.

Ponsonby of Shulbrede, L.

Prashar, B.

Prescott, L.

Prosser, B.

Quin, B.

Radice, L.

Ramsay of Cartvale, B.

Rees-Mogg, L.

Richard, L.

Rooker, L.

Rosser, L.

Rowlands, L.

Royall of Blaisdon, B.

Sawyer, L.

Scotland of Asthal, B.

Sheldon, L.

Sherlock, B.

Simon, V.

Smith of Basildon, B.

Smith of Leigh, L.

Snape, L.

Soley, L.

Stern, B.

Stevenson of Balmacara, L.

Stone of Blackheath, L.

Symons of Vernham Dean, B.

Taylor of Blackburn, L.

Taylor of Bolton, B.

Temple-Morris, L.

Thornton, B.

Tomlinson, L.

Touhig, L.

Tunnicliffe, L. [Teller]

Turnberg, L.

Turner of Camden, B.

Walker of Aldringham, L.

Walpole, L.

Warnock, B.

Warwick of Undercliffe, B.

West of Spithead, L.

Wheeler, B.

Whitaker, B.

Whitty, L.

Wigley, L.

Williams of Baglan, L.

Williams of Elvel, L.

Williamson of Horton, L.

Wilson of Tillyorn, L.

Worthington, B.

Young of Hornsey, B.

NOT CONTENTS

Aberdare, L.

Addington, L.

Alderdice, L.

Anelay of St Johns, B. [Teller]

Astor of Hever, L.

Attlee, E.

Avebury, L.

Barker, B.

Bates, L.

Berridge, B.

Bew, L.

Bilimoria, L.

Black of Brentwood, L.

Boothroyd, B.

Bowness, L.

Boyce, L.

Bradshaw, L.

Brinton, B.

Brittan of Spennithorne, L.

Brooke of Sutton Mandeville, L.

Brougham and Vaux, L.

Browne of Belmont, L.

Browning, B.

Buscombe, B.

Butler-Sloss, B.

16 July 2012 : Column 21

Caithness, E.

Campbell of Alloway, L.

Chalker of Wallasey, B.

Chidgey, L.

Chorley, L.

Clement-Jones, L.

Cobbold, L.

Colwyn, L.

Cormack, L.

Cotter, L.

Courtown, E.

Cox, B.

Craigavon, V.

Crickhowell, L.

Cumberlege, B.

Dannatt, L.

Deben, L.

Denham, L.

Dholakia, L.

Dixon-Smith, L.

Doocey, B.

Dundee, E.

Eaton, B.

Eccles, V.

Elton, L.

Emerton, B.

Falkner of Margravine, B.

Faulks, L.

Fearn, L.

Fookes, B.

Forsyth of Drumlean, L.

Fowler, L.

Fraser of Carmyllie, L.

Freeman, L.

Freud, L.

Garden of Frognal, B.

Gardiner of Kimble, L.

Geddes, L.

German, L.

Glasgow, E.

Gold, L.

Goodhart, L.

Goodlad, L.

Green of Hurstpierpoint, L.

Hamwee, B.

Hanham, B.

Hannay of Chiswick, L.

Harris of Richmond, B.

Henley, L.

Higgins, L.

Hill of Oareford, L.

Hodgson of Astley Abbotts, L.

Howard of Rising, L.

Howe, E.

Howe of Aberavon, L.

Howe of Idlicote, B.

Howell of Guildford, L.

Hussein-Ece, B.

James of Blackheath, L.

Jenkin of Kennington, B.

Jenkin of Roding, L.

Jolly, B.

Jopling, L.

Kakkar, L.

Kerr of Kinlochard, L.

Kilclooney, L.

Kirkwood of Kirkhope, L.

Knight of Collingtree, B.

Kramer, B.

Laming, L.

Lamont of Lerwick, L.

Lee of Trafford, L.

Lester of Herne Hill, L.

Lexden, L.

Lindsay, E.

Lingfield, L.

Linklater of Butterstone, B.

Liverpool, E.

Loomba, L.

Luce, L.

Luke, L.

McColl of Dulwich, L.

Macfarlane of Bearsden, L.

Maclennan of Rogart, L.

McNally, L.

Maddock, B.

Maginnis of Drumglass, L.

Manchester, Bp.

Mar, C.

Marks of Henley-on-Thames, L.

Mawhinney, L.

Mayhew of Twysden, L.

Miller of Hendon, B.

Montrose, D.

Morris of Bolton, B.

Naseby, L.

Newby, L. [Teller]

Newlove, B.

Noakes, B.

Northover, B.

Norton of Louth, L.

O'Cathain, B.

Oppenheim-Barnes, B.

Palmer of Childs Hill, L.

Pannick, L.

Parminter, B.

Perry of Southwark, B.

Phillips of Sudbury, L.

Plumb, L.

Ramsbotham, L.

Randerson, B.

Rawlings, B.

Razzall, L.

Redesdale, L.

Ribeiro, L.

Risby, L.

Roberts of Conwy, L.

Roberts of Llandudno, L.

Rodgers of Quarry Bank, L.

Roper, L.

Rowe-Beddoe, L.

Ryder of Wensum, L.

Sassoon, L.

Scott of Needham Market, B.

Seccombe, B.

Selborne, E.

Shackleton of Belgravia, B.

Sharkey, L.

Sharp of Guildford, B.

Sharples, B.

Shaw of Northstead, L.

Shipley, L.

Shrewsbury, E.

Shutt of Greetland, L.

Singh of Wimbledon, L.

Slim, V.

Smith of Clifton, L.

Spicer, L.

Stedman-Scott, B.

Stewartby, L.

Stoneham of Droxford, L.

Stowell of Beeston, B.

Strasburger, L.

Swinfen, L.

Taverne, L.

Taylor of Holbeach, L.

Thomas of Gresford, L.

Thomas of Walliswood, B.

Thomas of Winchester, B.

Tonge, B.

Tope, L.

Tordoff, L.

Trees, L.

Trimble, L.

16 July 2012 : Column 22

Trumpington, B.

Tugendhat, L.

Tyler of Enfield, B.

Ullswater, V.

Vallance of Tummel, L.

Verma, B.

Wakeham, L.

Wallace of Saltaire, L.

Wallace of Tankerness, L.

Walmsley, B.

Wei, L.

Wheatcroft, B.

Wilcox, B.

Williams of Crosby, B.

York, Abp.

Younger of Leckie, V.

3.47 pm

Schedule 1: The Adjudicator

Amendment 3

Moved by Lord Knight of Weymouth

3: Schedule 1, page 11, line 8, at end insert “, subject to confirmation by a joint committee of the relevant departmental select committees”

Lord Knight of Weymouth: My Lords, the amendment in my name and that of my noble friend Lord Grantchester relates to the role of Parliament in respect of the new office of the groceries code adjudicator. In pushing the amendment which we discussed in Committee and bringing it before the House today, we do so, believe it or not, in the spirit of the coalition agreement. I remind noble Lords that the coalition agreement stated:

“We will strengthen the powers of Select Committees to scrutinise major public appointments”.

In Committee, I reminded noble Lords that that followed manifesto commitments from both the Conservative Party and the Liberal Democrats at the election.

Since we met in Committee, a letter from the noble Baroness’s ministerial colleague, Norman Lamb, to my colleague in the other place, Ian Murray, has to some extent further clarified the Government’s position. Mr Lamb writes that,

“the Government believes that posts which should be subject to pre-appointment hearings will generally be senior non-executive roles which either: play a key role in regulating Government; play a key role in protecting and safeguarding the public’s rights and interests particularly in relation to the actions and decisions of Government; or where it is vital for the reputation and credibility of the public body in question that the post holder, and is seen to be, independent of Ministers and Government”.

I think that the Government need to reflect on whether the BIS and EFRA Select Committees should have a role in confirming the appointment of the groceries code adjudicator, given what the Government are saying. The new office that we are establishing in the Bill is important. It is something which has to have a certain reputation and credibility, and which has to be independent of Ministers and government. I think that this office passes the tests that Mr Lamb sets out in his letter to Mr Murray, although I know that the Minister himself does not agree. He goes on to say:

“The Government does not consider that the groceries code adjudicator, though very important to the groceries sector, would fall within these categories”.

I think that the Government need to reflect on this. I am not going to push this to a vote today, because this is the sort of concession that the Government should want to make to the other place as it is their Select Committees that will have a role in confirming the appointment. However, I would strongly advise, if the Minister is willing to take advice, that this amendment is entirely in the spirit and wording not only of what

16 July 2012 : Column 23

the coalition agreement, her party’s manifesto commitment and her coalition partner’s manifesto say, but of what, in effect, at least one of the tests that Mr Lamb sets out in his letter to Ian Murray says. I therefore beg to move, for the sake of the debate.

