Groceries Code Adjudicator Bill [Lords]

John McDonnell Excerpts

Tuesday 26th February 2013 Commons Chamber

[Philip Davies]

My hon. Friend is right. He knows as well as I do that if such a sunset clause is not introduced, and if the Bill is shown to be a completely unnecessary waste of time and an expensive bit of bureaucracy that we could well have done without, it will carry on endlessly. Nobody will have the guts to do anything about it. The provision will provide a mechanism for getting rid of the legislation if it is seen to be unnecessary. If it were seen to be necessary—who knows, I do not think it will, but it might—people could bring it back and would be anxious to get the legislation in place again. My new clause 3 will stop some ridiculous white elephant carrying on in perpetuity, when it is seen to be unnecessary. I say in passing that it would be sensible if more Bills had sunset clauses included in them, so that we can analyse whether they have been worthwhile and have done what was said on the tin.

My intention in this group of amendments has been to focus on new clauses 1 and 2. With your permission, Mr Deputy Speaker, I would like to divide the House on new clause 2, which would put the same £1 billion threshold on suppliers as applies in the Bill for the retailers themselves. There seems no good reason to me why the same figure should not apply to both sides of the equation. A Division will enable us all to see who has gone into the Lobby to look after the interests of big multinational suppliers and who effectively wants their constituents to pay more for their shopping to benefit the bottom line of those companies.

I do not believe I was sent to Parliament to boost the profits of Heinz, Mars or Nestlé, who are perfectly capable of looking after their own interests. I want my constituents to pay the lowest price necessary for the products they buy in the supermarket. They are already struggling with the cost of living. How ridiculous it would be if we were to put legislation in place that made them pay more than they would otherwise need to pay for their shopping. I hope that the Government will see sense and realise that the same equation should apply on both sides of the supply chain—to retailers and suppliers. I hope they will think about that and listen to reason. If they do not, I hope the House will force them to do so.

[John McDonnell (Hayes and Harlington) (Lab)]

I shall provide a brief background to amendment 3 and to the other amendments tabled in my name.

I am chair of the Bakers, Food and Allied Workers Union parliamentary group. We meet that union, which represents the workers in the baking and confectionary industry, on a regular basis. We have had a long campaign over a number of years to express our concerns about below-cost selling in the baking and confectionary sector. The concern relates to the Bill’s general provisions, but because I raised it on Second Reading, I shall not delay us further except to explain that the same pressure suppliers have felt from supermarkets has had its effect on the baking industry, as it has on farming and elsewhere.

The pressure to cut overall costs has reduced the quality of the product. Concerns have also been expressed over the years about the safety of ingredients. Some consumer organisations have pointed out the deterioration of the quality of bread as a result of the amount of water introduced into bread production, which has undermined the nutritional benefits from eating bread and has had an impact on the population’s health.

The anxiety is that the same sort of pressure has been applied to the baking industry. The result for members of the bakers’ union has been reductions in wages and job cuts, and the reduction in overall pay means that this sector has significant levels of low pay; in fact, it is one of the most low-paid sectors in our industry at the moment. Another impact of that pressure is deteriorating working conditions and terms of employment. Bakers have expressed the concern that skills within the sector have been undermined, too. With people’s potential to be upskilled undermined, it means further pressure on wages.

These are vulnerable workers, therefore, and they are fearful of raising their concerns about what is happening in this sector. That is why the bakers’ union has combined with employers and others to welcome this Bill. It feels that it gives its members protection when they blow the whistle on some of the supermarket practices that lead to deteriorating conditions in the industry. That, then, is the background to the amendment.

The bakers’ union welcomes clause 13, which enables the adjudicator to recommend to the Office of Fair Trading changes to the code as issues arise over time. It is important, however, that this process is seen to be open and transparent. That is what amendment 3 is designed to achieve. It would simply ensure that the Office of Fair Trading is required to publish its response to the recommendations in the groceries code adjudicator’s review. The response should explain whether the OFT has acted on those recommendations. The amendment would introduce a process of openness and transparency that will lead to accountability. It would place a statutory duty on the OFT to make its functions patently open to scrutiny from the general public and the industry itself.

I expect that my hon. Friend the Member for Edinburgh South (Ian Murray) will speak about amendments 34 and 35, which relate to the wider concern that we now feel about the nutritional content of some of the consumer goods that are placed before us. My amendment responds to some elements of that concern by proposing that recommendations whose implementation would improve the nutrition of our country and the operation of a particular food sector are in fact implemented, or reasons are given for the fact that they are not being implemented.

