Groceries Code Adjudicator Bill [HL]

Lord Howard of Rising Excerpts

Tuesday 22nd May 2012 Lords Chamber

[Lord Howard of Rising]

My Lords, I must declare two interests: I am a farmer. Even more relevant to this debate, I am landlord to a tenant who is a direct supplier to supermarkets. I therefore have first-hand knowledge and experience of what we are discussing today. I shall deal with the general points rather than the detail, which will probably be more appropriate in Committee.

Generally speaking, I find it difficult to understand why there should be a code at all, let alone an adjudicator to police it. There is no obligation on anyone to supply a supermarket. People and businesses do so because it is a commercial decision that benefits them. In my own case I delay the rent due from my supermarket-supplier tenant to tie in with when he is paid by his customer. It is an agreement freely entered into; if I did not like it, I would not have to do it. I could let the land to someone else and be paid more promptly.

Leaving aside the pointlessness of trying to interfere in markets, with all the unintended consequences that inevitably crop up, there are other faults in this Bill. There is no doubt that, as drafted, the Bill will impose substantial costs on the supermarkets, which in turn will be paid for by their customers. There is no cap on what the adjudicator may spend for which the supermarkets and their customers will then have to pay. Complaints are not limited to parties to a contract. Anyone—even someone with no involvement in a transaction—can complain to the adjudicator. It is almost incredible that someone with no connection to either side of an agreement can complain about that agreement. As no one knows what the adjudicator will regard as reasonable grounds for a complaint, it opens the door to more costs with the possibility of complaint upon complaint, with the supermarkets and ultimately their customers, again having to pick up the bill.

Major supermarkets already employ departments to deal with the Groceries Supply Code of Practice. On top of that they are being asked to pay for the adjudicator and his staff. If the adjudicator resembles any other office of a similar type it will grow exponentially. Can your Lordships imagine the self-discipline required to control costs and limit activities when all that is required to pay for expansion is to say, “Hey you—a bit more this year please”? What is it all for? The guidance notes tell us of “potential improvements” in quality and price. Do not the Government know that there is a cut-throat business out there where any supermarket not offering the best quality and choice soon suffers? We need only to look at how quickly the results of the large supermarkets can deteriorate to see that. How did the supermarkets get to where they are today? Guess what? They offered choice and quality at attractive prices with no government interference.

[Lord Vinson]

Would the noble Lord be kind enough to give way? If supermarkets sell milk for less than the price of water, does not that indicate that the price structure is not exactly working properly?

[Lord Howard of Rising]

It indicates that people are buying milk very cheaply. Lucky them.

Ultimately, there is only one person who will pay for all this expense, and that is the supermarket customer. I look forward to hearing from the Minister why the poor shopper should be clobbered in this way so that I can get paid earlier, and possibly increase the rent I receive.