Lord Borrie: My Lords, I support my Front-Bench spokesman who has just introduced this amendment. I hope I am right in thinking—the Minister will no doubt correct me if I am wrong—that the Bill currently going through the other place requires that the head of the proposed Competition and Markets Authority should be appointed by a Minister with the approval of the appropriate departmental committee. If that is so, and I am glad to think that it will be so, it emphasises the point that the Minister made in relation to the last amendment—namely the need to firmly establish the competition authorities’ independence of Ministers. She kindly said that this followed the Enterprise Act of the previous Government in their efforts to emphasise the independence of the competition authorities. It seems to me unduly subtle to say that the head of the Competition and Markets Authority, which is to be created shortly, is of a higher calibre of significance and importance than the groceries adjudicator. It is true that the groceries adjudicator’s role is narrower than that of the Competition and Markets Authority but, none the less, it is significant in its field. Indeed, the Government’s whole introduction of the Groceries Code Adjudicator Bill is based on the notion that, in a certain area of significance to the consuming public—supermarkets—the independence to be achieved by the appointment of this adjudicator is of some importance. I therefore hope that the Minister will agree with my noble friend who has introduced this amendment.

Lord Cameron of Dillington: My Lords, I am not so certain about this amendment—in fact, I think that I oppose it. If your Lordships have ever been involved in the appointment of a public post you will know that the criteria are very strict and there are many hurdles to be jumped, with independent assessors sticking strictly to the criteria and two or three interviews. I therefore think that this extra hurdle is an unnecessary piece of red tape. I know that it is common practice in the United States, for instance, to throw candidates for this sort of posts to the wolves before they have even got their feet under the table—the wolves, by the way, are the Select Committee—but I think that this is unnecessary. We want someone who is rational, methodical and good at making judgments in a legal or semi-legal context. We do not necessarily want someone who is used to the hurly-burly of political life and who might have to understand that when an MP is being rude to him he does not mean it. He is either showing off or trying to make a name for himself and just getting carried away.

I am opposed to the amendment. Perhaps that is simply because I do not have a particularly high opinion of MPs’ ability to take the right sort of decisions in this instance. It is better to leave it up to the usual channels to appoint a valid candidate who will really be able to do a good job.

16 July 2012 : Column 24

Baroness Wilcox: My Lords, before I get any further I would like to thank the noble Lord, Lord Cameron, for supporting me, and I will of course respond to the noble Lord, Lord Knight, as well. First, however, I would like to respond to the noble Lord, Lord Borrie, by saying that the role he mentioned is much more significant to the economy as a whole; whereas this role, as he acknowledges, is much more specific, and as such we do not feel that the same type of scrutiny is required. I say to the noble Lord, Lord Knight, that I still feel that it would be inappropriate to lay down in primary legislation a requirement for Select Committee oversight. The procedure for pre-appointment scrutiny was clearly set out in the document published at the time of the previous Government and involves discussion between the Secretary of State and the chair of the relevant Select Committee, not primary legislation. As for whether the adjudicator is a significant enough office to warrant pre-appointment scrutiny, I consider that, despite its importance to the groceries sector, it is not significant enough according to the criteria set out by this Government. However, as any scrutiny would ultimately take place through a committee in the other place, I am sure that if the other place feels strongly enough on this topic then there will be further discussion on the issue at a future stage there. For the moment, I ask the noble Lord to withdraw his amendment.

Lord Knight of Weymouth: My Lords, the noble Lord, Lord Cameron, clearly has a relatively low opinion of MPs, which may be shared by others. I would not wish to test that for one moment. The Minister is probably right that it is up to the other place to try to assert the reputation of Members of Parliament, perhaps by shifting on this issue. The noble Baroness said that it is not general practice to set out Select Committee oversight in primary legislation. I am comfortable enough with that. If her ministerial colleague Norman Lamb is happy, when the Bill reaches the other place, to stand up and say, “Let’s please not put this in primary legislation, but we will refer it to the relevant Select Committees for confirmation”, that will do me. If the noble Baroness does not want this to be in primary legislation, that is fine. On the basis that the proposal lives to fight another day elsewhere, I beg leave to withdraw my amendment.

Amendment 3 withdrawn.

Amendment 4

Moved by Lord Browne of Ladyton

4: Schedule 1, page 13, line 24, leave out “Office of Fair Trading” and insert “Competition and Markets Authority”

Lord Browne of Ladyton: My Lords, the effect of this group of amendments is to anticipate the passing into law of the Enterprise and Regulatory Reform Bill, which my noble friend Lord Borrie referred to in the previous debate and the provisions of which will combine the competition authority with the Office of Fair Trading. Those two bodies will be merged to create the Competition and Markets Authority. In Committee I spoke to a similar group of amendments

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but I did not press them too hard because I anticipated that I would be met with an argument that those amendments were premature, the Enterprise and Regulatory Reform Bill being at the early stages of its passage through Parliament. I was not disappointed because the noble Baroness explained in reply that that was exactly her position. I refer noble Lords to col. 99 of the

Official Report

of the first day in Committee.

The Government’s opposition to this group of amendments was one not of principle but of timing. The noble Baroness pointed out that as the Enterprise and Regulatory Reform Bill had not yet received a Third Reading in the other place—indeed, I think that it only goes into Committee tomorrow in the other place—it would be presumptuous of the Government to accept an amendment at this stage, and that she or another Minister would table similar if not identical amendments at a later stage once the Enterprise and Regulatory Reform Bill had matured and crystallised sufficiently for such amendments not to be presumptuous.

4 pm

I accepted the argument at the time and withdrew the amendment. However, I have reflected on it and now bring back this group of amendments because it has been pointed out to me that, in the Crime and Courts Bill—your Lordships will need to follow a number of dates in order to get this point—which is currently before this House and had a First Reading on 10 May, there is a reference in Schedule 3(10) to,

“the chief constable of the Police Service of Scotland”.

The office of the chief constable of the Police Service of Scotland was created by the Police and Fire Reform (Scotland) Act 2012, which, on the day on which the Crime and Courts Bill had its First Reading, was at Stage 1 of its passage in the Scottish Parliament, which has a three-stage process. If ever there was an example of presumption and premature anticipation, that is it. That Act, fortuitously, passed into law on 28 June 2012, but the same Government who resisted my amendments were doing exactly the same thing in the same House of this Parliament on another piece of legislation.

I bring this before your Lordships’ House not because it is the most important point in the Bill—I have got serious points on the Bill, which I will come to—but because if there are rules about this, what are those rules? Why do those rules apply to some people, in terms of legislation, and not to the Executive? I am a great believer in consistency. If the Government can anticipate that another Parliament will pass a piece of legislation that makes sense of drafting that they present to your Lordships’ House, it would surely be consistent with that approach to accept a piece of drafting that anticipates that your Lordships’ House will do something that the Government themselves intend it to do. I beg to move.

Baroness Wilcox: My Lords, on the amendments tabled by the noble Lord, Lord Browne, I appreciate that the Competition and Markets Authority, when established, is likely to take on the functions of the OFT and the Competition Commission that are relevant to the adjudicator. The Bill will eventually need to be amended to reflect this. We were very grateful for the

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noble Lord’s understanding attitude in Committee and suggested that these amendments should be considered at a later stage of the Bill.

Last week, the Enterprise and Regulatory Reform Bill passed through Committee in the House of Commons but is still some way from enactment. For this reason, the Government believe that these amendments are still somewhat premature. Furthermore, I ask noble Lords to note that Clause 58 of the Enterprise and Regulatory Reform Bill includes a power to make consequential amendments to enactments, including enactments made in the same Session as that Bill. Even if this Bill were not amended during its passage to refer to the Competition and Markets Authority in place of the OFT and the Competition Commission, that power could later be used to bring it into line following enactment. Today the noble Lord has asked why the same approach is not taken on every Bill. The answer is that each Bill is different and the Government will consider what approach to take on a case-by-case basis. In this case, where it is relatively easy to amend either Bill at a later stage, the Government have decided to amend it at that later stage and I therefore ask the noble Lord to withdraw his amendment.

Lord Browne of Ladyton: My Lords, I am grateful to the Minister for responding to my amendments in what I suspect is the only way that she could. I am reminded of an experience that I had when I was a young solicitor with a client who had a dreadful drink problem. On one occasion I met him in the cells of the local sheriff’s court, and he had a summons for being drunk and incapable and a summons for breach of the peace. I asked him how he was pleading and he said not guilty. I said, “What’s the defence?”, and he said, “As far as breach of the peace is concerned, I was so drunk that I couldn’t speak, so I could not have been shouting and swearing. I am an alcoholic”. I said, “What about the drunk and incapable?”. He said, “I’m teetotal. I don’t drink”. I said, “These defences would appear to be inconsistent”. He said, “But you’re a young man at the beginning of his legal career. You will learn that two separate cases have two separate defences”. I am struck that to some degree my life has come full circle.

