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PARLIAMENTARY DEBATES
HOUSE OF COMMONS
OFFICIAL REPORT
GENERAL COMMITTEES
Public Bill Committee
GROCERIES CODE ADJUDICATOR BILL [LORDS]
First Sitting
Tuesday 11 December 2012
(Morning)
CONTENTS
Programme motion agreed to.
C
LAUSE
1 agreed to.
S
CHEDULE
1 agreed to.
C
LAUSES
2 and 3 agreed to.
C
LAUSE
4 under consideration when the Committee adjourned till this day
at Two o’clock.
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The Committee consisted of the following Members:
Chairs:S
IR
R
OGER
G
ALE
,†H
YWEL
W
ILLIAMS
† Crabb,Stephen (The Lord Commissioner of Her
Majesty’s Treasury)
† Danczuk,Simon (Rochdale) (Lab)
† Eustice,George (Camborne and Redruth) (Con)
† George,Andrew (St Ives) (LD)
† Gilmore,Sheila (Edinburgh East) (Lab)
† Hart,Simon (Carmarthen West and South
Pembrokeshire) (Con)
† Irranca-Davies,Huw (Ogmore) (Lab)
† Kelly,Chris (Dudley South) (Con)
† Luff,Peter (Mid Worcestershire) (Con)
† Mosley,Stephen (City of Chester) (Con)
† Murray,Ian (Edinburgh South) (Lab)
† Parish,Neil (Tiverton and Honiton) (Con)
† Powell,Lucy (Manchester Central) (Lab/Co-op)
† Ruane,Chris (Vale of Clwyd) (Lab)
† Sawford,Andy (Corby) (Lab/Co-op)
† Simpson,David (Upper Bann) (DUP)
† Spencer,Mr Mark (Sherwood) (Con)
† Swinson,Jo (Parliamentary Under-Secretary of
State for Business,Innovation and Skills)
† Uppal,Paul (Wolverhampton South West) (Con)
Neil Caulfield,Kate Emms,Committee Clerks
† attended the Committee
1 2
11 DECEMBER 2012
Public Bill Committee Groceries Code Adjudicator Bill
[Lords]
Public Bill Committee
Tuesday 11 December 2012
(Morning)
[H
YWEL
W
ILLIAMS
in the Chair]
Groceries Code Adjudicator Bill [Lords]
8.55 am
The Chair:Before we begin,I have a few preliminary
announcements.Hon.Members maytake off their jackets
if they so please.Will hon.Members please ensure that
their mobile phones,pagers andsoonare off or switched
to silent?The Committee will first be asked to consider
the programme motion,copies of which are available in
the Committee Room.The debate on the programme
motion is limited to half an hour.
TheParliamentaryUnder-Secretaryof Statefor Business,
Innovation and Skills (Jo Swinson):I beg to move,
That—
(1) the Committee shall (in addition to its first meeting at
8.55 amon Tuesday 11 December) meet
(a) at 2.00 pmon Tuesday 11 December;
(b) at 11.30 amand 2.00 pmon Thursday 13 December;
(c) at 8.55 amand 2.00 pmon Tuesday 18 December;
(2) the proceedings shall be taken in the following order:
Clause 1;Schedule 1;Clauses 2 to 4;Schedule 2;Clauses 5 to 9;
Schedule 3;Clauses 10to26;newClauses;newSchedules;remaining
proceedings on the Bill;
(3) the proceedings shall (so far as not previously concluded)
be brought to a conclusion at 6.00 pmon Tuesday 18 December.
Chris Ruane (Vale of Clwyd) (Lab):Will the Minister
give way?
Jo Swinson:How could I refuse?
Chris Ruane:I thank the Minister for giving way so
early.She will know that the title of the Bill is the
Groceries Code Adjudicator Bill,which is shortened to
the groceries Bill.Many hon.Members have approached
me to say that that sounds silly,so may I offer an
alternative name?As it is a regulatory Bill,could it be
called “Off-trolley”?
JoSwinson:I welcome the hon.Gentleman’s suggestion,
and take it in the spirit in which it is offered.
I am delighted,Mr Williams,to serve under your
chairmanship today and for the rest of the Committee’s
proceedings.I am sure that they will be enjoyable.I
apologise for having a horrible cold;I fear that other
hon.Members,being trapped in a room with me,may
contract it,so the sooner we conclude our proceedings,
the less likely it is that they will have a grumpy Christmas.
The programme motion is appropriate.We want to
ensure proper scrutiny of the Bill,and I hope that the
motion will be agreed and that we can proceed to
discussing the Bill.
Ian Murray (Edinburgh South) (Lab):It is a great
pleasure,Mr Williams,to serve under your chairmanship
for the first time,and I welcome you to the Chair.I have
noproblems withthe programme motion,but Opposition
Members are already disappointed,before we even hit
9 o’clock,to find that we are not sitting on the Tuesday
following 18 December.Given the amount of groceries
that are purchased at this time of year,it would have
been great to sit then,but I will not press the matter to a
Division.
Question put and agreed to.
The Chair:Before we begin our scrutiny of the Bill,a
brief explanation may be useful to hon.Members who
are unfamiliar withPublic Bill Committees.The selection
list for today’s sitting is available in the Committee
Room,and shows the amendments selected for debate,
and those that have been grouped together for debate.
Amendments grouped together are generally on the
same or similar issue;so far all amendments have been
selected.The hon.Member who moves the amendment
makes an opening speech,and proposes the amendment.
Other hon.Members may then speak to the amendments
in that group.When all hon.Members have spoken,and
the Minister has replied,if appropriate,I will again call
the hon.Member who moved the amendment.It will
be useful if hon.Members indicate whether they wish
to withdrawan amendment before the Committee or to
seek a decision.The same applies to the amendments in
the group.
Hon.Members should note that amendments are
voted on in the order they come in the Bill,although
they may have been debated in an earlier group.
Amendments that have been debated are called formally.
As a rule,my fellow Chair and I do not intend to call
starred amendments that have not been tabled with
adequate notice.The required notice in Public Bill
Committees is three working days,soamendments should
be tabled by the rise of the House on Monday for
consideration on Thursday,and by the rise of the
House on Thursday,for consideration on Tuesday.The
House is expected to rise at 5.30 pmon Thursdays.
Finally,there is an error on the amendment paper.
The amendments to schedule 1 have been incorrectly
marshalled in the amendment paper,so hon.Members
should consult the end of the amendment paper for
amendments 1,62,32,33 and 34.I hope that that
explanation is useful.
Clause 1
T
HE ADJUDICATOR
Question proposed,That the clause stand part of the
Bill.
Jo Swinson:I hope that this will be a thoroughly
straightforward clause stand part debate.Clause 1 is so
brief that I can read it to the Committee:
“AGroceries Code Adjudicator is established(see Schedule 1).”
It is a very straightforward clause that says there will
be a groceries code adjudicator.The history of the issue
was outlined in more detail on Second Reading.There
is clearly a great deal of cross-party agreement that the
3 4
HOUSE OF COMMONS
Public Bill Committee Groceries Code Adjudicator Bill
[Lords]
adjudicator should be established.Therefore,I hope the
Committee can proceed to areas where there may not be
as much agreement.
Ian Murray:As the Minister said,there is not much
to debate on clause 1.It just gives me the opportunity to
pay an early tribute to the Minister in her role on the
Bill;she has been both engaging and co-operative so
far.OppositionMembers lookforwardtothat engagement
and co-operation continuing with the Government
accepting all of our amendments.If they could accept
all our amendments now,perhaps could we go home
and have an early Christmas.
I also take the opportunity to pay tribute to my hon.
Friend the Member for Ogmore who has essentially
done all the work on the Bill as shadowMinister for the
Department for Environment,Food and Rural Affairs.
However,the way in which this place works means that
the baton has passed to the Department for Business,
InnovationandSkills for us totake it throughCommittee.
The Bill started as a reasonable one and became a
very good one,with the Minister making the right
moves regarding the Government amendments,to make
it a great one.We nowhave the opportunity inCommittee
to make it a fantastic Bill,after our jovial Second
Reading debate.We have an opportunity to create a
respected,responsible andcredible adjudicator that would
be good for supply chains,for innovation,for consumers
and,most of all,if done properly,for retailers.
There was a great deal of debate in the other place on
clause 1,believe it or not,given that it is only one
sentence.My hon.Friend the Member for Ynys Môn
(Albert Owen) wantedthe clause toread,“the supermarket
ombudsman” when he introduced his private Member’s
Bill a couple of years ago.We will not make that
suggestion.I was very surprised that the clock had not
even turned to 8.56 am before my hon.Friend the
Member for Vale of Clwydpoppedupwithhis suggestion
that the termshould be changed to “Off-trolley”.There
is nobody more qualified in this place to make that
suggestion than the hon.Member for Off-trolley himself.
My noble Friend Lord Knight of Weymouth,when
he took the Bill through the other place,said:
“My delight knows no bounds when the Minister in her
peroration confirmed that this Bill to establish a quango and a
regulator is good for growth.”—[Official Report,House of Lords,
22 May 2012;Vol.737,c.758.]
Therefore,I think clause 1 should stand part of the
Bill.
The Chair:I call Mr Matthew George.
AndrewGeorge (St Ives) (LD):Thankyou,Mr Williams
—Mr Hywel Williams.It is a pleasure to serve under
your chairmanship.
I have only a few brief remarks as this is not a
contentious clause.There is an opportunity to reflect on
the fact that we are at the point of creating anadjudicator
following the Competition Commission’s report in 2008.
The suggestion at that stage was that this should be a
groceries code ombudsman.I know there has been
discussion and heart-searching by many to resolve the
issue and find an appropriate termthat properly reflects
the fact that we want something proactive rather than
reactive,which would be the impression if the regulator
were referred to as an ombudsman.
A variety of terms has been considered during the
process.Of course,only the hon.Member for Clwyd
West could come up with “Off-trolley”.
Chris Ruane:Vale of Clwyd—Matthew.
The Chair:Order.
AndrewGeorge:Sorry,but perhaps the hon.Gentleman
coming up with such a suggestion says something about
him,as the hon.Member for EdinburghSouthsuggested.
At the end of the day,“adjudicator” is a compromise.
There is not a term that will satisfy all those who want
to ensure that this is an effective regulator.Whether
“regulator”,“investigator”,“ombudsman”or “adjudicator”
is used,we all know that there is significant cross-party
consensus to try to take the matter forward,and it is
marvellous to be at that point.We want a watchdog
with genuine teeth to make sure that it bears down on
the problems of unfair trading that the Competition
Commission identified in its report.
Sheila Gilmore (EdinburghEast) (Lab):The important
thing is what this person does and not necessarily what
we call the office.
Andrew George:Absolutely,and I was not going to
detain the Committee any longer on that point.I am
delighted that successive Ministers,in advance of this
stage of the Bill,have introduced the opportunity to
protect the anonymity of those who bring evidence to
the adjudicator and,as we will discuss later,have ensured
that investigations can be instigated on the back of
market intelligence,providing protections to those who
suffer fromthe kind of unfair dealing that we knowhas
beenhappeninginthe sector.I alsowelcome the Minister’s
wisdom in proposing amendments that introduce the
availability of fining,which I am sure the adjudicator
will take advantage of when the post is taken up.Thank
you for allowing me to make a brief contribution,
Mr Williams.
Huw Irranca-Davies (Ogmore) (Lab):I welcome the
opportunity to serve under your stewardship again,
Mr Williams,on this important Bill.Following the
contribution by the hon.Member for St Ives,it would
be helpful to pay great tribute to his contribution over
many years,to the organisations that he has pulled
together to garner support for the provisions,and to
other Members as well.I say that now to get it out of
the way,so that I do not have to repeat it later in the
Committee.
Andy Sawford (Corby) (Lab/Co-op):I join my hon.
Friend in paying tribute to the hon.Member for St Ives,
and I wonder whether he read the hon.Gentleman’s
comments last September in Farmers Weekly—I am a
regular reader of the magazine.The hon.Gentleman
remarked that the Government have dragged their feet
on this,observing that there is some reluctance to act.
He said:
“Every week the government fails to act,farmers are finding
themselves in more difficulty.”
In the spirit of unanimity,I fully agree.I also pay tribute
to my hon.Friend the Member for Ogmore,who has
done a fantastic job and is very much the embodiment
of the fact that this is Labour’s achievement.
5 6
11 DECEMBER 2012
Public Bill Committee Groceries Code Adjudicator Bill
[Lords]
Huw Irranca-Davies:I thank my hon.Friend.There
is far too much bonhomie in this Committee already.I
concur with the tribute paid to the hon.Member for St
Ives and with his urging the Government to get on with
it and deliver.It is important,in taking the Bill through
the Committee,that all Members reflect the will and the
spirit on Second Reading to improve the Bill and turn
it,as my hon.Friend the Member for Edinburgh South
said,into a very good Bill rather than a half-decent one.
We also want to do so in a timely manner and get it on
to the statute book as soon as possible.
Mr Mark Spencer (Sherwood) (Con):I just wondered
if the hon.Gentleman would take the time to recognise
that,while he is waffling on,farmers are still waiting.
