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Clause 4 - Investigations

Groceries Code Adjudicator Bill [Lords] – in a Public Bill Committee on 11th December 2012.

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Amendment proposed (this day): 19, in clause 4, page 2, line 5, leave out subsection (1) and insert—

‘(1) The Adjudicator may carry out an investigation where there are reasonable grounds to suspect that a large retailer has—

(a) broken the Groceries Code; or

(b) failed to follow a recommendation made under section 7; or

(c) failed to incorporate the Groceries Code into a supply agreement, as required under Article 5 of the Groceries Supply Order.’.—(Andrew George.)

Question again proposed, That the amendment be made.

Photo of Roger Gale Roger Gale Parliamentary Assembly of the Council of Europe (Full Member)

I remind the Committee that with this we are discussing the following:

Amendment 20, in clause 6, page 2, line 26, leave out from ‘that’ to end of line 28 and insert ‘any of the grounds for launching an investigation under section 4(1) has in fact occurred, the Adjudicator may take one or more of the following enforcement measures—’.

Amendment 21, in clause 7, page 2, line 33, leave out subsection (1) and insert—

‘(1) If the Adjudicator chooses to enforce through making recommendations, that means—

(a) in the case that a retailer has been found to have broken the Groceries Code, or has failed to follow a previous recommendation made under this section, recommending what the large retailer should do in order to comply with the Groceries Code; and

(b) in the case that a retailer has been found to have failed to incorporate the Groceries Code into a Supply Agreement, as required under Article 5 of the Groceries Supply Order, recommending what the large retailer should do in order to comply with Article 5 of the Groceries Supply Order.’.

Amendment 40, in clause 13, page 5, line 3, after ‘Code’, insert ‘or the Groceries Supply Order.’.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I am delighted to be back for the second sitting of this Bill Committee and to be here for the first one under your chairmanship, Sir Roger. I am sure that we will continue with this morning’s enjoyable and good-humoured debates on the detail of this important measure. Just before we broke for lunch to see what else was happening in the House by way of statements and so on, my hon. Friend the Member for Camborne and Redruth asked what  would happen if the adjudicator made a recommendation and it was not followed by the retailer, and whether there would be proper protections against repeat offenders.

I had outlined why it would be helpful if recommendations did not always have to be sanctioned if they were not followed. There may be cases where the retailer could fulfil the ultimate aim of complying with the code by using a slightly different method from the specific tasks set out in the adjudicator’s recommendations. None the less, I understand the concern about retailers who are seen to be flouting recommendations that the adjudicator puts in place, presumably for good reason. That is worth considering in the context of escalation.

We obviously do not want cases whereby retailers do not follow the adjudicator’s recommendations, but there are already protections in place, which I will share with the Committee, that will hopefully provide the reassurance that my hon. Friend seeks.

First, it is important to note that the adjudicator has a duty to monitor whether a recommendation has been followed. They have powers under schedule 2 to require information from a retailer to determine whether a recommendation has been followed. Paragraph 1(2) of schedule 2 states:

“The Adjudicator may, for the purposes of monitoring whether a large retailer has followed a recommendation made under section 7, require the retailer—

(a) to provide documents in the retailer’s possession or control;

(b) to provide other information in the retailer’s possession or control.”

That sets out clearly that the adjudicator will monitor whether the recommendations are being followed. If they have reasonable grounds to suspect that a recommendation is not being followed, which may well be the case after they have exercised their powers under schedule 2, they can begin a new investigation.

To go back to the example of Bob and the training, and his incorrectly issuing a contract that was not compliant with the code, I suspect that if the adjudicator found that the compliance officer had not looked at Bob’s contracts, but that training had been undertaken and that Bob was now operating effectively, they would accept that the code was not being broken and that all was well, even though a recommendation had not been followed to the letter. Importantly, however, if they found that the code was being broken, they could start a new investigation.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

Does the Minister not appreciate that amendment 20, tabled by the hon. Member for St Ives, essentially says that the Bill, as it stands, almost has a full stop after any penalty is issued? Rather than a new investigation being started if recommendations are not complied with, that amendment would simply allow the adjudicator to refer the matter back to clause 4 and run through the procedure again.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I understand the sentiment behind what my hon. Friend the Member for St Ives is trying to achieve, but the consequence would be that the recommendations, which are supposed to be a light-touch tool for the adjudicator, would cease to be light-touch because they would become binding. That would not necessarily be the best way to ensure compliance with the code because the adjudicator may not always be  best placed to say whether, for example, in a specific business model, the training or the compliance officer signing off the contracts was the better solution. A recommendation may be helpful, but it is important that retailers and companies have the freedom to choose their method of complying with the code, even if the adjudicator makes helpful recommendations.