I do not intend to press this to the vote at this stage, but I hope that at some point the amendment, along with the position that the Minister has been put into in trying to defend these contradictory positions, may encourage those who draft legislation to be a wee bit more consistent. I beg leave to withdraw the amendment.

Amendment 4 withdrawn.

Amendment 5 had been retabled as Amendment 44.

Clause 2 : Arbitration

Amendment 6

Moved by Lord Whitty

6: Clause 2, page 1, line 11, at end insert—

“(3) If a trade association or other third party refers a dispute to arbitration, the Adjudicator may—

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(a) accept appointment as arbiter;

(b) appoint another person to arbitrate;

(c) dismiss the dispute referred as trivial or vexatious or providing insufficient prima facie evidence.”

Lord Whitty: My Lords, the amendment goes back to the basic problem about the relations within the food supply chain between the supermarkets and small and medium-sized suppliers and all the attempts to enforce the code and its predecessors without statutory backing. Whether we like it or not, there is an atmosphere of apprehension, anxiety and fear among small suppliers to supermarkets, and a feeling that if they raise problems with the supermarkets under the code, they are in danger of retaliatory action at some later stage—their contracts will be ended, curtailed or put on to a less beneficial basis.

I am aware that this was discussed in Committee and indeed there have been discussions about it since it was first raised, but Clause 2 still appears to allow disputes to be referred to the adjudicator only by the supplier themselves or, alternatively, by the large retailer. My amendment would explicitly allow a case to be referred to the adjudicator by a third party—an appropriate trade association or a farming union—and this would relate to issues that covered more than one supplier, or perhaps only one supplier but where there were general implications of the outcome of that particular case. The amendment would allow third- party initiation by a trade association or farming union but possibly also other third parties that were appropriate—for example, an agricultural charity.

This would not be an open-ended requirement. As with the large retailer, the adjudicator would not have to take the case under this amendment. While Clause 2 requires the adjudicator to take a case from the supplier, although not the large retailer, my amendment would give the adjudicator sufficient grounds for not taking it, on the grounds either of it being trivial or vexatious or because of a lack of prima facie evidence. The argument that this would be used against the supermarkets on spurious grounds by campaigners who were opposed to supermarket activity in unrelated fields would not be a good reason for rejecting the amendment. It would relate to genuine supplier problems but it would protect the supplier, the farmer and the small business from the fear of being retaliated against at a later stage. It would support that supplier if the NFU or trade association took up the case.

I appreciate that the Minister may not like the wording—her officials rarely do—but this must be something on which she could go a little further than she did in Committee to assure us that third parties could take such cases. Only that, I feel, would put an end to the apprehension and the fear among small and not so small suppliers, which are at a serious disadvantage with supermarkets. They would be protected under this code and other legislation. I beg to move.

Lord Browne of Ladyton: My Lords, I will speak to the amendment standing in my name, which seeks to insert a mechanism for ensuring the independence and the qualifications of an arbitrator appointed under

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the code by reference to the provisions of this Bill. It generates, I would argue, a valuable opportunity for the Minister to explain a very complex part of this legislation, which, without an explanation in the

Official Report

of our deliberations, I fear may not be understood by those who come to apply, or seek to apply, the provisions of this Bill in relation to the code.

As we have already heard, this is a unique piece of legislation, because the basis of it is a code that is owned by the Competition Commission. If the code is repealed, then all this legislation becomes redundant. I embarked on the amendment of this particular part of the Bill because of my then limited understanding of both the arbitration legislation as it applied in England and Wales and the Arbitration (Scotland) Act 2010, which has been passed by the Scottish Parliament and, in part, now applies to Scotland, but which is not yet fully commenced. I was unsure how all these things interacted, but I was certain that at some stage it would be necessary for the Government to make it perfectly clear that the provisions of that legislation, which were carefully debated and thought through both in this Parliament and the Scottish Parliament, and were designed to generate an independent and properly qualified process of arbitration, would properly be applied to this legislation when enacted and to the processes that it was creating. The more I got into it, the more I began to appreciate just how important that was.

With the leave of the House, I will take a few minutes to explain some of this complexity but will leave it to the Minister to explain how all this works. In my discussions with the noble Baroness and her Bill team, both of whom have been extraordinarily generous with their time and in explaining this, we have between us uncovered areas in which this Bill and the code could be improved. I have not endeavoured to do that in this particular amendment, and have removed other amendments that I proposed, because I am confident that at some stage in the progress of this Bill the Government will themselves bring forward some amendments that deal with those issues that have now been uncovered.

This amendment, on plain reading, concerns the qualifications and appointment conditions for an arbitrator under the Bill and has had the benefit of shining a spotlight on a particularly unclear and potentially confusing part of the Bill. To understand how this Bill works, one has to understand the interaction of the arbitration provisions in the Bill with the existing arbitration laws in England, Wales and Northern Ireland, and also with the arbitration provisions in the code itself. It is not easy to follow all this. We are not helped by the fact that the Explanatory Notes compound this lack of clarity rather than resolving it. In particular, paragraph 30 states that the provisions of the Arbitration Act 1996 will “broadly” apply and that,

“the Arbitration (Scotland) Act 2010 will broadly have a similar effect in applying the Scottish Arbitration Rules, except so far as this would be inconsistent”,

with the groceries supply order or the Bill. That was not intended to be clear. It is intended just to report the position which is quite difficult to work out.

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4.15 pm

When one interrogates this process closely, one discovers that the provisions of the 1996 Act and the 2010 Act—which are partly enacted by this Bill, but I will come to that in a moment—do not broadly apply; they apply entirely. Arbitrations under the Bill will be statutory arbitrations. One would think that it would therefore follow that the 1996 Act would apply in England, Wales and Northern Ireland and the Scottish legislation would apply to statutory arbitrations in Scotland. However, that is not the case because the Act having been passed in 2010, the Scottish Executive, who have responsibility for bringing its provisions into effect, have specifically said that they do not yet apply to statutory arbitrations. So the ingenious answer in this Bill to that problem is that Clause 21 has the effect of applying those provisions of an Act of the Scottish Parliament, which is not yet in force in Scotland, to arbitrations under this Bill. Apparently the Scottish Government have agreed, and that is to be celebrated. It is not something that the current Scottish Government will tell many people in Scotland, but they have agreed to legislation passed by the Scottish Parliament that is not yet in force as far as statutory arbitrations are concerned being applied to statutory arbitrations under this Bill and code. I welcome that. Indeed, in an earlier debate we had in relation to this Bill, I tried to encourage the Government to have that sort of relaxed attitude towards relationships between Scotland and the rest of the United Kingdom, but I was unsuccessful.

For those of us who are anoraks about devolution and, in particular, devolution to Scotland, the question arises of whether a step like this in the constitutional settlement we have requires a legislative consent Motion of the Scottish Parliament. It appears that the Government’s position and the consensus from BIS, the Office of the Attorney-General in Scotland and the Scottish Government is that an Act of the Scottish Parliament is not required to bring into force legislation in relation to the operation of UK legislation. I would not be surprised if I am losing a number of people in this argument, but I am not really concerned about that because I am only pointing out how complex this is and why it is important that the Government explain how this will work so that the supplier who thinks that he may have something that needs to be attended to by this process has some idea about what he is getting himself into.

Whether an Act of this Parliament in relation to a matter that would otherwise be devolved requires a legislative consent Motion depends upon the application of the purpose test. In other words, is the purpose of this legislation to do with competition law or arbitration law? If it is to do with competition law, it is reserved and Acts of this Parliament do not require legislative consent Motions, even if they encroach upon arbitration law, which is devolved and is an area where the Scottish Parliament has passed an Act that the Scottish Government have quite deliberately not brought completely into force. I am not going to ask your Lordships’ House to debate the purpose test in relation to this legislation because the Government are very clear that it is to do with competition law and it would appear that the Scottish Government agree with them.

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Interestingly, I do not think anybody has asked the Scottish Parliament what it thinks, but that may be an irrelevance as far as this is concerned.

These are interesting questions. In circumstances where other comparatively trivial matters about the relationship between the Scottish and UK Parliaments and the UK and Scottish Governments have occupied us sometimes for hours in Scotland, how do we come to a situation where an accommodation like this can be created without any recourse, in any circumstances, to either Parliament? This is an interesting and welcome thing to do and I hope that it is a forerunner to a degree of co-operation between our respective Parliaments that we have not seen until now. However, I suggest and predict that this apparently unclear and untransparent way of enacting law makes it difficult, apart from anything else, to know which parts of the Scottish Arbitration Act 2010 are in force and which are not. In some circumstances, it also makes it difficult to work out where it is best and which law applies to an arbitration that comes from this complicated process of the code, our Bill, the 1996 Arbitration Act applying to England, Wales and Northern Ireland and parts of Scotland’s 2010 Act that we are now bringing into force. It would have been much easier for the Scottish Government just to have implemented the 2010 Act in a way that was consistent with all this, but apparently we have got beyond that.

