Food Prices and Food Poverty

Andrew George Excerpts

Monday 23rd January 2012 Commons Chamber

[Mary Creagh]

Yes, it is slightly bizarre that that should be the case. I do not understand why, having battled so hard to secure minimum standards across the sector, the Secretary of State should think it acceptable to water them down, unless it is about saving money in pursuit of an ideological objective, but that could surely never be the Government’s intention.

I have mentioned “Richard Corrigan on Hunger” and the hospitalisation of children. People also talk in that programme about lunch boxes containing last night’s cold chips and ketchup. In government, we set up the School Food Trust, whose latest research shows that the average local authority-catered school dinner has gone up by 5p in the past year to £1.88 in primary schools, and by 4p to £1.98 in secondary schools. Councils are forced to charge more as their Government funding has been cut. We have heard today about councils that are doing their best to prioritise children’s nutrition. Those price rises could force parents to take their children out of school-meal provision and make do with a lunch box. If someone has three children who do not qualify for free school meals, £6 a day or £30 a week is an awful lot of money to find.

Food will be a defining issue for this century. The price spike in food commodities in 2008 showed that the era of cheap food may not be with us much longer. Increases in commodity prices—oil, fertiliser and pesticides—all contributed to year-on-year food price inflation of 6% last September: the second-highest increase in the EU, apart from Hungary. That 6% added £233 to the food bill of a family of two adults and two children. Food inflation, currently at 4%, remains higher than most pay rises that people will receive this year. As prices rise, people are eating less beef, lamb and fish, and more bacon. People are shopping around and trading down, and there is less supermarket loyalty. Figures from DEFRA reveal a 30% fall in the consumption of fresh fruit and veg by the poorest fifth of families since 2006. Those families are eating just 2.7 of their five-a-day fruit and veg.

We need a better understanding of what is driving up food prices, and how costs and risk are transferred across the supply chain. However, shopping is confusing and labels do not always show the true costs. Supermarkets are not required legally to show the unit cost on special offers, so they give the price pre-discount, which makes it impossible to compare prices on the shelf; or they give the price per unit of fruit, rather than by 100 grams, making comparisons impossible. We want supermarkets to be more transparent in their labelling to ensure that shoppers get the best deal. We want them to help people to eat healthily. Our traffic light system was rejected by significant players in the food industry, who have turned their back on what consumers want and need to make healthy choices.

We want a fair and competitive supply chain for growers, processors and retailers. The Competition Commission in 2008 found that there was an adverse effect on competition from unfair supply chain practices. It recommended that supermarkets with a turnover of more than £1 billion a year should be prevented from imposing retrospective discounts and from changing terms and conditions for suppliers. That leads to an unfair spread of risk and cost down the grocery supply chain, and to short-termism in relationships. [Interruption.] I thought I heard a phantom sedentary intervention, but that is not the case. We wanted a voluntary approach, but the supermarkets were unable to agree a way forward. That is why Labour in government secured cross-party agreement for a groceries code ombudsman to ensure a fair deal for farmers and producers. This Government’s delays and procrastination mean that the adjudicator will probably not be up and running until 2014-15.

[Andrew George (St Ives) (LD)]

I note that the motion expresses dismay at the Government’s delay, yet it asks for the groceries code adjudicator to be introduced in the next Parliament, rather than in the next parliamentary year, which I assume is a drafting error. Leaving that aside, given the fact that the first Competition Commission report was in 2000, and the Competition Commission report to which the hon. Lady refers was completed in 2008, what word other than “dismay” would she use to describe the Labour Government’s response to that report?

[Madam Deputy Speaker (Dawn Primarolo)]

Order. May I remind everyone in the Chamber that the debate ends at 7 pm? There is already a time limit of eight minutes on Back-Bench speeches. Interventions should therefore be short, and I hope opening speeches will not be overly long.

--- Later in debate ---

[Mrs Spelman]

As I am sure Opposition Front Benchers are aware, the lead Department on the grocery code adjudicator, both for the Government and for the Opposition, is of course the Department for Business, Innovation and Skills, but we have been very clear as a Government that we are fully committed to introducing the adjudicator as soon as possible.

