Shadow DEFRA minister Jim Knight explains why the Grocery Code Adjudicator must not be toothless in the face of poor supermarket practices
Around an eighth of household budgets are spent on food and as a result supermarkets are massive businesses. These huge retailers compete hard to attract shoppers and to maximise profit – and the largest makes UK profits of £2.5bn, with £1 of every £10 spent in the UK spent in Tesco. However what's good for shareholders can be at the expense of suppliers who need a little help to keep the worst excesses of supermarket buyers at bay.
I have heard real horror stories. Farmers who've spent over a year growing a crop for a specific retailer getting cancelled with just six weeks notice. Food producers being charged for shelf positions. Others fined for failing to supply produce when the quantities have changed at no notice. These shocking practices make it much harder for new products to come on our shelves, reducing choice and ultimately damaging consumers.
That is why in 2008 the Labour government asked the Competition Commission to look at the supply to supermarkets and see if they were behaving fairly. As a result they followed the recommendation and introduced a Groceries Supply Code of Practice so the supermarkets would be fairer in their dealings with suppliers. All three main parties then promised in their 2010 manifestos to introduce an adjudicator to police these rules.
Today, the Lords continue their discussion of the Groceries Code Adjudicator Bill. We are pleased the Government have finally brought forward the Bill to set up a referee for these rules, but we want the adjudicator to have real teeth.
The first issue of the day will therefore be the big one. After considerable pressure, Ministers have agreed that suppliers can complain anonymously or through trade bodies like the National Farmers Union. But while they have agreed that the adjudicator might need powers to fine, they are refusing to give those powers from day one.
What is the point of a referee with few meaningful sanctions? The threat of a red card is helpful in getting footballers to stick to the rules. In rugby, they respond to the threat of the sinbin and being moved back ten metres. These sanctions aren’t always used but they need to be there to give the referee authority. The same applies to regulators.
We are now paying the price for banks being under regulated. A few years ago, the Tory Opposition pushed for city deregulation and we went too far in giving them what they wanted. Our media have been regulated by a toothless Press Complaints Commission and the phone hacking scandal is upon us as a result. Ofgem is weak before the might of the vested interests of the energy companies.
Not all supermarkets abuse their power. But these massive powerful interests need reining back, in the interests of producers and consumers. Without the power to fine from day one the new adjudicator will be feeble and won’t give farmers that extra little help they need. All sides in this debate are speaking with one voice. I hope Ministers are listening.
Lord Jim Knight of Weymouth is Labour’s Shadow DEFRA Minister in the Lords
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