Huw Irranca-Davies:Indeed.That is why we have an
out-date agreed,in very short order,for the Committee.
I hope that then,if the Bill meets with our sovereign’s
approval,we will have Royal Assent in very short order
as well.However,we doneedtogothroughthe democratic
process.
I want to ask the Minister about this issue:on Second
Reading,my hon.Friend the Member for Ynys Môn
reiterated his view that this role was,more correctly,
that of an ombudsman.I know that,between then and
now,the Government have listened to many comments
made on Second Reading,particularly those about
putting financial penalties on the face of the Bill;that is
hugely welcome.We do not intend to argue the toss over
what the name should be,but can the Minister put this
issue to bed once and for all,by clarifying whether there
is some legal or technical distinction between an
ombudsman and,as we have here,an adjudicator,and
other terms of reference for this regulatory approach,
which has led the Government to the conclusion that an
adjudicator is the most appropriate type of regulator?
Are there fears about the phraseology to do with
ombudsmen that have led her stalwart officials to say,
“Don’t go near that,because it will lead us down a
different track”?It would be helpful for the sector,from
grocery providers through to primary producers,to
know exactly what the Government’s reasoning is,and
whether,in the Minister’s mind,it limits the scope of
the role that we have an adjudicator rather than an
ombudsman.
Jo Swinson:I amhappy to echo the tributes that have
already been paid in this short debate to the many
individuals who have campaigned,argued and worked
tirelessly,for many years,both within this House and
outwith it,to make sure that we have a groceries code
adjudicator.I am delighted that my hon.Friend the
Member for St Ives is on the Committee,as I know he
has been working on this issue for many years.The hon.
Member for Ynys Môn has been mentioned.He of
course had a private member’s Bill on the issue,and
when I saw the list of Committee members,I thought
that it was a shame that he was not it;no doubt he will
contribute further on Report.Perhaps he has been
detained by an alternative Committee.
Ian Murray:Just for the record,my hon.Friend the
Member for Ynys Môn is a member of the Panel of
Chairs,andtherefore,although—unlike most other people
in the room—desperate to be on the Committee,was
barred frombeing so.
Jo Swinson:We started off with such consensus,yet
theshadowMinister has just suggestedthat manyMembers
in the roomwere not desperate to be on the Committee.
I know for a fact that that is not the case for the vast
majority—certainly the vast majority of Government
Members;he can speak for the Opposition Members if
their feelings are any different.It is very helpful for the
Committee to know why the hon.Member for Ynys
Môn is unfortunately unable to play a role in these
proceedings;I am sure that he will do so on Report
given his strong contribution on Second Reading.
I amalso delighted that some of the newer Members
of the House are on the Committee,including the hon.
Member for Corby.I have not had many dealings with
him before now,although when he was sworn in I was
on the Bench and of course nodded and so on.I also
welcome the hon.Member for Manchester Central.It is
great for us to get to knowsome of the newer Members
of the House.This Committee may not be the truest
representation of the degree of consensus that usually
exists either in Public Bill Committees or in the House
more generally,but I am sure that,none the less,it will
be a welcome introduction to the joy of Committee
proceedings.
We have begun the debate with a degree of good
humour,and that bodes well for our deliberations over
the next fewhours,later this week and next week.Sadly,
we will not be here on Christmas day itself,as the
shadow Minister said,as we will have concluded our
proceedings inadvanceof that.Members of theCommittee
may,however,go away for Christmas with a little present
to remind themof the proceedings:my cold.
9.15 am
On the issue raised substantively on the choice of
name between ombudsman and adjudicator,we have
ombudsmen working on a whole range of issues that
look after consumers’ interests.We felt that a different
name may be better in this case because although there
will be benefit to consumers because market practices
created a lack of innovation in the market place,this
individual will primarily look after the interests of
supplier businesses.To create clarity,we chose a different
name,but I reassure the Committee that there is no
difference in powers.Adjudicator is a positive name;it
does not screamconflict.That is helpful becausedeveloping
a good relationship with both the supermarkets and
suppliers will be crucial for whoever takes up the role.I
hope that that answers the Committee’s questions and
that they will be pleased for clause 1 to stand part of the
Bill
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Schedule 1
T
HE
A
DJUDICATOR
Ian Murray:I beg tomove amendment 1,inschedule 1,
page 12,line 8,at end insert
‘following a pre-appointment hearing by the Business,Innovation
and Skills Committee of the House of Commons.’.
7 8
HOUSE OF COMMONS
Public Bill Committee Groceries Code Adjudicator Bill
[Lords]
The Chair:With this it will be convenient to discuss
amendment 62,in schedule 1,page 12,line 8,at end
insert—
‘(4) The Adjudicator’s appointment will also be subject to
approval by—
(a) the Business,Innovation and Skills Select Committee;
and
(b) the Environment,Food and Rural Affairs Select
Committee;or
(c) their respective successor committees from time to
time.’.
Ian Murray:Now we will start on the line-by-line
scrutiny and get to the crux of the Bill.Amendment 1
was tabled by my hon.Friend the Member for West
Bromwich West (Mr Bailey) and the hon.Member for
Worcester (Mr Walker).They are not on the Committee
and are therefore not able to move the amendment,but
their amendment is similar to amendment 62.
First,I pay tribute to the Business,Innovation and
Skills Committee and the Environment,Food and Rural
Affairs Committee—as they are meeting just through
the wall,if I said that loudly enough,they may have
heard it live.The amendments demonstrate a commonly
held principle:Select Committees do an important job
in scrutinising legislation,scrutinising the Government
andproducingtheir ownreports andinquiries toinfluence
the House’s thinking.We hope to persuade the Minister
to allowthe appropriate Select Committees to look into
the appointment of the adjudicator because it will be
one of the key roles created in this Parliament.That
must bring confidence to the appointment,but that
should be done under proper scrutiny,with other
Committees of the House allowed to look into the
appointment properly.
The hon.Member for St Ives has spoken already on
the Bill,and I pay tribute to his work,as I did on
Second Reading—although I did so reluctantly after
being barracked by the Government side.He said that
the Bill has cross-party support,and on that basis we
believe that cross-party Select Committees should look
at the appointment of the adjudicator.Lord Knight,
the shadowEnvironment,FoodandRural Affairs Minister
in the other place,put forward this amendment as well.
Ultimately,it is about the adjudicator’s accountability.
We know that accountability breeds responsibility,and
our amendment seeks to achieve that by ensuring that
the Government’s recommendation for the important
position of adjudicator is subject to confirmation by
Joint Committee of the relevant departmental Select
Committees.We propose to add to schedule 1,page 12,
line 8 that the appointment will also be subject to
approval by the BIS,EFRA and respective successor
Select Committees.
I appreciate that the Minister may not want to accept
the amendment,but perhaps if she were to come back
on Report to propose that a cross-section—or any
make-up—of those Committees would come together
to approve the appointment,we would accept that.
Crucially—the Minister may not know it in depth—the
2010 Conservative manifesto stated:
“To increase the scrutiny of quangos,we will give Select
Committees the right to hold confirmation hearings for major
public appointments including the heads of quangos”.
The adjudicator heads a quango,to all intents and
purposes,so it seems to fit neatly into that.The coalition
agreement,which may be closer to the Minister’s heart,
states:
“We will strengthenthe powers of Select Committees toscrutinise
major public appointments.”
In mentioning major public appointments,the coalition
agreement goes even further than talking about the
heads of quangos.I encourage the Minister to set out
clearly why such scrutiny would not take place in this
instance.
I wrote tothe Minister’s predecessor,the hon.Member
for North Norfolk (Norman Lamb),on 9 July to ask
him to consider whether the Select Committees might
look at the appointment.He wrote back to me on
9 July:
“The Government supports the principle of suitable Parliamentary
oversight of key public appointments.”
He went on to say that
“the Government believes that posts which should be subject to
pre-appointment hearings will generally be senior non-executive
roles which either”—
it falls into three categories—
“play a key role in regulating Government,play a key role in
protecting and safeguarding the public’s rights and interests…or
where it is vital for the reputation and credibility of the public
body in question”.
The letter goes on to say:
“The Government does not consider that the Groceries Code
Adjudicator,though very important to the groceries sector,would
fall into these categories.”
He concluded:
“I hope this explanation makes the position clearer”.
We are fond of the Minister’s predecessor and we
spent many heady days andnights withhiminCommittee
debating the Enterprise and Regulatory Reform Bill
clause by clause and point by point.We were so fond of
him that we bought him a copy of “Fifty Shades of
Grey” at the end of proceedings,because it had been
referred to five or six times in that Committee.I hope he
has read it,and I hope he will be questioned on it at
some point in the House.The proceedings of that
Committee demonstratedthe level of cross-party support
for some of our amendments,and I hope that the
current Minister will bring similar qualities to this
debate.
Huw Irranca-Davies:I echo what my hon.Friend has
said.The Government have shown that they are listening
when it comes to the Bill,particularly because new
Ministers are overseeing it.Regardless of the previous
Minister’s answer to my hon.Friend,parliamentary
oversight of the appointment is in the interests of open
and transparent government.Given the importance of
the groceries code adjudicator,Parliament shouldoversee
the appointment not least to ensure that the candidate
satisfies the seven principles of public life.I hope that
the Government are listening,because by being open to
our reasonable argument,the new Ministers would
demonstrate a strong mark of independence.
Ian Murray:I amgrateful to my hon.Friend for that
intervention,and I will say three things in response.
First,the groceries code adjudicator will play a critical
role,and given the controversy that even the suggestion
9 10
11 DECEMBER 2012
Public Bill Committee Groceries Code Adjudicator Bill
[Lords]
[Ian Murray]
of such a role has caused in some parts of the groceries
sector,maximumparliamentaryscrutinyof theappointment
is important.Secondly,in the Scottish Parliament 400
miles away the Government are closing downcommittees,
closing down scrutiny and closing down debate.That is
resulting in very bad policy and very bad legislation,
which shows that parliamentary scrutiny is worth while.
Finally,the Government have instigated such scrutiny
for other appointments,so we are not necessarily arguing
about a principle.The Government set out in the
Conservative manifesto and the coalition agreement
that they would allow parliamentary scrutiny of
appointments toall major public bodies,whichestablished
the principle.In the amendments,hon.Members are
arguingonacross-partybasis that the Business,Innovation
and Skills Committee should consider the appointment
of the groceries code adjudicator.
Andy Sawford:Not being as familiar with the hon.
Member for North Norfolk,I enjoyed hearing his
correspondence with my hon.Friend.I agree with the
hon.Member for North Norfolk that there are three
important reasons why Select Committee scrutiny of
public appointments is appropriate.Will my hon.Friend
clarify whichof those reasons are relevant tothe groceries
code adjudicator?As I understand it,the role would fall
into two of those three categories.
Ian Murray:Yes.I congratulate my hon.Friend on
his wonderful electionandhis appointment tothe House.
Given that this is his first Committee I hope that he will
be as enthusiastic a Member of Parliament at the end of
it as he is at the start.He raises an important point.He
is right.I do not think that anyone on the Committee
could argue that the adjudicator will play a key role in
regulating Government because that is not the role of
the adjudicator.We could argue tenuously that the
adjudicator is regulating a Government policy in terms
of the groceries code,but certainly not regulating
Government.My hon.Friend is right to say that the
adjudicator probably falls into only two of the three
categories.I hope that we are choosing the same two.
Will the adjudicator
“play a key role in protecting and safeguarding the public’s
interests and rights particularly in relation to the actions and
decisions of Government”?
The first part of that qualification is quite important.
The adjudicator is charged with upholding the code and
the code is in place to look after the direct suppliers of
the large retailers.If he can look after the direct suppliers
of large retailers we have lots of evidence fromthe Food
and Drink Federation and other bodies that that will
create innovation,which will hopefully drive down costs,
make the supply chains more efficient and put a bit of
certainty into the industry.So certainly the adjudicator
plays a key role in protecting and safeguarding the
public’s rights and interests.
Crucially,the third qualification put forward by the
hon.Member for North Norfolk is
“where it is vital for the reputation and credibility of the public
body in question that the post holder is,and is seen to be,
independent of Ministers and Government.”
There is no doubt that the reputation and credibility of
the adjudicator will be key,for the sake not just of the
suppliers andthe customers,but of the retailers—although
the retailers would doubtless be happier if we scrapped
the Bill tomorrow than if it went on to gain Royal
Assent.It is crucial that there is confidence in the
appointment of the adjudicator.That confidence could
be underpinned by the Select Committee undertaking a
proper scrutiny process of the individual involved.My
hon.Friend the Member for Corby is absolutely right.
The adjudicator falls under two of these points and
tenuously falls under the third.
At the end of letter the hon.Member for North
Norfolk says:
“I hope this explanation makes the position clearer”.
Given the context of his letter it has probably made the
position slightly unclear.
Neil Parish (Tiverton and Honiton) (Con):Does the
shadow Minister agree that the fact that the major
retailers are not very keen,at the very least,for the
adjudicator to come forward means that we need to get
a very strong individual into the post given the power of
these major retailers?One in particular,which I will not
name here but everybody knows which it is,has 32%
of the retail trade in the country.It seriously needs to
be taken to task sometimes and it will need a strong
adjudicator to do that.