Free and fair competition is the key to a healthy market, and it is right that the adjudicator should make sure the market is working in the best long-term interests of consumers. In this Session, we published a draft Bill to allow pre-legislative scrutiny. It was a popular measure, welcomed on both sides of the House, and as the Leader of the House said on 15 December 2011:

“There will be a second Session of this Parliament, and the Groceries Code Adjudicator Bill is a strong candidate for consideration as part of it.”—[Official Report, 15 December 2011; Vol. 537, c. 937.]

So there is no delay, but it has to be done right.

It is important to bear it in mind that, overall, the Competition Commission found that retailers are providing a good deal for their customers, and they should not be prevented from securing the best deals and passing the benefits on to their customers, but, similarly, we are clear that they should be required to treat their suppliers lawfully and fairly.

During pre-legislative scrutiny, the Business, Innovation and Skills Committee suggested that third parties should be allowed to lodge complaints. Our position remains that it is more appropriate for complaints to be lodged directly or indirectly by suppliers, but we are open to considering further arguments on extending the range of those who can trigger an investigation. That is the benefit of pre-legislative scrutiny. We recognise that third parties, including trade associations, have a valuable role to play, so the adjudicator will be fully free to gather evidence from trade associations once an investigation has begun.

The draft Bill provides the adjudicator with the power to name and shame retailers that are in breach of the code, and we believe that, in a highly competitive market, retailers will not risk reputational damage from unacceptable behaviour towards suppliers. If negative publicity proves insufficient, however, the draft Bill contains a reserve power for the adjudicator to impose financial penalties, subject to an order made by the Business Secretary but without the need for primary legislation.

I hope the House agrees, therefore, that these measures represent significantly more progress than was made under the previous Government and should be generally welcomed.

[Andrew George]

It has been suggested, in particular during the intervention by the hon. Member for Shipley (Philip Davies), that the adjudicator would introduce inflation to the food market, but the Competition Commission itself, which is after all independent on the issue, made the situation quite clear, stating that

“if unchecked, these practices”—

the practices that the Secretary of State and others have described—

“would ultimately have a detrimental effect on consumers.”

It is quite clear that they would have a detrimental effect on prices for consumers.

[Mrs Spelman]

I thank my hon. Friend for his intervention. The Competition Commission clearly keeps the practices of retailers under scrutiny and sees a benefit in independent adjudication of fairness in the supply chain.

I shall turn to other points in the motion. The hon. Member for Wakefield espouses the virtues of the Healthy Start programme, which this Government have continued, and no one will argue with the role of food banks, which are an excellent example of the big society. They are not new, as Churches have been redistributing food in that way down the decades, and we are four-square behind organisations such as FareShare, which do excellent work in the field.

In making it easier for shoppers, this Government have wasted absolutely no time in working with the food industry to simplify food date labelling. Last autumn I made it clear that one date should appear on the label, so that there is no confusion between “use by”, “use before”, “display until” or “store until”. There should be one date: if the product is perishable, the label should state “use by”, for food safety; if it is not, the label should state “best before”. In that way, we can certainly help people to reduce the amount of food that goes to waste.

--- Later in debate ---

[Andrew George (St Ives) (LD)]

I shall do my very best, Mr Deputy Speaker. I am the first Liberal Democrat speaker, and I regret the fact that we have only six minutes. Of course, I am not criticising you, Mr Deputy Speaker.

[Bob Stewart (Beckenham) (Con)]

There are no more Liberals here.

[Andrew George]

The hon. Gentleman has only just arrived in the Chamber, so I advise him not to start.

I welcome the fact that the Opposition have introduced this important debate, the full title of which is, “Rising Food Prices and Food Poverty”. That is appropriate, although I notice that the motion is rather narrow, and refers primarily to the groceries code adjudicator. Following my intervention on the hon. Member for Wakefield (Mary Creagh), I urge the hon. Member for Ogmore (Huw Irranca-Davies), when he replies to the debate, to ensure that the Opposition reflect carefully on the drafting error in the motion, which sends an unhelpful message to those of us who believe that the primary message of today’s debate concerns the speed of the introduction of the groceries code adjudicator. I urge him to withdraw the motion when he has an opportunity to do so. It is vital that we send a strong, clear message through our debate.