However, it is important that that procedure is in place so that the new investigation can begin. Obviously, it will be up to the adjudicator, but if a particular retailer had not followed recommendations and was therefore committing a regular breach of the code, it follows in logic that a reasonable adjudicator would be tempted to reach for the more severe powers at their disposal on the next occasion. A recommendation is their lightest-touch tool in terms of powers, and they could still name and shame in any subsequent investigation, or impose fines. I suspect that there would be an appetite for the adjudicator not to take it lightly if any retailer tried to ignore an investigation’s findings. That kind of escalation is more appropriate than making recommendations binding. Attractive as that may appear superficially, I have pointed out some of the problems that might arise when the code could be complied with through a method different from the specific recommendations. The bottom line, and what is important, is that the code is complied with.

For those reasons, I ask my hon. Friend to withdraw the amendment. I appreciate that, with part of the arguments being heard in the pre-lunch sitting, the debate has been slightly disjointed.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

On the issue I raised through amendment 40 about items purchased for resale by arm’s length or subsidiary companies operating on behalf of the retailer, is my hon. Friend content that the basis of the argument is well made? Does she accept that the non-governmental organisations and others who advance that argument have a fair point and that, even if it is not to be addressed by amendment 40, it deserves to be tackled in her response or in some other way?

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

My earlier comments on amendment 40 were about ensuring that the principle was kept between the OFT and the groceries code: the groceries code adjudicator is there for the code, and the OFT is there to enforce the order. It is important that we keep those two different things separate. My hon. Friend made some points that we may come to in our debate on amendment 17, and I will be delighted to debate those issues further at that juncture.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

It is a pleasure to have you with us and to serve under your chairmanship, Sir Roger. I am grateful to the Minister for her response. The context of clause 4 needs to be borne in mind when looking at the amendments. As I said in my opening remarks, it is important that we recognise that market intelligence can be used as the reasonable grounds on which the adjudicator instigates an investigation. That is vital, and an essential basis that underpins the Bill.

In addition, it is reasonable, if market intelligence can be used—that intelligence may be gathered, for example, from trade bodies that may advance a particular case—that it is tempered by clause 10, which ensures  that if the evidence that instigates an investigation is vexatious or without merit, costs can be awarded. That is the circumstance against which I hope the Minister would judge the reasonableness of the case for, for example, allowing an escalation to a further level of enforcement if it is clear that the retailer is completely flouting or ignoring the adjudicator’s recommendations.

The Minister gave reasons why the amendments are not necessary. However, I thought that tabling the amendments and teasing these points out was indeed necessary. It is important that the Minister and the Government reflect on the points made during the debate, and, having reflected, consider whether any further tinkering or amendment is necessary.

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs)

The hon. Gentleman is making a very considered response to the Minister’s statements, but I share his concern in that I am not quite clear about how enforcement is stepped up in the case of a repeat offender or somebody who, one way or another, wheedles their way out of the recommendations. It is not entirely clear to me, so I am taking this opportunity, through an intervention, to give the Minister a chance to clarify the issue for the hon. Gentleman as well.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

I take the point and no doubt so will the Minister.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

The key thing to bear in mind is that the adjudicator will have recourse to three types of action: recommendations, naming and shaming, and fining. They will have the ability to instigate an investigation when they have reasonable grounds for believing that the code has been broken, and the powers to check whether the recommendations are being followed. In the scenario where they are not being followed and there are reasonable grounds for believing that the code has been broken, they can do an investigation. Without prejudicing what the adjudicator would do in a particular case, I suspect that any adjudicator would take a pretty dim view of retailers flouting what they had been asked to do to comply with the code. If necessary, further sanctions are available, such as naming and shaming, and fining, which a retailer could not weasel out of.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

I am grateful to the Minister for that intervention, because it seems to indicate that the power to escalate enforcement action is available to the adjudicator in extremis, or where the adjudicator is unimpressed by the retailer’s response to the recommendations. There was perhaps a grey area there, and some uncertainty about the capacity of the adjudicator to escalate. Perhaps we can come back to that at a later stage.

