Amendment 63

Agriculture Bill - Report (2nd Day) – in the House of Lords at 7:29 pm on 17th September 2020.

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Lord Grantchester:

Moved by Lord Grantchester

63: Clause 27, page 23, line 15, leave out “a specified person” and insert “the Groceries Code Adjudicator”Member’s explanatory statementThis amendment is intended to ensure that the role of regulating agricultural contracts is given to the Groceries Code Adjudicator’s office.

Photo of Lord Grantchester Lord Grantchester Opposition Whip (Lords), Shadow Spokesperson (Energy and Climate Change), Shadow Minister (Environment, Food and Rural Affairs), Shadow Spokesperson (Business, Energy and Industrial Strategy)

I thank the noble Baroness, Lady Bakewell of Hardington Mandeville, the noble Lord, Lord Curry, and my noble friend Lord Whitty for adding their names to this amendment and to many of my following amendments, which introduce the office of the Groceries Code Adjudicator as the mechanism by which these fair dealing provisions under Clause 27 will be administered. At this stage I will mention that the noble Lord, Lord Curry, asked me to express his disappointment that he has had to leave tonight because of the late sitting of our proceedings; he cannot get home without leaving immediately. He would have liked to have been present to make his remarks on this important series of amendments to this clause.

I introduced these amendments in Committee as probing amendments to draw out from the Government how they expected to take these provisions forward. As with many features of this framework Bill, so much of the detail and the governance arrangements are not being made explicit in the Bill.

That these provisions have been recognised as needed and necessary to the better conduct of a fair market is something that the Government can be congratulated on. The debate in Committee underlined how effective the GCA Act has been in setting out and policing business practice in the GSCOP, which now regulates the behaviour of the retail industry, which must abide by it in its relationships with its direct suppliers. There was universal praise for Christine Tacon on how she, as the adjudicator, successfully encouraged effective change to become embedded down the supply chain.

In response, the Minister explained that his department, Defra, would be the lead department in delivering these obligations. The Government intended to commence these regulations agricultural sector by sector, starting with the dairy industry. This has already started, with a consultation on the operation of contracts that is drawing to a close next week, as I understand it, on 24 September—that is, three months after the opening of the consultation in June. However, I may be corrected, as on a previous amendment the noble Baroness the Minister said that it has already closed. That it is on the cusp of closing or has already closed is regrettable in that we are not able to deliberate on the consultation in our considerations on the Bill.

I table these amendments again to give the House a chance to debate these important provisions and reflect further on the Government’s approach. I state again that Clause 27 is a very bold and ambitious step that the Government have taken. I express concern that, although the groceries code has proved very effective in stabilising fair dealing provisions in the retail sector, difficulties remain regarding whether this was the appropriate mechanism to cover the whole of the supply chain: the service sector as well as the retail sector, the widespread diversity of food products in the supply chain and how they are delivered across many forms of enterprise and business practice.

The Government are undertaking a huge task and care must be taken, as a one-size-fits-all regulatory regime may not fit all in the appropriate manner. The problems and solutions in one sector and the relative merits in the behaviour of various participants may not be suitable to be applied across the board to all sectors, each with differing market imperatives, regarding how the various markets may be made to work more effectively. That there is an imbalance in negotiating power between the primary producer through the processing, manufacturing and product development supply chain and the end market is not in doubt.

I shall not press these amendments tonight, nor support other amendments, including Amendment 87 should it be pressed. The Government have set out on the task and already started a consultation with the dairy sector. As I set out in Committee, I was concerned that these provisions had a narrow focus on contracts. Indeed, Clause 27(1)(a) specifically addresses contracts. Fair dealing provisions should examine the business relationship in its widest implication and interpretations that encompass many various circumstances that arise in primary production. However, it must be recognised that a first step is being taken, and it is starting at a very pertinent point—the contract.

In the interval between Committee and Report over the Summer Recess, I spoke to many in the dairy sector, especially those at the foot of the supply chain—the dairy farmer and his or her processor. I can tell the Minister that the department’s consultation has been widely promoted among the many sections of the industry: the farmer, the producer group representing the farmer’s suppliers, and the processing industry. Many have shared their submissions with me, and I am sure that the Minister’s department will receive a widespread response. Here and now is perhaps not the place to debate this further; I will add merely that the voluntary code of practice—VCOP—in contracts, introduced in 2012, has proved ineffective in improving fairness and transparency on a wider scale and, as has been experienced during this pandemic, urgency is needed to tackle the problem more extensively and in a comprehensive fashion.