Ian Murray:That is an important intervention.All
such interventions are welcome because “every little
helps”.I have never been taken in by petty advertising
as youcanprobablytell,Mr Williams.The hon.Gentleman
said that we need a strong adjudicator.The adjudicator
needs to be not just strong,but very knowledgeable.
These are complex processes.He will need to know not
only about the retail market but about the practices of
the large retailers.This Committee should not simply
bash retailers for the next six sittings.That is not what
we are here to do.But I amsure the retailers themselves
would agree that the adjudicator has a very important
role to play and they would have more confidence in the
adjudicator if he knew about the industry and how the
supply chains worked.That will make the adjudicator
better.
Chris Ruane:My hon.Friend is quite right to focus
on the buying policies of individual supermarkets.Are
we as a Committee aware of that?Do they buy locally,
in what areas and at what prices?Is there any way that
we can compare each supermarket,highlight,praise
and thereby spread best practice?
9.30 am
Ian Murray:My hon.Friend managed to get through
an intervention without using the words “Off-trolley”,
which is surprising to me and,I amsure,the rest of the
Committee.However,he makes a critical point,because
it is difficult to dig down into supermarkets’ pricing and
supply chains.Indeed,a report by Which?from a few
weeks ago showed that it is difficult to determine the
actual cost of the average shopping basket despite all
the comparison websites.We have seen issues around
buy-one-get-one-free offers,labelling and proper pricing,
and I amnot sure whether anyone knows how to get to
the bottom of them.I hope that the adjudicator,when
dealing with some of the investigations that it may
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conduct,will be able to dig down into that,because
there is no doubt that those kind of purchasing issues
and offers have a direct impact on the supply chain.We
have heard many stories from investigations by the
Office of Fair Trading that high-level discounted offers,
which allow the supermarkets to compete with each
other,have an impact on suppliers.Indeed,the suppliers
could be paying for those offers.We need a strong
adjudicator that can look into those aspects of the
system.
Such issues are nothing new,and,adding to what my
hon.Friend the Member for Ogmore has already said,
the Treasury Committee will have a confirmationhearing
into the new Governor of the Bank of England.There
is nodoubt that the newGovernor is amajor appointment,
but we should put the adjudicator on the same level.
There are confirmation hearings for members of the
Office for Budget Responsibility,and thank goodness
that there are given howits figures for the economy have
been roundly brought down over the past few Budgets
and autumn statements.It is right that those individuals
have a confirmation hearing.
Huw Irranca-Davies:An important aspect of the
adjudicator’s role is the ability of the individual appointed
to be trusted right across the sector,not just by primary
food producers and the supply chain,but also by the
grocery sector.The job description lays out clearly the
range of experience that the individual will have,but
trust is absolutely essential.That is why the Business,
Innovation and Skills or Environment,Food and Rural
Affairs Committees,or,as inamendment 62,anysubsequent
Committees,should be able to judge that individual not
simply on their merits and qualifications,but also on
whether they command respect across the industry to
give impartial,but proactive,judgments on the sector.
Ian Murray:That is the point that I have been trying
to make.When the Bill receives Royal Assent and the
adjudicator is appointed—hopefullythroughaconfirmation
hearing—I hope that they have no work to do.I hope
that the supermarkets will comply with the Groceries
(Supply Chain Practices) Market Investigation Order
2009,that they respect the adjudicator and that they
think that the adjudicator has the power,the credibility
and the teeth to be able to hold the supermarkets to
account in a proactive manner,so that they do not have
to investigate breaches of the code.
Huw Irranca-Davies:I agree that it would be ideal if
the individual and their office had ostensibly no work to
do,but another good reason to put them in front of a
Committee is that the salary commanded is up to
£120,000 a year.That on its own,from the taxpayers’
point of view,would merit some sort of hearing to
judge their appropriateness and suitability for the role.
Ian Murray:Given the amount of public money
involved in the adjudication and given that large retailers
will be paying the salary of the adjudicator,it is important
to ensure that they are the right person for the job.I also
hope that the adjudicator will pay PAYE and national
insurance.
Peter Luff (Mid Worcestershire) (Con):Can the hon.
Gentlemanclarify whether amendment 62 wouldcommit
the BIS and EFRA Committees to meet together for a
single pre-scrutiny hearing,or would they be obliged to
meet separately?
Ian Murray:That is a very good intervention,and I
mentioned that point at the start.Our amendment
seeks todiscover whether the BISandEFRACommittees,
or any successors,could hold separate hearings or come
together for some special sitting.If the Minister will
come back on Report with a formulation of how she
thinks that might work,we would happily accept that.
We tabled the amendment merely to say that,as a
starting point,the BIS and EFRA Committees should
look at this,either separately or together,and it is for
the House to decide whether to go forward with that.
Mr Spencer:Will the hon.Gentleman clarify what
the process would be if those Committees rejected the
suggested candidate,and how many times they could
reject a candidate?
Ian Murray:Again,it would be for the Minister to
decide on the process.I would hope that the personal
specification for the appointment of the adjudicator
would be strong enough to bring forward candidates
who were good enough to do the job.I would also hope
that a candidate at a hearing of the BIS or EFRA
Committees,or otherwise,would instil confidence in
the Committees and the House in their appointment.
If we ended up with the Select Committees not giving
their blessing to the appointment,we would have to go
through a process of finding someone else,or deciding
whether the original candidate could be brought back
to the Committees after a period of training or with
further information.Admittedly,that would lead to
problems,but the very fact that the hon.Gentleman is
raising the issue shows that the Select Committees
should consider the appointment.
Mr Spencer:The shadow Minister is suggesting a
rubber-stamping exercise.Surely the Select Committees
already have the power to hold the successful candidate
to account through their current working.I wonder
whether theamendment is just another layer of unnecessary
administration.
Ian Murray:Our amendment says,“subject toapproval
by”.The hon.Gentlemanreferredto“rubber stamping”,
and if the Select Committees gave approval to the
appointment,they would be rubber stamping it,but
there should be a robust process to allow the Select
Committees to have that input.
Huw Irranca-Davies:It is important to note that the
two amendments are slightly different.The second is
much more robust in that it would require approval to
be sought.There is a precedent for that in other
appointments that require the approval of a Select
Committee.That is important in such a vital role,and I
would be surprised if the BIS and EFRA Committees
did not want to have that power to send a positive
message to the Government that the individual was the
right one or,as we have seenwithprevious appointments,
that they were wrong and that the Government should
think again.
Ian Murray:Absolutely.We do not want to find that,
three months down the line,the adjudicator has lost all
respect and credibility with the industry,because we
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[Ian Murray]
would be left with a lame duck adjudicator unable to
uphold the code that is supposed to make the supply
chain better.
Andy Sawford:The point is very well made by my
hon.Friend that a range of organisations want a real
assurance about the adjudicator’s teeth.I draw his
attentiontothe remarks just last weekby Harry Cotterell,
president of the Country LandandBusiness Association,
who welcomed the news that fines can be imposed and
said:
“Now it is up to the adjudicator to ensure this works in
practice and the supermarkets do not ride roughshod over the
new system.”
That concern was clearly expressed earlier.The public,
businesses,people in the countryside and farmers want
that absolute assurance,and I am confident that the
Select Committee process can add to that.
Ian Murray:My hon.Friend makes the most critical
point yet,because the other place has given,as will
amendments that the Minister will move today or later
this week,real teeth to the adjudicator.We could add to
the adjudicator’s remedies a specification that they could
shoot retailers at dawn,but if the adjudicator is unable
proactivelyandefficientlytotake forwardaninvestigation,
the remedies are irrelevant because the investigations
will be irrelevant.The adjudicator nowhas real teeth to
do something about that,and Harry Cotterell has made
that point.We must ensure that now that we have
remedies with teeth,we have an adjudicator with the
ability to take those remedies forward.
Before the Minister pops up and says it is all very well
talking about the Governor of the Bank of England
and the members of the Office for Budget Responsibility,
I mention again the Enterprise and Regulatory Reform
Bill,which has just gone through this House and is in
the other place.The specifications in that Bill are to
merge the Office of Fair Trading and the Competition
Commission to create the Competition and Markets
Authority.The appointment of the chair of the CMA
will be ratified by the BIS Committee.It seems to me
that that post is very similar,in its level of responsibility,
to the adjudicator.I cannot understand why that
appointment will be ratified by the BIS Committee but
that of the adjudicator will not be.
Lord Knight of Weymouth also proposed this
amendment in the other place,where it was rejected.It
seems to me a procedural matter that would be easy to
resolve.The BISCommittee couldhave heldthe ratification
hearing in the time it has taken me to propose the
amendment.I do not think it would be an onerous
process and it could be done fairly quickly.
The amendment aims to ensure proper due diligence.
We cannot undertake due diligence after the appointment.
We will not know if the adjudicator has the skills and
knowledge to do the job properly until after the event.
It would be in the adjudicator’s interest—something we
have not spoken about yet—to have gone through a
robust process,because it would give the individual
personal credibility in saying to suppliers and large
retailers,“I amthe adjudicator refereeing GSCOP.” We
want to ensure that it can be refereed properly.
To rewind to the start of the Committee,when my
hon.Friend the Member for Corby quoted the hon.
Member for St Ives on how long it has taken us to get
here,I think that,given that lengthy period,we should
spend just a little more time to allow the adjudicator
appointment toberatifiedbytheBISor EFRACommittee,
or a combination of the two,to ensure that,having
gone throughthe lengthy process,we nowget it absolutely
right.
Peter Luff:The Government need not be unduly
concerned.I will not be contributing to the Committee
at length or frequently.However,as a past Chairman of
boththeBISCommitteeandtheoldagricultureCommittee,
nowthe Environment,FoodandRural Affairs Committee,
I have a vested interest in the amendment.
My message to the hon.Gentleman who moved his
amendment so fluently—and at such length—is that the
Committees are right to want this power.If they do not
get it,they can take it anyhow.If the Government reject
the amendment,the Committees can hold the hearing
anyhow;they have the power to summon people and
papers.Were I the Chairman of either of these two
Committees,whatever the Minister says when winding
up today and whatever is in the Bill at the end of the
process,I would summon the adjudicator candidate
and ask himor her to justify their appointment.It is up
to Select Committees to assert their power in this place,
not just to the Executive to give themthe power.
Ian Murray rose—
Stephen Mosley (City of Chester) (Con) rose—
Peter Luff:I give waytothe hon.Member for Edinburgh
South.
Ian Murray:The hon.Gentleman brings a great deal
of experience to the Committee.We are delighted he is
on it and look forward to his contributions.Surely,the
point is that if the adjudicator is appointed and then the
BIS Committee,having asked the adjudicator to come
before it,decides it is a dreadful appointment,there is
no mechanism for the appointment to be looked at,
stopped or amended.If the adjudicator is in place and
is called retrospectively by the BIS Committee,which
concludes they are the wrong person for the job,there is
no mechanismfor the appointment to be changed.
Peter Luff:The hon.Gentleman makes an important
and interesting point.I think the knowledge that the
Select Committee would declare in advance,irrespective
of the Government’s candidate,that it would summon
him or her,would be a powerful discipline on the
Government and a real sanction on the appointment.
An adjudicator who lost the confidence of the two
relevant Select Committees would be ineffective.The
Government would probably want to wait for the Select
Committees’ decision once the announcement was made
anyhow.Select Committees must assert themselves;they
must take the power they can for themselves.They have
the power to do that irrespective of the hon.Gentleman’s
amendment.I give way to my hon.Friend the Member
for City of Chester.
Stephen Mosley:The hon.Member for Edinburgh
South made exactly my point,so I will sit down.
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9.45 am
JoSwinson:I ampleasedtorespondtothe amendments
moved by the hon.Member for Edinburgh South,one
of which is also in the name of the hon.Member for
West Bromwich West,the Chair of the BIS Committee.
As ever,it is wonderful to hear frommy hon.Friend the
Member for Mid Worcestershire,and I will perhaps risk
incurring the wrath of the Whips by saying that I hope
his contributions are not rare.He has lot to offer and is
possiblythe best placedpersontospeakonthe amendment
givenhis former roles as Chair of relatedSelect Committees.
Select Committees do a fantastic job.Whether it is
Business,Innovation and Skills,Environment,Food
and Rural Affairs or any other Select Committee,their
scrutinisingandchallengingof theGovernment is absolutely
vital.Frommy time as a member of the Environmental
Audit Committee,I knowhowimportant that relationship
is.It is vital that the Government take Select Committees
seriously.We are committed to increasing transparency
and accountability in the public appointments process
andtostrengtheninghowSelect Committees canscrutinise
major appointments where it is warranted.The issue
here is about whether this appointment is of sufficient
importance to warrant that level of scrutiny.I appreciate
that the amendments give us the opportunity to have a
good debate on the issue,but,in any event,it would not
be normal practice to write such a thing into the Bill.I
amnot aware that the previous Government ever wrote
intolegislationwhat pre-appointment scrutiny is required,
so I amnot sure whether doing so would be the best way
of achieving the amendments’ aim.
