Baroness Wilcox
Main Page: Baroness Wilcox (Conservative - Life peer)Groceries Code Adjudicator Bill [HL]
Baroness Wilcox Excerpts
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 historic moment in which the revising powers of the Chamber were exercised to the benefit of the ordinary people of the country.
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 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 whenever needed and therefore contributes to a truly living code, while respecting the existing structure of the Enterprise Act.
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 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.
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.
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 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.
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 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 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.
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 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.
Baroness Wilcox
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. 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.
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 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.
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 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 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.
The Government believe that the best way is through a proportionate, regulatory regime, focusing on advice, guidance, investigations and name and shame, backed by the threat of financial penalties in reserve. In such a way, the retailers will be encouraged to comply with the code. A punitive, adversarial culture, such as that which would be created by financial penalties, could also work—but much more slowly and at a much higher cost.
I ask noble Lords whether they would prefer that the adjudicator carries out four investigations a year, in each one identifying breaches of the code and correcting them, or that he or she carries out just one, imposes a financial penalty and then gets bogged down by a lengthy court battle as the retailers fight appeal after appeal? Make no mistake, if fines are needed, they will be brought in. The Government are very clear on this. The amendments I have tabled, which noble Lords will be discussing shortly, demonstrate our intent. By removing the double layer of consultation and by allowing the adjudicator to publish guidance on fining prior to being given the power to impose fines, we have ensured that fines can be brought in swiftly if necessary. However, we should first give the more moderate regime a chance.
One might expect the suppliers would push for the retailers to face the maximum penalty. That is their right. However, they have also acknowledged the need to be proportionate. I cite the briefing of the British Brands Group, which has said that fines are “not essential” and of the NFU, which has said that it will not be arguing for the Bill to be amended to allow fines from the outset, provided the Government’s amendments to streamline the process are accepted. If the suppliers are being so measured, should not the Government and Parliament also take a proportionate approach and decide on the most proportionate remedy that will be best for both the country and the economy as a whole?
This is already a Bill with teeth. I therefore ask the noble Lord to withdraw his amendment.
Lord Knight of Weymouth
My Lords, there we have it. The Minister started off by saying she was not lukewarm but then spoke with passion as to why the supermarkets should not be fined right now. That was lukewarm about fining supermarkets if ever I heard it. I am grateful to noble Lords who have spoken in this debate, all of whom, with the notable exception of the noble Lord, Lord Howard of Rising, supported fining in principle. I would urge the noble Baroness, Lady Randerson, and her party to vote with their principles rather than with the lame excuses that they have been given. I say to the right reverend prelate the Bishop of Newcastle that the Bill itself sets out how the powers to fine would be introduced, and it is perfectly clear that allowing the powers to fine from day one would not delay the passage of the Bill and the establishment of the adjudicator. However, if we do not pass this amendment, the adjudicator will begin without the powers that he wants and without the teeth that we need as the threat to make sure that people abide by this code. I would like to test the opinion of the House.
Lord Borrie
My Lords, if there is a “naming and shaming” proposal from the adjudicator, according to Clause 8 he or she has got to give written notice specifying,
“what information is to be published … how it must be published… and… the time by which it must be published”.
Clearly, there has to be a response to that. While it is not called an “appeal”, none the less, because notice has to be given by the adjudicator as to what he intends and the supermarket can respond to that, there is a time factor, and there is in effect an opportunity for the supermarket to say further things that it wants to say.
The common-law rule of natural justice, which we all know about, is that everybody has a right to be heard before some decision is made which may be adverse to them. The rule of natural justice as I have always understood it is that you only have an opportunity to be heard once. You cannot call upon some right of appeal under that rule, because that would be giving you the right to be heard twice, and that is not the position. Of course, there is always judicial review but that is, I admit, limited in that you have to show something seriously wrong with the decision, and that no reasonable person would have made such a decision. It is fair enough that anybody should have a right of judicial review to have that checked, but no case for an appeal has been made out. The whole set-up of the adjudicator is meant to be fairly speedy and so on. Subject to the points I have mentioned—you have to be given advance notice about naming and shaming, and you have a right to respond to that—there is no call for any more than that.
