Groceries Code Adjudicator

I will be brief, Mr Gale. It is a pleasure to follow the hon. Member for Shipley (Philip Davies). We disagree, but not in every respect, and I passionately agree with his concluding remarks about the operation of the free market. The issue is about what happens when the market fails. We have always had the Monopolies and Mergers Commission—now the Competition Commission—and other regulatory bodies to ensure fair dealing, and that is fundamentally what the debate is about. It is not about price setting or protecting large and powerful supermarket suppliers such as Kellogg's and the producers of baked beans and other similar brands. In 2008, the Competition Commission raised a concern about the transfer of"““excessive risk and unexpected cost.””" The hon. Member for South Staffordshire (Gavin Williamson) should be congratulated warmly on securing this important and timely debate as we look forward to the publication of the Government's draft Bill. He should also be congratulated on the balanced and considered manner in which he introduced the subject. The report from 2008—three years ago—came after years of inquiries by the Competition Commission and the Office of Fair Trading going back to 2000, after which the first voluntary code was established. I will not go into the history of it all. I will quote from that report, because it fundamentally explains why we are in our position today, and there is great disappointment that we are not further forward. The report concludes:"““We found that all large grocery retailers, wholesalers and buying groups have buyer power in relation to at least some of their suppliers. This buyer power is of benefit to consumers since part of the lower supplier prices arising from this buyer power will be passed on to consumers in the form of lower retail prices.””" That agrees entirely with the hon. Member for Shipley."““However we found that when, in the hope of gaining competitive advantage, grocery retailers transfer excessive risks or unexpected costs to their suppliers, this is likely to lessen suppliers' incentives to invest in new capacity, products and production processes. If unchecked, we conclude that this will ultimately have a detrimental effect on consumers, by leading to lower-quality goods, less choice of goods and product innovation.””" I am grateful to the hon. Member for Ynys Môn (Albert Owen) for his major contribution to this debate both today and over the years. His private Member's Bill helped to stimulate and provoke more rapid progress, although not rapid enough. From his party I also remember the former Member of Parliament for Stroud, David Drew, who was a great champion for this issue. In the remaining minutes, I would like to emphasise that I entirely sympathise with the hon. Member for South Staffordshire on the issue of the name; given the circumstances, the name is a bit like something put together by Frankenstein. I did not like the word ““ombudsman””, because that implies something reactive and we want something that will proactively keep an overview on what is going on throughout the supply chain. As I said, this issue is about fair dealing. If the adjudicator were called the ““supermarkets ombudsman””, the assumption would be that all wrongdoing was on the part of supermarkets. If it were called a ““grocery supply adjudicator””, that would recognise that fair—or unfair—dealing might work both ways. In future years, we must keep an open mind as to how that power relationship might play out. Previous reports have found that supermarkets are so powerful that they can dictate market conditions. They also identified that when suppliers were depended on to complain in order to stimulate an investigation into the breaking of the code, there was a climate of fear among them because of possible retaliatory action. I do not know the precise answer to the question from the hon. Member for Shipley about how much the adjudicator will cost to set up, but it will be small numbers of millions of pounds, and the cost to the taxpayer should be nil; it will be done through an industry levy, as I hope the Minister will confirm. Ultimately, I hope that the adjudicator will be used as a badge of pride for supermarkets if they get a clean bill of health on an annual basis. I hope it will provide a service to the retail trade in awarding a badge, a tick, to a supermarket because it was found to have done nothing wrong during the year. As the Minister is aware, I have raised a number of issues with him about the industry levy, which should be based on a formula to reflect the size and turnover of the supermarkets that are regulated, as well as the extent to which they are found to comply—or not comply—with the code. The capacity of the adjudicator should be sufficient for it to be capable of undertaking its own independent, proactive investigations. The powers of the adjudicator to undertake enquiries should be sufficient to nullify the risk of retaliatory action being taken against the supplier in a range of circumstances. It is vital that we move with maximum speed towards a conclusion on this matter. It has all-party support, and I wish the Minister well. I know that with one or two exceptions, he has full backing across the Chamber to move the legislation forward.