Huw Irranca-Davies:Accepting the argument that it
is normally rare,but not unique,to have such a proposal
writtenintothe Bill,does the Minister have analternative
suggestion?Her Department is currently going through
the process of appointment,and there is merit in pre-
ratification—theminimal approachtakenbyamendment 1,
rather thanthe maximal approachtakenbyamendment 62.
Is there some way,throughguidance or internal procedure,
that that pre-ratification by one of the appropriate
Committees could be sought?
Jo Swinson:I hear the hon.Gentleman’s arguments
and will come to those points.He is right to draw the
distinction between amendment 1 and amendment 62
and between scrutiny and confirmation hearings.The
confirmation hearing is rightly reserved for the most
important roles,such as the Governor of the Bank of
England,and I will mention the significant differences.
The hon.Member for Edinburgh South suggested that
the role of adjudicator is on a par with the Governor of
the Bank of England,but I would gently challenge that.
There is a difference between the confirmation and
scrutiny hearings.Indeed,members of the Business,
InnovationandSkills Committee already have experience
of that difference in the slightly troubled scrutiny of the
director of the Office for Fair Access,where the Select
Committee played its role,but the Secretary of State
none the less decided that the preferred candidate was
the right person for the job.There are circumstances
where it is appropriate for a Select Committee to take a
view,but not necessarily to have a veto over a particular
candidate.I hope that all hon.Members will accept that.
Ian Murray:Will the Minister give way?
Jo Swinson:I amin a generous mood.
Ian Murray:I am grateful to the Minister.I want to
follow up on what my hon.Friend the Member for
Ogmore said.It is striking that amendment 1 comes
from the Chairman of the Business,Innovation and
Skills Committee.Some Opposition Members may find
amendment 62 rather strong.The Chairman of the BIS
Committeeis askingthis Committee,throughamendment 1,
for the chance to have at least a look at the adjudicator.
Jo Swinson:Indeed.I echo the points made by my
hon.Friend the Member for Mid Worcestershire.It is
certainly up to Select Committees if they want to assert
their authority,and the Business,Innovation and Skills
Committee,in tabling amendment 1,has made clear its
desire to be involved in the adjudicator’s appointment.
Select Committees should be closely involved in the
appointment of individuals to such positions by being
able to summon themand ask themquestions.Whether
or not that means pre-confirmation hearings,I hope
that whoever is appointedas the groceries code adjudicator
will have a productive and close working relationship
with Select Committees and be available whenever they
are keen to see themfor an update.
Huw Irranca-Davies:I want to tempt the Minister to
go further.I think she has some sympathy at least with
the spirit of the first amendment.The critical difference
between that amendment and the approach taken by
the former BIS Committee and the hon.Member for
Mid Worcestershire,with his great experience,is that it
is a clear and expressed desire of the BIS Committee to
havepre-appointment hearings—not confirmationhearings.
As my hon.Friend the Member for Edinburgh South
said,it would be of benefit to the individual if in that
pre-appointment—rather thanpost-appointment—hearing
the Committee could validate,and say this is the right
woman or man for the job.
Jo Swinson:I thank the hon.Gentleman for his
intervention.I quite understand the distinction he draws
between the approach outlined by my hon.Friend the
Member for Mid Worcestershire and amendment 1.It
would be helpful if I outlined to the Committee the
procedure that is in place for making these decisions.It
is a systemthat was agreed by the previous Government
for working out and agreeing between Parliament and
the Executive which public appointments would be
subject toapre-appointment scrutinyhearing.Adocument
entitled“Pre-appointment hearings bySelect Committees:
Guidancefor Departments”—ahelpful title—was published
by the previous Government in August 2009.The
Government follow those guidelines.
Under that system the Secretary of State discusses
andagrees withthe Chair of the relevant Select Committee
which appointments will have this kind of hearing and
the Cabinet Office then publishes a list of those
appointments.That current system works well and the
Government donot thinkthere is anyparticular advantage
in formalising that process in legislation,and no real
case for doing so in respect of individual roles such as
that of the groceries code adjudicator.Obviously this
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[Jo Swinson]
is a role that did not exist back in 2009,and so it is
important that those kinds of discussions can go on
outside the list that has already been drawn up.
Andy Sawford:I sense that there may be some difference
of view,which I hesitate to say given the unanimity on
many points so far in the debate,on the importance of
this post holder.The Minister is quite right to say that
we would all agree that the post is not as significant in
our national life as the Governor of the Bankof England.
Nevertheless this post is very important to so many
people.Could I draw her attention to the trade union
perspective which is always worth listening to?The
president of the National Farmers Union,Peter Kendall,
said only last week:
“It is vital that parliament ensures the adjudicator is equipped
with the full range of powers to do his or her job effectively.”
The reason I noted that comment was because he talks
about Parliament rather thanGovernment.That is critical
here.Parliament has a vital role and that is why the
Select Committee is so important.
Jo Swinson:I thank the hon.Gentleman.I do not
thinkthere is adifference of opinionabout the importance
of this role,except perhaps with the shadow Minister
who places the adjudicator on the same par as the
Governor of theBankof England.But thehon.Gentleman
accepts that there is a difference between those two roles
andthe place theyhave inour public life.The Government
believe that this is a very important position,particularly
within the grocery sector and those related groups such
as the NFU,which is closely affected by everything that
happens in that sector.
As set out in the letter frommy predecessor,my hon.
Friend the Member for North Norfolk,there are three
criteria for determining which posts should be subject
to pre-appointment hearings.The first are posts which
“play a key role in regulating Government”.
There has been general acceptance that that does not
apply in this case.The shadow Minister attempted to
make a tenuous link but I think he would accept that it
does not apply.The second are posts which
“play a key role in protecting and safeguarding the public’s rights
and interests particularly in relation to the actions and decisions
of Government”.
Given that this is not about the actions and decisions of
Government,that does not apply in this case.The third
criterion is posts
“where it is vital for the reputation and credibility of the public
body in question that the post holder is,and is seen to be,
independent of Ministers and Government”.
That is where I think there is potentially some discussion
to be had.I am happy to consider that issue and the
arguments that have been advanced,but I just want to
outline to the Committee why I think that there is a
difference between this role and some of the other roles
that have been mentioned.They include the Governor
of the Bank of England,the head of the Office for
Budget Responsibilityandtheheadof thenewCompetition
and Markets Authority.
Groceries code adjudicator is a very important role,
but it is an individual office holder,focused on one
particular sector and with a tightly defined remit within
that sector,limited to enforcing the code that came out
of the Competition Commission’s investigation.The
powers of the post and its remit are significantly less
broad than those of sector regulators such as Ofgem
and Ofwat.The budget will be relatively small—about
£800,000 in the first year—and there will be only a
small number of seconded staff.It will have no direct
impact on consumers or the wider public and has no
constitutional role.It is a very important post in its
sector.A comparison was made with,for example,the
head of the CMA.The remit of that organisation
applies across industries and it is about 50 times larger
in terms of budget and staff,so there is a difference.
Lucy Powell (Manchester Central) (Lab/Co-op):Does
the Minister agree that the issue is not just the remit of
the role in terms of breadth and so on,but the nature of
the interests that the adjudicator will come up against?
Those will be very powerful vested interests.We are
talking about supermarkets.Those interests are hugely
powerful,much more powerful than any one individual
whom we here could give powers to,and therefore it is
critical that we give this position as many teeth as
possible.Like,I am sure,many other members of the
Committee,I meet through my role many suppliers who
just would not go to this person—even though it would
be in their interest to do so—unless they felt that they
really had teeth,because those interests are so powerful.
Jo Swinson:I thank the hon.Lady for her eloquent
intervention.On the basis of that,I am sure that she
will make a strong contribution to the House.She raises
a very important point similar to that raised by my hon.
Friend the Member for Tiverton and Honiton.He,too,
outlined the importance of this individual being a strong
person who can stand up to vested interests.There is
recognitionthat this personneeds tobe able tocommand
the respect of both supermarkets and suppliers.They
need to know that this person will be fair,will have a
good knowledge of the sector and will be an individual
whom people can trust and have confidence in.That
certainly is important.
Huw Irranca-Davies:I am sure that the hon.Lady
does not mean to undermine the scope of this role,but
just in case she is in any danger of doing so,I just want
to point out that it is within a sector that is the largest
employer inthe UK.We are talking about foodprocessing
and food manufacturing,from the primary sector all
the way through retail,manufacturing and distribution.
It is the largest employer andone of the biggest economic
contributors.If we get this right,the impact onconsumers
through efficiency in the supply chain will be massive,
hence I suggest that there is a strong argument for
something in the spirit of the amendments,even if the
Minister just brings back something that would allow
this appointment tobethesubject of somepredetermination
byone of the Select Committees.I amthinkingparticularly
of the BIS Committee,because of my comments on the
importance of this to employment,manufacturing and
growth.
Jo Swinson:I thank the hon.Gentleman for his
intervention.He is right.I hope—I am sure that the
record will show this—that I have not in any way
undermined the importance of this position.It is also
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important that we do not over-promise in terms of what
the groceries code adjudicator will be able to do,because
this is about enforcing the groceries code,which is
about supply arrangements.It is correct that there will
be an indirect impact on consumers.After all,the
CompetitionCommissionfoundthat there was consumer
detriment as a result of the problems in the relationship
between the big supermarkets and their suppliers.There
was a lack of innovation,for example,which was leading
to consumer detriment.However,that is an indirect
link.The issues that the hon.Gentleman raises are
more indirect,because this is about enforcing the groceries
code.
I hear the arguments have been put forward.I am
generally a great believer in transparency and the power
of Parliament to hold to account not just the Executive
but the role that it plays in our wider public life.That is
very important,and I will consider very carefully the
arguments on the third criterion—the independence of
the adjudicator and the need for the adjudicator to be
seen to be independent.While I do not think that there
is a case for pre-appointment confirmation,I will consider
whether pre-appointment scrutiny is something that
Select Committees could do.I am not making any
promises to the Committee,but I will consider that
further.Perhaps we can return to this matter on Report.
10 am
HuwIrranca-Davies:I intervene onlytobe of assistance
to the Minister and to seek some clarification.She
heard the views expressed and showed once again that
she is listening,but she does not want to over-promise.
Is she suggesting that she may return with something of
her own making on Report?We would be particularly
content with that if it focused on the pre-appointment
element.
Jo Swinson:I amnot promising anything—I say that
again—but I will consider those issues between now
and on Report.Even if it is not in the form of an
amendment—being overly prescriptive in a Bill is not
necessarily helpful—I will look carefully at whether the
issues raised on pre-appointment in terms of Select
Committees can be resolved.
Huw Irranca-Davies:I thank the Minister for her
helpful response.In the period between Committee and
Report,will she seek counsel directly fromthe Chair of
the BIS Committee to get his input on this?From his
amendment,it is clear that there is a specific and
explicit desire for his Committee to be involved in
pre-appointment scrutiny.
Jo Swinson:The hon.Gentleman is quite right that
the tabling of the amendment made that point clearly.I
am always happy to have discussions with the BIS
Committee Chair,and it is appropriate for me to do so.
In closing,I note that the hon.Member for Edinburgh
South talked about a gift he gave to my predecessor,my
hon.Friend the Member for North Norfolk.That set
the standard,and it was not even near Christmas when
that Committee concluded,so on the basis that I will
consider the matter further,perhaps he will give me an
early Christmas present by withdrawing the amendments.
Ian Murray:Given the stereotype of a Scotsman,if
the only present that I could give the Committee were
withdrawing amendments,that would save the wallet a
bashing,which is something that I would welcome at
this time of year.The Minister said that she was feeling
generous and in a good mood,but she would not accept
the amendment.If she is not willingtoaccept amendments
now,I fear for what will happen when she is in a worse
mood and not feeling quite so generous.
Let me provide some clarity.In my contribution,I
was not saying that the adjudicator would be at the
same level as the Governor of the Bank of England or
the chair of the Office for Budget Responsibility;I was
merely highlighting that those tworoles gotothe Treasury
Committee,apowerful Committee.More of acomparison
can be made with the chair of the Competition and
Markets Authority,and that similar role will go to a
pre-appointment hearing at the BIS Committee.
The key to the two amendments—I agree with my
hon.Friendthe Member for Ogmore—is that amendments
1 and 62 are two sides of the spectrum,and somewhere
along that spectrum there are points that could be
looked at.That highlights some points made by the
hon.Member for Mid Worcestershire.The very fact
that the Chair of the BIS Committee tabled amendment
1says that theCommitteewishes tohaveapre-appointment
hearing,and also that it considers the adjudicator’s role
to be worthy of its scrutiny.I do not think that the BIS
Committee tabled such an amendment to the Enterprise
andRegulatoryReformBill withregards totheCompetition
and Markets Authority chair,so it must consider pre-
appointment scrutinyof theadjudicator tobeas important,
if not more important than that.
The hon.Gentleman said,quite clearly,that the BIS
Committee could call in the individual in any case,and
any Select Committee that is doing its job properly in
terms of scrutiny would do that.
