Groceries Code Adjudicator Bill [Lords]

Philip Davies Excerpts

Tuesday 26th February 2013 Commons Chamber

[Philip Davies (Shipley) (Con)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

New clause 2—Supplier turnover—

‘Suppliers are not allowed to refer cases to the Adjudicator and cannot have cases referred on their behalf if their turnover exceeds £1bn per annum.’.

New clause 3—Sunsetting—

‘This Bill will expire in seven years from the date it receives Royal Assent.’.

New clause 4—Supplier headquarters—

‘Suppliers are not allowed to refer cases to the Adjudicator and cannot have cases referred on their behalf if they have their principal headquarters outside the European Union.’.

New clause 5—Supply source—

‘The provisions of this Act shall not apply to any supplies which are produced, manufactured or processed, in whole or in part, outside the European Union.’.

Amendment 28, in clause 12, page 4, line 32, at end insert—

‘(a) the nature and type of arbitrations to be conducted under section 3 including:

(i) the law applicable to an arbitration; and

(ii) where the arbitration should be conducted.’.

Amendment 3, in clause 13, page 5, line 18, at end insert—

‘(2) The Office of Fair Trading shall be required to publish a response to the Adjudicator on the recommendations set out in subsection (1) explaining whether they will be acted upon or not.’.

Amendment 30, page 5, line 18, at end add—

‘(3) In assessing changes that could be made to the Code, the Adjudicator shall give due consideration to—

(a) the territorial extent of the Code, especially in relation to activities of large retailers outwith the UK, including work done by subsidiaries of large retailers;

(b) whether intermediaries in the supply chain should be covered; and

(c) whether commercial pressures or criminal activity pose risks to consumer interests by potentially compromising standards of food safety, hygiene and food authenticity.’.

Amendment 33, page 5, line 18, at end add—

‘(3) In assessing changes that could be made to the Code, the Adjudicator shall give due consideration to—

(a) the territorial extent of the Code, especially in relation to activities of large retailers outwith the UK, including work done by subsidiaries of large retailers;

(b) whether intermediaries in the supply chain should be covered.’.

Amendment 34, in clause 14, page 5, line 31, at end insert—

‘(4A) The report must include details of any incidents that have come to the Adjudicator’s attention during the reporting period in which breaches of the Groceries Code or commercial pressure on retailers have led or may have led to actual or potential cases of compromised—

(a) food safety;

(b) food hygiene; and

(c) food authenticity.’.

Amendment 35,  page 5, line 34, at end add—

‘(c) the Food Standards Agency.’.

Amendment 27, in cause 25, page 11, leave out lines 7 to 12 and insert

‘This Act shall come into force two months after Royal Assent.’.

[Philip Davies]

New clause 1 stands in my name and that of my hon. Friend the Member for Bury North (Mr Nuttall).

I do not want you to think, Mr Speaker, that my speech would be better suited to a debate on Second or Third Reading, but it is important that I give some context as to why new clauses 1, 2 and 3—which all stand in my name—are important.

I do not have any interest to declare, but I do have considerable experience that is relevant to the Bill. Before entering Parliament in 2005 I spent the previous 12 years working for Asda. I spent four years working in-store and eight years working at the head office in Leeds, so I have first-hand knowledge of how the supermarket industry works. To be perfectly honest, it works in a completely different way from the way in which people might be forgiven for thinking it works if they listened to previous debates on the matter. We have been given to believe that terrible, shocking, awful, nasty supermarkets care nothing about their suppliers, that their only role in life is to screw their suppliers into the ground and leave them destitute—bankrupt, if we are to believe previous debates—and that the only way to prevent that from happening is to have this ridiculous adjudicator, which is the Bill’s premise. That argument is complete and utter nonsense—that is not how it works at all.

[Mark Tami (Alyn and Deeside) (Lab)]

I think that I have raised this point with the hon. Gentleman in the past, but the supermarkets’ power means that they are able to tell suppliers, “Provide this product at this price or do two-for-one offers at your cost, or we will go somewhere else.” Does the hon. Gentleman not accept that that is an unacceptable power in some cases?

[Philip Davies]

I am afraid that the hon. Gentleman is highlighting the misconceptions. The Office of Fair Trading is already able to enforce a grocery code of practice. It is already in place. It is not being introduced by this Bill. The code of practice already exists under the auspices of the OFT. If the hon. Gentleman has any concerns about how supermarkets are operating with regard to their suppliers, he can take his complaint to the OFT and ask it to investigate it. The adjudicator is not supposed to introduce a new code of practice, although we fear that they might. The code of practice already exists. If the hon. Gentleman has evidence of supermarkets breaking the code of practice, I would be happy for him to come forward and tell me about it. If anybody has evidence of supermarkets breaking the code of practice, let us hear about it today and we can all decide what the best course of action is. However, there is no evidence that the code of practice is being breached.

[Huw Irranca-Davies (Ogmore) (Lab)]

With all due respect, the hon. Gentleman fails to understand one of the fundamental points that was made in Committee, which is that many of the examples of abuse in the supply chain concern primary producers who are literally afraid of coming forward. That is why the anonymity and protection of those producers is built into the Bill.

[Philip Davies]

I understand the point that the hon. Gentleman makes, but he is basically highlighting that he can give no examples of abuses of the groceries code of practice.

[Andrew George (St Ives) (LD)]

I respect the consistent position that the hon. Gentleman takes on this matter. However, he cannot ignore the fact that in 2008, the Competition Commission concluded that supermarkets were transferring excessive risk and unexpected costs to suppliers, and that that was having a detrimental effect not only on the suppliers, but on consumers. It proposed the introduction of the code, but made it clear that on its own, the code would not be sufficient. A referee was needed to enforce it, otherwise no complaints would be brought forward. Simply saying that we have to find the evidence ignores the Competition Commission’s conclusions.

[Philip Davies]

The hon. Gentleman, likewise, has taken a consistent view on these matters. In fact, he has been so consistent that he wanted an adjudicator before a new code of practice had even been introduced, let alone bedded down. He has always been in favour of this solution, even when there was no problem.

The Office of Fair Trading controls the groceries code of practice and is there to investigate any abuses of fair trade within the sector. If the hon. Gentleman has any evidence, he can take it to the Office of Fair Trading. It has all the powers that it needs to investigate any cases. The problem is that there are no such examples.

[Andrew George]

I am grateful to the hon. Gentleman for giving way again. The Grocery Market Action Group, which I am privileged to chair on behalf of a large number of organisations, gave evidence to the Competition Commission inquiry. That is one reason why it came forward with the clear and firm conclusions that are now being carried forward by the Government. That is the right thing to do.