The Minister also said, in the dim and distant earlier part of our proceedings, that suppliers have a recourse in law through the Enterprise Act 2002. That comment would probably be taken with a very large dose of salt by a lot of suppliers who already fail to use the previous voluntary code, and indeed the existing code, as a means of resolving disputes with retailers, for all the reasons I have explained already.

I entirely accept the Minister’s point that retailers will often find a more appropriate way of satisfying the recommendation than the way the adjudicator has  advanced, and I thought I had covered that point in my opening remarks. Nevertheless, the debate has been useful and has teased out and clarified—I think the hon. Member for Ogmore will have found the most recent interventions clarifying—several issues, which has enhanced the strength of the clause. There may be matters for the Minister and the Government to reflect on, but I remain satisfied with that response, and, as I indicated earlier, the amendments are probing. I therefore beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Andrew George Andrew George Liberal Democrat, St Ives 2:15 pm, 11th December 2012

I beg to move amendment 37, in clause 4, page 2, line 7, after ‘Code’, insert ‘since the Code since came into force.’.

Photo of Roger Gale Roger Gale Parliamentary Assembly of the Council of Europe (Full Member)

With this it will be convenient to discuss amendment 15, in clause 4, page 2, line 12, at end add—

‘(4) The Adjudicator will have authority to review compliance and to undertake one or more investigations if the Adjudicator suspects that there has been any breach of the Groceries Code since that Code came into force on 4 February 2010.’.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

I particularly wanted to introduce those amendments as I had advanced the point with both the Minister and the Minister of State, Department for Environment, Food and Rural Affairs on Second Reading. I want to remind people that the adjudicator is merely the referee that has been brought in to enforce a code that was introduced 4 February 2010. There is, therefore, a fundamental point of natural justice, apart from making sure that we do the right thing: if there have been flagrant abuses of that code by retailers that commenced and ceased—perhaps in some cases, cynically—just before the adjudicator was appointed, the responses that I received from my hon. Friends suggest that those abuses and breaches of the code should be ignored and that no action can be taken. I understand that, for example, the Gangmasters Licensing Authority has been gathering evidence of alleged breaches of the code numbering up to 1,000, which it intends to bring to the attention of the adjudicator when they are appointed.

Apart from anything else, if we want to make sure that, when the adjudicator is appointed, they are up and running, effective and can deal with the reality of the challenges that they will inevitably face, what could be better than giving them the power to review some of the alleged breaches of the code that happened before their appointment? That would be the most instructive way of getting them up and running.

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs)

The hon. Gentleman makes a strong point, and I hope that he does not automatically concede that this is a purely probing amendment. As he knows, the adjudicator may well be in place in a shadow form, possibly before the full implementation of the Bill. I hope that the adjudicator in shadow form will earn their salary, and will look not simply from that day zero forward, but at the continuity of issues that go back to the start of the code. That is a good one to ask the Minister to respond to positively. The code is in  operation; the adjudicator should be looking at the continuity, right back across the chronology of a particular case.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

I am grateful to the hon. Gentleman for making that particular point, and certainly I was grateful to the Minister for her intervention on me in column 363 of Hansard on Second Reading on 19 November 2012. Later in that debate when the Minister of State, Department for Environment, Food and Rural Affairs was speaking, I intervened on him. He made it clear that there is:

“A strong principle in British legislation that we do not apply retrospectivity to something that occurred before the date that a particular statute comes into effect. Therefore it would not be entirely proper for the adjudicator to look at complaints within the terms of the code that pre-dated that appointment if they no longer continue.”

I intervened in order to point out to my hon. Friend the Member for Somerton and Frome that of course the statute—and the statutory right of the Competition Commission to introduce a statute—in fact came into effect under the code on 4 February 2010. The Bill is merely the means by which that statute is monitored and enforced. It is simply the referee of the rules and statutes that were established more than two years ago.

My hon. Friend the Member for Somerton and Frome said that he understood the points that I had made, and that if I

“would care to engage with Government lawyers on that point of law, I am sure we would be happy to engage with him. We can return to the subject in Committee or on Report.”—[Official Report, 19 November 2012; Vol. 553, c. 409.]

