Groceries Code Adjudicator

Rebecca Long Bailey Excerpts

Tuesday 3rd June 2025 Westminster Hall

[Rebecca Long Bailey (Salford) (Lab)]

It is a pleasure to serve under your chairmanship, Dr Allin-Khan. I thank the right hon. Member for South Holland and The Deepings (Sir John Hayes) for securing today’s debate and for his impassioned and articulate speech, which I very much associate myself with. I am quite staggered at how regularly our minds meet on the crisis of capitalism, although we do have different answers to it from time to time. I place on record my role as the chair of the Bakers, Food and Allied Workers Union parliamentary group, and thank them for their extensive work on this issue over the years.

As we have heard from the right hon. Gentleman, the groceries supply code of practice and the adjudicator, despite being well intentioned, miss the mark by quite a large margin in terms of protecting those whom they were designed to protect. The code applies only to designated grocery retailers whose annual turnover is more than £1 billion. It does not apply to indirect suppliers, cover pricing or consider the protection of workers throughout the grocery supply chain; and even with its limited powers, it has not issued a single fine.

Sustain, the alliance for better food and farming, agrees with the right hon. Gentleman that as a result of those deficiencies, the UK’s food system is on a precarious footing. It says that most suppliers producing and processing the food that ends up on our supermarket shelves are vulnerable to unfair purchasing practices, which can send competent businesses into bankruptcy, undermine competition and lead to a worse deal for consumers. As the bakers union says, there is a limit to suppliers’ ability to keep prices down through productivity increases from automation or sourcing cheaper inputs—a key factor in the horsemeat scandal. As a result, there is relentless downward pressure on labour costs, leading to attacks on the pay and conditions of workers employed in and across supply chains.

In the four weeks to 18 May, grocery price inflation has jumped to 4.1%—its highest level since February last year. Of course, the reasons for that are complex, ranging from wholesale costs, to energy and ecological issues, all the way through to problems with the supply chain, but that does not mean that the Groceries Code Adjudicator can continue to ignore the important issue of excessive pricing. Sometimes there is a reasonable cause, beyond the control of the supermarket or supplier, but sadly, sometimes it is a result of aggressive cost cutting, asset stripping, and unsustainable leveraging strategies.

There are long-running accusations that some of the big retailers and manufacturers have been using reduced competition  and market leverage to set prices and, in turn, make excessive profits. For example, in 2023 wholesale food prices started to fall, with the World Bank saying they were expected to drop by 8% by the end of the year; but those falls were not reflected on supermarket shelves for some considerable time, which led to accusations of “greedflation”. Even the Tesco chairman suggested that suppliers might be at fault, telling the BBC at the time that it was “entirely possible” they were using high inflation as an excuse to raise prices unnecessarily. Of course, the major retailers and suppliers refute that, and the Competition and Markets Authority said there was nothing to find—nothing to hang their hats on—but large profits and record executive pay and shareholder payouts were juxtaposed against a backdrop of high food inflation and food insecurity.

Most people were perplexed, and rightly so. The Competition and Markets Authority might not have found widespread market abuse per se, but there remained a fundamental issue of fairness. Is it right to report bumper executive pay and shareholder dividends at times when consumers and the wider supply chain are struggling?

Last November, interestingly, the Competition and Markets Authority’s second report on pricing suggested that manufacturers had been raising the cost of first infant formula milk higher than was necessary to cover inflationary costs. It was not the Groceries Code Adjudicator that instigated action. Some supermarkets themselves responded by slashing the cost of formula, but the fact is that the Groceries Code Adjudicator should have had the powers to intervene earlier and to regularly monitor price fluctuations to identify emerging issues. It should not have taken a one-off CMA investigation to uncover that unscrupulous price hike.

If the Groceries Code Adjudicator cannot investigate and robustly intervene to protect suppliers, producers or consumers when it is clear that the pricing structure of a supermarket or a major supplier pricing structure is putting the short-term interests of shareholders above the wider public interest, and if it cannot respond to emerging issues, outline measures to help families facing hunger and protect the sustainability of the UK grocery supply chain, what is the point of the Groceries Code Adjudicator?

There are a few recommendations that I have made to the Minister on which I would like an update. I hope he will take these points on board. First, a new groceries regulator authority with beefed-up powers should be established with a wider responsibility to protect the sustainability of UK suppliers and the interests of consumers. It must apply to the whole sector, not just to those with a turnover of more than £1 billion. The new regulator should be given the power to introduce price floors and ceilings to protect suppliers and consumers from aggressive pricing tactics and exploitative price gouging. There must be an investigation across DEFRA, the Department for Business and Trade and the Competition and Markets Authority into the impact of private equity acquisitions of UK groceries retailers and manufacturers on the security and sustainability of the UK food supply chain. We must restore and extend sectoral collective bargaining for workers employed in the UK food supply chain. Finally, we must introduce a statutory right to food in UK legislation and address the root causes of insecurity.

As the right hon. Member for South Holland and The Deepings rightly set out, consumers should not be forced to buy their goods from major retailers if they are the only retailers in town. We have to provide an economic framework that supports suppliers and producers and ensures that people enjoy a diversity of shopping experiences and diversity in pricing so that we have a sustainable UK food sector.

[Several hon. Members rose—]