[Philip Davies]

The hon. Gentleman keeps making the same assertion. He should take the matter to the Office of Fair Trading. That is the body that oversees the groceries code of practice.

[Mr Andrew Turner (Isle of Wight) (Con)]

I am going to talk about something completely different. The Isle of Wight has three locations where ferries land. It was found that the ferry companies were not being reasonable. They could not find a solution and neither could anybody else. Exactly the same thing that the hon. Member for St Ives (Andrew George) is describing with food is happening with ferries.

[Philip Davies]

My hon. Friend is a fantastic representative of the people of the Isle of Wight. However, I would not want you to tell me that I am going off course, Mr Speaker, so if my hon. Friend will forgive me, I will avoid the ferry analogy and stick to the adjudicator and the groceries code.

Let me get to the point that I have been trying to make from the beginning. It is amazing that all the people who would have been happy to vote for the Government’s programme motion to restrict the debate are anxious to intervene as often as possible on my speech, thereby prolonging the debate. I am sure that there is an irony in there somewhere.

The genesis of my new clauses is that the idea that supermarkets will flourish by making their suppliers bankrupt is the most ridiculous premise known to man. A supplier does not have much of an outlet for their goods if they are not bought by a supermarket. Equally, a supermarket does not have much of a shop if it has nothing on its shelves to sell. This is not a one-way street. The supermarket cannot manage without the supplier. The nature of the free market means that they have to work together on each other’s terms. If a supermarket upsets Heinz and has no Heinz beans on its shelves, it will not be a supermarket for very long.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

The hon. Gentleman makes the point about the markets in which the supermarkets operate, but does he at least concede that the power imbalance between the supermarket and the supplier is often very unfair, and that supermarkets have consistently pushed the costs and risks of doing business on to the supplier at the end of the food chain?

[Philip Davies]

No, I do not agree with that at all. I will come on to this point in a bit more detail soon, but the hon. Lady is forgetting something. The big supermarkets, without a shadow of a doubt, are massive companies that have hundreds of stores in their chains. By definition, a viable supplier to a supermarket chain has to be a very big company as well, otherwise it would not have the wherewithal to supply all the supermarket’s branches. When I get to the detail of my new clauses, I will talk about the thresholds that the Bill should apply. She will see that far from it being the case that vast supermarkets are being awful to very small suppliers, many of the suppliers are bigger than the supermarkets that they are supplying. She ought to bear that in mind.

[Mr Mark Spencer (Sherwood) (Con)]

My hon. Friend misunderstands the whole supply chain in the UK. There are organisations that provide hubs to supply supermarkets, but those hubs are supplied by very small primary producers such as family firms. Those firms are microscopic in comparison with the supermarkets.

[Philip Davies]

My hon. Friend makes a good point. If he has a big problem with the middleman, so to speak, for example in the dairy industry, he should pursue his complaint with the middleman, rather than having a go at the supermarket.

The hon. Member for Alyn and Deeside (Mark Tami) made a point about special offers. There is a view that supermarkets have been forcing suppliers against their will to do special offers, such as buy one, get one free or buy three for two. Let me tell the House, as somebody who has worked in this environment, what happens in the real world, rather than in the invented world that people want to talk about.

My hon. Friend the Member for Fylde (Mark Menzies) is here and he will know what happens as well as I do because he worked for Asda at the same time as I did. He will recall that, before I left, Asda decided that it did not want to do special offers any more and that it would have no special offers in its stores. It did not want any buy one, get one frees or three for twos. It asked its suppliers instead to just sell it the product at an everyday low price and to put what they would have invested in a promotion into providing that price. It was not companies such as Asda that were forcing suppliers to do buy one, get one frees; suppliers were falling over themselves to do special offers in the supermarkets and to get their products in the promotional areas.

Some of those firms have massive marketing budgets. They have marketing budgets that supermarkets would love to have. They use that budget to do offers such as buy one get one free or three for the price of two. They are trying to persuade people who buy Daz for their washing, for example, to move to Persil. To persuade people to do so, they give them a buy-one-get-one-free offer.

[Mark Tami]

Will the hon. Gentleman give way?

[Philip Davies]

I will in a second, because it was the hon. Gentleman who started me off discussing this misconception in the first place, so I will happily let him come back in.

A special offer such as “Buy one, get one free” on Persil is intended to encourage people to buy Persil in the hope that by the time the special offer ends, they will stick to that brand. It is a way of promoting a brand, and it has absolutely nothing to do with the supermarket.

[Mark Tami]

The hon. Gentleman is talking about very large companies, but does he accept that some smaller companies are almost totally reliant on the supermarkets for their business, and whatever the supermarket says goes? Does he also accept that one thing that we have to recognise from the horsemeat scandal is that if we keep driving prices down, some suppliers will look to cut costs by whatever means they can in order to survive?

[Philip Davies]

I am grateful to the hon. Gentleman, because he seems to have indicated—I will take it as such—that he will support my new clause 1 or new clause 2. He gets to the nub of the point, although I suspect he has not even bothered to read the new clauses, because if he had he would not have led with his chin in the way that he just has.

I wish to make it clear at this point that, with your permission, Mr Speaker, I would prefer to press new clause 2 to a Division than new clause 1, but I will be guided by you later on that.

[Mr Peter Bone (Wellingborough) (Con)]

I am grateful to my hon. Friend for giving way. He has been exceptionally generous throughout his speech.

I have been looking at new clauses 1 and 2, and they seem to be the same except for the level of turnover specified in them. Is that the case, and will my hon. Friend go into some detail on that?

[Philip Davies]

As ever, my hon. Friend is eagle-eyed. The amendments are the same, but the purpose of tabling two was to give the House a choice, because as it happened, I envisaged the interventions that the hon. Member for Alyn and Deeside (Mark Tami) has made.

At Asda, we found huge reluctance on the part of suppliers to stop special offers. They lobbied Asda for ever to do more and more of them to promote their brands, and an everyday low price did not offer them the same marketing opportunity.

[Mr Spencer]

I applaud my hon. Friend’s campaign to get his whites whiter, but he must recognise that there is a fundamental difference between a supplier of a brand of washing powder and a supplier of a cauliflower, carrot or parsnip, because it is not possible to brand a carrot or a cauliflower.

[Philip Davies]

I am grateful to my hon. Friend, and again, I take his intervention as a signal that he will support my amendment. That brings us on to the nub—

[Mr Speaker]

Order. I do not wish to interrupt the hon. Gentleman for any length of time, still less to be discourteous to him, but above all I would not want the House to be inadvertently misled. He has no amendments in this group, but he does have a series of new clauses tabled, if memory serves me, in his name and that of the hon. Member for Bury North (Mr Nuttall), namely new clauses 1 to 3, on which I know the House will now focus with beady eyes.