I shall try to avoid the temptation to start discussing which jurisdiction will apply to arbitration, although I have a speaking note about it. There is a question about whether a Scottish supplier will be defeated by the operation of these provisions. A retailer might want his arbitration to be conducted under the rules in Scotland, but find that he is stuck with it being conducted under the rules in England. I will leave that hanging; it may be a debate for the other place. I am not sure that lifting up this particular stone and discovering what was underneath has been of great benefit to your Lordships’ House. Given the discussions that have taken place between me, those advising me, the noble Baroness and her Bill team, I hope that we may get a degree of clarity from the response to this amendment, which will then be there for others to take advantage of.

At least one good thing has come out of this: the groceries code order needs to be amended because it no longer reflects the state of law in Scotland. At some stage, an amendment will have to be brought to this Bill to create the mechanism to change the order. I am happy to leave the noble Baroness and her deeply skilled Bill team, who are across all this in some detail, to explain when that is going to happen. However, it would be better if it happened before the Bill left your Lordships’ House so there cannot be any criticism from the other place that we are not doing our job comprehensively. That is crucial at this particular time. It would be helpful if that could be done before the Bill leaves your Lordships’ House.

Baroness Wilcox: My Lords, I thank the noble Lord, Lord Whitty, and the noble Lord, Lord Browne, for these amendments. Regarding the amendment tabled by the noble Lord, Lord Whitty, for reasons I shall explain, we do not believe it should be possible for third parties to refer disputes to arbitration. Clause 2

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simply supplements the arbitration provisions in the groceries supply order 2009. Article 11 of the order does not allow a trade association or other third party to refer a dispute to arbitration so, if we provided that in the Bill, we would be departing from the order. In any event, we do not think that it is right that a third party should be able to refer a dispute to arbitration. A dispute is between a retailer and a supplier, not with a third party. If a supplier seeks compensation or some other remedy for its own benefit, it should come forward to submit the dispute to arbitration itself and on a named basis. This is consistent with the normal way in which disputes between two parties are resolved. Any other approach would risk unfairness to the retailer concerned. However, a trade association or other third party will be able to complain to the adjudicator if it considers that a retailer has breached the code. The adjudicator could then take that information into account in deciding whether to commence an investigation. That is how third parties can get involved. There is a distinction between arbitrations, which must be between retailers and suppliers, and investigations, where the adjudicator will be able to consider information from any source, including trade associations.

The remainder of my remarks are now directed more to the amendment of the noble Lord, Lord Browne, concerning the process for appointing an arbitrator, and to explaining why his amendment is not necessary. As I say, Clause 2 supplements the 2009 order. Because the order and the Bill provide for arbitration between retailers and suppliers, the arbitrations will be statutory arbitrations for the purposes of the Arbitration Act 1996 for England, Wales and Northern Ireland and of the Arbitration (Scotland) Act 2010. In the latter case, Clause 21(6) applies the provisions of the 2010 Act, pending that Act coming into force in relation to arbitrations under the Bill.

Section 94 of the Arbitration Act 1996 applies the provisions of Part I of that Act to every statutory arbitration, but this is subject to the adaptations and exclusions in Sections 95 to 98 of that Act. Also, the provisions of Part I will not apply to the extent that they are inconsistent with the groceries supply order 2009 or with the Bill; that is why I used the word “broadly” in referring to Section 94 in Committee. In Scotland, the effect of Section 16 of the Arbitration (Scotland) Act 2010 is similar in applying the Scottish arbitration rules set out in Schedule 1 to that Act to arbitrations under the 2009 order and the Bill. Again, there are certain exceptions set out in Section 16 and, again, the Scottish arbitration rules will not apply to the extent that they are inconsistent with the groceries supply order or the Bill; that is also why I used the word “broadly” in referring to Section 16 in Committee.

I will briefly give a couple of examples of inconsistency. The mechanism for the appointment of an arbitrator in Clause 2 of the Bill and provisions in Article 11(7) of the order for the payment of the arbitrator’s costs will each take precedence over provisions in the Arbitration Act 1996 and the Scottish arbitration rules about appointment and costs. I should also explain at this point that Article 11(6) of the order provides for the arbitration to be conducted in accordance with the

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rules of the Chartered Institute of Arbitrators or any other dispute resolution body nominated by the appointed arbitrator. The rules of the relevant dispute resolution body and/or provisions of Part I of the Arbitration Act 1996 and the Scottish arbitration rules will protect the parties against the risks of the arbitration being carried out by an arbitrator who is not capable, impartial and fair. I refer in particular to Sections 24, 33 and 68 of the Arbitration Act 1996 and to rules 8, 10, 12, 24 and 68 of the Scottish arbitration rules.

In addition, it is worth noting that the adjudicator, as a public authority, must act reasonably and respect the right of the parties to a fair trial in appointing any arbitrator. Those duties will also act as a safeguard against the appointment of an arbitrator who is not capable, impartial, independent and fair. All that means that the amendment tabled by the noble Lord, Lord Browne, is not necessary.

4.30 pm

On a minor point, we have noted that in at least one respect it would be sensible to bring Article 11 of the order up to date to reflect the Arbitration (Scotland) Act 2010. Article 11(8) refers to Sections 67 to 69 of the Arbitration Act 1996 but not to the similar provisions of the Arbitration (Scotland) Act 2010, which of course came after the order. The Government will therefore consider whether this updating could usefully be facilitated by a minor and technical amendment to our Bill.

Clause 21(6) is a slightly unusual provision but it provides a practical solution to an issue which in our view is technical and uncontroversial. For the reasons I have explained, we want the Scottish arbitration rules in the Arbitration (Scotland) Act 2010 to apply to arbitrations between a retailer and a supplier which take place in Scotland. That will make the position in Scotland similar to the position which applies in England, Wales and Northern Ireland under the Arbitration Act 1996. However, the provisions of the 2010 Act which will bring this about are not yet in force in relation to statutory arbitrations such as these.

As explained in the Explanatory Notes, Clause 21(6) therefore applies the 2010 Act to arbitrations under the order and our Bill as if the 2010 Act were in force, until it is in force. At that point Clause 21(6) will fall away. Therefore, the effect is similar to the commencement of the relevant provisions of the Arbitration (Scotland) Act 2010, but only for that clear and very limited purpose. Therefore, I suggest that Clause 21(6) is a practical solution to what is essentially a timing difference connected with the Scottish arbitration rules, and one which is very specific to the needs of our Bill. I suggest that the position under the 2010 Act is clear.

The question has been raised of whether Clause 21(6) should be the subject of a legislative consent Motion under the Sewel convention. Our view is that the convention is not triggered. The Bill relates to matters of competition law and is a reserved matter. It does not fall within the legislative competence of the Scottish Parliament because, although arbitration generally is a devolved matter, the Scottish Parliament could not provide for matters of arbitration only by the adjudicator or a person appointed by the adjudicator. I hope that I have not spoken too fast for noble Lords to take in the

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points that they deeply need and, with all those explanations in place, I request that the noble Lord withdraws his amendment.

Lord Whitty: My Lords, I thank the Minister for making clear the distinction between a complaint leading to an investigation and one leading to arbitration. However, I still think that there should be a means whereby someone could represent a supplier through the arbitration process as well as triggering an investigation. This may not be the appropriate clause to amend in that respect. The Minister made it clear that we would have to amend the code in order to do that, which I accept.

However, the net effect is that in this Act, the code and all its operations, we have not solved the basic imbalance of power to enable individual suppliers to have the confidence to take a case under this code. Until we do that, this will be only a limited protection, which is welcome in itself and for the teeth that this Act will give them. But it does not address all the fears and apprehensions of farmers and small businesses who are reliant on supermarket orders that they will be treated absolutely fairly.

I suspect that the Minister’s colleagues will get this amendment back in another place, probably from her own side. Therefore, this is not a closed case but, for now, I beg leave to withdraw the amendment.

Amendment 6 withdrawn.

Amendment 7 not moved.

Clause 4 : Investigations

Amendment 8

Moved by Lord Howard of Rising

8: Clause 4, page 2, line 13, at end insert—

“( ) In deciding whether to carry out an investigation, the Adjudicator may consider only one or both of the following—

(a) information provided by a supplier;

(b) information that is publicly available.”