Peter Luff:Should the BIS Committee choose to do
that,I hope that it would do so in conjunction with the
EFRACommittee.
Ian Murray:Absolutely.The point has been well
made that those Committees could do that.That is why
I find it slightly strange that the Government will not
accept at least amendment 1—just to put the pre-
appointment hearing on the face of the Bill—not just
for the sake of the very first adjudicator,but for any
other adjudicator that may be appointed in the future.
Peter Luff:I think that amendment 1 is flawed because
it does not mention the EFRACommittee.
Ian Murray:Perhaps we could encourage the Chair
of the BISCommittee totable,onReport,anamendment
mentioningtheEFRACommittee.I thinkwearediscussing
semantics now.The broad principle of allowing those
Committees to carry out such scrutiny is quite clear.
If the Minister can assure the Committee that she
will talk to the Chair of the BIS Committee,or,indeed,
that she has already done so,that will certainly be a step
forward.If it thentranspires that the Minister has totable
an amendment on Report,we would welcome that.We
welcometheMinister’s assurances andthecommunications
that will happen between her and the BIS Committee.
21 22
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Huw Irranca-Davies:I aim to be of help to the
Minister.She will no doubt have discussions on this
issue between Committee and Report.Can I suggest to
my hon.Friend that it would be of great help if the
Minister were toshare her considerations andanysolutions
she might propose in advance of Report?That way,we
can consider them before we have to vote on them on
Report.
Ian Murray:The Minister has heard that request.If
the request to the BIS Committee could be copied to
members of this Committee that would be useful,and
would give us the assurance that we require that both
the BIS and the EFRA Committees are being properly
consulted on this issue.Given those welcome assurances
from the Minister,I beg to ask leave to withdraw the
amendment.
Amendment,by leave,withdrawn.
IanMurray:I begtomoveamendment 32,page13,line1,
leave out from‘with’ to end of line 2 and insert
‘for the appointment of staff’.
The Chair:With this it will be convenient to discuss
the following:
Amendment 33,page 13,line 16,leave out ‘Secretary
of State’ and insert ‘Adjudicator’.
Amendment 34,page 13,line 17,leave out
‘if asked to do so by the Adjudicator’.
IanMurray:WehavestartedtheCommitteeat breakneck
speed,and are racing through the amendments;we have
got past clause 1,that simple sentence setting up the
adjudicator,and are now looking at some of the details
of schedule 1.
This group of amendments is designed to give the
adjudicator the independence they require.They need
to be completely independent of Government influence.
Under paragraph 9 of schedule 1,the adjudicator can
make arrangements to second staff from
“the Secretary of State or any other public authority”.
Amendment 32 aims to dispense with any perception
that the independence of the adjudicator might be
curtailed through seconding staff.It is important that
the adjudicator is completely free from any influence
from the Secretary of State,and so we would like the
secondment of staff fromthe Secretary of State removed
from the Bill.The adjudicator ought to be able to
appoint their own staff from wherever those staff are
needed;that will not necessarily be by secondment of
the Secretary of State’s staff.
Amendment 33 is to paragraph 11(2) of schedule 1,
which allows the Secretary of State to appoint a deputy
adjudicator.It is important here,as well,that we allow
the adjudicator to make those sorts of decisions on
their own,without reference to the Secretary of State.
Stephen Mosley:Paragraph 11 applies only if both
the adjudicator and the deputy adjudicator are unable
to act because they have declared conflicts of interest.
Does the hon.Gentleman really think it appropriate
that somebody who has declared a conflict of interest
should then appoint the person who will make a decision
about the matter to which that conflict of interest is
relevant?I do not;I think that the Secretary of State is
probably the right person to make that appointment.
Ian Murray:The hon.Gentleman makes a good
point;however,we are trying,throughthese amendments,
to make the adjudicator’s office completely independent.
I appreciate what he says on conflicts of interest for the
adjudicator and the deputy adjudicator,but we are
looking at whether or not it must be the Secretary of
State who appoints a replacement deputy adjudicator.
Essentially,there must be a firewall between the office
of the adjudicator and the Secretary of State to enable
that office to operate properly;otherwise,quite rightly,
retailers could suggest that any Government—not just
this one—could have undue policy influence on the
adjudicator’s office,when the role of that office is to
referee the code.It would be clear at any point in that
process if the adjudicator or the deputy adjudicator had
a conflict of interest.I cannot foresee any circumstances
in which that would happen,although the Minister may
be able to provide some examples.
That reflects back to the first set of amendments,
because such a conflict might be teased out at a pre-
appointment hearing with the BIS or EFRACommittee.
It is important for the adjudicator not only to be able to
appoint the deputy,but to be in charge of the process.
That wouldprovide transparencyandremove anyconcerns
about conflicts of interest.
We witnessed a great deal of debate in the Growth
and Infrastructure Bill Committee about the Secretary
of State for Communities andLocal Government sucking
up powers,and we do not want this Bill to allow the
Secretary of State for Business,Innovation and Skills to
suckuppowers awayfromthe adjudicator.The adjudicator
must be an independent body that can control what it
wants to control,and surely it will be best placed to
decide what is in the interests of the adjudication.I
appreciate the hon.Member for City of Chester’s raising
the matter,but I would have thought it wholly unlikely
that both the adjudicator and the deputy adjudicator
would have a conflict of interest.If the adjudicator felt
that they had a conflict of interest they would pass
something to the deputy,and vice versa.
Stephen Mosley:Paragraph 11(1) states quite clearly:
“This paragraph applies if both the Adjudicator and the
Deputy Adjudicator are unable to act in relation to a matter
because of conflicts of interest.”
It applies only in that situation,even though it might be
an unlikely one.
Ian Murray:That is the point I have just made.It is
very unlikely that both the adjudicator and the deputy
adjudicator will have a conflict of interest.Will the
Minister tell us whether the Department has modelled
any circumstances in which that might be an issue?
Although I appreciate what the hon.Member for
City of Chester has said,the amendments are designed
simply to tease out the independence of the adjudicator
from the Secretary of State.This Bill and many others
allow Secretaries of State to take powers as and when
they want to,but it is important that the office of the
adjudicator remains completely independent,and I hope
that the Minister can assure us that that will be the case.
23 24
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Jo Swinson:I thank the hon.Members who have
tabled the amendments,which I take in the probing
spiritinwhichtheyweremeant.Iagreethattheindependence
of the adjudicator is important.Amendment 32 suggests
that the adjudicator should appoint staff rather than
relying on secondments,but I hope to reassure the hon.
Gentleman that secondment has significant advantages
over appointment.We intend that the adjudicator will
have a pretty small office that carries out very specific
functions,and we do not want the budget to become
overblown with a large permanent staff.The advantage
of secondments is that theygive the adjudicator flexibility
to increase or decrease resource quickly as the work
load requires.The work load will fluctuate depending
on the arbitrations and investigations that are taking
place and the number of complaints that have been
submitted to the adjudicator.
Huw Irranca-Davies:I am just wondering whether
the Minister can explain which public body or intra-
Government agency those staff are likely to be seconded
from in different situations.As she has said,it will
depend on the circumstances,but I amsure that she has
some idea already where that core of three,four or five
people will come from.
Jo Swinson:Absolutely,and there is a real advantage
in the adjudicator’s being able to second staff who have
specialist knowledge.The adjudicator will be able to
bring in staff with the skill set or knowledge base that is
relevant to each investigation.It is inevitable that the
adjudicator will not have extensive knowledge of every
part of something as large as the grocery sector,so
bringing in people with the relevant expertise,where
appropriate,makes a lot of sense.
10.15 am
That expertise can lie in a range of different areas,
including the independent competition authorities,the
Department for Business,Innovation and Skills,the
Department for Environment,Food and Rural Affairs
andother areas of the public sector.The shadowMinister
said we would not want the adjudicator to rely only on
the expertise of the BIS Department,and I quite agree.
That is why paragraph 9(1) states:
“The Adjudicator may make arrangements with the Secretary
of State or any other public authority for staff to be seconded”.
That means that a really wide range of people could be
seconded,including from the sector regulators,which
may have specific expertise.That will be very effective,
particularly in short-terminvestigations.
Huw Irranca-Davies:There is a vital point about the
expertise ina very small teamandabout the adjudicator’s
ability to identify,seek and secure particular people.
Under paragraph 9(1),the adjudicator can
“make arrangements with the Secretary of State or any other
public authority”,
but who will argue for the adjudicator’s right to drawon
those people,when—this is not a political point—all
Departments and public bodies are,at this very moment
and for the foreseeable future,under such stringent cost
constraints that their heads are likely to argue to retain
the best,most appropriate staff?Who will battle for the
adjudicator?
JoSwinson:That is adiscussionbetweenthe adjudicator
and the Secretary of State.It is certainly envisaged that
there will be a close working relationship between the
adjudicator and BIS,as the lead Department.The hon.
Gentleman highlights a situation in which there could
be a difficulty and some reticence.The adjudicator has
a budget,which it will be expected to spend on staffing
and other things,so it might be an advantage,where
organisations’ budgets are stretched,for individuals to
be seconded for a period to the adjudicator’s office.
It is also worth pointing out that this would be an
opportunity for staff to gain additional experience in
something a little different.They would return to their
sponsor Department or public body enhanced by their
experience with the adjudicator,so a secondment might
be apersonal development opportunity.There are therefore
advantages to public bodies in complying,but,as I say,
we will have a close working relationship with the
adjudicator,and we will certainly be able to try to
unblock any difficulties that may occur.
Let me reassure the Committee by emphasising that
there is no intention that secondments will in any way
compromise the adjudicator’s independence.Once
somebody is seconded,they are under the direction and
control of the adjudicator,not their home employer,so
they are not there to do the bidding of the body they
have come from.People can come from across the
public sector,whichreduces the possibilityof independence
being compromised.
Huw Irranca-Davies:That is helpful.This is the way
Committees should work so that we can get real
clarification.Paragraph 9(1) says:
“The Adjudicator may make arrangements with the Secretary
of State”
—I will pause there for a moment—
“or any other public authority for staff to be seconded”.
Would such arrangements with the Secretary of State
allowfor secondments froma private sector organisation,
suchas the BritishRetail Consortium?My interpretation
of the wording is that expertise would not need to be
sought from within the Department,but from outside,
including fromindustry.
Jo Swinson:I thank the hon.Gentleman for his
question;he is quite right that it is important that the
Committee can be clear about these things.It is not the
intention that that expertise could come from a private
sector organisation,and I can understand that there
would be concerns if that were the case.I am happy to
give the Committee that answer.
HuwIrranca-Davies:I appreciate that the best intentions
in statute can amount to nothing.Will the Minister
clarify the point,if not now,perhaps in writing?My
interpretation of what she has just put on record is that
the intention is clear:the expertise should not be from
the private sector.However,my reading of paragraph9(1)
is that it actually allows for private sector firms to
become involved in this area.That may or may not be a
good or bad thing,but paragraph 9(1) says:
“The Adjudicator may make arrangements with the Secretary
of State”—
I take out the bit about public bodies—
“for staff to be seconded to the Adjudicator.”
25 26
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Public Bill Committee Groceries Code Adjudicator Bill
[Lords]
[Huw Irranca-Davies]
That would allow the Secretary of State to go to the
British Retail Consortium,or to the National Farmers
Union,or to the NFU Scotland,or whatever,and say,
“Your person has got the expertise;we want to bring
themin.”
Jo Swinson:I thank the hon.Gentleman for further
probing this issue;I appreciate that he wants to ensure
that there is clarity on it.I encourage himto look at the
explanatory notes for the Bill,in particular paragraph 82
on page 15,which says:
“The Adjudicator is not permitted to engage staff but,under
paragraph 9,may make arrangements for staff to be seconded by
the Secretary of State or any other public authority.This would
be on arms’ length terms and would be likely to be by agreement
as to the identity of the individuals in question.”
As I say,I appreciate his expression of concern that
there is not clarity on this issue,but I think that the
explanatory notes provide further clarity on it.I am
also able to give that reassurance to the other members
of the Committee,but I have no problemwhatsoever in
writing further to members of the Committee to put
that matter beyond doubt,if that would be helpful to
the hon.Gentleman.
Ian Murray:I am grateful to the Minister for giving
way;there is still a good mood of generosity prevailing
at this stage.My hon.Friend the Member for Ogmore
has just raised the issue of where the adjudicator can
secondstaff from.We are concernedabout paragraph17,
entitled“Assistance fromOffice of Fair Trading”,although
we did not table an amendment.There might be a slight
conflict of interest for the OFTin the provision of staff,
premises and facilities,given that it is the ultimate
arbiter of competitioninthesector,tothenewCompetition
and Markets Authority.Does paragraph 9(1) allow the
adjudicator andtheSecretaryof Statetomakesecondments
from bodies where there may be a conflict of interest
but which are in the public sector?That concern is
slightly different from my hon.Friend’s concern about
the private sector;it is about possible conflict of interest
in the public sector.