[Philip Davies]

I am grateful, Mr Speaker, and you are absolutely right, as ever. My hon. Friend the Member for Sherwood (Mr Spencer) seems to indicate that he is prepared to support new clauses 1 and 2, and I will be grateful to him for that. It seems that the longer we go on, the more support I am garnering for my case, so I am encouraged to go on a bit longer.

[Mr Spencer]

My hon. Friend will recognise that putting a figure on turnover as suggested in the new clauses would mean that there was a difference between somebody supplying a low-value product such as a carrot and somebody supplying a high-value product such as a bottle of champagne. If we were to put a firm figure in the Bill, as time and inflation moved inevitably forward, that figure would become smaller and smaller in real terms and small and medium-sized enterprises would be dragged over the threshold.

[Philip Davies]

My hon. Friend appears to be indicating that he prefers new clause 2 to new clause 1, which further persuades me that I should seek to press new clause 2 to a Division, if you allow me to do so, Mr Speaker.

The Bill was sold to people on the back of what I believe was a false premise—the idea that supermarkets are screwing suppliers into the ground remorselessly and hoping that as many of them as possible will go bust. It is a completely nonsensical argument.

[Justin Tomlinson (North Swindon) (Con)]

On the evidence of what has happened so far, has the current groceries code been well utilised since its introduction?

[Philip Davies]

My hon. Friend asks a good question and strikes at the heart of why the Bill is a nonsense. There is no evidence that the groceries code is being abused. Nobody has yet been able to come forward with any such case. They all give reasons why they cannot do so, but the fact remains that there are none. There is no evidence that the code is not being applied properly.

[Andrew George]

As the competition authorities have repeatedly found, there is a significant climate of fear in the sector. That is why it is highly unlikely that anyone will use the code until the adjudicator is in place. I ask the hon. Gentleman to look at clauses 4, 10 and 12 in particular, which should give him the reassurance that I believe he is looking for. Potentially powerful suppliers will not abuse their power, because of the reasonableness that is a golden line running through the Bill.

[Philip Davies]

I am grateful to the hon. Gentleman, but again, I do not want to get on to parts of the Bill that are subject to amendments in future groups, so I will resist that temptation.

Supermarkets can operate properly only with the good will of their suppliers. There are often cases in which, for example, a supplier has a problem at short notice—we have seen that recently with the issue of horsemeat. Things have to be taken off sale at short notice and production dries up quickly. That happens when foreign bodies are found in certain products, which have to be taken off the shelves. A supermarket can operate only if it then has other suppliers that it can go to and ask to fill the void at short notice. It goes to another supplier and says, “We’ve got some empty shelves and a lack of supply. Can you come and help us out?” Do people really think that the supplier would help out a supermarket chain that was trying to bankrupt it or screw it into the ground? Of course it would not.

My hon. Friend the Member for Sherwood made the point that the limits in my new clauses may impede small business at some point in future. However, new clause 2 specifies a turnover of £1 billion a year, and all I can say is that, my word, supermarkets must be a force for good if they can turn small and medium-sized enterprises into firms with a £1 billion-a-year turnover. That should be something to celebrate, not to criticise supermarkets for. Suppliers would be delighted to be companies of that scale. I am not entirely sure which ones in his constituency he is thinking of, but if he has any examples of firms that he is worried may have a turnover of £1 billion a year, I would like to meet them to find out what their fears are.

[Mr Christopher Chope (Christchurch) (Con)]

My hon. Friend makes a good point. Can he illustrate to the House what he thinks would be £1 billion-worth of cauliflowers?

[Philip Davies]

My hon. Friend makes a good point, which strikes at the heart of new clauses 1 and 2. We can argue about the necessity of the Bill, and as far as I am concerned it is not only unnecessary—as my hon. Friend the Member for North Swindon (Justin Tomlinson) made clear, there are no complaints about the existing code, so it is a solution looking for a problem—but the most unconservative-minded thing that we could possibly see. I have no problem with the Liberal Democrats supporting it, because of course they are always a left-wing tribe, but I am worried that members of my own party are supporting this intervention in the free markets.

Two companies, free to make their own decisions, are making agreements and signing a contract, and then we in the House think that we should intervene in that contract that they have both entered into freely and say, “By the way, we don’t think you should have signed that contract.” I have always thought that companies are more than capable of deciding those things for themselves.

[Mr Spencer]

Again, my hon. Friend misunderstands the concept of what the groceries code adjudicator is intended to achieve, which is related to exactly the point that he has just made. When an agreement has been made between two parties, if both sides stick to it there is no problem, but there is a problem when one side tries to change that agreement and goes back on it at a later date.

[Philip Davies]

My hon. Friend makes a good point, and he seems to make the point that the Bill is totally unnecessary. I am not a lawyer—my hon. Friends the Members for Christchurch (Mr Chope) and for Bury North are, and I will happily bow to their expertise—but it seems to me as a layman that if two sides sign a contract and one side then breaks it, there are already laws in place to ensure that the matter can be seen through in the courts. The courts ensure that contracts entered into voluntarily are honoured, so we do not need to do that. The Office of Fair Trading already looks after the groceries code, which deals with these matters anyway.

[Andy Sawford (Corby) (Lab/Co-op)]

I am listening carefully to the hon. Gentleman’s point about the role of the courts. Does he accept that the reason why many Opposition Members believe the Bill is important and helpful to farmers, producers, consumers and, ultimately, supermarkets, is the imbalance in economic power and in the relationship between small suppliers and the supermarkets? That the resources available to large supermarkets are vastly disproportionate to those available to small suppliers would be demonstrated in a court process.

[Philip Davies]

This is a red letter day for me, because I now have another volunteer to support my new clause 1 and new clause 2, which I will come on to in a second. The hon. Gentleman may well not have read them and therefore may have intervened inadvertently, but when he actually finds out what is in new clause 1 and new clause 2—if I am ever allowed to get on to that—he will find that he agrees with the point I am making. I do not agree with the principle of the Bill; I am the first to make that clear, and that relates to the purpose of new clause 3. On new clause 1 and new clause 2, the Bill was sold on the premise articulated by the hon. Gentleman—we have big supermarkets that are in a vastly preferential situation to very small suppliers, and that the House should be looking after those very small suppliers where they face problems. That is the premise of the hon. Gentleman’s point, and that is what my hon. Friend the Member for Sherwood is indicating. That is how the purpose of the Bill was sold.