I also note that this is a widespread problem throughout the industry that now extends across borders, with the overseas ownership structure covering the dairy industry in both the UK and Europe. The EU is also pressing on with its solutions, through directive 2019/633 on unfair trading practices in business-to-business relationships in the agricultural and food supply chains. Can the Minister make any comment, even though the consultation has barely closed, on the progress of the consultation, concerning the numbers, extent and general features beginning to become clear? Even in the immediacy of the lockdown, the retail relationship with the supply chain is today much better than it has been, due to the activities of the Groceries Code Adjudicator.

Will the department be separating out submissions from the retail sector and the service sector from this consultation? The consultation does not mention the wider farmer-processor relationship with the ongoing supply chain, and specifically with the retailer. Will the Minister give a commitment that further inquiries will be conducted as the submissions are considered? It may prove difficult to make immediate recommendations. Reflecting across other sectors in the industry, can the Minister give any indication as to when further consultations will be progressed? Which sector has the department next in mind? Furthermore, how might the various sectors combine to find comprehensive answers to this very difficult problem of fair dealing in the industry, a problem that is now being tackled by the Bill? I beg to move.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

My Lords, I congratulate the noble Lord, Lord Grantchester, and the co-signatories for bringing forward Amendment 63 and others in this little group. Amendment 67, in my name and that of the noble Baroness, Lady Ritchie of Downpatrick—I thank her for supporting this amendment —seeks to achieve precisely the same ends. I join with the noble Lord, Lord Grantchester, in expressing regret that the noble Lord, Lord Curry, is not able to speak to this group, but I entirely understand the circumstances in which he felt he had to head north.

Again like the noble Lord, Lord Grantchester, I pay tribute to the Groceries Code Adjudicator, who has done a sterling job in regulating the relationships between the major retailers and direct suppliers. I was most grateful to have the opportunity to discuss this amendment with my noble friend the Minister, who I understand may be able to signify some movement in this regard. I look forward to that with great interest.

I hope that the Government are minded to widen the remit to cover the gap that needs to be plugged by including the indirect supply chain, such as dairy, which is currently excluded from the process. For dairy producers and fruit growers, many of whom are quite small in size, it is extremely difficult to bring a complaint to the Groceries Code Adjudicator. That is why I am very keen—and it is something that we concluded some seven or eight years ago on the Environment, Food and Rural Affairs Select Committee next door—that it should be incumbent on the Groceries Code Adjudicator to bring forward, on her initiative, investigations in this regard. The indirect supply chain, as well as the direct, is extremely important for these small suppliers, and things do sometimes go awry. We should not be entirely reliant on complaints from small producers and growers who can too easily be identified and may, as a result, lose their contract, livelihood and mainstay of their income.

I very much support the Groceries Code Adjudicator taking over this role. I understand the difficulties, as she reports to a different department. If there has been some movement and my noble friend is able to see a way forward in this regard, I think it would be very welcome to the House.

Photo of Baroness Ritchie of Downpatrick Baroness Ritchie of Downpatrick Non-affiliated

My Lords, I support this suite of amendments. As the noble Baroness, Lady McIntosh of Pickering, has said, I was quite happy to add my name to her Amendment 67 but, in fact, all these amendments as elucidated by the noble Lord, Lord Grantchester, clearly seek to achieve the same ends, namely to widen the remit of the Groceries Code Adjudicator in the indirect supply chain, to benefit those in the dairy industry and fruit growers’ association.

I pay tribute to the outgoing Groceries Code Adjudicator, Christine Tacon, and welcome the new person to that role. It is interesting that there was a review published on 16 July this year into the role of the Groceries Code Adjudicator, which found that:

“The overall evidence from the review also suggested there is still a need for” such an organisation and such a person,

“to ensure retailers comply with the requirements of the Groceries Code.”

Some responses to the review indicated that some suppliers are still reluctant to raise issues with the Groceries Code Adjudicator. The Government recognise in the report the steps that the current Groceries Code Adjudicator has taken to encourage suppliers to raise issues and make the commitment to work with the next Groceries Code Adjudicator—the new person in that job—and the retailers directly.

Since the Groceries Code Adjudicator is the independent regulator ensuring that regulated retailers treat their direct suppliers lawfully and fairly, it would be good at this stage if the Minister could show us a certain direction of reflection in his thinking in respect of the amendments in this group, which seek to widen the remit of the role to cover the indirect suppliers and to ensure that there are greater levels of regulation.

Photo of Baroness Bakewell of Hardington Mandeville Baroness Bakewell of Hardington Mandeville Liberal Democrat Lords Spokesperson (Environment, Food and Rural Affairs) 7:45 pm, 17th September 2020

My Lords, it is a pleasure to follow the noble Baroness, Lady Ritchie of Downpatrick. I have added my name to Amendments 63 and 64 in this group, as I believe that the Bill needs to be much clearer on who will take responsibility for complaints into alleged non-compliance.

