Ending Exploitation in Supermarket Supply Chains

Part of the debate – in the House of Commons at 12:46 pm on 18th October 2018.

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Photo of John Hayes John Hayes Conservative, South Holland and The Deepings 12:46 pm, 18th October 2018

Supermarkets have decimated high streets, destroyed livelihoods and distorted the food chain. The exploitation to which Kerry McCarthy drew the attention of the House is not an aberration and is not marginal to supermarkets; it is intrinsic to their business model.

In my lifetime—I should say my short lifetime—I remember parades of shops on council estates, like the one on which I was brought up, across the whole of the country; shops run independently by people who knew their customers and knew those who supplied them. They had an interest in ensuring that their practices were sufficiently ethical to maintain their customer base and to preserve quality relationships with their suppliers. In my lifetime, farmers and growers in my constituency could sell the goods they made to a variety of people in a variety of places. They could go to local markets. They could sell in local produce auctions. They could walk away from deals if they were not fair, reasonable and ethical. In my short lifetime—I emphasise that again, Madam Deputy Speaker—our high streets were vibrant places. Our towns and cities were made lovelier by the variety and particularity that one found there. Sadly, all of that is no longer the case. What Napoleon called a nation of shopkeepers has become a nation of automated checkouts with contactless cards. We are all worse off as a result.

I want to deal in particular with the exploitation that the hon. Lady mentioned, and which I have said is implicit in the food chain model we have created. It is inevitable that farmers and growers must sell to the handful of places available to buy their goods. A report issued in 2000 by the Competition Commission demonstrated that a business able to control as little as 8% of the market has sufficient means to engage in exploitative trading practices. The big supermarkets do not control 8% of the market or even double that. Combined, the five big supermarkets control the vast majority of the United Kingdom’s grocery market. That concentration of power, made worse by Tesco’s recent absorption of the wholesaler Booker, magnifies and exaggerates the potential for exploitation right through the food chain, with my farmers and growers in Lincolnshire unable to walk away from bad deals as they have nowhere else to sell their produce. We know what those bad deals look like: up-front payments and delayed payments for the goods that suppliers provide, and sometimes, suppliers being obliged to fund “marketing campaigns” on behalf of retailers. Payments are now delayed for an average of 45 days, which puts small and medium-sized businesses on the brink of survival, as the supermarkets routinely engage in these practices.

The Agriculture Bill is welcome. Clause 25 gives new powers to Government— thanks to the insight, will and vision of the Secretary of State for Environment, Food and Rural Affairs, no doubt—to take action against supermarkets that behave in the ways I have described. I have implored him to use those powers with alacrity and determination, for they are needed. The supermarket adjudicator, introduced when I was a Minister in the Department for Business, Innovation and Skills, has also made some progress, although I would like to see her powers extended and used more liberally.

However, we must do much, much more, because as well as the exploitative practices that the hon. Member for Bristol East raised and which I have tried to amplify, we must consider the character of our high streets. Most towns now suffer from out-of-town developments that draw people away from the small shops that remain. With footfall decreasing, fewer shops can survive, because they rely on busy town centres to attract their customers.

Hon. Members know the scene as well as I do in large parts of Britain, with boarded-up shops, boarded-up banks and decimation in many places. People who do shop at out-of-town estates are forced to drive there, as they can no longer walk or cycle to the shops. They are encouraged to buy in large volume because they visit the shops infrequently, so there is then the problem of over-purchasing and food waste. We are told that around 30% of the food purchased ends up being thrown away. Encouraging over-buying more than offsets the claim from supermarkets that they have driven prices down. They may have kept prices down, but people no longer buy what they need; they buy much more than they need and much of it goes to waste.