I believe the Bill is totally unnecessary, but I am the first to accept that that is a minority view and that it will go ahead. My new clauses seek to ensure that the Bill hits its given purpose—to look after the small suppliers that my hon. Friend the Member for Sherwood is rightly keen to look after. I do not disparage him for that. Currently, the Bill will not just look after the small suppliers that my hon. Friend and the hon. Member for Corby (Andy Sawford) are so concerned about; it will give an avenue for complaint to all suppliers of supermarkets, whatever their size. All I can do is reiterate the fact that the vast majority of suppliers to supermarkets are huge companies in their own right, and that some of them are bigger than the supermarkets they supply.

Let us make no bones about it. One way or another, the suppliers—whether in terms of special offers, deals or whatever—hope that ultimately the adjudicator will deliver a benefit to their bottom line. Suppliers hope, through whichever avenue, that this will ensure that they have a healthier bottom line.

[Mr Spencer]

My hon. Friend must also recognise that the role of the groceries code adjudicator is as a referee. If a large corporation—we all know they exist—is in a trading disagreement with a supermarket, then the supermarket could use the groceries code adjudicator to make sure that it gets a fair deal from that large supplier.

[Philip Davies]

My hon. Friend makes his point. As it happens, I am a Conservative. I know it is an old-fashioned view these days in the Conservative party, but I believe in the free market. Companies such as Asda, Tesco, Morrisons and Sainsbury’s are big enough to look after themselves. They do not need a referee to look after a contract on their behalf against any supplier; big companies are more than capable of doing that themselves. My hon. Friend may take the point that it is the role of Parliament to intervene in every contract negotiation between two companies.

[Huw Irranca-Davies]

Will the hon. Gentleman give way?

[Philip Davies]

I will in a second. I will deal with this intervention and then give way to the hon. Gentleman. My hon. Friend the Member for Sherwood may think that the role of this House is to intervene in all sorts of contract disputes. Why limit it to supermarkets? There are lots of industries where one big person negotiates deals with a smaller supplier; it does not just happen in the supermarket trade. It seems to me that my hon. Friend is arguing for a total business ombudsman looking at every negotiated contract. That is not the kind of country I want to live in; it is certainly not what I consider to be Conservative.

[Huw Irranca-Davies]

I thank the hon. Gentleman for giving way; he is being very generous. New clauses 1, 2 and 3 lay his cards on the table; essentially, they support the free market option. That is what they are about, regardless of the technicalities. Did he listen to Radio 4, as I did the other morning, when Billy Bragg was being interviewed? He made the comment that when we leave everything to the free market we end up with horsemeat.

[Philip Davies]

I have no doubt that the hon. Gentleman does not believe in the free market—that is why he sits on the Labour side of the House. I have no quibble with Opposition Members agreeing with this nonsensical Bill. He was elected to try and introduce this kind of interventionist nonsense. What I object to is Government Members believing in this kind of stuff. I have no quibble with him believing it.

[Mark Tami]

The hon. Gentleman has painted a picture, which no doubt he actually believes in, where the supermarkets are fair and always have everyone’s best interests at heart. What would they have to fear, regardless of the size of the companies that could take them through this process? According to him, they have never done, and will never do anything wrong.

[Philip Davies]

In a Westminster Hall debate I heard one of my hon. Friends, who is in favour of the Bill, make it abundantly clear that he thought the adjudicator would have nothing to do, and that it would, in effect, be a sinecure post. The adjudicator would just be there in case he was needed at some point. It is unnecessary, and I do not believe in creating unnecessary bureaucracies. They end up empire building. They start off small and targeted, but of course once they find out that they have nothing to do they find something to do, even when it is not necessary.

[Huw Irranca-Davies]

rose—

[Andrew George]

rose—

[Philip Davies]

I am going to make some progress. These are the same Members who were happy for the debate on three groups of amendments to be restricted to three hours, and they now want to try to prolong the debate for as long as possible. If they still want to intervene at a later point I will try and allow it, but I am sure other Members want to speak.

The Bill was sold on its supposed support for small suppliers. If that is what it is about, let us make that support clear in the Bill. New clause 1 states that the adjudicator could not have cases referred to it by, or on behalf of, companies with a turnover exceeding £500 million a year. New clause 2 is exactly the same, but puts the figure at £1 billion a year. To try to be as helpful as possible, I have done some investigation to try to work out what sort of companies would be covered by my new clauses, so that we can see what we are talking about. Perhaps the Minister will be able to tell us whether the purpose of the Bill is to help those companies.

Returning to my point, suppliers hope the Bill will help their bottom line. If it does not, as a company there is no point to it. That is what they are hoping for. Who pays for an increase in the bottom line of a supplier? It will not be the supermarkets. I am sure the Opposition believe the idea that supermarkets’ profits are going to be eaten into, that there will be some kind of magical transfer of wealth from the supermarket to the supplier, and that the supermarket will give up its profits and it will all feed through and go to the small farmers. It does not work like that. What will happen is this: supermarkets work to very, very low margins. The whole purpose of supermarkets is to cut the price and increase the volume—that is how they look to increase their profit. If there is a benefit to the suppliers’ bottom line it will only come from one person: the consumer. Consumers will end up paying more for their products—that is what the Bill will deliver.

If people want to tell their constituents that they are voting for them to pay more for their products, I am happy for them to do so—at least it would be honest, at least they would be saying, “Look, because we want to look after suppliers, you’ll have to pay more for your shopping, but we think it’s a price worth paying.” I would respect that. It is a perfectly respectable view.

[Mark Menzies (Fylde) (Con)]

My hon. Friend’s new clauses—on the £500 million and £1 billion thresholds—are incredibly sensible. We are talking about companies such as Procter & Gamble, Heinz, Unilever, Coca-Cola, Nestle, Mars, Kellogg’s—multi-billion dollar, multinational corporations—and it would be indefensible for a groceries adjudicator to spend its time on them, instead of on protecting small independent suppliers. He is absolutely right that it will lead to higher prices, because it will make buyers timid: they will not negotiate hard on behalf of the customer, because they will not want their time taken up with a groceries adjudicator. They will not want the bad publicity, so they will settle for second best, and people will get higher prices. He is on the money.

[Philip Davies]

I am grateful to my hon. Friend, who knows a great deal about this subject.

If people want to transfer money to suppliers either, in their idealistic world, from supermarkets or, in the real world, from their constituents, and if they think that a price worth paying, let them say so. If they reject my new clauses, however, I want them to be clear with their constituents about whom they are benefiting as a result of higher prices and who they will be paying their higher prices to. My hon. Friend the Member for Fylde (Mark Menzies) listed a few of them, but I will give a more extensive list, with your permission, Mr Speaker. We are talking about companies such as Esso, which supplies petrol to supermarkets. Do supporters of the Bill really want to help Esso, which is far bigger than any supermarket chain? Is the purpose of the Bill to enable Esso to go along with its complaint to the adjudicator, so that the adjudicator can faff about looking at a complaint from Esso about Tesco or Asda? Is that what the Bill is all about?

