My Lords, we have had a good debate about this important issue for consumers, producers and retailers.

As my noble friend, Lord Grantchester, said at the beginning of the debate, we have a sense of ownership of this bill since we first advocated it and since the adjudicator is refereeing the Code we brought in, in 2009. On that basis of course we are keen, now as the Opposition, to work with Government as the Bill goes through Parliament to make sure the Adjudicator has the best possible chance of success.

As has been said we brought in the Code following the 2008 report by the Competition Commission. In that report the Commission talked about the climate of fear among suppliers in relation to disputes using the code in force at the time. The Commission recommended a new code and an adjudicator to give it teeth.


I was delighted when I met representatives of the large retailers through the British Retail Consortium last week, that they were not opposing the principle of establishing the adjudicator in this Bill. This was reinforced by an email from Waitrose who claim to have supported this move from the outset. This is positive and constructive from the large retailers and reflects what I am sure will be helpful engagement from all stake holders as the bill goes through its legislative journey.

On that constructive basis I hope can get this bill on the statute book as soon as possible so that Adjudicator can get with the this important job and offer suppliers the comfort that not only is the playing field a little more level thanks to the Code, but that there is now a referee to ensure the game is played according to the rules.

But before I move to a wholly constructive mode let me just make one criticism of the Government. Why has it taken so long? Back at the beginning of 2010 the then shadow environment minister Nick Herbert went to the Oxford Farming Conference and said: "While the government dithers the Conservatives are clear: we will introduce an ombudsman to curb abuses of power which undermine our farmers and act against the long-term interest of consumers." At the same time Labour MP Albert Owen introduced a private members bill on the issue. Clearly the policy was worked out and in Opposition the noble Baroness, the ministers party were ready to go with this measure. So why have we waited two years?

Is it the fault of their coalition parties being luke warm? Was it her Secretary of State not managing to make the case for the bill in the legislative timetable? Or was it that Defra, the real policy lead wasnt being listened to by anyone and farmers were being taken for granted by the Coalition?

But that off my chest I will now try to be more positive.


If needed on why needed a code:

X has claimed we dont need the Code. Let me give some examples from suppliers: Salad Grower, Sussex In a nutshell, they (the retailer) have expected us to support their price activity in store by contributing with reduced price returns, to maintain their margin demands. In order to do this it has been made very clear that lack of support could be seen as showing no commitment to the retailer and the potential loss of business, forcing us to drop our prices and support the activity. Interestingly none of this has been put in writing. Hope this summarises the position for you Field Vegetable Grower, Cornwall

They have cut the price of their brassica lines by 20%. I had to agree to it to maintain my supply, but today theyve told me that they are extendingthe promotion for another four weeks, and have asked me to cover the cost ofthe entire promotion. Ive said I just cant do it, so I dont know whatwill happen to my orders now. Brassica Grower, Lincolnshire Their price activity has really cost me. Im now receiving half the price I used to be per head, because the retail price is on a 50p promotion. Egg Producer, Midlands "The retailer has reneged on a commitment to cover the costs of packagingshould they terminate dealings with me at short notice despite this beingconfirmed in an email." These are just a few of the stories we have heard others today from.......

And I know the noble Lords Cameron, Whitty, and Haskins would have liked to be here today and may have had other stories to tell the House.


The noble Lord Grantchester also set out the tests we will use in Opposition as to whether the Adjudicator will be effective.

First, is it a good for growth?

I was delighted to go to the briefing for Parliamentarians last Monday that the minister and her ministerial colleague Norman Lamb MP kindly offered last week. I was even more delighted that Norman described the bill as a growth measure.

My delight knows no bounds when the noble Baroness, in her peroration, confirmed that this bill to establish a quango and a regulator is good for growth. This feels slightly discordant with the rhetoric we hear from the Prime Minister about deregulation being the key driver for growth. But maybe on this, like on

Beecroft, the ministers Secretary of State has won the argument.

Perhaps she could pass on our regards to Vince. Because of course there are times when a market needs intervention to make competition work well, if players in that market become over mighty. I note my noble friend Lord Myners wanted a similar arrangement as in this bill for banks and Im sure is making the point to our friend Ed Balls. I wonder if Vince agrees.