Baroness Wilcox
My Lords, the question of appeals is important and I can fully understand the desire of my noble friends Lord Howard of Rising and Lord Eccles to return to it at this stage of the Bill. However, although we have considered the matter carefully, the Government’s position remains unchanged.
Financial penalties clearly deserve a full merits right of appeal and the Bill provides for this. However, the other sanctions, including the requirement to publish information, have no direct legal consequence against a retailer. A recommendation is just that and is not binding, and a requirement to publish is essentially simply about distributing and sharing information which will, in all likelihood, be in the adjudicator’s investigation report. For this reason, therefore, judicial review is sufficient.
Although a judicial review will not normally involve a reconsideration of all the factual evidence, it could consider whether the adjudicator had reached a decision which was not supported by the facts, or had taken into account irrelevant facts or had failed to take account of relevant facts. I draw a comparison with the Financial Services Authority. Under the terms of the Financial Services Bill currently proceeding through this House, the FSA—or, in future, the Financial Conduct Authority—may issue public warning notices about a specific firm. Before making such a notice, it must give the firm the opportunity to comment, but there is no right of appeal before publication. Issuing a public warning notice in this way is, given the potential impact on reputation of the financial services firm in question, similar in consequence to our requirement to publish information which also has the benefit of warning those who deal with a retailer that they have been found in breach of the code. The requirement to give the firm the opportunity to comment is similar to that provided in Clause 5(4) of this Bill. This is similar to what the noble Lord, Lord Borrie, has also said on this point.
Furthermore, as I said in Committee, a full right of appeal, requiring the repetition of a detailed fact-finding exercise, could seriously delay the requirement to publish and so substantially diminish its impact. In particular, we expect a full merits appeal of this kind normally to take significantly more time than a judicial review because it involves a reconsideration of all the facts. Taking these matters into account, the Government consider that a full right of appeal is needed only against financial penalties, and that otherwise the possibility of judicial review by the court would be sufficient.
On whether appeals should be in the CAT or the High Court, this is a finely balanced question and I have written to Peers on this matter already. We do not think it would be wrong for either the CAT or the High Court to hear such appeals, nor do we think there is likely to be a significant difference in speed. However, on consideration, we do not think using the CAT would make the best use of its expertise, which is, of course, in competition matters. This is because, although introduced on competition grounds, the context of the adjudicator’s functions concerns contractual and commercial relationships between retailers and suppliers. The expertise needed to address these practices can be found in the High Court, or the Court of Session in Scotland. We do not think that the particular specialist expertise of the CAT is needed in order to consider the adjudicator’s decisions.
A further practical issue is whether, if the CAT were to hear appeals against financial penalties, appeals against costs or judicial reviews of all decisions of the adjudicator were also to be referred to the CAT. To the extent any appeals or reviews remained in the High Court, one could see two separate appeals or reviews on related subjects being taken forward in different fora at the same time. On the other hand, if they all took place in the CAT, this could lead to the CAT making rulings on matters even further from its core competition remit. That is a difficulty which is avoided by the Bill as we have it now. Therefore, in conclusion, we consider that appeals should most appropriately be to the High Court. I therefore ask the noble Lords to consider withdrawing their amendments.
Lord Howard of Rising
I thank the Minister for her remarks. I accept that the High Court would be as good a place as the Competition Appeal Tribunal. However, if an appeal is acceptable for a financial penalty, surely an appeal should also be acceptable for naming and shaming. It seems to me that fair play is the objective of this Bill, so surely there should be fair play in the application of the code by the adjudicator. Fair play surely would mean the right of appeal if someone thinks that the adjudicator has got it wrong.
I am grateful to the noble Lord, Lord Browne, for his support and I endorse his comment that, if there is to be no right of appeal, there should be an opportunity for the retailers’ arguments to be included with any report produced by the adjudicator. Having made those points, to which I hope that the Minister will listen, I beg leave to withdraw the amendment.