Lord Howard of Rising: My Lords, in moving Amendment 8, I shall speak also to Amendments 19 and 20. Before so doing, I declare interests both as a farmer and a supplier to supermarkets. I still cannot get my mind around why there should have been a change from the original drafting of the Bill, which limited complaints to those directly concerned in a transaction. My amendment seeks to do so, so that only those concerned with the business could complain. I can only think that the people who changed this have absolutely no connection with reality or commerce because there is bound to be some form of malicious or frivolous complaint. Anybody who doubts that has only to look at the world around us, where they cannot even fix LIBOR without doing it how it should not be done.

With something that is so open to abuse, it is only right that there has to be some form of corrective mechanism. Indeed, in the Bill there is the ability for the arbitrator to ask for costs from those who put in malicious complaints. Amendment 19 obliges the arbitrator to seek costs. He does not have to seek all of his costs, it is discretionary. Nevertheless, it would act

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as a deterrent to those who wish to behave badly if it was a certainty that they would have to pay for it. Amendment 20 emphasises that deterrent by asking the adjudicator to include actions that he takes so that it can be seen that he is dealing with those who make irresponsible complaints. This is a very important and necessary amendment to the Bill. I beg to move.

Lord Razzall: My Lords, the problem with the amendment of the noble Lord, Lord Howard of Rising, is that when we drill down, the real reason why the previous regime did not work is because a lot of farmers are very nervous and want to preserve their anonymity. That is why the regime, which I know the noble Lords, Lord Howard of Rising and Lord Borrie, and the noble Viscount, rather wish had been maintained, did not actually work in practice. Farmers were afraid that were they to complain and lose their anonymity, they would be victimised by the 10 major supermarkets. That is the reason we want to have this Bill. The amendment would go to the heart of the Bill and that is why it should be rejected.

Lord Cameron of Dillington: My Lords, I too am not convinced by any of these amendments, and I support the noble Lord, Lord Razzall, in that. The amendment undermines the point of the Bill and the adjudicator; there is currently an imbalance between the power of the various parties involved in the food supply chain which the Bill tries to redress. Thus, to tie the hands of the adjudicator in this way is not particularly helpful. After all, if we are trying to minimise spurious and vexatious complaints, is it best to limit the complaints to the supplier who may have been personally affected, or is it best to have their grievance or grievances assessed and filtered by a trade association and others, who might be able to point out what is reasonable and what is not? That, of course, is quite apart from the point about anonymity raised by the noble Lord, Lord Razzall.

I am afraid that I cannot support Amendments 19 and 20. The whole point of the Bill is to defend the little man against the power and possible bullying tactics of the big man. The whole point of the groceries code is that legal redress is too costly to risk, even if one thinks one has a case and does not have to succumb to the threat of delisting or other bullying tactics. I like the word “may” in Clause 10 because it deals with time wasters and those who are trying it on, but I strongly object to “must” in Amendments 19 and 20, which would undermine the flexibility of the adjudicator and thus much of the point of the Bill.

Lord Plumb: My Lords, I rise for the first time after something like an hour and a half of debate. I am very concerned at the way it has gone so far. I declare an interest as a farmer. In the course of the debate, I thought about the 2,500 farmers who were in Central Hall last week. Every one of them would have difficulty understanding what we have been talking about. We have rightly been talking about legal aspects of the Bill, because they have to be right and clear. However, what concerns the farmer at the moment, as a supplier of goods, is simply fairness in the marketplace. Therefore, farmers believe someone should be appointed to see that that is achieved.

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That person—I presume that it will be a team—will have to take responsibility for dealing with issues not only fairly but correctly and with full understanding of what the job is about. They are not there to be involved in competition but to deal with investigation of the market that exists, or of the market that should be. The other day in Central Hall, the Minister held up a pint of milk and a bottle of water to illustrate the difference in price—56p as against 83p. A lot of questions must be asked. Surely it goes without saying that something has to be done and someone must be appointed.

If the person who is appointed finds unfairness on the other side, let it be so. That is their role and responsibility in this field. I do not agree with the amendments in this group, tabled by my noble friend Lord Howard. This amendment would leave the Bill in a similar form to the draft Bill that we saw in May 2011. Nothing has changed, and we are trying to bring about changes in the interests of the industry with which we are concerned.

The amendment would seriously narrow the sources of evidence that the adjudicator could use in launching an investigation into a possible breach of the code. That would be of considerable concern. The powers need to be broadened to allow credible evidence from any person who is prepared to come forward with a legitimate reason for asking the adjudicator to take responsibility and deal with an issue. All organisations, including charities, will have to be able to provide evidence of a breach of the code. This is a crucial element in safeguarding the adjudicator’s duty to protect the identity of the complainants. Therefore it is essential that the investigatory powers in the Bill are safeguarded but not complicated by cumbersome rules that could delay the process of ensuring a fairer functioning supply chain.

Lord Whitty: My Lords, I will be brief because the noble Lord, Lord Plumb, has spelt it out. It would be extraordinary if Amendment 8 were accepted and carried by this House. I accepted with some reluctance the noble Baroness’s indication that it would not be possible for third parties such as farming associations or unions to bring cases. I can understand that, but the idea that they should be cut out of providing information or that the adjudicator should be constrained from looking at that information and considering it before making his or her judgment seems extraordinary. I hope that the Minister will reject Amendment 8. It would tie the adjudicator’s hands and be unfair to the complaining supplier.

4.45 pm

Viscount Eccles: My Lords, following on from the noble Lord, Lord Whitty, I do not understand,

“information that is publicly available”

as stopping anybody doing anything. The only thing a trade association, for example, has to do is to make its report on an alleged breach of the code public; it does not have to quote the names of companies.

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It cannot just go to the adjudicator with verbal information. It has to take the trouble to find out where the problems are.

I have huge sympathy with the immense consternation that is going on among dairy farmers. It is an extremely uncomfortable process. If the NFU has reason to believe that the code is not being observed, there is a case for it to collect as much evidence as it wishes from its members, who stay anonymous, and put its report about these breaches of the code into the public arena, presenting it at the same time to the adjudicator. That is a tremendous protection to both the public and the adjudicator; otherwise we shall all be left with a suspicion that what is happening is rumour and hearsay. It seems tremendously important that people’s reasons for doubting whether the code is being adhered to become public.

Lord Borrie: The noble Viscount, Lord Eccles, seems to have forgotten that the whole requirement in this Bill is that the investigation can properly go ahead only if there is a reasonable suspicion on behalf of the adjudicator that an investigation is required. That is the essential requirement in the Bill and I do not think it appropriate, for many of the reasons mentioned by the noble Lords, Lord Plumb and Lord Whitty, and others, that it has been so difficult up to now because of the difference in bargaining power between the suppliers and the retailers. In addition to the requirements that are already in this clause, there is no need to establish that the information should be made public, for example by the NFU.

Lord Knight of Weymouth: My Lords, I was ready to give an impassioned speech to try to persuade the noble Lord, Lord Howard of Rising, that he was wrong, but I think we have heard enough really good arguments from all sides of the House, so I will not delay the House by doing so. I will simply use the opportunity to thank the National Farmers’ Union, the Food and Drink Federation and the Federation of Small Businesses for their robust position on this, in saying that we should oppose these amendments.

Baroness Wilcox: My Lords, the question of who should be able to complain to the adjudicator has been discussed extensively: in consultation, at pre-legislative scrutiny, at Second Reading and in Committee. Along with most noble Lords who have spoken on this issue, the Government consider that the adjudicator should be able to consider evidence from any relevant source when deciding whether to commence an investigation.

The ability of the adjudicator to consider evidence from any source has been described by supplier groups as essential to the adjudicator’s operation. Furthermore, it simply makes sense. If the adjudicator has reasonable grounds to suspect a breach of the code, he or she should be able to initiate an investigation, no matter where the information came from.

My noble friend Lord Howard of Rising has explained that his concerns are motivated in part by the possibility of vexatious or malicious complaints and that is the issue behind Amendments 19 and 20. The Government certainly have some sympathy with this concern. No one wants to see the adjudicator’s time wasted or

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businesses put under a burden due to vexatious complaints. However, it is important that in the wording used we take into account what is customary as well as the need not to scare off legitimate complainants. As I said in Committee, this is intended to be a strong test directed at irresponsible complaints rather than simply erroneous or weak ones. I note also that the discretionary power to recover costs currently applies to the recovery of costs from both retailers and complainants. There seem to be few grounds for strengthening the requirement on one side without similarly strengthening it on the other. In either case the Government consider that the discretion provided by the word “may” allows the adjudicator to treat each case on its merits. The Government therefore consider that the Bill as it stands provides a necessary deterrent against vexatious complaints. The adjudicator can consider imposing costs on a complainant whose complaint is vexatious or wholly without merit but we do not think it should be mandatory or near-mandatory.