Fair dealing in agriculture is vital to the reputation of the farming industry, and the public need to be reassured that there is someone watching their backs. I thank the noble Lord, Lord Grantchester, for setting out the argument so clearly. The aim is to widen the remit of the Groceries Code Adjudicator, who is a truly independent person.

A “specified person”, as stated in the Bill currently, could be anyone. Can the Minister say who the Government had in mind to be this person? Would there be open recruitment, with advertising, or would this be an appointment through the old boys’ and old girls’ networks? The Groceries Code Adjudicator is a far better choice: a nationally recognised person who has a reputation and inspires trust and confidence. This is the proper person to take forward alleged non- compliance.

Amendment 64 sets out how the Groceries Code Adjudicator will interact with the Agriculture Bill in determining a complaint being carried out. I have not added my name to Amendments 65 and 66, but I fully support them. It is somewhat surprising that the Bill just refers to functions being conferred on “any” person. This does not fill me with confidence. Of course, this person must be competent and appropriate, and this should be in the Bill; otherwise, it might be somebody like me.

The noble Lord, Lord Grantchester, has spoken about fairness and contracts. Dairy farmers are at the start of the supply chain and need to be considered carefully. The noble Baroness, Lady McIntosh of Pickering, has tabled an amendment which would also give the Groceries Code Adjudicator responsibility for the supply chain in the regulatory clauses of the Bill. There seems to be a wish to achieve the same aim, as has been reiterated by the noble Baroness, Lady Ritchie of Downpatrick.

Given the very reasonable arguments which have been put forward this evening, I hope the Minister can give a positive response to this debate. I look forward to his response.

Photo of Baroness Finlay of Llandaff Baroness Finlay of Llandaff Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, the noble Baroness, Lady Jones of Moulsecoomb, had requested to come in, and I understand she has not been able to. Therefore, I now call the noble Baroness, Lady Jones, before the Minister responds.

Photo of Baroness Jones of Moulsecoomb Baroness Jones of Moulsecoomb Green

Thank you— I was scrubbed by mistake. I am sure your Lordships are very happy that I have been slotted back in.

A noble Lord:

Hear, hear.

Photo of Baroness Jones of Moulsecoomb Baroness Jones of Moulsecoomb Green

Thank you very much. I would like to say that these amendments are so obviously a good idea for the regulation and adjudication of this part of the Bill. There is nothing else to be said; I hope the Minister accepts them.

Photo of Lord Gardiner of Kimble Lord Gardiner of Kimble The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

My Lords, this has been an interesting debate, and I thank all noble Lords for contributing toward it. Of course, I regret that the noble Lord, Lord Curry of Kirkharle, is not with us. He sent me a note, and I will have further discussions and considerations with him, because I am very keen to hear what he would have said in this debate.

Turning to Amendments 63, 64 and 67, I would like to assure noble Lords that work is ongoing to determine the most appropriate mechanism of enforcement for the provisions under this part of the Bill. No decisions have been made about who will be appointed as the enforcement body for Part 3. It is important to note, with particular reference to Amendment 67, that while all the measures contained in this part of the Bill will collectively work to improve supply chain fairness, the Government believe enforcement will work best when each particular policy area in Part 3 can be addressed individually. I say that because it is very important that we get to grips with the issues in each sector, identifying those that are distinct as well as those that may be common. I think that would be a pragmatic consideration.

On the suggestion that the Groceries Code Adjudicator should be given enforcement responsibilities, it is important to note that one of the key factors in the adjudicator’s success is its targeted focus on the behaviours of the UK’s largest supermarkets with their direct suppliers. This has enabled the adjudicator to work closely with the industry in developing supply chain solutions. I join other noble Lords in acknowledging in the work of the Groceries Code Adjudicator. It has been a considerably successful tenure of office.

A government call for evidence in 2016 explored the possibility of extending the adjudicator’s remit beyond those directly supplying the largest retailers. The review found insufficient evidence of widespread problems further down the groceries supply chain and concluded that there was no justification to extend the remit. However, it did identify some remaining concerns. These were sector-specific and predominantly concerned with the first stage of the supply chain. Following on from this, we feel that such issues are best addressed with the appropriate and targeted interventions included in the Bill.

Preliminary analysis of the responses to the Government’s consultation on the dairy sector has shown that there are a range of views about appropriate enforcement. I emphasise that an adjudicator-style model is only one of many potential means to resolve contractual disputes and ensure compliance with any new regulations. Amending the Bill to appoint the Groceries Code Adjudicator as the enforcement body would serve potentially to tie the Government’s hands to only one of the many possibilities available. This would also preclude the ability to listen to the views of industry and respond accordingly, which is really important and, we think, critical in creating effective solutions.