Baroness Wilcox
Baroness Wilcox
My Lords, the question of financial penalties has been central to our deliberations on the Bill. It is, as we have heard today, an important question. The Government have consistently stated their view that financial penalties should be a reserve power, but that it should be possible to bring them in quickly if they prove to be necessary. At Second Reading and in Committee a number of noble Lords, including the noble Lords, Lord Knight, Lord Grantchester, Lord Razzall and Lord Teverson, and the noble Baronesses, Lady Byford and Lady Randerson, and others, expressed the view that the Bill as drafted did not achieve this. Noble Lords indicated that the process for introducing fines was unnecessarily slow and bureaucratic and that it should be simplified. After careful consideration, I agree that noble Lords were right that the process was too slow. The Government have therefore decided to bring forward these amendments.
The amendments draw on the inspiration of the noble Lords, Lord Knight and Lord Grantchester, in that they allow the adjudicator to publish guidance on how it would use financial penalties in advance of the Secretary of State making the order that would confer that power. This means that if the power is granted it can be used straight away, without the need for further consultation, provided that the adjudicator has already published the necessary guidance under Clause 12. To accompany the amendment to Clause 12, we have deleted paragraphs 4 and 5 of Schedule 3.
I would also like to touch on the need for the Secretary of State to consult before introducing financial penalties, an issue which the noble Lords, Lord Razzall and Lord Teverson, raised in Committee. We think that this provision needs to be retained as it would be inappropriate to introduce such a significant change with no consultation. However, my officials have examined the Bill and advised that this consultation could, if desired, take place simultaneously with a triennial review by the Secretary of State. That would further streamline the process if the introduction of fines were being considered at a similar time to a triennial review, although I remind noble Lords that an order under Clause 9 and Schedule 3 does not have to await a triennial review.
We have, as I say, also deleted paragraphs 4 and 5 of Schedule 3 to accompany the amendments to Clause 12. This means that fines could be introduced within six months of the need being identified. All it will require is a three-month consultation and an affirmative order. These amendments have been supported by three of the major supplier organisations: the NFU, the Food and Drink Federation and the British Brands Group. I hope that noble Lords agree that these amendments will significantly streamline the introduction of fines and that they are able to give them their support. I beg to move.
Baroness Wilcox
I am delighted to answer the noble Lord’s question. Fines can be introduced within six months or so of the need being identified. I thought that I had just said that but I am very happy to repeat it.
Lord True
My Lords, I intervened briefly in Grand Committee to support my noble friend on part of the amendments in this group. I think that he has already implied the following point in what he said. Clause 12(3) states:
“The Adjudicator may publish guidance about … steps that large retailers need to take in order to comply with the Groceries Code”.
I believe that the adjudicator must give such guidance; otherwise the position would be nonsensical. In Committee I gave the possible example of my local authority publishing a parking order but not putting up signs to say during which hours the parking scheme would operate and with people having to apply to find out that information.
With respect to my noble friend, I think that his amendments are probably rather widely drafted. Looking at the phrase, “may publish guidance about any other matter relating to the groceries code”, I can understand why my noble friend on the Front Bench might want to resist it. However, it might be a fruitful course, between now and Third Reading, if the Government thought about the more confined area to which my noble friend referred. It would seem to offend against natural justice not to tell people the steps they must take to comply with a code which could lead to their being fined, named and shamed or whatever. I hope the Minister will consider that specific point which arises from my noble friend’s Amendment 22 in this group.
Baroness Wilcox
My Lords, I have sympathy for the spirit of all three amendments. On Amendments 21 and 22, we certainly consider that an important role of the adjudicator will be to provide advice and guidance. That is why we have included these clauses. It is clearly better if the adjudicator can encourage compliance with the code through light-touch means, such as advice, rather than by enforcing it after a breach has been committed through sanctions. However, as I think my noble friend Lord Howard of Rising would concede, we cannot make these provisions mandatory. The adjudicator must be able to prioritise his or her workload and cannot be required to give advice in all circumstances to any of the 10 retailers or thousands of suppliers who might have a question. Even limiting the “must” to the retailers, could be open to abuse by one retailer at the expense of others.