[Dr Whiteford]

The hon. Gentleman’s argument, to which I am listening carefully, seems to have been predicated on the premise that there is no problem, so why on earth would there be a problem between these big corporations?

[Philip Davies]

I will try to put it more simply for the hon. Lady’s benefit: I do not agree with the Bill, as I think I made abundantly clear—I did not want to mislead anybody. If we are to have a Bill, however, I want it to focus on the people I think she had in mind when she decided to support the Bill. If anybody wants to intervene and say that when they had the idea of supporting the Bill, the first company they had in mind was Esso, let them do so.

[Sir James Paice (South East Cambridgeshire) (Con)]

rose—

[Philip Davies]

I thought my right hon. Friend was in favour of farmers, but he is obviously in favour of Esso.

[Sir James Paice]

It pains me to have to point out to my hon. Friend that petrol is not a grocery and is not covered by the code, so he is making a completely spurious point.

[Philip Davies]

I am grateful to my right hon. Friend. Perhaps then we can move on to Procter & Gamble. Would it be covered by the Bill? Is that a spurious point too? When he supported the Bill and was telling his farmers how marvellous it was that the Government were supporting an adjudicator, did he say to them, “By the way, the biggest suppliers will have the greatest opportunity to benefit and could clog up the adjudicator with complaints before you get your own complaint heard, and one of those companies is Procter & Gamble”? Did he tell them that that was the sort of company he had in mind? No, I do not think he did.

[Mr Spencer]

Again, my hon. Friend is misrepresenting the role of the groceries code adjudicator. When a deal is done between two suppliers, whether large or small, as long as it is stuck to, there will be no role for the adjudicator. Those large companies can do their negotiations, and those deals will stand fast. The adjudicator would get involved only when the supermarket goes back and tries to change the original agreement. That is its role.

[Philip Davies]

So my hon. Friend does not think that Procter & Gamble is big enough to look after itself. He thinks poor little Procter & Gamble—that poor mite—needs a state adjudicator to intervene on its behalf because it might find itself at the wrong end of an unfair negotiation with a supermarket.

[Justin Tomlinson]

We are on the side of David, not Goliath. It seems eminently sensible that my hon. Friend’s new clauses would focus attention on the genuine David, not on supporting the real Goliath.

[Philip Davies]

I am grateful to my hon. Friend. We were told that that was exactly the purpose of the Bill in the first place. When it was being sold to us, nobody said it would benefit Procter & Gamble. As has been rightly said, if we want the adjudicator’s time freed up to look after the small suppliers, we do not want its time being taken up by these big multinational corporations.

As it happens, I am going to say something that might seem controversial, but to be perfectly honest I do not particularly care. If supermarkets are going around screwing Procter & Gamble into the ground to get the cheapest possible price to pass on to their customers, I say, “Good on them!” Procter & Gamble’s profits will not be massively impacted on by the supermarkets. I want supermarkets to negotiate robustly with big companies in order to get prices down for my constituents. The Labour party is supposed to support the working person—the people on fixed incomes—but the early indications are that its Members will vote to protect Procter & Gamble’s interests over the interests of their constituents. What on earth has the Labour party come to, when it sides with Procter & Gamble?

It is not just Procter & Gamble, however. We have Harvest Energy, Green Energy Fuels, Imperial Tobacco, Arla Foods and Gallaher—the top suppliers to supermarkets. The naive people who think that the adjudicator will not empire build are living in cloud cuckoo land. If they think that the adjudicator will not look into all sorts of things, they obviously have no experience of these matters.

[Mr Speaker]

Order. I am slightly concerned that the hon. Gentleman has been diverted from the path of virtue on which he embarked some minutes ago. He was talking specifically about his new clauses, but he has since taken a series of interventions that, in a sense, have caused the debate to elide into a Second Reading consideration of the merits or otherwise of adjudicators and so on. I know that he will want to return to the terms of his new clauses, on which, of course, he can expand at such length as he sees fit, as I am sure he will. I call Mr Philip Davies.

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[Mr Speaker]

I am grateful to the hon. Gentleman. I am sure he is seeking to be helpful, but I thought I had myself made the point perfectly adequately that the hon. Member for Shipley (Philip Davies) would wish to return to the terms of his new clauses, which are themselves entirely orderly.

[Philip Davies]

I am grateful, Mr Speaker, but people ought to be aware that the Bill leaves great scope for the adjudicator to decide what to do. People should not have too much faith. The Bill deliberately gives it massive power and freedom.

[Mr Bone]

We have very limited time, because the House agreed to the programme motion, so perhaps we could speed things up. I notice that the Minister has been deep in conversation and looking at the new clauses. I wonder if she might intervene and accept new clause 2, because then we could move on.

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[Philip Davies]

My hon. Friend is for ever an optimist, but I am afraid that, in my experience, logic is not usually the great winner in these debates. Unless the Government come up with an idea themselves, they appear reluctant to accept anybody else’s amendment, simply because they did not come up with it themselves.

Do we think the Bill should be directed at Walkers snack foods? What about Coca-Cola? That is a poor, small firm that needs looking after when it negotiates with supermarkets!

[Mr Chope]

My hon. Friend refers to Walkers snack foods. Potatoes are among the raw materials that that company uses a lot of, but there is nothing in the Bill that would protect the suppliers of potatoes to Walkers.

[Philip Davies]

My hon. Friend makes a good point. The Bill would still allow Walkers to screw the potato suppliers—who provide the raw materials—into the ground as much as it liked, but it would prevent Asda, for example, from trying to negotiate the best deal with Walkers for its crisps.

I have mentioned Coca-Cola. I also wonder whether Heinz Ltd would really need to take a complaint to an adjudicator. Is Heinz not big enough to look after itself? Why on earth are we passing legislation to intervene in disputes between big supermarkets and big suppliers such as Heinz, Diageo, United Biscuits, Kraft Foods, Nestlé, Premier Foods, Fullers Foods, Britvic Soft Drinks Ltd and Mars? Are we really saying that the House must set up a state regulator to intervene in negotiations or disputes between massive multinational companies? Those companies have recourse to the courts if they feel that a contract has been breached. Are we really saying that Heinz does not have the wherewithal to take a case to court if it feels that a supplier has dealt with it unfairly? Does anyone want to stand up and say that Heinz does not have the wherewithal to take such a case to court? Who wants to make that point?

[Mr Spencer]

rose—

[Philip Davies]

My hon. Friend does.