Regarding the amendment to produce an additional annual report, that would be an unnecessarily burdensome piece of bureaucracy. In paragraph 15 of Schedule 1 the adjudicator is already required to keep proper accounts and prepare a statement of accounts each year. These accounts would need to include any costs recovered from retailers or complainants. The application of the power to recover costs could be included in the annual report prepared under Clause 14. I therefore ask the noble Lord to consider withdrawing his amendment.

Lord Howard of Rising: I thank the Minister for her remarks and all other noble Lords who have spoken. I just want to point out that it is normal that there is an imbalance between the person paying and the person receiving the money. Why there should be protection in this case I do not know, even though it would be to my own personal benefit. Amendments 19 and 20 come into effect only if the system of complaints is being abused. I cannot see that charging those who have committed the abuse for the cost they have incurred can in any way be unfair. Indeed, it is unfair the other way because it is the people about whom they are complaining who have to pay all the costs. That said, I will not pursue the matter further and I beg leave to withdraw the amendment.

Amendment 8 withdrawn.

Schedule 2 : Information powers

Amendment 9

Moved by Baroness Wilcox

9: Schedule 2, page 14, line 20, leave out from “requires” to “the” in line 21 and insert “an individual to attend at a particular place”

Baroness Wilcox: My Lords, in Committee my noble friend Lady Byford raised an important question about when the adjudicator should pay travel expenses, which received a great deal of support from the Committee. She asked whether the 10-mile threshold on paying travel expenses was appropriate in rural areas, given that in such areas public transport is often very limited.

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This amendment is in both our names but the spirit of the amendment is all hers. I am merely speaking to it on her behalf as for personal reasons she cannot be here today. Rather than basing travel expenses on distance or time, we have simply specified that if the adjudicator requires a person to attend a particular place, the adjudicator must pay all that person’s travel expenses. I am grateful to the noble Baroness for bringing this issue to my attention and I hope that noble Lords are happy with this solution, which should benefit all those required to give evidence, particularly in rural areas. I beg to move.

Lord Plumb: My Lords, I congratulate my noble friend the Minister on what she has just said. I know that her noble friend Lady Byford will be thrilled to hear the news—in fact, she had already assumed that that would be the answer that she would get. For that reason, I thank the Minister for accepting the amendment. It is extremely important and will be recognised as such as time passes.

Amendment 9 agreed.


Clause 5 : Investigation reports

Amendment 10

Moved by Lord Browne of Ladyton

10: Clause 5, page 2, line 21, at end insert “; and

“(c) the reasons for the findings and any action taken or proposed”

Lord Browne of Ladyton: My Lords, Clauses 4 to 10 govern how the adjudicator should conduct investigations and carry out his further powers of enforcement following investigations. Amendment 10 would amend Clause 5, which is the second of those clauses which relate to the publication of reports following investigations. The clause requires the adjudicator to publish a report, which is appropriate. Subsection (2) sets out what the report must specify as a minimum. The amendment would add to that minimum requirement the requirement for a statement of reasons for any finding made by the adjudicator and any action taken or proposed to be taken by him. I moved a similar amendment on the first day in Committee at col. 119 of the Official Report, where I set out the arguments for a requirement for reasons in a report in these circumstances. I do not intend to rehearse those arguments other than to say that it is my firm belief that, if reasons are set out, such a requirement would reduce rather than increase the possibility of challenge at a later date. In the absence of reasons, my experience is that people challenge to find out reasons.

This is consistent with my whole approach to the Bill—I say this for the benefit of the noble Lord, Lord Plumb, who has not had the opportunity to hear me speak in support of the Bill or of its objectives. I have in the past expressed my strong support for the Bill and the mechanism that it creates. My purpose in seeking to amend the legislation is to try to make it clearer, and to make it work more effectively and in a way in which those who need to have confidence in it can do so. I understand the necessity of the legislation,

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which has to be put at the heart of a relationship which is otherwise deeply unfair and potentially operates to the disadvantage of smaller suppliers. It is helpful to have this opportunity to make it clear that that is my objective. If I am seen to be unduly technical or legal about some of the amendments, I reassure noble Lords that they are all designed to make the legislation work better and to give the Minister the opportunity to explain the necessarily complicated process of how it will work. It may not have been immediately obvious to everybody that there was clarity in the Minister’s response to the amendment that I proposed earlier. I commend her for that, because it will enable those who need to read the reports of our debates to understand the mechanism much better.

When I moved the amendment in Committee, I was grateful for the support of the noble Viscount, Lord Eccles, and my noble friend Lord Borrie. I was grateful, too, for the implied support of the Minister, who said that she thought that it was reasonable that the report should give reasons. She offered to speak to me further about it. I have taken advantage of that opportunity and have had a conversation also with her Bill team, whose help in advancing some of my intentions in relation to the Bill I have referred to. The result of that is a changed amendment which I hope is more felicitously worded than that which I proposed in Committee. I commend the amendment to the House and beg to move.

5 pm

Lord Howard of Rising: My Lords, I speak to Amendment 11, which is grouped with Amendment 10, the sensible amendment of the noble Lord, Lord Browne. This amendment would seek the inclusion of comments made by the retailer to the adjudicator, and it seems to me only reasonable that both sides of the argument are included where a report is issued. The industry is particularly sensitive to public reputation and it would be unfair if it was not allowed to make its case at the same time as being criticised.

Viscount Eccles: My Lords, I do not wish to repeat the arguments made in Committee but I support these two amendments.

Lord Browne of Ladyton: My Lords, before the Minister speaks I should perhaps indicate—for the purpose of the record—that I also support the amendment of the noble Lord, Lord Howard of Rising. I think it is entirely consistent with what is fair in relation to the conduct of this process.

Baroness Wilcox: My Lords, as I said in Committee, the reports that the adjudicator must publish at the end of each investigation are a vital part of his or her accountability, and an important way of keeping retailers, suppliers and consumers informed of his or her work. While I can understand the intention behind the amendment of my noble friend Lord Howard of Rising, I am not sure that it is necessary. If a retailer wishes to make a public comment on the report, it will be free to do so by issuing a press release or publishing a statement on its website. For this to be included as an annexe to

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the report itself would appear somewhat unusual, particularly as there would—due to confidentiality—be less possibility of a similar statement from any suppliers.

Furthermore, we think it important that the report is clearly the adjudicator’s report and the adjudicator’s alone. The report should be fair and impartial and should not be coloured by commentary from a retailer with which the adjudicator may or may not agree. As I say, the retailer will be free to make its own statement, and similarly the adjudicator will have no right to have his or her comments on that statement included in it. I therefore ask the noble Lord not to press that amendment.

To move on to the amendment of the noble Lord, Lord Browne, I said two weeks ago that this was interesting and reasonable—he repeated my words exactly—and upon further consideration I am happy to say that my opinion has not changed. It is eminently sensible to require the adjudicator’s investigation reports to contain the reasons for the decisions made, and I am therefore happy to accept that amendment.

Lord Browne of Ladyton: My Lords, I am overwhelmed by the scale of my success this afternoon. I suspect I may retire from the lists now. This will be a day that I will never repeat. I thank the noble Baroness for her consistent approach in this case. I thank her and her Bill team once again for their co-operation and engagement with me in an attempt to try and make this amendment work better, and it does. I think that we have, between us, improved the Bill.

Amendment 10 agreed.

Amendment 11 not moved.

Clause 6: Investigations: forms of enforcement

Amendment 11A

Moved by Lord Knight of Weymouth

11A: Clause 6, page 2, line 31, at end insert “which the Adjudicator may impose in any circumstances he sees fit at any time after the Secretary of State has made an order commencing this section”

Lord Knight of Weymouth: My Lords, we consider Amendments 15 and 18 to be consequential to Amendment 11A and therefore, if the House passes Amendment 11A, it should be aware that it would also be voting to pass Amendments 15 and 18. I am grateful to the noble Lords, Lord Curry and Lord Cameron, for their support for those two amendments. Amendment 11A specifies that the adjudicator has the power to fine in any circumstances that he or she sees fit as soon as Clause 6 is commenced. That is, it gives the right to fine from day one. It therefore follows that Amendment 15 to Clause 9, which deletes those powers being introduced by order of the Secretary of State, and Amendment 18, which deletes Schedule 3 detailing the order-making process by the Secretary of State, should also be agreed to.

The question of whether the adjudicator should have the power to fine from day one concerns what makes an effective regulator. We have seen regulatory

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failure in recent times in respect of banks—much as I applaud the action of the FSA in exposing and then fining Barclays over the LIBOR scandal.

How much better would it have been if we had had an effective Press Complaints Commission? Perhaps the grotesque scandal of phone hacking could have been prevented if there had been a regulator with more teeth than just the ability to name and shame. Clearly, the powerful forces of the media have not feared their regulator or the threat of a statutory regulator with real power.