I ask noble Lords to keep in mind here that the adjudicator will be a public authority and will be required to act reasonably in responding to requests for advice. In that context, some discretion for the adjudicator is appropriate. Equally, while guidance is crucial, I would emphasise that the adjudicator is already required under Clause 12(1), to publish guidance about how he or she will carry out his or her core operations. It would not be meaningful to have a mandatory requirement for the adjudicator to publish guidance on “any other matter relating to the groceries code”. Again, there has to be some flexibility for the adjudicator.
On the other hand, the Government certainly consider that the adjudicator would normally answer reasonable requests, and should normally provide advice where this would aid in the core objective of encouraging compliance with the code. Similarly, sufficient guidance should be provided to ensure that retailers and suppliers have the clarity they need to interact effectively with the adjudicator. This is similar to the expectation that we would have of a local authority. If the adjudicator was not acting appropriately in giving advice and guidance, I am sure that the Secretary of State would take steps to remedy this by issuing guidance to the adjudicator under Clause 15(8). The adjudicator has a statutory obligation to take account of such guidance in carrying out his or her functions, which I hope offers some reassurance to my noble friend Lord Howard.
On Amendment 24, although again I can sympathise with the principle behind the amendment, I do not consider it necessary. This is because the Bill, in Clause 12(4), already requires the adjudicator to consult any persons whom he or she thinks appropriate before publishing guidance. In the vast majority of circumstances this would include the retailers. In the unlikely event that the adjudicator did not consult the retailers before publishing guidance, in a case where it was clear that he or she should have done so, there would be the possibility of judicial review. The adjudicator will be very aware of this, meaning that Amendment 24 is not necessary. I would, therefore, ask the noble Lord to withdraw his amendment.
Lord Howard of Rising
My Lords, I thank the noble Baroness for her remarks, disappointing as they are. Of course, the point is that it is always the adjudicator who chooses what advice to give whereas there may be some area that is in doubt which the large retailers would like to know about. Perhaps they will be comforted by the Minister’s remarks, and by the fact that any future Secretary of State will be able to read in Hansard what is expected and call the adjudicator to order. In the mean time, I beg leave to withdraw my amendment.
Baroness Wilcox
“( ) If the Secretary of State makes an order under section 9 authorising the Adjudicator to impose financial penalties, the Adjudicator must publish guidance about the criteria that the Adjudicator intends to adopt in deciding the amount of a penalty (and this requirement can be satisfied by guidance published before the order is made).”
Baroness Wilcox
“( ) The Secretary of State must lay a copy of the report before Parliament.”
Baroness Wilcox
My Lords, I would like to propose government Amendment 28. I am sure that noble Lords will agree, whatever their perspective on the adjudicator, that it would be appropriate and helpful for a copy of his or her annual report to be laid before Parliament. This should improve scrutiny of the adjudicator both here and in the other place. I hope that noble Lords will welcome this, whether they look forward to taking the opportunity of the report being laid to bury the adjudicator or to praise him. I therefore beg to move.
Lord Knight of Weymouth
My Lords, I am going to mark this one down as a victory for us as we moved a very similar amendment in Committee. I would not want my noble friend Lord Browne to think that he had got two and I had not got any at all, so I am very grateful to the Minister.
Baroness Wilcox
My Lords, I fully understand the sentiments behind these amendments. All three parties have expressed their agreement that an adjudicator is needed, and the Government have no wish to enable the abolition of the adjudicator without proper parliamentary scrutiny. I remind noble Lords that the intention of Clause 16 is to bring the Bill into line with the broader policy on sunsetting and review, and the need to ensure that regulations and regulators can be removed once there is no longer a need for them. It does not indicate intent to abolish the adjudicator or transfer their functions, but is simply standard practice.