I acknowledge the point that many Members have made about the impact of food poverty and the fact that people have to choose between paying their rent and eating, or between paying their heating bill and eating. Nowhere does that apply more than in my constituency, which has been at the bottom of the earnings league table for years, pretty much since records began. Tragically and regrettably, a food bank is required in Penzance, which is strictly managed by an excellent team of volunteers led by David Mann, Brenda Fox and others, who do very good work. They consider it a matter of enormous regret that such things are needed.

I welcome other topics raised by the hon. Member for Wakefield, including the importance of maintaining regulation by the Gangmasters Licensing Authority and ensuring that agricultural workers are properly remunerated for their work. She expressed dismay at the failure to introduce the grocery code adjudicator. I remind her of the dismay that many of us felt at the failure of the previous Government to act in this area. However, those who have followed the debate over many years recognise that this is a matter on which there is cross-party consensus.

The hon. Member for Ynys Môn (Albert Owen), who was mentioned earlier, the former Member for Stroud, David Drew, who did some excellent work in this area, the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), the hon. Member for South Holland and The Deepings (Mr Hayes), who is the Minister for Further Education, Skills and Lifelong Learning—Members across all parties—have recognised that the abuse of power by the supermarkets is unacceptable.

In its 2008 report the Competition Commission recognised that there was a climate of fear in the supply chain. That had been identified by the Office of Fair Trading report in 2004, when it reviewed the failure of the then supermarket code of practice and the urgent need for a grocery supply code of practice. As a result of the Competition Commission’s work, that has been in place since February 2010, but it is a little like a game of rugby without a referee. It is all very well having the rules in place, but if there is no one to enforce them, we do not know that rampant abuses of power are not occurring within the supermarket sector.

I declare an involvement as the chair of the Grocery Market Action Group, which includes representatives from the National Farmers Union, Friends of the Earth, the Association of Convenience Stores, the British Brands Group and other organisations. Since 2006 we have been providing evidence to the Competition Commission and pushing for an adjudicator. We have made the point that we need a supermarket watchdog that has proactive powers, can take information anonymously, can receive third-party and trade association evidence, and follow that through to an inquiry. Of course it is important that an adjudicator should not be able to go on fishing expeditions and waste the time and resources of supermarkets and their suppliers in undertaking pointless inquiries. That will sort itself out over time.

[Simon Wright (Norwich South) (LD)]

I know that my hon. Friend has been looking into the matter for some years. What does he consider to be the initial priorities of the adjudicator, once that office is established?

--- Later in debate ---

[Andrew George]

I am grateful to my hon. Friend. The objectives in the draft Bill are helpful. However, the importance of speed should be emphasised. Most of the framework is in the Bill, and I would be prepared to have it put in place early, even if we failed to achieve some of the elements that I have spoken about—proactivity, anonymity, third-party referral to the adjudicator, which is important, and the power to fine.

The Bill may well enable the Secretary of State to introduce regulations allowing the adjudicator to fine supermarkets that fall below the standards set in the Bill. To bring about reputational damage, which is the only way in which supermarkets will be made to change their practice, that additional power will be needed. It is important to recognise that not all the supermarkets and those who will be brought under the code object to the proposal. Supermarkets have been achieving record profits in the deepest recession, so to argue that they cannot afford it is rubbish.

I say to the hon. Member for Ogmore that speed is of the essence. The motion should be withdrawn so that we send a strong message to the outside world.

--- Later in debate ---

[Huw Irranca-Davies]

Charitable effort has indeed always been part of this country, before the phrase “big society” was invented, but never with the proliferation that we currently see. It is a tragedy.