We are now in Committee, and we have the opportunity to be clear about which statute we are talking about. In my view, the key statute is indeed the code, and the Bill is merely the mechanism of enforcement.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

The hon. Gentleman is hugely influential on these matters, and indeed the hon. Member for Somerton and Frome said that the Government would look at this. However, surely the principle of Government legislation must be that if someone has broken the code, then they have broken the code. Simply because the referee is now coming in to referee that code, if it has been broken then it has been broken, and therefore remedies should be sought.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

I entirely agree, and that is why I do not think that it is appropriate for any Government to, in effect, send a message that they will turn a blind eye to breaches of the law—and that is what it is. It is a breaching of the law, of a statutory code. This is not a voluntary code; it is a statute. The Government are in effect saying that this issue is more than their job is worth and they do not want to be troubled by having to retrospectively trawl through all these issues. That is the “blind eye approach” to this matter. I think that sends out entirely the wrong message, quite apart from anything else.

I would quite understand if the Minister said that the Government could look at it but that they will not have—and of course they would not have had at the time—the powers to fine, for example, because fining is being introduced in the Bill. There may indeed be a halfway house; I do not know. Perhaps I am trying to  help my hon. Friend find a way forward so that we can meet halfway on this issue. Perhaps the Government could take the view that the clause on investigations that we are now debating will apply retrospectively. The adjudicator can instigate investigations in order to examine whether there has been any breach of the code, but perhaps there might be circumstances in which it is reasonable to argue that because the enforcement powers were not in place when the code was first established in February 2010, it would be unlawful for Government to take any enforcement action in those circumstances. I do not know. I am not a lawyer and the Minister is no doubt advised by an army of lawyers.

On this point, Sir Roger, I wish to make it clear once again—and my saying so may aggrieve the hon. Member for Ogmore—that this is indeed a probing amendment. I made it clear on Second Reading that it is important in my view that this issue is addressed. I hope that the Government will listen to the points that I at least am making, and that perhaps others may wish to make, and having reflected on it perhaps bring forward some amendments of their own on Report.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

I am very grateful to the hon. Member for St Ives for giving way. I appreciate the consensual spirit in which this Committee has moved forward. We all support the amendments that the hon. Gentleman has tabled to this particular Bill, but would he not agree that he probed at Second Reading, and indeed has been probing since, and is now still probing? It is about time that the Minister stopped receiving the probing and acted on it.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

It is kind of the hon. Gentleman to advise me, and I will reflect on that. Perhaps he was probing me on the action that I should take.

On Second Reading, it was suggested that we should debate the matter and seek clarity in Committee. We still have one further stage, Report. I have been given the opportunity to at least advance the point that as far as we are concerned, the statute in this case is the code and not the Bill.

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs)

I am just going to probe the hon. Gentleman by way of an intervention. I suggest to him that one good reason behind amendment 50, in concert with his other amendment, is that it would allow the new adjudicator or the shadow adjudicator, once they are in position, to examine patterns of behaviour that might contribute to a new investigation. It would allow them to go back and say, “Actually, we have seen this before on repeated occasions since the code was in place, so it is worth while to go back and look at it.” That is why there is merit in the combination of amendments.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

I entirely take that point. I said earlier that in effect, if the groceries code adjudicator wants to learn on the job quickly, if they identify that particular retailers have form with regard to certain practices and get to know the wily activities that some of them get up to as a result of investigations, which may be retrospective, that can only enhance the adjudicator’s effectiveness, knowledge and ability, so that they do not come in blinking, wide-eyed and naive on day one,  dealing with a group of retailers that have prepared their obfuscations and defences in readiness for the adjudicator, who will find it much more difficult to mount investigations on matters and breaches that have yet to emerge.

I commend the amendments to the Committee, and I look forward to the Minister’s reply.

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs)

It is a great pleasure to serve under your stewardship once again, Sir Roger. In supporting these probing amendments, I seek reassurance from the Minister that in their absence, the adjudicator—or the shadow adjudicator, should they be in place before the Bill receives Royal Assent, as we hope it will—will be able to look backwards, particularly at incidents where there might be strong evidence of practices that would now fall foul of penalties under the remit of the Bill, to name and shame and even, although we want it as a last resort, to impose financial penalties.