The noble Lord, Lord Knight, suggested that the Government intended to set a precedent for the abolition of new public bodies by affirmative order. It may be the case that it is appropriate to require the abolition of some public bodies by super-affirmative order, but one must consider this on a case-by-case basis, depending on the nature of the body or office. In the case of the adjudicator, first, the adjudicator will not be a “body” in the usual sense of the word but an officeholder, with only a small number of staff who will be seconded rather than directly employed. The adjudicator’s powers will extend to only one area of the economy: the groceries sector. Furthermore, he or she will have a tightly defined role: to enforce the groceries code.
Furthermore, as I said in Committee, the Delegated Powers and Regulatory Reform Committee scrutinised the Bill carefully. The committee is dedicated to the inspection of the procedures for delegated powers, and the Government take its recommendations very seriously. Given the purpose of the Bill and its specificity regarding the functions of the adjudicator, the committee decided that the affirmative procedure would be satisfactory and proportionate in this case.
I thank noble Lords for drawing our attention to the important issue of parliamentary scrutiny. However, one must also consider the issues of parliamentary time and efficiency. The investment of resources required for the super-affirmative procedure would not be proportionate to the functions of the adjudicator. In accordance with the recommendations of the Delegated Powers and Regulatory Reform Committee, we are satisfied that the affirmative procedure is the most appropriate.
The noble Lord, Lord Cameron, asked about the Secretary of State’s review. It is referred to in Clause 15 and would require full consultation with retailers, suppliers and other stakeholders. Finally, the noble Lord, Lord Knight, indicated the importance of listening to committees of the House during the passage of the Public Bodies Bill. We are listening to the relevant committees on this Bill. Given these explanations, I hope that noble Lords will feel satisfied and will not press their amendments.
Lord Knight of Weymouth
My Lords, that was a brief but interesting debate. I am most grateful to the noble Lord, Lord Cameron, for his support. The comments of the Minister are now on the record—another demonstration of a somewhat lukewarm view of this body. I do regard it as a body rather than an officeholder. The super-affirmative procedure was used in respect of the Commission for Rural Communities, which was largely an office of the rural advocate. This is one of the many examples in the Bill of where the super-affirmative procedure is used.
This will be a very powerful body—much more powerful than some of the bodies that are being abolished using the super-affirmative procedure. The Minister talked on some occasions about the power of name and shame. On others, when it was convenient, naming and shaming was described as a less powerful ability. I disagree with her. However, given the oddity of the Bill—as my noble friend Lord Browne set out, the Government could get rid of the code without even coming to Parliament—I will not press this, because if they chose to do that without even the “by your leave” of Parliament, we would have a referee without any rules and it would be a straightforward matter to get rid of the post. I am happy to withdraw my amendment.
The Duke of Montrose
If the Government feel that they need these interrogatory questions put in print, are the Explanatory Notes not also available online, along with the Bill? Could these questions not be laid out in the Explanatory Notes rather than in the Bill itself?
Baroness Wilcox
My Lords, I thank the noble Lord, Lord True, for bringing forward this interesting amendment. While we cannot support this specific amendment, I am able to take into account the noble Lord’s broader points about ensuring that sub-headings are accurate and clear.
First, italicised sub-headings in themselves are not a recent innovation. For example, the Slave Trade Act 1873 groups its clauses using italicised sub-headings such as “Seizure of Slave Ships” and “Bounties”. Although the approach to the precise wording of these italicised sub-headings may have changed, the Government have always striven to write in a way that communicates meaning as clearly as possible to the audience of the day. I have placed a note about this in the Library of both Houses.
Turning to the noble Lord’s specific amendment, I believe that Clause 17 should remain under the sub-heading “How is the Adjudicator supervised?”, because the purpose behind allowing the Secretary of State to require information from the adjudicator is to allow him to supervise the adjudicator through triennial reviews. This is quite separate from the vital issue of how the adjudicator should ensure that it upholds confidentiality when handling information, even though it is clear from Clause 17(2) that there is some relationship between these issues.