[Mr Spencer]

I will happily challenge my hon. Friend on that point. Those large companies have the ability to negotiate deals, and those deal will be stuck to. The groceries code adjudicator will not get involved in those kinds of negotiations. The adjudicator will have a role to play when a supermarket tries to go back on a deal and change it at a later date.

[Philip Davies]

We all know that that is the case, but my point is that if companies such as Heinz, Walkers, Nestlé or Coca-Cola feel that a supermarket has breached a contract with them, they can take the case to court. We do not need the state to set up an adjudicator to decide which side is right. As it happens, I am quite relaxed about supermarkets trying to screw those big suppliers into the ground to get the best possible deal. Those suppliers are making massive profits, and I would prefer to see that money benefiting my constituents rather than adding to the bottom line of those multinational companies.

[Andrew George]

rose—

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[Philip Davies]

I will let the hon. Gentleman explain why he wants to add to the bottom line of those multinational companies.

[Andrew George]

The hon. Gentleman is, in truth, arguing for the abolition of all the competition authorities. That seems to be the direction that his argument is taking. In fact, clause 4 makes it clear that the decision to investigate would be made if the adjudicator had reasonable grounds for suspecting a breach of the code, and clause 10 makes it clear that any supplier who brought a complaint that was “vexatious or…without merit” would be required to pay some or all of the costs involved. Paragraph 48 of the Competition Commission’s final report stated that it envisaged that the groceries code adjudicator

“would prioritize the resources of its office to focus on those disputes and complaints concerning suppliers without market power over and above those concerning suppliers of major branded products that have market power.”

It is clear that such decisions must be made by the adjudicator, and I am perfectly content that the Bill has the capacity to ensure that that description—

[Mr Speaker]

Order. I am loth to interrupt the hon. Gentleman in mid-flow, but interventions seem to be becoming progressively longer. There is no problem about their frequency, but there is about their length. We must now hear from Mr Philip Davies.

[Philip Davies]

I am grateful to you, Mr Speaker.

The hon. Member for St Ives (Andrew George) misreads the Bill, but I will come to the point about the recovery of investigation costs when we debate the other groups of amendments. The Bill does not say that those costs have to be recovered in that way; it says that they “may” be recovered. He seems to have huge faith in allowing the adjudicator to do just as it pleases, but I do not want it to do just as it pleases. I want it to follow strict rules that will prevent it from empire building, and that is part of the purpose of my new clauses.

[Justin Tomlinson]

The adjudicator will clearly have finite amounts of time and resources. Surely it would be better for it to focus on the smaller suppliers who do not have the confidence or the resources to take on the supermarkets.

[Philip Davies]

My hon. Friend is absolutely right; that is the purpose of the Bill. The big multinational companies that I have mentioned are the biggest suppliers to the supermarkets, in that they supply the biggest volume of the 40,000 or so products on sale in supermarkets at any given time, and they therefore have the most scope to benefit from the Bill. Why on earth should we wish to enable them to do that? I do not know the answer, and no one has yet argued that Heinz or Nestlé cannot afford to take their contractual disputes to court or explained why we need an adjudicator to act on their behalf. They do not need an adjudicator; they are perfectly big enough and bad enough to look after their own interests without needing an adjudicator to step in, and so are the supermarkets.

When there is an agreement between a huge multinational supermarket such as Asda, which is owned by Wal-Mart, and a huge multinational supplier such as Heinz or Walkers or Nestlé, let them get on with it. If there is then a row about who has broken a particular rule, let them get on and sort it out themselves. Believe you me, Asda needs Heinz products in its stores just as much as Heinz needs Asda to sell its products. It is a perfectly even arrangement between the two; the one could not manage without the other. Let them sort the disputes out between themselves. Why on earth are we legislating to get involved in those disputes? That is completely ridiculous. Members are arguing that the introduction of a groceries code adjudicator will help small suppliers, and supporting new clauses 1 or 2 will give them an opportunity to make it abundantly clear to the House that the Bill is designed to help the smaller suppliers to supermarkets.

I want to explain why I have used the figure of £500 million in new clause 1 and £1 billion in new clause 2, and why—with your permission, Mr Speaker—I shall put new clause 2 to a vote. I have listed some of the suppliers that would be covered by the £1 billion figure in new clause 2. The adjudicator will deal with retailers with a turnover of more than £1 billion. The Bill is effectively saying that other people need protecting from such huge organisations, and that they are too big not to have an unfair advantage in any contract negotiation. The Bill therefore puts in place a kind of backstop. My point is that if a supermarket with a turnover of £1 billion a year is deemed big enough to look after itself without any extra help or support, surely suppliers with a similar turnover are in exactly the same situation. If a supermarket with such a turnover is deemed too big to be trusted to negotiate properly, why would a supplier with a similar turnover need the protection of the adjudicator? Where on earth is the logic in that?

[Ian Murray (Edinburgh South) (Lab)]

rose—

[Philip Davies]

Perhaps the hon. Gentleman is about to tell us.

[Ian Murray]

We have all been listening carefully to the hon. Gentleman, but I want to make two important points. First, his proposals are not backed by the industry itself. The Food and Drink Federation and the British Brands Group do not support the proposed restrictions in his new clauses. Secondly, although I have some sympathy with his wish to move further down the supply chain, his proposals were not accepted in Committee.

[Philip Davies]

That is an extraordinary intervention. The hon. Gentleman is saying that he is not minded to support my new clauses because the representatives of the food and drink industry, who represent massive suppliers, do not support them. The Opposition are not going to support them because they want to look after the interests of those massive organisations that pay the bills of the Food and Drink Federation. Can the hon. Gentleman not make a decision for himself on this matter? Has he not got the capability to understand the equation for himself? I will make it simple for him. Why do suppliers with a turnover of more than £1 billion need help, if a supermarket retailer with a turnover of more than £1 billion does not need help? It is a nonsensical position for anybody to hold.

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[Mr Bone]

I am considering whether to support new clause 3. Am I right in understanding that if, in seven years’ time, the post of adjudicator turns out to have been superfluous, it would just fade away, whereas if it has been a good measure, Prime Minister Cameron would, in his 21st year or whatever, be able to reintroduce it?

[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.

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[Sir James Paice]

I will come to that specific point, but let me first deal with the more philosophical point raised by my hon. Friend the Member for Shipley, who made it clear that he did not consider those of us who share these Benches with him to be true Conservatives if we supported the Bill. I wish to rebut that view. The Bill is necessary because—as has just been suggested by my hon. Friend the Member for North Swindon (Justin Tomlinson)—notwithstanding what was said by my hon. Friend the Member for Shipley, there are plenty of examples of supermarkets exceeding what I believe to be fair terms of trade.