[Andy Sawford]

When Labour Members tried in Committee to strengthen the relationship between the adjudicator and the Office of Fair Trading, we were given very unsatisfactory reassurances. We were told, for example, that the adjudicator could use the publicly available telephone line to contact the OFT. Any measures that strengthen that relationship must surely be welcome.

[John McDonnell]

I followed the dialogue that took place in Committee and read the reports of it. That has been one of the joys of my life over the last couple of months. The Minister said that an amendment such as mine was unnecessary, and would not give the Bill any additional force. She suggested that if the OFT repeatedly failed to act on the adjudicator’s recommendations, two routes would be available. Select Committees, she said, would have “a role to play”, and it would also be possible for any supplier to conduct a judicial review of the OFT, in particular to establish whether it was behaving reasonably or in relation to its duties under the Enterprise Act 2002.

I shall not comment on the hotline issue mentioned by my hon. Friend the Member for Corby (Andy Sawford), because I thought it too bizarre, to say the least. I took it to be just part of the knockabout of Committee stages in which Members engage just to keep themselves awake. I shall, however, deal with the issue of the judicial review. Of course it is open to any supplier to initiate such a review, but it is virtually impossible that it would succeed on reasonableness grounds, especially in the context of the OFT’s powers and the broad range of the adjudicator’s role. I do not think that it would be a constructive process. Moreover, the time required for it would not deal with the immediacy of some of the adjudicator’s recommendations.

As for Select Committees, of course they have a role, but they have no directional force. They can recommend, but their recommendations are often ignored, or there is a long gestation period between the initiation of a review and the acceptance and implementation of recommendations in the subsequent report.

I understand the reason for the Minister’s responses in Committee. I realise that she does not want to over-bureaucratise the process. However, I think that the world has changed and moved on since the Committee stage. There has been, for instance, the issue of public concern about the content of consumer goods following the horsemeat scandal. People expect the Government to be decisive, as well as open and transparent, in tidying up the current mess, but in the long term they expect a system that will monitor the operations of the supermarkets and other parts of the grocery supply chain. It is necessary to ensure that when we have a structure in place it operates openly, transparently and effectively, and that is what my amendment seeks to do.

If we cannot give the OFT a duty to report on whether or not it has acted on a recommendation from the groceries code adjudicator or has taken it into account, that demonstrates the weakness of the Bill. The amendment does not even require a detailed report giving reasons for the OFT’s decision, although there will probably be a public clamour for such a requirement following the rejection of a recommendation. This is a simple, minor amendment, which I think the House would be expected to support in the current climate. For that reason I intend, if time permits, to press it to a Division.

--- Later in debate ---

This group of amendments also includes a set about the operation and review of the adjudicator. Amendment 3, tabled by the hon. Member for Hayes and Harlington (John McDonnell), would require the OFT to respond to recommendations. I do not believe that that is necessary. I appreciate that the hon. Gentleman has looked at what was said in Committee, where we discussed the issue in detail, but the OFT has a general duty to act reasonably, which includes a duty to respond to members of the public and other public authorities where appropriate. This is about creating a system that is not overly prescriptive for the adjudicator, while recognising that they will discharge that public duty in a responsible way.

[John McDonnell]

Does that mean, then, that the Minister can now place it on the record that the Government expect the OFT to respond in a public, open, transparent and timely manner to any requests or recommendations by the adjudicator?

[Jo Swinson]

I absolutely give that assurance. If a body such as the OFT receives information, particularly from a respected public servant, we would expect it to respond appropriately as part of its general duty, but we do not want to be overly prescriptive in how we set that out in legislation. I hope that that reassurance is helpful to the hon. Gentleman and I urge him not to press his amendment.

Amendment 28 would require the adjudicator to set out in guidance which laws will apply to arbitration and where it will be conducted. The amendment is superfluous, because it would duplicate information that is already in the groceries supply order. We discussed arbitration in Committee, as did the other place when it debated the Bill. Article 11 of the order sets out the rules that will apply and the fact that

“the seat or legal place of arbitration will be London…or such other city within the United Kingdom as the Supplier nominates.”

Of course, the adjudicator may choose to publish guidance on arbitration, but we do not believe that it is necessary to make that a requirement under the Bill.