However, I have been able to take into account the noble Lord’s points concerning the wording of sub-headings. I have raised these concerns with the Public Bill Office, which has agreed to change “How is the Adjudicator funded?” to “How may the Adjudicator be funded?”, and “Will this law mean other changes to the law?” to “Amendments and transition”.
I hope that the noble Lord is content with these changes, and I am sure that the process of considering the amendments and discussing them for this Bill will help ensure careful drafting of similar headings in future Bills. I therefore beg the noble Lord to withdraw his amendment.
Lord True
I thank my noble friend for that response. Rather like the noble Lord, Lord Browne, I should not be churlish when I have a minor victory, as he put it. I do not really see it that way, although I am very grateful for the gracious response of my noble friend the Minister.
The reality is that this style of writing, with question marks, et cetera, is new; it is intended to be new, and when a Government or an Executive make such a change from the traditional, rather arid way of wording these things, it must be construed to be intended to have an effect. That will arouse the interest of other people. I said in Grand Committee, rather fancifully perhaps, that the courts might look at whether this was part of the intention. As the courts, like Parliament, never look at these sub-headings I think that is extremely unlikely. In the course of this debate I believe I have demonstrated that the sub-heading “What are the Adjudicator’s reporting requirements?” above Clause 14 is also nonsense because it does not cover the reports on investigations and so on. I hope my noble friend will take that point to colleagues, because the powers-that-be need to think carefully about this approach.
I am grateful to my noble friend Lord Howard and the noble Lord, Lord Knight of Weymouth, who spoke in this debate. I am interested in the point that the noble Lord, Lord Knight, raised about Private Members’ legislation. It had not occurred to me but it is a significant point. I am also grateful for the support from my noble friend the Duke of Montrose, who made a very sensible suggestion that this signposting could be done to the side of the legislation. In the electronic age it might be much more helpful to do it via the Explanatory Notes or an introduction to the Explanatory Notes. The powers-that-be may want to consider that. I do not wish to detain the House so without more ado I thank the Minister and I beg leave to withdraw my amendment.
Baroness Wilcox
My Lords, the adjudicator’s obligation to maintain strict standards of confidentiality is integral to the Bill. I therefore thank the noble Lord, Lord Browne, for his careful consideration of how we can make these standards exacting.
As I said in Committee, the Government are confident that the deputy adjudicator and people acting on behalf of the adjudicator would be bound by the duty of confidentiality as set out in the Bill. The deputy and the individuals acting for the adjudicator have no functions which are independent of the adjudicator and can only carry out the adjudicator’s functions. In doing so, they will be subject to the same restrictions as the adjudicator. If a person acting on behalf of the adjudicator breaches Clause 18, normal agency principles will make that a breach of Clause 18 by the adjudicator. Additionally, we are convinced that the words “may not” and “must not” have the same force and meaning here.
The noble Lord has raised the issue of plain English with regard to the amendments. We are confident that the Bill has the correct legal sense as it stands. Although it would not be wrong to use “must not”, we believe that “may not” is slightly better here. The words “may not” in their context here are clearly intended to be prohibitive. If they were permissive, it would mean that the adjudicator was allowed not to make unauthorised disclosures, which would not make sense. If further clarification were needed, the words “prohibitions contained in this section” are used in Clause 18(5).
The noble Lord has also suggested that the creation of a criminal offence is needed to discourage breaches of confidentiality. This seems unnecessary, as the adjudicator will be a public authority and be expected to take his or her statutory duties very seriously.
Perhaps I might also remind noble Lords that Schedule 1 provides for the Secretary of State to,
“dismiss the person if satisfied that the person is unable, unwilling or unfit to perform his or her functions”.
Serious breaches of confidentiality, either personally or from those working for him, have the potential to satisfy these requirements. We therefore believe that the threat of dismissal will be a sufficient deterrent, if indeed a deterrent is needed.