During my time as a Minister, I had a number of meetings with supermarket chief executives, either alone or in a group. Most of them—and, indeed, other senior directors and officials from supermarkets—would argue, as has my hon. Friend the Member for Shipley, that there is no need for the Bill, and that they are already doing everything fairly, above board and properly. I can only conclude that many chief executives do not know what is being done in their names by people operating much further down the chain. Reference has been made to buyers. Since the code was introduced in 2010, there have been numerous examples, some quite recent, of suppliers being verbally required by supermarkets to use a nominated haulier, even though the supplier may be able to find an equally good and competent haulier to do the job for less money. There are also examples of supermarkets seeing that a supplier has made a certain amount of profit in one year, but instead of saying to them, “We think you’re being excessive and therefore we should pay you slightly less for your product next year,” which we could all accept, they say they want a cheque now—today—for £1.5 million or more before they will even consider doing business with that supplier next year. That is not acceptable; it is not a moral way of doing business, which is why I strongly believe the supermarkets need to be investigated. The debate has understandably ranged over a number of different types of commodities, but the most glaring examples of these practices have been in the fresh produce sector.

My hon. Friend also said that having a supermarket adjudicator would be a waste of time if it turned out that he had nothing to do. My attitude is different. I would be delighted if the adjudicator had nothing to do, because it would demonstrate that everything was being done in accordance with the code and that all suppliers were being treated fairly—although I have to tell my hon. Friend that I do not believe there is any chance whatever of that being the case. Indeed, a number of cases are already being brought forward for the adjudicator to deal with, and I have described a couple of them. I think the threat of such action may well prove to be the answer to our problems, but it is wrong to suggest that there is no need for an adjudicator on the basis that the code is in place, as it is clearly not enforceable through the Office of Fair Trading.

My hon. Friend also seems to ignore the point made by my hon. Friend the Member for St Ives (Andrew George). The Competition Commission’s reason for all this was to look after the consumer. The whole thrust of its argument was that shifting risk from the retailer to the supplier was putting the long-term interests of the consumer at risk, with the result that while items may be cheaper today, they may be far more expensive in future, or the supply chain may no longer exist. That is not in the long-term interests of the consumer.

[Philip Davies]

I will ignore the nonsensical—and, to be frank, idiotic—point that this measure will be of benefit to consumers. My right hon. Friend said he would be happy for the adjudicator to have nothing to do. Will he tell us how much the adjudicator is going to be paid?

[Sir James Paice]

I do not know, because it has not been made public. That is a complete irrelevance, however. It is not a reasonable argument, because the situation in this case is the same as it is for judges: if everybody obeyed the law, we would not need any judges, but we would still have them, just in case. There is ample evidence that there will be cases for the adjudicator to adjudicate on, however. The Bill contains a number of limiting provisions, too: the adjudicator can decide not to take up a reference; the adjudicator can fine somebody if the reference has no serious foundation; and the adjudicator’s job is only to arbitrate on alleged breaches of the code, which is quite a narrowly drawn document. I strongly believe the Bill is right as drafted.

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My hon. Friend’s point about trying to restrict the remit of the Bill to companies with a very small turnover might be honourable, but it is not necessary. No case will come forward.

[Philip Davies]

My amendment does not seek to restrict the remit only to very small suppliers but to suppliers with a turnover of up to £1 billion; surely my hon. Friend cannot argue that a supplier with a turnover of £950 million is a very small supplier.

[Mr Spencer]

I am grateful to my hon. Friend for his intervention, as it allows me to clarify that that is my exact point. At no point will there be such a negotiation, as this is not a David and Goliath situation. We are talking about two Goliaths, so the adjudicator will have no role. My hon. Friend has made a career of criticising unnecessary legislation and it seems strange that he should now want to introduce an unnecessary clause into a Bill. I hope that he recognises that new clause 2 would not be necessary simply because the adjudicator will not have a role in negotiating between two Goliaths.

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[Huw Irranca-Davies]

I am pleased to speak in this debate and I welcome the speeches that have been made so far. I did not expect it to be as sparky as it has been, but I welcome that because it allows us to flush out the arguments about the amendments and new clauses, as well as the fundamental principles of what we are trying to achieve.

I did not intend to speak to new clauses 1, 2 and 3, but I wish to reiterate the comments made by the hon. Member for Sherwood (Mr Spencer), the right hon. Member for South East Cambridgeshire (Sir James Paice) and others. A great deal of discussion in Committee focused on the fact that the adjudicator’s office will intentionally be small, mean and lean. It will not be some behemoth, as the hon. Members who spoke to new clauses 1, 2 and 3 suggested it would be. It is supposed to be an intelligent organisation that does not go on fishing expeditions but responds to good intelligence. I suspect that if there are no cases to follow, the report will be very slim indeed. I suspect that the adjudicator will not respond to Procter & Gamble or anyone else if they are asked, “Please look at the power relationship within the supply chain and how we are being disgracefully abused.”

The hon. Member for Shipley (Philip Davies) spoke to new clauses 1, 2 and 3 at great length. New clause 3 gives the reality to the mission, which is at a set moment in time to get rid of the adjudicator, which would fly in the face of the advice that has come down over years from the Competition Commission and others that there is a need for such an adjudicator. Lean and mean, yes, but the hon. Member for Shipley should have some faith in the adjudicator and, having advertised the position and given her the power and set up the office on a lean, mean basis, he should allow her to decide where to investigate to achieve a good, efficient supply chain.

[Philip Davies]

The hon. Gentleman seemed to be criticising me for moving my new clause at great length. Does he accept that I spoke at great length because I took such a large volume of interventions, not least from him?

[Huw Irranca-Davies]

I am in no way being critical of speaking at great length. I can extemporise for the nation myself on occasions. I do not criticise the length of time and I am glad that the hon. Gentleman has had the opportunity to expound his arguments. I have no doubt that he and colleagues who spoke in support of his new clauses believe firmly in what he was saying and believe that we should have much more of what he regards as a free market. I am not anti-free market. The hon. Gentleman may not realise it, but I spent six years working in the private sector running leisure centres, theatres and so on. I understand how the free market works. I have worked within it as a manager and as a business person. I am opposed to the approach that says that we can beggar our neighbour or have a race to the bottom.

The hon. Member for Shipley challenged Members to go and explain to their constituents why they would argue against the cheapest possible price. I will not argue that we should have the cheapest price for every product on a supermarket shelf if that means sacrificing much-needed employment protection such as the Gangmasters Licensing Authority or sacrificing the standards in British agriculture of which we are rightly proud, such as animal welfare standards and so on. His argument that we should provide the very cheapest by lowering standards on food safety, food provenance, nutrition or employment rights is the argument that has previously exposed to their detriment multinational companies when they have been caught out for exploitation or low standards. We have only to think back, in a wholly different sector, to some years ago and to Nike in the previous World Cup when the very footballs on the field were being produced in sweatshop conditions in developing countries. Was that to its benefit?