The Government are, of course, aware of the issues that farmers face in the supply chain and that is not confined to the dairy sector. To answer one of the questions from the noble Lord, Lord Grantchester, the Government will carry out similar consultations to explore the issues facing other sectors in turn. Discussions with stakeholders have already begun, to look at the situation in the red meat sector and what sort of interventions could improve the position of producers in that supply chain.

On Amendments 65 and 66, I thank the noble Lord, Lord Grantchester, for highlighting the importance of a robust enforcement regime to ensure that the fair dealings obligations are effective and sustainable. It is important to state that no decisions have been made about the nature of enforcement, or the body responsible for enforcement. The reason is robust and strong: the Government want to work with industry and listen to its ideas and concerns before any final decision is made.

The noble Lord, Lord Grantchester, asked about the consultation on the dairy sector. To be precise, I can confirm that the consultation closed on Tuesday. The consultation included a specific question about dispute resolution and, while the detailed analysis is still being carried out, it is already clear—this is broad-brush, because I asked whether there are any indicators—that stakeholders have a broad range of views about the most appropriate form of enforcement and finding the best solution will obviously require some consideration. The Government aim to publish a summary of responses later this year, which will be very important and will provide greater detail about the views shared and the options available. I hope it will not be too long before there will be scope for that consideration. The Government will exercise due diligence in designing the enforcement regime and appointing a regulator.

I say to the noble Baroness, Lady Bakewell of Hardington Mandeville, that I do not recognise her description of the rigour with which I and other Ministers consider appointments to public bodies. It is a very serious matter; we recognise that it is a matter of people coming forward to help in the public service. I reassure her that it has no input other than that it must be done rigorously, and the right people need to be chosen.

The Government intend the fair dealing obligations to create positive change for the industry. That is why we are doing it and why this is such an important feature. I am very glad that the noble Lord and other noble Lords have raised this, because this is all part of the prism of this Bill. A lot of people are worried that we are talking too much about the environment, but a lot of the guts and detail of what will come out in the provisions of the Bill are designed to help the farmer in the great production of food, and so that we can help the farmer get fairer dealing.

I have a note relating to the remarks of my noble friend Lady McIntosh on the GCA launching its own investigations. The Groceries Code Adjudicator can launch its own investigations, if it has reasonable grounds to suspect that a large retailer has broken the code. Again, I think the adjudicator’s work has been essential. I think and hope that, in the spirit of this debate, the reason the Government would at this time resist putting forward a particular body, however successful the adjudicator has been in this area, is that the best way to deal with difficulties in certain sectors is to work with the sector to see what is the best mechanism for enforcement. Let your Lordships be in no doubt that these are provisions that we recognise must be attended to, and in short order, because they are the way that will help the farmer in this situation.

In that spirit, I very much hope that the noble Lord will feel able to withdraw his amendment.

Photo of Lord Grantchester Lord Grantchester Opposition Whip (Lords), Shadow Spokesperson (Energy and Climate Change), Shadow Minister (Environment, Food and Rural Affairs), Shadow Spokesperson (Business, Energy and Industrial Strategy)

My Lords, I thank all noble Lords who have come forward to speak tonight. I certainly appreciate the remarks of the noble Baroness, Lady McIntosh, in calling for the extension of the role of the adjudicator, and the various discussions with the Minister. I agree that the widespread experience of the Groceries Code Adjudicator should give rise to exploring how the role of that office may be extended.

I remind all noble Lords that agriculture can be characterised as unusual: it is almost unique in that producers invariably buy retail yet sell wholesale. I certainly appreciate the Minister’s comments and the gracious way in which he is going to include the noble Lord, Lord Curry, in further discussions. He has also come forward with a very helpful update on his department’s ongoing deliberations. I appreciate that the Government need flexibility to get the right solutions to each sector’s issues, and I look forward to clarity being provided in the publication of this consultation and to the debates we will have on that later. In the meantime, I beg leave to withdraw the amendment.

Amendment 63 withdrawn.

Amendments 64 to 67 not moved.

Photo of Lord Russell of Liverpool Lord Russell of Liverpool Deputy Chairman of Committees

We now come to the group beginning with Amendment 68. I remind noble Lords that Members other than the mover and the Minister may speak only once, and that short questions of elucidation are discouraged. Anyone wishing to press this or anything else in this group to a Division should make that clear in the debate.

Clause 32: Identification and traceability of animals