Let me relate a direct story about one not unusual family of four in England today. One parent is out of work and the other is in a low-paid job. Before Christmas, they found themselves behind on their mortgage, with their council tax debt racking up and the gas and electricity meters running out of money. They receive working tax credit and child tax credit, both of which will soon be cut by the Government. Their home is increasingly cold and dark and the only things in their cupboards are food parcels from the local food bank. The right hon. Lady shakes her head, but they buy what fresh food they can when they can, but without the support and kindness of local people, they would simply go hungry. We would love that to be fiction, but such are now the facts of life for too many families.

Into that harsh reality stumbles a throwback to the 1980s—a former Conservative Minister who was then the hon. Member for South Derbyshire. When confronted recently with that dire social and economic regression, she boldly answered:

“Are you telling me people in this country are going hungry? Seriously? Seriously?”

Yes, seriously—former Conservative Ministers might not want to believe it, but it is a searing indictment of the Government that more and more people across England, Wales, Scotland and Northern Ireland find themselves relying on food banks, one of which was opening every week last year. Those people depend on the generosity of others to get by.

Last year, 60,000 people received help from a food bank, a figure that the Trussell Trust predicts will rise to 130,000 in the next year. For all those impoverished families who now need a voice in the Chamber, the words and sentiment of the former Member for Ebbw Vale echo down the years: this is their truth, our truth—tell me yours. What is true across the UK is true in my constituency and neighbouring constituencies. From Llanharan to Gilfach Goch, and Maesteg to Pontycymmer, and all points between, food banks proliferate.

We should pay tribute to the many volunteers and organisations involved, such as the Bridgend food bank and the Pontyclun food bank, but the issue is a terrible indictment of the economic misery inflicted on families under this failing coalition Government. I challenge the Minister and the Government to dispute that stark reality. The Government’s failing policies and inaction on the economy mean that families are finding it hard to make ends meet and struggling to cope with rising living costs, higher energy, housing and food bills, and the constant fear that they could lose their jobs—if they have them—at any time.

For too many, eating is losing out to heating and housing costs. Charities warn that having a job is now no protection; an estimated 10% of food bank recipients are middle earners whose salaries have been cut or frozen or who have recently lost their jobs. Food prices rose by more than 4% last year. Lower-income families are eating less fresh fruit and vegetables. They spend more than 15% of their income on food. In real terms, it comes down to a couple with two young children spending an extra £233 on their annual food bill.

When surveyed by Which? in the last year, more than half of consumers said that increasing prices made it difficult to eat healthily. Nearly 90% genuinely fear the increasing cost of food. Those are startling figures. However, when people need help, the Government seem torn between prevarication and paralysis when it comes to taking action that will go some way towards easing the pressure on people’s wallets—not least by assisting farmers and manufacturers of the food we eat with the retail and financial challenges that they face.

When in government, Labour took action after the hike in food prices in 2008 to address that challenge and to produce more food sustainably. In 2010, we published the first Government food strategy for 60 years and our priority was a sustainable, affordable competitive food sector. We gained cross-party support for the supermarket ombudsman—to ensure a fair deal for farmers and food producers, who still need a fair deal from major retailers—and for the implementation of the groceries supply code of practice in February 2010.

Yes, there was more to be done, but the creation of an ombudsman—the groceries adjudicator—to enforce and monitor the code of practice was a recommendation of the Competition Commission and is supported by the Environment, Food and Rural Affairs and Business, Innovation and Skills Committees. It would do a great deal for farmers, food manufacturers and the public. It was not just us asking for it.

[Andrew George]

I have to put the hon. Gentleman right. The Competition Commission was empowered and used its power to introduce the groceries supply code of practice; it was not the last Labour Government. Will he retract that claim?

[Huw Irranca-Davies]

I am happy to say that the code is in place, and that happened while the Labour party was in government. I agreed with the hon. Gentleman when he said last September:

“Every week the government fails to act, farmers are finding themselves in more difficulty.”

So let us get on with it.

We do not want bluff and bluster; we do need action. As my hon. Friend the Member for Wakefield (Mary Creagh) said, we ignore the perfect storm of rising prices, falling incomes and food poverty at our peril. I urge the House to support the motion.