I welcome the Government’s conversion to the principle that the adjudicator may need the power to fine. They listened to the Select Committees, and that is good, but this is not a wholescale Damascene conversion. If they are coming back down the road, it is with no great conviction, as they are not offering those powers from day one of the operation of the adjudicator.

Of course, that should be no great surprise, as it is arguable that the Bill is full of lukewarm commitment. There is no sign of wanting to keep the code alive and updated as circumstances change, as we have discovered. The Bill to establish the adjudicator includes the power to abolish the office by ministerial diktat, as we will debate later today. The concession to allow complaints by third parties was also given in response to the Select Committee, but along with a clause to allow the Government to change their mind back again by another order. The charge of foot-dragging is reasonable.

If the Government were truly listening to the Defra and BIS Select Committees in the other place, the power to fine would be available from inception. The Government said in response to the Select Committee's recommendation:

“If there is evidence of significant non-compliance with the Groceries Code and the existing regime seems not to be sufficiently effective, there is the prospect of a swift introduction of financial penalties, without the need for primary legislation”.

That is their main argument for the way the Bill is currently constructed. The key phrase here is “swift introduction”. Even with the concessions on adjudicator guidance that we will debate shortly, it will still take a long time.

As things currently stand, first, the adjudicator will get up and running and run investigations following complaints. Then, when a significant breach is found, the retailer is named and shamed. It is hard to see that taking less than a year. Then, after a reasonable period, more complaints and another investigation, there may still be significant non-compliance. That will take another year. The adjudicator then decides to use that as evidence of the need for powers to fine and recommends accordingly to the Secretary of State. I find it hard to believe that the decision to fine in principle would then take less than three months for the Secretary of State to consider. Then there will be a consultation on that decision in principle for it to be confirmed and the process of moving orders through Parliament to begin. That will take not less than six months. Then, the adjudicator has the powers and can launch another investigation following a further complaint and then use the powers to fine.

No one can seriously believe that all that can be done sooner than three years after the adjudicator was established. So much for swift introduction. The National

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Farmers’ Union has always supported fines, but now appears to concede reserve powers because it does not want to delay the Bill. I respect its concern. We have listened carefully to it throughout, but if we decide today to improve the Bill by allowing what others, such as the Federation of Small Businesses, still want, there need be no delay. The FSB has e-mailed me to say:

“We remain concerned that without the ability to impose significant financial penalties, the Adjudicator will find it difficult to be fully effective. While powers contained within the Bill, particularly the ability to name and shame, are important, we believe that the Adjudicator will need a full range of penalties available to it as soon as it is set up to ensure that it is able to deal with the complaints it may face”.

I also refer your Lordships to the campaign on this Bill led by ActionAid, which includes an extraordinary alliance of organisations, as diverse as the FSB, the Country Land and Business Association, Unite the Union, the World Wildlife Fund, WSPA, Friends of the Earth, the Church of England and the Campaign to Protect Rural England—not necessarily normal bedfellows as a group. They say that Parliament should ensure that the adjudicator can,

“launch investigations on the basis of credible evidence provided by third parties, such as business associations, NGOs, trade unions and MPs”.

They add that they should be able to do this from day one. The Government have already agreed in Amendments 16 and 23 that the adjudicator may upon appointment begin drafting guidance on the use of fines, and that concession is welcome. However, that means that, unless the Government decide to dig in their heels and change the Bill back in the Commons, if your Lordships’ House is minded to agree these amendments now there need be no delay. On this side of the House, we are absolutely committed to this Bill making rapid progress. That is why we took it quickly through Committee in the Moses Room, with an extended day; that is why we are progressing relatively quickly today; and that is why we have delivered on our side to the commitment to conclude Lords’ consideration of all stages of the Bill by the Summer Recess.

I would like to add one more thing—on listening. As we have heard from the noble Lord, Lord Plumb, and my noble friend Lord Grantchester, feelings are running high in the dairy sector about how exploited liquid milk producers are. When discussing this crisis with these producers, I tried to reassure them that Parliament was listening and legislating through this Bill, but too many have given up on us and do not believe that we will make any difference. Without the power to fine from day one, they may be right and another chance to rebuild trust in this Parliament will be lost. However, I am pleased that some retailers are listening to these producers, including some supermarkets. I take this opportunity to mention a welcome initiative by Sainsbury’s. In April, the farmers who supply Sainsbury’s milk voted to move to an industry-leading cost of production-based supply model. Following their first pricing review of dairy costs, they increased the price they pay farmers for milk by 0.26p to 30.56p per litre from 1 July. That is a marginal amount, but it is welcome and I am happy to pay tribute to the fact that there are some supermarkets that want to make progress.

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Not all large retailers are acting voluntarily, however, so we need to push them down the road of responsibility. It all comes down to whether the adjudicator should grow teeth or be born with them. We are in the process of bringing a guard dog into the world to protect the groceries supply code. Currently, our hound will be able to patrol the perimeter, to sniff out and investigate intruders or potential intruders. The beast will be able to bark if it finds anything, in the hope that someone will notice or that the intruders will think someone will notice and therefore voluntarily back off. However, if the intruders persist, they will do so in the knowledge that the dog has no teeth; it is all bark and no bite, all name and shame and no fines. I hope our guard dog never has cause to bite, but I do want potential intruders to worry that it might and that it can take a chunk out of their profits straight away—not in the future if we decide later perhaps that it needs teeth. We need effective regulation of overmighty vested interests. Retailers making multibillion-pound profits are very mighty indeed. Their suppliers need protection from an effective regulator, and that regulator needs the power to fine from the start.

Baroness Randerson: My Lords, I am surprised at the noble Lord’s ferocity on this given the record of the previous Government, which although well-intentioned was hardly decisive and swift on this issue. I think his judgment that it would take three years to bring in fines is very speculative. However, I am sympathetic to his argument. Certainly, I have been listening very carefully to the idea that we need fines from the start.

For that reason, I am very pleased to see Amendments 16 and 23 from the Government in this group, which will ensure that financial penalties can be brought in quickly. Bearing in mind the Government’s philosophy, which is light-touch regulation, I can see that this fits in with that philosophy.

5.15 pm

Having had discussions with supermarkets themselves, it is important to point out that there are penalties other than naming and shaming—although naming and shaming is of huge importance to supermarkets. That process will in itself cost supermarkets money. If they get bad publicity, they will lose customers and that is probably the strongest penalty. I am sure that many noble Lords would agree, whether they are in favour of fines or not, that that naming and shaming process will matter to supermarkets because it has a financial impact.

It is also worth pointing out that there is a cost recovery process available to the adjudicator. He or she can recover the costs of an investigation if it is judged to be right. There is also the fact that the levy will be able to be varied in due course, so that it reflects the amount of time that the adjudicator has spent on each supermarket and the problems that flow from it. That will also have a financial impact. Although fines are in principle an important part of the armoury, I accept that it looks now as if we are to have a mechanism that will enable the adjudicator and the Government to respond rapidly—in quick succession—to ensure that fines become an active part of the deterrent.

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Lord Cameron of Dillington: My Lords, I put my name to Amendment 15 because I am very much in favour of the immediate application of financial penalties where, after due process, a clear breach of the code has emerged. I do not believe that merely naming and shaming will have any effect at all. Supermarkets know that, in the short term, their customers shop with them largely because they are local. Why would the supermarkets still be chasing a further 44,000,000 square feet of retail space in a recession if they did not believe that? They need more retail space nearer to more customers.

Shoppers stick to their habitual supermarkets either because they are local, as I said, or because they get to know where things are on the shelves and find it much easier to shop that way. It seems that very few supermarket customers actually make shopping decisions based on ethical or moral grounds. There are one or two but they are very few. I suspect that some supermarket staff believe that any publicity is good publicity, so I do not believe that naming and shaming will work. Supermarkets have to feel the effects of their misbehaviour in their pockets, or at least to know that they could.

Clause 9(1) seems to be merely a delaying tactic, which will put off the much-needed effects of this Bill for yet another year or so—maybe three, as the noble Lord, Lord Knight, said—until the Secretary of State grips the issue. I believe we should try to grip the issue now and that the introduction of an effective adjudicator has been delayed long enough. Frankly, there is no point in having an adjudicator unless he or she has the powers to be effective. Of course, we all hope that if they have such effective powers, those will in itself be enough to make it unnecessary for them to be used. However, the powers must be effective, and I do not believe that they will be without the ability to fine.

