I absolutely agree, and that is why the Bill is so important. Over the past 20 years, there has been huge growth in the power of a handful of very powerful retailers who have huge market clout and have, frankly, abused their power. If we want proper market conditions back, in which people are paid a fair market price for their goods, the Bill and the groceries code adjudicator will be vital.
Let me move on to the issue of the financial penalties, which have featured heavily in the debate so far. As my hon. Friend the Member for Thirsk and Malton (Miss McIntosh), the Chair of the Environment, Food and Rural
Affairs Committee, has said, our Committee concluded that there was a case for making those fines available to the groceries code adjudicator from the start rather than waiting for it to be become necessary for another order to be introduced by the Secretary of State.
The question of fines is important and I agree with the Minister that naming and shaming might be adequate for some minor breaches, but I take issue with the claim that naming and shaming might be a more powerful deterrent than a fine. The British Retail Consortium might say that we should name and shame, because that is more powerful than a fine, but that is a bit of a clue. When the retailers say that what really scares them is naming and shaming, even though they do not want fines, the Minister ought to be a little more suspicious than she has been.
It is important to have an escalating scale of penalties. Why remove an important tool from the box? It would be possible for the Government to craft guidance on when a fine would be appropriate and what size that fine should be. It could stress that fines should be used sparingly and that other sanctions, such as naming and shaming, should be the preferred route. I think it is wrong, however, to rule fines out at this stage because of the question of what should happen if there is one persistent offender out of the 10 supermarkets caught by the groceries code adjudicator. What if that one offender, however many times they are named and shamed, sticks up two fingers to the adjudicator and says, “We really don’t care.”? That is unfair on the remaining nine, who might be abiding by the code, and it risks making the whole initiative unstable.
The groceries code adjudicator is more likely to succeed if the power to fine is there from the beginning and more likely to fail if it is not. For the adjudicator to work, we need to ensure that its introduction will change the behaviour of the supermarkets. It is not just about having investigations all over the place—we need people to be fearful of a fine, so that they moderate their behaviour.
There is a real problem in the serious mismatch between what a Minister might be told by the public affairs officers who work for the supermarkets and what she would experience if she was a carrot grower supplying supermarkets and dealing with buyers daily. The truth is that public affairs officers for the supermarkets will often strike a paternalistic pose and say, “It is not in our interest to upset our suppliers. We want happy suppliers,” and they will have pictures in their supermarkets of happy farmers’ children working out in the fields. It all sounds great, but the buyers have very different incentives that focus on margins, profit and exercising control over their suppliers. The Minister said that the market for supermarkets was fiercely competitive, and she is right. That is why my fear is that when Parliament’s back is turned, the incentives that motivate the buyers will prevail because it is ultimately their profit margins that they will seek to protect.
The possibility of third party complaints has been raised and is an important power. The industry has a part to play in this. Although it says that we need anonymity and that it is important for complaints to be made without the complainant being identified, the industry has to play its part in helping the supermarket adjudicator identify bad practices. One of the proposals that I have made to the NFU, which keeps telling me
that it is under consideration, though I have not heard that it has been taken up fully yet, is the idea of what I have termed a farm-fair index. That would be based on a panel of 500 farmers and suppliers across a range of sectors. Each quarter they would be given a questionnaire asking a series of questions that measured the adherence of each of the 10 supermarkets to the groceries code. There would be a league table of the 10 supermarkets and they would be scored according to which of them abided by the code the most and which departed from it the most. If a particular supermarket was at the bottom of that league table for two consecutive quarters, an automatic investigation by the groceries code adjudicator would be triggered. That would be a good way of ensuring that vexatious complaints were filtered out. A broad panel—the same 500 farmers and suppliers each quarter—who could score the adherence of the supermarkets to their own code would provide an important tool to help the adjudicator identify bad practice.
In conclusion, I welcome the Bill. It is a positive step forward and will improve relations between farmers and their supermarket customers, but I wish the Government would take another look at the issue of financial penalties.
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