There are therefore ample reasons for the adjudicator and those working for the adjudicator to take care over confidentiality. I agree that strict confidentiality requirements will be essential if the adjudicator is truly to eradicate the climate of fear that we are aiming to address in the Bill. The Government are confident that the Bill provides for these requirements as it stands. I therefore ask the noble Lord to withdraw his amendment.
Lord Browne of Ladyton
My Lords, I am grateful to the Minister for the care that she has again taken to address these issues having previously thought that she had seen me off in Grand Committee. I am pleased that we now have further clarity about the basis for her confidence in relation to the extension of the obligation to the deputy adjudicator and his staff—that is helpful. I maintain the position that, if “must not” and “may not” mean the same thing, “must not” is preferable, particularly when you are trying to build confidence among people who are in a weakened position—if they were not in a weakened position, we would not be doing this. I am disappointed, however, in the Minister’s failure to appreciate that there needs to a sanction for a breach of confidentiality which does not imply the dismissal of the adjudicator himself, because that, too, is about building confidence. If people see that a criminal offence will have been committed if their confidentiality is breached, their confidence in the legislation will be increased. I hope that the Minister’s confidence that there will be no leaks is well placed. I will regret it, as much as she will, if she is wrong. I just think that, in this internet age that we live in, it is fanciful to imagine that we are capable of creating an organisation that is leak-proof. However, I have been seen off on this occasion and I shall not come back. I beg leave to withdraw the amendment.
Lord Knight of Weymouth
My Lords, I am supportive of all the amendments in this group. I suspect that a concession is coming the way of the Liberal Democrat Benches. While I have disagreed with virtually everything that the noble Lord, Lord Howard of Rising, has said on this Bill, he has made a valuable contribution to it and I think that he has got a point here. A graceful concession from the Minister on this one, too, would be wonderful.
Baroness Wilcox
My Lords, the amendments tabled by my noble friends Lord Howard of Rising and Lord Eccles are ones that we have discussed before. As I said in Committee, the Government’s intention to fund the adjudicator via a levy is clearly set out in the Bill and in previous policy statements, so I see no need to require an order to be made first.
Regarding the suggestion of consultation on any increase of the levy, my worry is that this would add unnecessary bureaucracy and inflexibility. The adjudicator’s workload will vary depending on the number of complaints received. In some years, it may have very few, in which case the levy needed would be small. In other years, it may carry out major investigations requiring considerable resources, and I remain convinced that the safeguard of requiring the Secretary of State’s approval is the best way to balance flexibility and accountability.
On the subject of flexibility, my noble friends have also tabled an amendment regarding the returning of any unused funds to the retailers. While I believe that “may” adds helpful flexibility, I can assure them that any unused funds would certainly be taken into account when calculating the size of the next levy, so that no more was raised from the retailers than was absolutely necessary. I would therefore ask the noble Lords to withdraw those amendments.
With regards to the amendments tabled by the noble Lords, Lord Razzall and Lord Teverson, and the noble Baroness, Lady Randerson, in Committee, I indicated that the Government were sympathetic to an amendment along these lines. The Government have always stated that the intention should be that as soon as he or she has sufficient experience, the adjudicator should move to a differential levy. After consideration, it therefore seemed unnecessarily bureaucratic to require an order to be passed before this could be done and I am grateful to the noble Lords for bringing forward this amendment.
The fact that individual levies would still need to be approved by the Secretary of State will provide an adequate safeguard against abuse. Furthermore, the ways in which the levy can be raised are clearly specified. The levy must be the same for each retailer or else based on criteria broadly intended to reflect the expense and time the adjudicator expects to spend in dealing with matters relating to each retailer. It could not, for example, be proportional to turnover as that would not fit these specifications.
Noble Lords have said that they wish to see a system in which those who behave badly pay more. The Government concur with this sentiment and I am therefore happy to accept this amendment.
Lord Howard of Rising
I am grateful to my noble friend for indicating that the surplus in one year would be set off against the next year. I am completely gobsmacked at getting some support from the noble Lord, Lord Knight. I beg leave to withdraw the amendment.