Lord Borrie: My Lords, I am delighted to follow the noble Lord, Lord Cameron. He has made a clear case and, of course, my noble friend on the Front Bench, Lord Knight of Weymouth, made a very powerful case, for a power to fine from day one—in other words, under the Bill itself—without having to wait for some subsequent statutory instrument which may come into force some year or so later. My noble friend Lord Knight made the powerful point that the Government’s commitment to this is lukewarm. Yes, we have the Bill—that is something and it is important; the Government have indicated that it is important—but then they draw back. They draw back from the possibility, among other weapons to be used by the adjudicator, of a fine.

Who might be subject to a fine? We are talking about powerful businesses. Not any supermarket, but only the 10 most powerful supermarkets in the country could possibly be subject to the Bill. Will they be frightened off doing what some of them have done up to now—which is why we have the Bill in the first place—by the other powers that are mentioned; naming and shaming and so on? I do not think so. Mind you, they may not, because of their power, be terribly put out by a substantial fine, but fines can be very effective as a deterrent and, after all, that is what we are mainly concerned about: not the actual imposition of a fine, two fines, or whatever, but the deterrent value of a

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fine. To have that deterrent value from now, from the moment when the Bill becomes law, rather than at some distant point in the future, is what makes a real difference, it seems to me. I trust that we may succeed in getting the Government to agree to this change.

The Lord Bishop of Newcastle: My Lords, I, too, would prefer to have fines in the Bill from the outset, because I believe, like many noble Lords, that that is the most effective way of enforcing the groceries supply code and also that it will prevent the transfer of excessive risk down the supply chain. Nevertheless, like us all, I do not want to delay the Bill any longer than is necessary; I want to get it implemented as soon as possible. I am anxious that, if this power were to be given from day one, it would mean the creation of a rather complicated appeals system which could delay the passing and implementation of the Bill even further and for some considerable time. I would like to be assured about that, if any noble Lord can do so. I wonder whether naming and shaming is the crucial issue for the moment, providing, of course, that retailers are not to be given a statutory right of appeal. I would rather get on with this as soon as possible, even though my own preference would be to have fines in the Bill from day one.

Lord Plumb: My Lords, I have been very impressed with what I have heard. I did not expect that there would be many in this House who would press for immediate action. I can see the point very clearly—what the right reverend Prelate has just said is absolutely right—but I would like the Minister to say whether, if there was a delay in the powers being implemented, it would complicate things and make it a much more complicated Bill. I see no reason for that, but it is a question that needs to be answered. If it would, can the Minister say, or give us a guesstimate as to how long it would be before those powers are implemented?

Lord Whitty: I, too, support this amendment. It seems to me that this clause as it stands, combined with Schedule 3 and the possible orders under it, the nature of which we do not yet know, could seriously constrain the nature and instances of the financial penalties which the adjudicator felt able to impose.

There are difficulties here. If I look at other regulators, adjudicators or ombudsmen, a delay has rarely awaited the Secretary of State before the provisions for their powers came into practice. I do not see any particular argument why that should be the case here, either immediately, in terms of the year or so’s delay in giving the powers, or in how the powers are exercised in broad terms.

I was going to widen the debate, and I shall still mention this point: financial penalties are one thing—the “fines”, as we normally call them—but quite often the most obviously appropriate remedy would actually be compensation to the supplier that had been disadvantaged by the behaviour and practices of the retailer. I have an amendment following this group that deals with that issue, but it deals with it rather crudely. I have now read the Committee proceedings on this, which indicate the complexity of writing in compensation in the way

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that I am proposing, and I will therefore not be moving that amendment. However, there ought also to be some process whereby financial penalties are augmented by the ability of the arbiter or the adjudicator to refer the possibility of compensation to appropriate authorities.

In reality, naming and shaming is not enough. Although I agree with the noble Baroness, Lady Randerson, that it can be important for the reputation of the company, fines are even more important in terms of that reputation. At the end of the day, though, the organisation that has been disadvantaged is the small business, the farmer or whoever it is who has been at the receiving end of the abuse. Somehow within this regulation and code there ought to be an ability for the adjudicator to recommend, possibly under the powers of recommendation, that the issue of potential compensation is referred to the appropriate legal authorities. That is missing at the moment, although it could be included within the recommendations.

The point here is that we should not be placing undue time delays or undue constraints on the ability of the adjudicator to impose sufficient redress. If we removed Schedule 3 and altered Clause 9, we would be able to put the Bill into operation as rapidly as possible and establish a more equitable balance within the supply chain.

The Duke of Montrose: Is part of the purpose of the adjudicator that the disadvantaged person should not be identified? If that is so, how do they go about talking about compensation?

Lord Whitty: The person is not necessarily unidentified; that depends on the supplier. I know that those arguments were made in Committee and I accept that it would not be for the adjudicator to impose compensation or the level of it themselves. However, it ought to be open to the adjudicator to be able to say, “It looks as if a supplier or a number of suppliers have been disadvantaged by this practice and the issue should be referred, effectively, to the courts”. That could be part of the recommendatory powers. That is not the central issue on this group of amendments, though; they are really to remove the constraints on the Secretary of State and allow the adjudicator to have a whole range of potential financial sanctions.

Lord Howard of Rising: My Lords, contrary to what has been said by some this afternoon, naming and shaming is a genuine deterrent. In a cut-throat, highly competitive business such as this—reading the results of supermarket chains shows how very quickly they can go downhill from having made substantial profits—naming and shaming is a real deterrent. I also hope that the Minister will remember that the only person who actually pays those fines in the end is the consumer.

5.30 pm

Baroness Wilcox: My Lords, I do not want anyone to think we are lukewarm. We introduced this Bill as a priority and did so as soon as possible in this Session. Ever since we started discussing the establishment of an adjudicator, people have been concerned to know

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whether the adjudicator will have teeth. Central to that discussion has been financial penalties: should they be available at all, should they be a reserve power and how easy should they be to introduce? We are discussing now whether they should be introduced from the beginning. These are of course important questions.

We have carefully considered the sanctions available to the adjudicator and are convinced that this is indeed a Bill with teeth. The wide information-gathering powers, the ability to recover costs from retailers and the ability to raise a levy in a way that causes offenders to pay more all mean that no retailer will want to risk breaching the code. These aspects all ensure that those who breach the code will face a real cost.

However, more important is the sanction of “name and shame”, or the requirement to publish information as it is more properly known. I can assure you, as someone who has worked in this sector directly supplying supermarkets, that this will be an important deterrent, for reputation is extremely important to our biggest retailers. My noble friend Lord Howard of Rising has just spoken from his own experience in support of this. No retailer will want to be publicly named and shamed as having breached the code or having been found against for an action that does not appear to be fair or right. Every customer who goes into that shop will know that this has happened. Furthermore, every retailer will know that financial penalties are in reserve and that, with the amendments the Government tabled last week, they can be brought in very swiftly. Clearly, all retailers will want to avoid this.

I have shown that the adjudicator has teeth. I have shown that the existing powers and sanctions are sufficient to hold retailers to account and give them a clear incentive to obey the code. However, that is not enough. It is not sufficient to show that introducing fines from the outset is not necessary, since people could justly say that we might as well give the adjudicator the power just in case. However, if the power to impose financial penalties is granted, it is very likely to be used. Obviously, each case will be treated on its facts but enforcement authorities will tend, over time, to use the full range of sanctions available to them. That is why I would like to set out why the Government believe that introducing financial penalties from the outset is not only unnecessary but actively undesirable. The reasons for this are twofold. The first concerns proportionality and the second concerns culture.

We must remember that this is a very difficult time for business and our economy is going through a troubled period. Although regulation is sometimes necessary, we must strive to ensure that it is proportionate, so as not to impose unnecessary costs on business. We must also remember that the large supermarkets do a great deal of good for our country, as was confirmed by the Competition Commission in its report. As well as providing employment, their fierce competition has provided unprecedented choice for consumers and driven down food prices in recent years. Currently, with many ordinary families feeling the pinch of both wage freezes and inflation, the big supermarkets’ contribution to keeping prices down is particularly important. The fact that they have to compete with

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each other publicly, for us all to see, is equally important and another reason why being named and shamed in the middle of all this is not going to please any supermarket group.

Of course, the Competition Commission also found problems in the use of buyer power with respect to suppliers—that is why we are introducing this Bill. However, this is a sector that is fundamentally working well, and that is why we should strive to regulate it in as moderate a way as possible, unless and until it is shown that this is not effective. If compliance with the code can be achieved through “naming and shaming”, that will be far better than imposing fines, the cost of which might ultimately be borne by the consumer anyway.

The second reason for preferring a regime without fines concerns the culture that we are trying to create. The issue of culture was discussed very helpfully in Committee by the right reverend prelate the Bishop of Wakefield and is something I would like to return to. The goal of this Bill, and of the great majority of us in this Chamber, is to encourage retailers to comply with the code. It is not to punish them—that helps no one. It is to make sure they treat their suppliers fairly. The question is how best to encourage that culture of compliance.