Jo Swinson:The hon.Gentleman makes a useful
point.There is further information on page 16,
paragraph 85,of the explanatory notes about the role
of the OFT.That role is clearly intended to be helpful,
particularly to the public purse,and the adjudicator
could reduce costs by sharing premises with the OFT,
againonarm’s-lengthterms andsubject tothe appropriate
safeguards being in place to protect confidentiality,to
avoidconflicts of interest andsoon.The hon.Gentleman
is right that it is important that any conflicts of interest
are avoided,whether by the OFT or indeed any other
body.In any secondment,we would want to ensure that
safeguards were in place.
The fact that the appointments will be made with
the agreement of the Secretary of State provides some
accountability.It wouldbeunhelpful tobemoreprescriptive
within the schedule,because we would not want to have
a situation whereby there might be a conflict of interest
with one part of one body but a really excellent person
could be seconded from another part of the body.We
will avoid that problem,because safeguards can be put
in place.We would not want to go further in the
schedule,but the hon.Gentleman makes an important
point about ensuring that things are done appropriately.
Parliament can play a useful role in holding Government
to account on any issues that arise.I hope that I have
provided reassurance on the issue of the independence
of the adjudicator’s staff.
Amendments 33 and 34 propose that the adjudicator
should be able to appoint a deputy adjudicator rather
than making a request to the Secretary of State.I
appreciate that amendment 33 is a probing amendment,
but we disagree on the issue.As my hon.Friend the
Member for City of Chester pointed out,paragraph
11(1) applies only
“if both the Adjudicator and the Deputy Adjudicator are unable
to act in relation to a matter because of conflicts of interest.”
We expect such a situation to be rare.We are keen to
avoid conflicts of interest for the adjudicator or the
deputy adjudicator,but it is worth ensuring that we
have made provision if such a conflict did arise.On the
rare occasions when there is a conflict of interest for
one of those individuals,the other will be able to deal
with the issue in question,but a conflict of interest for
both individuals is not beyond the bounds of possibility.
In that circumstance,it would be advantageous for the
appointment to be made by the Secretary of State,
because by definition,the adjudicator would have a
conflict of interest.
Stephen Mosley:Paragraphs 11(3),11 (4) and 11(5),
along with the explanatory notes,refer to an “acting
Deputy Adjudicator.”The cause of the shadowMinister’s
confusion may be that paragraph 11(2) refers to a
“deputy Adjudicator”.Should that say “acting Deputy
Adjudicator”,and if so,should that be added to the
measure on Report?
Jo Swinson:I think that we are covered by
paragraph 11(2):
“The Secretary of State must appoint a person to act as a
Deputy Adjudicator”.
The phrasing—“to act as”—means that the person will
be the acting deputy adjudicator.There is not a capital
“A” in “to act as”,and I am quite a stickler for such
grammatical issues,as my Department will attest—
particularly around apostrophes.I think the phrasing
fulfils what is required,but I welcome my hon.Friend’s
eagle eyes,not only in spotting the flaws inherent in
amendments 33 and 34 and expressing them so clearly,
but in ensuring that we are covered for the rest of
paragraph 11.The other advantage to the appointments
being made by the Secretary of State in this scenario is
that there is accountability to Parliament.
Huw Irranca-Davies:Again,this is on a point of
clarification—it is helpful for the Minister to put her
thoughts on record.We have begun to explore how the
appointment of the adjudicator andthe deputyadjudicator
will be made;guidance is out there at the moment,and
the Secretary of State will have oversight.In the
appointment of the acting deputy adjudicator—or
the deputy adjudicator in an acting position—would
the same process apply?I ask because that relates to the
time delay.The appointment would be in respect of a
particular conflict of interest and a particular case that
27 28
HOUSE OF COMMONS
Public Bill Committee Groceries Code Adjudicator Bill
[Lords]
is being pursued,so will the Minister give us an idea of
whether the same process would apply and what that
would mean in terms of a time delay in pursuing
that case?
Jo Swinson:The hon.Gentleman makes a good point.
The rare situationthat we are making provisionfor—and
it is absolutely right that we do so—would be one where
there is a requirement to take action quickly,because it
would deal with one particular matter,as it is only one
case where there would be a conflict of interest.We do
not want a lengthy process that holds that up,as he
rightly highlights.We would still want to ensure that we
appointed the right person with the relevant skills and
so on,but it would therefore be a quicker process.In
relation to our discussions on a previous group of
amendments that I endeavoured to go away and look
at,I do not think that a full-blown process in quite the
same way would be appropriate in such a circumstance.
HuwIrranca-Davies:Can the Minister again enlighten
the Committee on what discussions she has had with
her expert teamon time scales?Would it be one month
or three?Certainly not six months,I hope.
Jo Swinson:I would certainly not be looking at six
months,nor do I think that we would want to delay for
three.Equally,I would not want to be too prescriptive
to the Committee.It is important that this is done
properly,but swiftly,and if it took a month,that would
be fantastic,but if it took six weeks,or if it could be
done in a fortnight,that may be appropriate,too.In this
rare occurrence,we would have to leave the matter to
the discretion of the Secretary of State,acting on the
recommendation that the adjudicator identified,and if
there was a conflict of interest,that would need to be
dealt with.If there was concern in Parliament about an
undue delay or about something being rushed,I am
sure that questions would be raised in BIS questions.If
the matter was urgent,Mr Speaker has a tendency to be
kind in granting urgent questions,so I am sure that
there wouldbe the opportunityfor parliamentaryscrutiny,
if the time periodthat was usedwas not seenas appropriate.
I hope that I have answeredall the Committee’s questions
on this group of amendments,and that I have provided
the reassurance requiredtoenable themtobe withdrawn.
10.30 am
Ian Murray:First,let me refer to staffing.We are
reassured about private sector involvement and the
Secretary of State’s ability to appoint.
On the Secretary of State appointing a newor deputy
adjudicator when there is a conflict of interest,under
clause 2,the adjudicator will appoint someone toarbitrate
on such issues.Given that the Minister has said that
that provision will be rarely used,I would hope that the
Secretary of State’s involvement will be minimal,if not
zero.We have discussed the adjudicator’s independence,
and have been reassured about the appointment of
staff and having a firewall between the adjudicator’s
office and any other appointed office.
HuwIrranca-Davies:May I,through my hon.Friend,
raise an important issue that has arisen from our
discussions?The Minister has assured us that the use of
secondments fromthe private sector is not the intention.
I want to flag up for her attention the fact that there
maybe occasions whenusingapoacher turnedgamekeeper
is appropriate,and she may not want to rule out entirely
independence outside the public sector and the Secretary
of State’s gift.She may want to revisit that because
sometimes,the best expertise lies with those who have
been involved in the supply chain and understand where
elements of mischief are perpetrated.
Ian Murray:I suppose the best person to investigate a
complaint is the skeleton that has been in the same
cupboard.The Minister has heard the very good points
that my hon.Friend the Member for Ogmore has made.
We have been assured about conflict of interest,but
closing the door on any organisation ever being part of
the adjudication unit is a bad idea.We have had some
superbandknowledgeable contributions fromthe National
Farmers Union,Traidcraft,and ActionAid,which have
all givenevidence tomembers of the Committee.Someone
who works for a large retailer may want to contribute to
the adjudicator’s office.
Jo Swinson:I hear the point that the hon.Gentleman
raises,but of course there are many occasions when
people whohave workedinthe private sector subsequently
work for regulators or in different parts of the public
sector.We will still have the opportunity to access the
expertiseof apoacher turnedgamekeeper whenappropriate.
Ian Murray:I am delighted that the Minister has
been able to reassure my hon.Friend the Member for
Ogmore,who in turn has reassured the Minister that we
are reassured.We are all reassured,and I beg to ask
leave to withdraw the amendment.
Amendment,by leave,withdrawn.
Schedule 1 agreed to.
Clause 2
A
RBITRATION
Ian Murray:I beg to move amendment 22,in clause 2,
page 1,line 11,at end add—
‘(3) Where the adjudicator is appointing an arbitrator the
following must be taken into account—
(a) the location of the arbitration considering the
convenience of the supplier;
(b) the qualifications of the arbitrator;
(c) the experience of the arbitrator;and
(d) the awareness which the arbitrator has of
(i) the laws applying in—
(a) England and Wales;
(b) Scotland;and
(c) Northern Ireland;and
(ii) the market and economic conditions applying in—
(a) England and Wales;
(b) Scotland;and
(c) Northern Ireland.’.
We move ontoclause 2andarbitration.Our amendment
would augment the clause.We do not disagree with
specifications in the Bill which,however,does not set
out the criteria for the appointment of an arbitrator.
29 30
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[Lords]
[Ian Murray]
The amendment would require the adjudicator to take
into account certain factors when appointing someone
toarbitrate under the clause.Theywouldinclude location,
qualifications andexperience,andany legal andeconomic
awareness that the arbitrator wouldrequire.It is important
to make the process as easy as possible for both the
complainant and the defendant.Indeed,many of the
investigations under the groceries code may be complex
and regionalised.Given that the policy and the Bill have
a UK-wide application,there will be nuances in the
legalities of a particular investigation with respect to
where it takes place.
We tabled the amendment because the Bill does not
specify matters concerning the location of adjudication
or the convenience to the supplier.Small suppliers
might want tobringaninvestigativecasetotheadjudicator’s
office,which is why location is important.We must also
consider the issue of staffing and the adjudicator’s
pre-appointment hearing.There must be guidance about
the necessary experience and qualifications of someone
who can arbitrate in a case that has been brought
forward by the supplier.
As I have said,there must be awareness of the laws
that apply toEnglandandWales,ScotlandandNorthern
Ireland where there are slight differences in the law.
Clause 3 refers to requirements in civil proceedings and
mentions the different legal systems and the different
Acts that apply in different jurisdictions.It is important
that that is taken into account when the adjudicator
appoints someone to arbitrate on their behalf.
We can envisage circumstances in which suppliers
from the highlands and islands,for example,bring
forward specific issues relating to that particular market.
Given the information that we have received fromsome
suppliers,specialised suppliers will have particular issues
in mind about the breaking of the code,which they
want to bring to the attention of the adjudicator.We
are delighted that the Government and the other place
accept that third parties can bring forward such matters,
but it is important to ensure that if the adjudicator or
deputy adjudicator does not have the required skills to
deal with a specialist investigation,whoever is appointed
toperformthat arbitrationrolehas thenecessaryexperience.
There must be a minimumthreshold of skills.People
must have confidence in the system to be able to bring
forward a case for investigation.The amendment is
fairly straightforward,andI hope that either the Minister
will accept that it makes important provisiononarbitration
or,after the wave of reassurance we have had,can
provide us with even more reassurance that such
specifications will be takenintoaccount whenappointing
the arbitrator.
Jo Swinson:I thank the Opposition for tabling the
amendment.There is a great deal of agreement between
us.We both recognise that arbitration is an important
part of the Bill,and that it will be an important part of
the adjudicator’s role through arbitration to enable
suppliers to resolve specific disputes with retailers so
that they receive the necessary redress.Such measures
will enable the adjudicator to add real value to the
process.Theother placehadalengthydebateonarbitration,
as well as on the issues referred to under the amendment.
Amendment 22 sets out a detailed list of the issues
that an adjudicator must consider when appointing an
arbitrator.Such matters are important and will be
expected to be taken into account but,without wishing
to disagree with the hon.Member for Edinburgh South,
it is not necessary to be so prescriptive and add such
provisions to the Bill.I hope that I have convinced him
of that.As a public authority,the adjudicator will be
bound to act reasonably and carefully when selecting an
arbitrator,if the adjudicator were not carrying out the
arbitration.Naturally,the qualifications and experience
of the proposed arbitrator will be taken into account,
but that does not need to be stated expressly in the Bill.
AndySawford:Will the Minister indulge anewMember
and help me understand her approach in accepting all
aspects of the amendment tabled by my hon.Friend the
Member for Edinburgh South,yet saying it is not
helpful to include that in the Bill?It seems to me,as a
new Member of the House,that in the interests of the
public and all those concerned that the adjudicator
shouldworkeffectively withthose involvedinarbitration,
it would be incredibly helpful to have it in the Bill.I do
not understand the Minister’s reluctance.
Jo Swinson:I am more than happy to indulge a new
Member.It is a debate I am sure he will hear many
times;the desire to put more and more information and
detail inlegislation.That oftencomes fromthe Opposition,
though not exclusively.Government often prefer to
have legislationat a higher level.The clarity of legislation
is important,and we should put on record the fact that
we are discussing a plain English Bill.That might not be
immediately obvious to members of the public who
decide to read it,but it is better than many Bills in how
understandable it is for those of us who have not
studied law in detail.
The purpose and aim of legislation should be as
straightforwardandunderstandable as possible for anyone
who chooses to read it.The more detail that is put into
any piece of legislation,especially where it is unnecessary
because protections already exist,the more complicated
it becomes.That is where there is a role for reassurances
from Ministers and the explanatory notes that set out
the intention of legislation.
Andy Sawford rose—
Jo Swinson:I amhappy to give way again if the hon.
Gentleman has a supplementary question.