The hon. Member for St Ives made a wise point in saying that legally, there might well be an exemplary case to say that sanctions cannot be applied retrospectively, but I do not think that this Committee would want to inhibit the new adjudicator’s ability to look afresh where evidence exists. If that takes the adjudicator backwards in the chronology to when the code started, so be it, because the adjudicator should learn as they go. That is the assurance that I seek from the Minister. I am sure that she will be able to give it, but we need to know that the adjudicator will not be inhibited in any way from dealing with what will undoubtedly be on their desk from the moment they arrive, and that they will be able to follow the trail a little bit backwards, even if they are not allowed to apply sanctions. I support the amendment, and I hope that the Minister can give that categorical assurance.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills 2:30 pm, 11th December 2012

I welcome the opportunity to discuss such issues, because it is helpful to get clarity. I fear that I might disappoint some Members by not being able to accept the amendment, but as my hon. Friend has intimated that his amendment is a probing one, Opposition Members might be more disappointed than he is. None the less, I hope to provide reassurance for all members of the Committee.

On retrospective penalties, there is a general legal principle that laws do not apply retrospectively, and I am sure that Members will appreciate that that is for a good reason. It has been argued that the legal obligation was in force because the code itself had been in force since February 2010, and retailers knew that they were legally obliged to comply with it. That is, of course, true, but it is also the case that they expected to run the risk of a breach of contract claim if they did not comply. That is a bit different from the enforcement sanctions that the adjudicator will introduce, whether they be recommendations or naming and shaming and financial penalties. The issue is not, therefore, just that the breach itself was in place as an actual breach; it is about whether the consequences were clear.

The retrospectivity applies to whether there is a breach—and a breach from February 2010 onwards was a breach because the code was in place—but the consequences will obviously be different once the adjudicator is up  and running, particularly with respect to the powers in place when the Act commences. That is the key point of differentiation between the views that have been put forward. It is a matter of fairness, but also of legal certainty, and the hon. Member for Edinburgh South, I think, said that we are not here in Committee just to bash the supermarkets. It is important that the measure is in place to facilitate good business relationships. We do not want to create an environment of uncertainty.

Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East

Is there a difference between carrying out an investigation and reviewing compliance, which is what the amendment appears to suggest, and imposing a penalty? The point about retrospective penalties is well known and respected, but from my reading of the amendment it does not necessarily suggest that the reviews would lead to punishment, rather that they would enable past practices to be investigated and commented upon.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I hope to be able to give some reassurance to the Committee. The key criterion is whether there are reasonable grounds for suspecting that there is a breach of the code. We really want the adjudicator to focus on getting retailers to comply with the code, and if a retailer has breached the code but has since come into compliance, and is complying when the groceries code adjudicator comes into force, that is not necessarily the best use of the focus of the adjudicator’s attentions. We want the adjudicator to focus on areas where there is not compliance.

Once the adjudicator comes into force, an ongoing breach of the code is a valid case for investigation and, potentially, for sanctions.

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs)

Is the Minister saying that if, from the moment the Bill receives Royal Assent and the adjudicator is there, a live case reveals a certain pattern of behaviour, the adjudicator will be allowed to follow that trail chronologically backwards to uncover for how long the pattern has existed, or that the provision applies only from the day on which the adjudicator starts with his powers?

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I welcome the opportunity to be clear on that matter. The investigation will be instigated, once the adjudicator comes into being, on the basis of a suspicion that there is a live breach of the code. However, Members rightly point out that there may be an e-mail trail or information going back to before the adjudicator was in place that is helpful in building the case and pattern of behaviour. That is, therefore, information that the adjudicator will be able to look at, as long as there are reasonable grounds to suspect a live breach of the code. I think that should reassure the Committee.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

Given the Minister’s earlier remark that the primary purpose of the adjudicator is to ensure compliance with the code, is she advancing that argument to say that, therefore, she is merely advising the adjudicator on how to behave once appointed? Or is she saying that the adjudicator has no authority in law to undertake any investigations? It seems that we are talking about investigations here. Has the adjudicator any authority  in law to undertake any investigations that have commenced and ceased before the appointment of the adjudicator? It is important to get clarity on that point.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I am happy to clarify. The investigation must be based on the suspicion that there is a live, new breach that is current since the adjudicator has been set up. If there has been a previous breach that is no longer a breach or there is no reasonable suspicion of an ongoing breach, that would not be grounds for instigating a new investigation. On the basic grounds of practicality, of ensuring that the adjudicator is focused on driving compliance, it is more sensible for them to spend time on areas where there is not currently compliance than on areas where, by definition of what I have just said, there is currently compliance even if things were not done properly in the past.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

I thank the Minister for that response. When she says that it would not be grounds for undertaking an investigation, is she saying that the adjudicator would be disempowered from undertaking an investigation—merely giving advice, in other words—or is she saying it would be better for the adjudicator to concentrate on compliance in the present and future rather than worry about what may have happened in the past?

