Previous Groceries Code Adjudicator: 17th November 2015

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

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

The Minister for Small Business, Industry and Enterprise (Anna Soubry)
It is, as ever, a pleasure to serve under your chairmanship, Mr Gray. I sat through some of the previous debate and was looking forward to this one on the basis that my job would not be as difficult as that of ​the Minister in that one. I fear that I was mistaken. As you have heard, Mr Gray, everybody has ganged up on me. [Hon. Members: “Aww.”] I am not complaining particularly, because I think I have robust rebuttals to some of what has been said.

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

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

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

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

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

Neil Parish
The point I was making was not so much about whether the adjudicator is able to take these complaints but that those who are making the complaints are too identifiable by the big retailers and therefore are not prepared to come forward.
 
Anna Soubry
I have a rebuttal for that somewhere, because I am told that regarding whistleblowers—the clue is in the title, I suggest—the adjudicator has a statutory duty to protect confidentiality. That addresses the fear factor among suppliers. Also, the National Farmers Union has a scheme that allows suppliers to make anonymous reports of code breaches via an online form on its own website. The NFU is exactly the type of third party that can take up a complaint on behalf of somebody in the manner that my hon. Friend would like. I thank my officials for that information.

Several hon. Members rose—

Anna Soubry
I will get a barrage now, having shot a few foxes.
 
Chris Davies
I thank the Minister for giving way. May I say, very briefly, that the collective discussion we have had and the collective request we have made are not about making a complaint against the adjudicator? It is just that her powers do not go far enough.
 
Anna Soubry
I will deal with that one as well, if I may, because I am reliably informed that the problem for the adjudicator is that, as has been identified, she has no power to address matters falling outside the code, for the following reasons. First, the Government cannot change the code. As hon. Members have made clear in their speeches about the history of the establishment of the Groceries Code Adjudicator, the code came about from the work of the Competition and Markets Authority, arising from an investigation that it conducted into competition. Forgive me for saying so, but once again the clue is in the name and the history: it was all about unfair competition. I must say to the hon. Member for West Aberdeenshire and Kincardine (Stuart Blair Donaldson) that it was never about pricing. If there are to be changes to the code, they can be made only by the CMA.

Also, with great respect to everybody, the 2013 Act was passed by a previous Parliament; it was what Parliament decided. The Government could give the adjudicator additional statutory duties outside the code, but that would involve amending primary legislation and it would have to be debated in Parliament. There is nothing wrong with that, but just so everybody understands: new legislation would be needed.
 
Ms Ritchie
As part of such a review, would the Minister consider allowing the adjudicator more freedom within legislation to launch investigations on her own initiative?

Anna Soubry
The adjudicator already does that, as I have said, but it must be within the terms of the code, and those terms do not include pricing. I have huge sympathy for the dairy industry—in fact, I think it is important that I say that my mother’s family were dairy farmers and my partner is a non-executive director ​of Morrisons. I just want to put all my background on the table, so to speak, in case anyone listening to or reading this debate queries my own background. As everyone here knows, I am my own woman; nobody influences me—and some would complain about that. Of course, I always listen to hon. Members and the good arguments that they make, but I am my own woman, whatever my family’s interests may be. Although I am sympathetic to the plight of the dairy farmers, the Groceries Code Adjudicator is not the way to fix the problem.

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

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

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

Question put and agreed to.