Andy Sawford:The Minister says that it is important
that the Bill is in plain English.I welcome the way in
which my hon.Friends have used this brief opportunity
in seeking to put that in the Bill and specify that the
arbitrator would have an awareness of laws applying in
the different jurisdictions.While it may be in plain
English,to apply that so that it is clear to people in
ScotlandandWales that the arbitrator wouldunderstand
the laws of those countries would be incredibly helpful.
I understand the Minister’s point about not being too
prescriptive or detailed in the Bill.However,there is
beauty in the simplicity of the amendment and the key
issues it addresses on jurisdictions.
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Jo Swinson:I thank the hon.Gentleman for his
further intervention.It is quite appropriate for us to
describe amendments as beautiful or otherwise.However,
beautiful or otherwise,the amendment is still unnecessary.
SimonHart(CarmarthenWestandSouthPembrokeshire)
(Con):As a veteran of arbitration under the jurisdiction
of the Royal Institution of Chartered Surveyors in a
previous career,I can assure the Minister and the hon.
Member for Corby that all the concerns in the proposed
amendment are dealt with as a matter of course in the
appointment of anarbitrator.The systemworks perfectly
well in a range of other professions.There is no need to
clog up the Bill or impinge on the adjudicator’s work as
far as the amendment is concerned.
JoSwinson:I thankmyhon.Friendfor his well-informed
intervention.There are many reasons for reassurance
that the appropriate factors will be taken into account
without being specifically included in the Bill.The
order in article 11 gives the steer that the rules of the
Chartered Institute of Arbitrators will be used.It is
reasonable that the arbitrator will have the ultimate
choice.There are well-established criteria that are taken
into account.I see no reason,in my hon.Friend’s
words,to “clog up” the Bill with superfluous words.We
will resist the amendment while understanding the helpful
spirit in which it is offered.
On the subject of location,it is appropriate for a
ScottishMember topoint out the challenges ingeography
that sometimes exist.However,the Groceries (Supply
Chain Practices) Market Investigation Order 2009,
article 11(6) provides that
“the seat or legal place of arbitration will be London…or such
other city within the United Kingdomas the Supplier nominates”.
The supplier already has a right to say where that will
be.I appreciate that if someone is in the highlands and
islands that might mean a bit of a trek,but it does mean
that they do not have to go all the way to London.
10.45 am
Ian Murray:The Minister is being generous in dealing
with some of our queries.Can she give some reassurance
that if a supplier asked for an adjudication to take place
in Inverness or Aberdeen,or indeed in Wales or Devon,
it would not be unreasonably turned down?
Jo Swinson:To provide that reassurance,I will
re-emphasise what have I said.Inverness and Aberdeen
certainly count as cities,and the Groceries (Supply
Chain Practices) Market Investigation Order 2009,on
which all these provisions are based,provides that
“the seat or legal place of arbitration will be London,England
or such other city within the United Kingdom as the Supplier
nominates.”
The supplier is in the driving seat,and I think we would
accept that that is absolutely appropriate.I hope that I
have given the Committee some reassurance on the
matter and that the hon.Gentleman will therefore
withdraw the amendment.
IanMurray:Thebeautyandsimplicityof theamendment
was there purely to ensure that issues regarding
qualifications,location and experience were taken into
account.I amreassured by the explanatory note,which
states that therules of theCharteredInstituteof Arbitrators
will govern those issues.Such bodies are well respected.
I am also reassured that the supplier will be able to
nominate where the arbitration takes place,and that
no reasonable request will be turned down.To provide a
bit of balance though,the retailer itself is allowed to
request some arbitration,and would therefore also be
covered by our amendment.I understand,however,why
the Minister would not want to put it in the Bill,and I
beg to ask leave to withdraw the amendment—even
though it is a rather beautiful and simplistic one.
Amendment,by leave,withdrawn.
Question proposed,That the clause stand part of the
Bill.
Jo Swinson:I do not intend to detain the Committee
for long,but a bit of explanation of the clause will,I
think,help.The 2009 order establishes that if there is a
dispute between a direct supplier and a retailer on a
matter that is contained in the groceries code and the
matter is not resolved to the supplier’s satisfaction
within 21 days,the supplier may refer it to arbitration
during the following four months.A large retailer must
submit to the arbitration,and one of the functions of
the adjudicator is toarbitrate suchdisputes.Subsection(1)
requires the adjudicator to either arbitrate or appoint
another person to do so if the supplier refers a dispute
to arbitration in such a matter.We expect that in most
cases the adjudicator him or herself will be able to
arbitrate,but in specific cases that might not be possible
and another arbitrator can be appointed.We have been
able to have a bit of a discussion about how such a
decision would be made.
The 2009 order has already established a dispute
resolution scheme for disputes arising between a retailer
and a direct supplier under the groceries code,and the
order anticipates that the adjudicator—referred to in
that legislation as the ombudsman—will arbitrate such
disputes.That will ensure that disputes are arbitrated by
an individual with a high level of expertise in the sector,
and will allow the adjudicator to gain a greater
understanding of how the code is operating,which will
help themin carrying out their other functions,such as
preparing the annual report or providing advice.
Ian Murray:I do not need to detain the Committee at
all.We welcome clause 2,particularly as it also gives the
right to the large retailer to refer a dispute.It is a
particularly good clause to have in the Bill.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
Clause 3
I
NFORMATION ABOUT ARBITRATION
Question proposed,That the clause stand part of the
Bill.
Jo Swinson:As we have just heard,if a supplier refers
a dispute to arbitration under the Groceries (Supply
Chain Practices) Market Investigation Order 2009,the
adjudicator must either arbitrate the dispute or appoint
someone else to do so.That means they will gain a
greater understanding of how the code is operating.
Clause 3 ensures that the adjudicator will still be able
to access that information,even if he or she appoints
another person to arbitrate.Subsection (1) enables the
adjudicator to obtain information on an arbitration
carried out by an alternative arbitrator by establishing a
requirement that any personappointedby the adjudicator
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[Jo Swinson]
to act as an arbitrator,or any party to the dispute,must
provide the adjudicator withinformationif the adjudicator
so requires.
Subsection (2) establishes that the requirement to
provide information may be enforced by bringing civil
proceedings in England,Wales or Northern Ireland to
obtain an injunction,or in Scotland to obtain an order
for specific performance.
The clause will ensure that the adjudicator is able to
access the information that he or she needs to facilitate
his or her duties,ensuring that the adjudicator is not
disadvantaged by appointing someone else to arbitrate
adispute.Theconfidentialityof theparties toanarbitration
is protected by clause 18(1).
Huw Irranca-Davies:We have no difficulties with this
welcome clause.As we maymove subsequent amendments,
we particularly welcome the provisions because,should
we have a live code where the adjudicator is able not
only simply to learn fromits current remit,as prescribed
by the groceries code,but to report back on the role of
intermediaries,and should the Minister smile on those
amendments,the clause will not only stand the Bill in
good stead but stand the amendments in good stead,too.
Ian Murray:The Committee will be aware that we
have agreed with the Minister whenever she has moved
a stand part debate,but she has yet to agree with us.
This is the third time that we will not get in the way of a
clause standing part of the Bill.
My hon.Friend the Member for Ogmore is absolutely
right:we are enthusiastic about the clause not only
because it is in plain English but because when we
consider later clauses it will help us to put together a
proposal to make this a live code.Clause 3 makes the
Bill live in itself,so we will not stand in its way.
Question put and agreed to.
Clause 3 accordingly ordered to stand part of the Bill.
Clause 4
I
NVESTIGATIONS
Andrew George:I beg to move amendment 19,in
clause 4,page 2,line 5,leave out subsection (1) and
insert—
‘(1) The Adjudicator may carry out an investigation where
there are reasonable grounds to suspect that a large retailer has—
(a) broken the Groceries Code;or
(b) failed to follow a recommendation made under
section 7;or
(c) failed to incorporate the Groceries Code into a supply
agreement,as required under Article 5 of the
Groceries Supply Order.’.
The Chair:With this it will be convenient to discuss
the following:
Amendment 20,in clause 6,page 2,line 26,leave out
from ‘that’ to end of line 28 and insert ‘any of the
grounds for launching aninvestigationunder section4(1)
has in fact occurred,the Adjudicator may take one or
more of the following enforcement measures—’.
Amendment 21,in clause 7,page 2,line 33,leave out
subsection (1) and insert—
‘(1) If the Adjudicator chooses to enforce through making
recommendations,that means—
(a) in the case that a retailer has been found to have
broken the Groceries Code,or has failed to follow a
previous recommendation made under this section,
recommending what the large retailer should do in
order to comply with the Groceries Code;and
(b) in the case that a retailer has been found to have failed
to incorporate the Groceries Code into a Supply
Agreement,as required under Article 5 of the
Groceries Supply Order,recommending what the
large retailer should do in order to comply with
Article 5 of the Groceries Supply Order.’.
Amendment 40,in clause 13,page 5,line 3,after
‘Code’,insert ‘or the Groceries Supply Order.’.
Andrew George:I seek to continue the consensual
nature of the debate sofar witha well formedamendment
that has both beauty and simplicity,which I hope will
improve the Bill.Having said that,although this group
of amendments would strengthen the Bill,I reassure my
hon.Friend the Minister that they are intended to
probe and to elicit what I am sure will be a helpful
response that clarifies the points highlighted by the
amendments.Unless the Minister alarms me,and I am
sure she will not,my intention is to probe the issues.
Clause 4 is important,and it went through a number
of iterations during the development of the draft Bill.I
know the Department considered the clause over some
time.Indeed,it is important that the clause refers to
“reasonablegrounds”,rather thanstatingthat investigations
would necessarily only be instigated on the back of
complaints brought forward,either anonymously or
otherwise,by suppliers.As previous Competition
Commission reports have shown,because of what it has
described as “a climate of fear” in the supply chain,
complaints were just not likely and,indeed,under the
previous voluntary code they were simply not brought
forward.That was even though it was recognised that
many improper and unacceptable practices had been
carriedout,whichwas why the CompetitionCommission
held its inquiry—originally instigated in 2006—in the
first place.The clause is therefore a watershed in moving
the issue on,because the provision is vital in that
context,and I warmly congratulate the Government on
its introduction.
The purpose of amendment 19 is to ensure that
recommendations are followed up,because a potential
weakness in the Bill’s drafting is a failure to ensure that
that will happen.TheBill currentlyprovides theadjudicator
withthreeforms of enforcement,namelyrecommendations,
the publication of information—naming and shaming,
or the reputational damage that the Government have
previously said would be sufficient to bring the larger
supermarkets to book and to contain the practices that
manyof us havecriticised—andfines.Wemust congratulate
the Minister on her wisdom in tabling amendments
about fines.
Recommendations are intended to be the most light-
touch of the three forms of enforcement.It is expected
that recommendations will set out the action that the
adjudicator believes a retailer needs to take to comply
with the code.For instance,a recommendation might
be to remove from supply agreements provisions for
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shrinkage that would be a contravention of the code.
Under clause 7(2),the adjudicator must monitor whether
recommendations have been followed,and it can launch
investigations if it believes that a recommendation has
not been followed.However,even if the adjudicator
subsequently finds that a recommendation has been
ignored,no further action can be taken,or so it appears
fromthe current drafting.Under clause 6,the enforcement
mechanismcan be used only if
“the Adjudicator is satisfied that a large retailer has broken the
Groceries Code”.
It cannot be used if the adjudicator is satisfied that a
retailer has ignored a recommendation.
It could be argued that the original breach—for
instance,the inclusion of provisions for shrinkage in
a supply agreement—might be the basis for further
enforcement measures,but that would be extremely
controversial.Due process demands that multiple or
successive sanctions are not appropriate for a single
transgression.Instead,the Bill shouldsimply be amended
so that,if required,the adjudicator could apply a
further enforcement measure when a recommendation
is ignored.
Afailure to followa recommendation need not always
lead to further enforcement.The Bill would not require
that,because it states that the adjudicator “may”,not
“must”,use enforcement measures.For instance,if a
retailer has remedied a breach through an action that
was different fromthe one recommended,the adjudicator
would have no interest in pursuing the failure to follow
that recommendation,and that could be set out in the
adjudicator’s guidance.Nevertheless,the adjudicator
must be provided with some way of ensuring that
recommendations are enforced where they have been
ignored.
11 am
HuwIrranca-Davies:I commend the hon.Gentleman
for the way in which he articulates his arguments.I have
great sympathy with his amendments,albeit he said
they were probing.One of those ingenious amendments
would provide that after a failure to follow a previous
recommendationthe adjudicator couldrecommendwhat
should be done.Where is the final backstop following
that subsequent recommendation?
Andrew George:The purpose of the amendments is
to highlight the fact that there appears to be no further
sanction available to the adjudicator,who can simply
monitor and seek to ensure that the recommendation
has been enforced.The group is intended to ensure that
the adjudicator can move on to further actions.I am
looking to the Minister to confirmthat there would not
be a separate cul de sac of recommendations,out of
which the adjudicator could not move.They would have
to be able to move on and take further enforcement
action such as naming and shaming or,indeed,fines,in
the event of a retailer’s persistent failure to follow
recommendations.