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I am saying that the power we have set out in statute will be based on there being grounds for suspicion that there is a current breach. My rationale that that is the right position for the Bill to set out is analysis that it makes sense for the adjudicator to be able to prioritise. The investigatory power is on the basis of a current breach. If there are no reasonable grounds of suspicion of a current breach, there are no grounds to start an investigation.

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs)

I understand the Minister’s focus on a current breach. She has talked of the possibility of an adjudicator following, as part of the investigation into a current breach, an investigation that may follow what she described as an e-mail chain. What if evidence is brought forward, or is already there, that is not connected with the immediate live case but shows with a particular retailer, heaven forfend, that in the past 12 months there have been three or four different occasions, not linked to that particular case, all showing that same approach to breaking or misapplying the code? Is the Minister saying that the adjudicator should not follow those, unless they are directly related to the individual case that is right in front of them on their desk?

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I am saying there are alternative routes for justice in those scenarios. The existing routes are open. Suppliers in that situation that have evidence that the code is currently being breached—before the adjudicator exists—can take those cases forward as a breach of contract and can potentially get redress through that methodology. There is a potential overlap. Currently, if a supplier is concerned about a breach of the code, they can go through an arbitration process where the retailer may give redress, depending on the findings of the arbitration. That is open to suppliers at the moment and the adjudicator will take on the arbitration function. In the arbitration function, they may look at previous issues, but that is separate from the investigation function.

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs)

I want to pursue that important point. I do not want to put words in the Minister’s mouth, but it seems she is saying that if there were two or three primary producers who said, “We strongly suspect that this is going on; we know you are pursuing a line of investigation; we have evidence that this has gone on within the last year and we can name people who have been affected by it,” her advice is to pursue a different course of action. She seems to be saying, “Do not bring that to the adjudicator, because they will not be empowered. They will not be guided by Ministers to follow that particular course of investigation as part of the overall investigation into the retailer.”

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

It depends on the facts of the case. If the additional information that is brought forward is relevant to the current live investigation, it would certainly be sensible for the adjudicator to consider that. If it is unrelated and also not live, and not current and ongoing beyond the date at which the adjudicator comes into force, the adjudicator will know that they do not have the power to lodge an investigation on that basis. I imagine that they would advise that other methods would be the right way to take that forward, and I am sure they will be able to say that to anybody who came forward with that particular scenario.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

I am grateful to the Minister for giving way. On the point that the hon. Member for Ogmore raised regarding the availability to suppliers to use the existing code and the powers of arbitration, there are recourses that are available to suppliers in the code. Given the concerns that we have raised about the climate of fear and the fact that suppliers themselves would never use those recourses, because of the climate of fear, can she inform the Committee whether, in the past two and a half years, any suppliers have indeed used any of the recourses available to them under the code?

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I certainly can say, from one of the meetings that I had with retailers, that they have been having discussions with suppliers. They have had positive discussions. There have been occasions when issues have been brought to the retailers and it has been possible to resolve the issues. They obviously hotly dispute the existence of a climate of fear, and the Government are clearly aware that there is a great deal of concern. That is why we brought forward the ability for third parties to make complaints. Anonymity is firmly enshrined in the Bill to provide such protection.

I appreciate that retrospectivity is a bit of an obstacle and that that is to some degree disappointing to the Committee. It is a legal principle that many members of the Committee will wish that we did not have to abide by, but it is important that there is fairness and certainty.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

The Minister is being incredibly generous, as she was this morning. She mentioned third parties and anonymity, but that particular process will be enshrined only when the Bill gets Royal Assent. It would be unfair on suppliers that are in a climate of fear, although I think it is an artificial climate of fear. If someone has a large contract, they will try to do everything possible to keep that contract, so it is perhaps an artificial climate of fear in that sense. I do not think the supermarkets  are, in most instances, making threats, but if suppliers have had problems and not wanted to come forward, the provisions for anonymity and third parties now give them the cover to do that. However, I think the Minister is saying that they will not be able to do that, because the problems would have occurred before the Bill receives Royal Assent.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills 2:45 pm, 11th December 2012

I am not saying that they would not be able to do that if there was an ongoing breach, but if the issue has been resolved, it will not be a matter for the adjudicator, because the code will be complied with. As I have said, that is understandably of some disappointment to the Committee, but if we have a breach and by the time the adjudicator is up and running there is no longer a breach, we should celebrate that. Retailers will have sorted their act out and started to comply with the code and that is the point we all want to get to.