But this bill will be good for growth if it makes the market work better. And similarly with our second test - does it improve things for consumers?

A healthy market will allow new entrants in, will allow innovation in the supply chain, will offer choice and competition, and will thereby push up quality and push down prices.

This takes us to another of our tests - will it be able act on the right things?

Here there is a real question about updating the Code. Much of what we have heard to day are issues for the Code and not the adjudication of the Code.

My noble friend Lord Grantchester and the noble Earl Sandwich talked about recent worries in the dairy industry.[Give examples]

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So whilst the code is out of scope of this bill the role of the Adjudicator in reviewing the operation of the code is not. We think it is in the interests of all stakeholders that the code is kept a living document. It should be reviewed regularly and updated by Parliament.

We will therefore explore in committee whether the Adjudicator should include in the Annual Report any recommendations on improving the code. I will also be seeking a commitment from the Government to commission a serious look at the whole supply chain to large retailers.

When the Competition Commission reported in 2008 it had only been asked to look at the immediate suppliers to supermarkets. Some of these, such as Kraft and Coca Cola are bigger businesses than some of the supermarkets. I think we need to

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look at their suppliers and the whole chain if this process is really going to create a fair deal for small producers.

I would be grateful if the minister in her wind up could give an indication as to what consideration the government is giving to looking at this, so that a better code can then be developed. I note in her opening speech she hinted that she might view it as over regulation - is she willing to ask the Competition Commission to research and test that view?

Our next test is will suppliers risk using it? Here I applaud the government for listening to stakeholders and the two select committees who did some excellent work in pre-legislative scrutiny. The bill is much improved around anonymity and we support that.

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It also allows third parties to make complaints, which is also welcome. I will however want to explore whether the bill needs a half way house if third parties dont work consistently when the operation of this system is reviewed.

Our final tests are: Is it strong enough to force change where needed and will it be seen to be fair on all parties?

These lead to three key issues to debate as the bill progresses. Appeal, independence and fining.

Currently there is no appeal for retailers. If financial penalties are brought in then the bill specifies the courts as the means of appeal. In the interests if fairness, I think we should debate whether the potential damage of naming and shaming is serious enough that retailers should have a straight forward appeal process.
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We will also explore the independence of the adjudicator.

The adjudicator, as set out, will be appointed to and accountable to the Secretary of State. We will explore whether it is better to have the independence and transparency of accountability to Parliament. I know from contact with members from the Other Place who serve on the BIS Select Committee. They would like a say in the appointment. Equally there is merit in an Annual Report to Parliament, including reporting on the operation of the Code and on the operating costs of the Adjudicator. The latter would provide some comfort to retailers who will be funding the operation through the levy.

Then there is the biggest issue. That of fining.

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Within this there are two issues to debate. The principle of whether the adjudicator should have this power from day one, and then, if not, whether the process for introducing for allowing fining is, as the noble Lord Razzall described it, cumbersome.

On the latter, we will bring forward amendments to Schedule 3 in committee, but first will try to win the argument on the principle.

Like the Rt Rev Prelate the Bishop of St Edmundsbury and Ipswich, I think the Adjudicator should have teeth from day one. The referee should have the red card to help to enforce the rules. I hope these powers would never be used because I hope there would never be sufficiently serious breaches to use them, but just having the powers there and ready to go may prevent such serious breaches.

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Incidentally, my Lords, this does raise the question: What does success look like? I hope the minister in a few years time will not abolish it by order if it has not had to do much more than low level arbitration and investigation. As a football fan I don't like it if the ref keeps stopping the play but I would always want one there to enforce the rules of the game.

I also think the power to abolish this new quango should replicate the new processes we are getting used to from the Public Bodies Act.

Like others I am keen on the proceeds of fines to be used imaginative, ideally in investing in innovation in the supply chain.

My Lords, this is broadly a good bill and has been warmly welcomed this afternoon. My promise to you my Lords is to
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engage openly and constructively across the House to improve this bill. I am sure the noble Baroness the minister will do the same and we look forward to helping her get an effective adjudicator up and running as soon as possible.

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