Amendments 20 and 21 deal with the failure to
incorporate the code in contracts or supply agreements,
and are fairly straightforward and technical.Article 5
of the Groceries (Supply Chain Practices) Market
Investigation Order 2009,the order that established the
code of practice,requires:
“A Designated Retailer must not enter into or perform any
Supply Agreement unless that Supply Agreement incorporates
the Code”.
The order also requires that all supply agreements be
recorded in writing,which,taken together,means that
retailers are required to provide the code in writing to
all suppliers.
That requirement,however,is part of the order and
not the code,which is set out in a schedule to the order.
Failure to comply with the order is enforceable by the
Office of Fair Trading rather than the adjudicator,who
is concerned solely with compliance with the code.That
means that,should retailers fail to provide written
supply agreements that include the code—something
that has often been reported—the adjudicator will not
be able to investigate.At least,some of those who have
examinedthe clause believe that tobe the case.Technically
it does not constitute a breach of the code.
That is a major oversight.Inclusion of the code in
supply agreements is crucial in ensuring that retailers
observeits provisions,andis somethingthat theadjudicator
should clearly be able to monitor and enforce.The
adjudicator will be much better placed than the OFT
in that regard,and there are many who have concerns
about the matter remaining the sole responsibility of
the OFT.
Ian Murray:The hon.Gentleman is making some
super points about the way that the adjudicator operates.
I wonder if I may ask two questions in one intervention.
First,many suppliers have said to us that they have no
supplier agreements at all and,indeed,no contracts at
all.Perhaps we should be considering that.Secondly,if
it were possible fully to enforce the inclusion of the
groceries code in a supply agreement,would that allow
a supplier to pursue a breach of the code through other
legal mechanisms,as well as through the adjudicator?
Andrew George:On the first point,with regard to
retailers saying that they do not have any written or any
supply agreements,that has always been a weakness in
the past of the verbal nature of “contracts” between
large retailers andtheir suppliers.Of course,suchcontracts
suit the larger and more powerful of those engaged in
that relationship,because they can always retrospectively
change those arrangements or claimthat suppliers might
have misheard or misunderstood the verbal contract
that was previously entered into.Recourse to law is
available toeither party andwould,I understand,remain,
but the purpose of the adjudicator is to avoid either side
in that agreement seeking recourse to law.The purpose
behind what the Competition Commission originally
set out when bringing forward the code—and proposing
that it should be backed up by an ombudsman,as it
described it—was to ensure that there is a rules base
and that everyone understands where they stand.Indeed,
a written agreement should be attached to each written
contract between supplier and retailer.
Mr Spencer:It is important that the market can be
flexible.I amsure that the hon.Gentleman understands
that trying to tie down verbal agreements takes flexibility
out of the market.The market can be warped by weather
events,for example,or other market factors and it is
vital that retailers andproducers have flexibility,allowing
themto rapidly fill that gap in a retail market.
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Andrew George:I accept that.My experience in the
agricultural trades prior to coming to the House
demonstrates clearly to me that being flexible and being
able to change arrangements at relatively short notice
are important.The Minister may wish to comment on
that,because the methodology by whichwrittencontracts
or any amendments to those are established,particularly
with the information technology available to us—my
Committee colleagues are perhaps engagedinnegotiating
supply agreements or amendments to those,as well as
listening intently to me—does not necessarily mean the
use of quill pen and parchment with a wax embossment,
delivered by courier.Changes to supply agreements can
be recorded through electronic communication.I look
to the Minister for reassurance on that point,because
the last thing we want is to introduce something that
means that those agreements are not flexible and cannot
move forward.
It is important that suppliers are reassured and know
precisely the nature of the contract between supplier
and buyer that they are entering into,rather than face a
great deal of uncertainty,as in the past,and a significant
prospect that,indays or weeks,theymayface retrospective
change about which they have no say whatever.It is
important that that happens.
Let me talk about the purpose of amendment 40,
proposedandencouragedby the many non-governmental
organisations that are interestedinfair trade indeveloping
countries.The amendment wouldcover enterprises buying
for resale.It is another probing amendment.It would
ensure that the adjudicator had power over enterprises
that buy for resale on behalf of retailers and could
recommend changes not only to the content of the code
but its scope.It would reinforce the need for the code to
apply to enterprises that are buying for resale products
soldinretailers’ outlets coveredby the code.For example,
the adjudicator needs to be able to investigate the
activities,if I may mention the name,of International
Produce Ltd,a wholly owned subsidiary of Asda.It
needs to be able to investigate where retailers have set
up sourcing offices in supplier countries which they
are using as a means of having arrangements that are
outside the provisions of the code.
The Government need to reiterate that the code and
the adjudicator apply to enterprises purchasing products
that will then be resold by retailers which need to
comply with the code of practice.If retailers outsource
the buying of products to different entities,those new
entities need to come under the scope of code.Although
the amendments cover a range of contexts in which
investigations take place and enforcement measures can
be carried out,I hope that the Minister appreciates that
they are intended to tease out the strength of the Bill as
drafted,to maintain its beauty and form and ensure
that the issues I have raised are taken on board by the
Government.If reasonable points have been advanced,
the Minister may wish to respond by introducing
Government amendments on Report.
Jo Swinson:I thankmy hon.Friendfor his constructive
approach.He has been working constructively on this
issue for many years.I am sure he is frustrated by the
length of time he has had to work on this issue,but I
hope he feels that his constructive approach with the
previous and the current Government has paid off.I
thank himfor his congratulations on the wisdomof my
recent decision on fining.I amkeen not to alarmhimin
my response and to give him the reassurance that he
sought.
I should like to set out an overview of this group of
amendments and then turn to the specifics in detail.
The generality is about whether the adjudicator’s duties
should go beyond enforcing the code as it stands;about
incorporating the code into supply agreements;about
whether the adjudicator should be able to enforce this
obligation and enforce recommendations and sanctions
if the recommendation is not followed;and whether
they should be able to make recommendations to the
Office of Fair Trading about changes in the GSCOP.
The principle that underpins all this,which was
establishedby the previous Government inthe Enterprise
Act 2002 which set up the OFT and the Competition
Commission,is basically that competition remedies are
the responsibility of the independent competition
authorities.That is an important principle because it
ensures that the important economic remedies needed
are made and enforced by the bodies that have the
necessary independence and expertise to do so fairly
and objectively.
11.15 am
Neil Parish:I think my hon.Friend the Member for
St Ives was saying that the groceries code adjudicator
should be much more proactive.Over the years,the
Office of Fair Trading and all sorts of people have
looked at the situation in the grocery trade and the
general way that the market works.While there needs to
be flexibility in the market,there also need to be,if the
adjudicator feels that a case should be investigated,
powers for it to do so.It would be a great shame if we
missed this opportunity to get the issue right.Before we
have tried and fiddled while Rome was burning.I think
Rome still burns today.
JoSwinson:Myhon.Friendreferredtothe Competition
Commission,which looked at the issue.Indeed,it is
because it has looked at the issue that we are here today
proposing a Bill to enforce the groceries code.
The specific recommendation by the Competition
Commission was that there should be an ombudsman,
which we are now calling an adjudicator,to enforce the
code,not the order.It is important to drawa distinction.
The order is enforced by the Office of Fair Trading,
while the Bill is focused on enforcing the code.It is
important that the order is also enforced and that the
OFT is able to do that.Duplication is not helpful,
which is why the groceries code adjudicator will have
the ability to make recommendations for changes to the
code but not the order.That distinction is worth bearing
in mind.
Andrew George:As the Government have decided,
rightly,that the adjudicator will sit in the OFT’s office,
will the walls between the adjudicator and the OFT
regarding compliance with either order or code make it
more easy or more difficult to pursue a potential conflict
by either body?
Jo Swinson:I am sure that,should anyone become
aware that the groceries supply order is not being
implemented,theywouldwant todrawthe OFT’s attention
39 40
HOUSE OF COMMONS
Public Bill Committee Groceries Code Adjudicator Bill
[Lords]
tothat.The groceries code adjudicator mayshare premises
withthe OFT,but it will be fullyoperationallyindependent
from the OFT.As I said,anyone who becomes aware
that the groceries supply order is not being properly
implemented should take that issue to the OFT,which
is the right body to enforce the order.
The OFT has powers under the Enterprise Act 2002
to enforce the groceries supply order if it is not being
properlyincorporatedintosupplyagreements.If suppliers
believe that retailers are not incorporating that,they
should ensure that they tell the OFT.Suppliers have
further remedies available to them.Under section 167
of the 2002 Act,if they suffer losses as a result of a
failure to incorporate the order,they can bring an
action against a retailer.Existing remedies are available.
Regarding amendment 40,similar principles apply.
The amendment says that the adjudicator should make
recommendations to the OFT for changes to the order
as well as to the code.However,the provision as it
stands makes sense.As the adjudicator’s remit is specifically
about the code,that is what it should consider in its
recommendations.The code is what the adjudicator is
responsible for enforcing and overseeing.Given that it
is the OFT’s responsibility to oversee the order,the
ability tomake any recommendations tochange the order
should be reserved for the OFT.
Regarding the issue raised by the hon.Member for
Edinburgh South in his intervention about supply
agreements,we do not have robust evidence that shows
that the code is not being incorporated.Where it is
happening,I would urge people to take that to the OFT.
Verbal agreements were mentioned.Article 6 of the
groceries supply order is clear that supply agreements
must be inwriting.As it may be helpful tothe Committee,
I will quote paragraph 8 of article 6—“Duty to provide
information to Supplier”—of the code:
“Where any subsequent agreements or arrangements made
under or pursuant to a Supply Agreement are agreed orally
between the Supplier and a Designated Retailer,the Designated
Retailer must confirmthe terms of such arrangements in writing
with the relevant Supplier within three working days of such
arrangements being agreed.”
Therefore,not only does such confirmation need to be
in writing,but it needs to be made promptly after a
verbal agreement is reached.In answer to the concern
of my hon.Friend the Member for St Ives about
whether that confirmationneeds tobe made onparchment
with a quill and with an embossed wax stamp,it does
not.We live in a digital age and e-mail is a perfectly
accepted form of “in writing”,so I hope that provides
some reassurance.
The main issue is not about the code not being
incorporated into supply agreements;it is about whether
the code is being followed and whether retailers are
using their buying power to pass excessive risk and
unexpected costs on to suppliers.That is what we hope
that the adjudicator will be able to address.
Huw Irranca-Davies:As the focus is on the
implementation and following of the groceries code,
will the Minister explain why amendment 19,tabled by
the hon.Member for St Ives,is an obstacle to the good
functioning of the Bill and why she does not agree with
it?I do not see it as an impediment.It is an advantage
in some ways,because if retailers do not incorporate
the code,they cannot be following it.I may be
misunderstanding it.
Jo Swinson:If they have not incorporated the order,
that is a matter for the OFT.The issue is about not
having duplication,so that we can focus the adjudicator
on the things that are specific to the role.Duplication
would ultimately take the adjudicator’s time away from
focusing on the things that we want themto.
I turntothe other elements of amendment 19,especially
around sanctions to ensure enforcement and whether
recommendations are followed.Recommendations are
deliberately intended to be non-binding.They are the
lightest of the enforcement mechanisms available to
the adjudicator.That is deliberate.If there is a severe
breach of the code,we expect the adjudicator to reach
for the further available sanctions,such as naming and
shaming or financial penalties,in addition to making
recommendations.The problemwith sanctions for when
a retailer has not followed a recommendation is that
that wouldeffectively make the recommendations binding
and therefore remove them as a light-touch measure.
That would be a real shame and not necessarily the
right way forward.
When an adjudicator makes a recommendation that
a retailer is no longer breaching the code,they may
recommend a particular activity that would help to stop
another breach of the code.I will give an example.
There could be a scenario where an individual buyer at
a retailer mistakenly issues an incorrect contract that
causes problems for a supplier and technically breaches
the code,but the adjudicator finds that it was a genuine
mistake.The adjudicator could make a recommendation
to ensure that the retailer does not accidentally breach
the code again,but all of Bob’s—the individual buyer’s—
contracts get signed off by the code compliance officer
for the next six months.The retailer could take the view
that a better way of ensuring that it does not happen
again is to give Bob some more training,which then
leads to the code not being breached again.In that
situation,the recommendationwill not have beenfollowed,
but I do not think that the Committee would deem it
appropriate for enforcement action to be taken in that
scenario.We want to ensure that the light-touch
recommendations can be made,but if a retailer,which
knows its business better,can find a better way of
ensuring that it complies with the code,that can be
done.
George Eustice (Camborne and Redruth) (Con):My
hon.Friend the Member for St Ives makes a good
point.If one supermarket becomes a repeat offender
and effectively ignores the code,how would that be
handled?There is a need for some kind of escalating
level of sanctiontocorrect that.I understandthe problem
that the Minister highlighted about putting such a
measure in this clause,but is it something that she could
envisage being included in the guidance published by
the adjudicator?
11.25 am
The Chair adjourned the Committee without Question
put (Standing Order No.88).
Adjourned till this day at Two o’clock.
41 42
11 DECEMBER 2012
Public Bill Committee Groceries Code Adjudicator Bill
[Lords]