I want to speak to our amendments 34 and 35, which stand in the name of my hon. Friend the Member for Edinburgh South (Ian Murray) and myself. Another illustration, if the House wants a more recent case, is the issue of food provenance and safety. No hon. Member can seriously argue that the commercial pressures along a complex supply chain have had no bearing on the entry of significant levels of adulterated meat. That is where a pure free market ideology will take us, and that is why I stand out firmly against the spirit in which the new clauses were tabled.

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[Philip Davies]

Is the Minister saying that she is incapable of making her own decision and exercising her own judgment and that she believes that her role is simply to rubber-stamp what the Competition Commission and a Select Committee say and leave all other critical faculties at home?

[Jo Swinson]

No, but I think that it is very important to listen to Parliament, as I have outlined. Indeed, I think that was the point that some of my hon. Friend’s colleagues made earlier.

A code without an adjudicator is, to borrow an analogy from my hon. Friend the Member for St Ives (Andrew George), like a sports match with a rule book but no referee. The hon. Member for Ogmore (Huw Irranca-Davies) described the climate of fear, which can mean that suppliers are unwilling to come forward, and that is why the independent adjudicator is necessary.

New clauses 1, 2, 4 and 5, which were tabled by a combination of the hon. Members for Shipley, for Christchurch (Mr Chope) and for Bury North (Mr Nuttall), would all restrict the operation of the adjudicator so that it would be less extensive than the coverage provided by the code, either by excluding suppliers above a certain turnover or excluding supplies from outside the EU. I do not think that in principle that is a sensible approach to take. As I have said, the groceries code was put in place by the Competition Commission, after a detailed and thorough investigation, to rectify certain features of the groceries market that were causing long-term detriment to consumers. The adjudicator’s prime purpose is to enforce the code, so it is sensible and coherent that they and the code should have the same coverage.

With regard to the suggestion in new clause 2 that suppliers with a large turnover should be excluded, it is important to point out that the Competition Commission and the Select Committee explicitly considered that and concluded that excluding certain suppliers would not be appropriate. The Committee stated in its report that such an approach “would be impractical” and that because GSCOP applies to suppliers of all sizes, so should its monitoring enforcement. The Committee stated that the adjudicator is the gateway to the dispute resolution procedure, so with no access to the adjudicator large suppliers would have only the courts for redress, not the arbitration process, which is also very helpful. If the evidence from large suppliers on whether retailers are complying cannot be taken into account, smaller suppliers—this point was made earlier by other hon. Members—might also lose out because the evidence might be crucial to the case. According to the Select Committee, large suppliers might be better able to bring widespread potential breaches to the adjudicator’s attention than small suppliers. For all those reasons, it is important that the scope of the adjudicator fits that of the code.

We had many discussions on whether we should restrict who can complain. In Committee and in the earlier pre-legislative scrutiny those discussions centred on whether trade associations should be allowed to complain. We have decided to allow evidence from any source whatever. Ruling out evidence from particular sources would weaken the adjudicator, which I suspect might be the intention of the amendment, given that it has been tabled by those who do not want the adjudicator to be in place at all.

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[Jo Swinson]

No, I am not. We have had an interesting debate, although I suspect it could have been more concise; nevertheless, we are where we are.

The hon. Member for Christchurch (Mr Chope) tabled amendment 27 on commencement. I am happy to make a commitment that the Government intend commencement to take place two months after the Bill receives Royal Assent. It is, however, usual procedure not to set that out in legislation, but to allow the Secretary of State discretion to commence an Act by order.

Finally, I cannot accept, in fact or in spirit, new clause 3, which was tabled by the hon. Member for Shipley. I agree that we do not want statutory offices to continue when they are not needed, and the Government have been working according to that principle. Indeed, in accordance with our general policy on sunsetting, the Bill’s sunset clause—clause 15—means that the Secretary of State must review the adjudicator every three years and may decide, if appropriate, to abolish the office. However, proposing an arbitrary end to the Act is not appropriate. If, in seven years’ time, the problems with large retailers that have led to the creation of the Bill and the adjudicator persist, we would not want the Act to be repealed automatically. I reassure Members that the Secretary of State will be rigorous in reviewing this matter. I believe that that is a much better way to ensure that statutory offices do not continue unnecessarily.

I hope that hon. Members are satisfied with my assurances and explanations, and that they will not press their amendments. If that is not the case, I urge hon. Members to reject the amendments before us.

[Philip Davies]

We have had a good debate. I am grateful to my hon. Friends who have supported my proposals. I am particularly grateful to my hon. Friend the Member for Wellingborough (Mr Bone) who, as he has made clear, came to listen to the debate before making his mind up. He has decided that if new clause 2 was not accepted, we would be in the ludicrous situation whereby retailers with a turnover of more than £1 billion will be subject to the code, but can be taken to the adjudicator by suppliers with a turnover of more than £1 billion who are perfectly big enough and capable of looking after their own interests and taking any disputes to court.

Unfortunately, while my hon. Friend the Member for Wellingborough came to the debate with an open mind, the Minister did not. She made it abundantly clear that she had already decided what the Government’s view was and that the Report stage of the Bill was a completely pointless exercise. Perhaps that is why we have had only three hours to discuss all of today’s proposals. She made it abundantly clear that she was not prepared to listen to the debate or to any arguments because the Competition Commission had told her what she should say and she was not prepared to deviate from that. That makes a farce of having Report stages of Bills. I will allow her to reflect on that.

We cannot allow it to stand that we will be setting up an adjudicator to which multinational companies with a turnover of more than £1 billion will be able to go to make complaints against retailers that also have a turnover of more than £1 billion. We should deliver the best deal for our constituents, not add to the bottom line of big multinational corporations. For that reason, I wish to withdraw new clause 1, but to press new clause 2 to a vote. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 2

Supplier turnover

‘Suppliers are not allowed to refer cases to the Adjudicator and cannot have cases referred on their behalf if their turnover exceeds £1bn per annum.’.—(Philip Davies.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

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[Philip Davies]

What a nauseating love-in! We have this ridiculous idea that the adjudicator will be good for suppliers, good for supermarkets and good for consumers —a painless panacea all round. We are told that suppliers and supermarkets will have money while consumers will pay less. What a lot of old guff. If anyone believes that, they will believe absolutely anything. Basically, this will—