There are other measures in place that the Government implicitly accept are imperfect in bringing forward the Bill. There is a climate of fear, and that is why we are creating the adjudicator. There are other measures that exist for those cases where the retailer has sorted it out and started to comply with the code. We want to reward that behaviour, rather than punish it. We all want the adjudicator to focus on the folk who are seeing current or continuing breaches of the code.

I just wanted to pick up on the issue of the shadow period, which several hon. Members have mentioned. We do not know the exact date of Royal Assent or commencement, but the Government are committed to implementing the Bill with a fair degree of urgency. We published the draft Bill in the first Session of the Parliament and it was the first Bill considered by the other place in this Session. We are keen to get the Bill through all its parliamentary stages so we can get the adjudicator up and running, but there will be a period with a shadow adjudicator designate and we want them to be able to hit the ground running. I slightly disagree with my hon. Friend the Member for St Ives when he talked about the new adjudicator arriving on day one, wide-eyed, blinking and naive, because I hope that that will not be the case, whoever the successful candidate is.

On retrospectivity, there is a further practical issue, which is worth bearing in mind. It was mentioned that 1,000 breaches were being collected by the Gangmasters Licensing Authority. We do not want the adjudicator to be snowed under; we want them to be able to focus on current issues, particularly when they start. Ideally, they will focus on some of the most serious ones. Anything that organisations can do to help prioritise issues will be helpful and well received.

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs)

I think the Minister has been very clear. Rightly she wants to avoid fishing expeditions as well.

Just to put the issue to bed, once and for all, because people listening to the debate will want utter clarity, if the Ulster Farmers Union and its members are involved in a live investigation in the constituency of the hon. Member for Upper Bann, what happens if the Farmers Union of Wales or NFU Cymru come forward in the constituency of the hon. Member for Carmarthen West and South Pembrokeshire and say, “This has been  happening to us as well, within the past six months”? Is the Minister’s advice that they should pursue other means than bringing it forward to the adjudicator? They will be slightly disappointed if they are not able to bring that forward, particularly if it relates to the same organisations, individuals and so on.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

The hon. Gentleman’s final points are absolutely relevant, because if it relates to the same organisations or the same individuals, there is every reason to think that it may be seen as reasonable grounds and relevant to that case. If it was an entirely different retailer, that would be entirely different. I hesitate to be too prescriptive, because it is up to the adjudicator. What they constitute to be reasonable grounds of suspicion of a live breach are also important, because there is a question of whether there are reasonable grounds of suspicion that it is a current breach if the Welsh farmers say it has been happening to them in the last six months. That all depends on the specific information that comes forward, and that is exactly what the adjudicator is there to look at.

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs)

That is very helpful. If there seems to be some direct correlation that is pertinent to a live investigation, then unions, individual producers, suppliers and so on should bring that forward, because it might be useful to the adjudicator. That is a helpful clarification, if I have got that right.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

Absolutely. The determining factor is whether it is helpful to prove that a live breach is occurring, but the person who is best placed to judge that is the adjudicator. While not wanting to encourage a deluge of irrelevant information to land on the adjudicator’s desk, I equally would not want any message to go out to deter groups from bringing forward what is relevant information.

It is important that the expectation is managed that the adjudicator will not be able to create investigations for breaches that have happened and been resolved, before the adjudicator has properly commenced. We do not want to have unrealistic expectations, but we also do not want to deter individuals and organisations from bringing forward relevant information. It is important, in the shadow period when they are up and running before they have formal powers through the passing of the Act, that they can work on guidance, along with retailers and suppliers and collect some of this information.

It may well be that some of the information that is being discussed about potential breaches may not result in enforcement action, but may be very helpful to the adjudicator in setting out the guidance that they put down. It might also be helpful in terms of some of the communication work that they do with retailers—possibly even being used as examples of bad practice to be avoided. There is a role for it, but there is the underlying principle of retrospectivity that we do not want to breach.

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs)

The Minister has been very helpful. Could I suggest in reciprocating that helpfulness that something that may be an advantage to this Committee  before we get to Report Stage is if there was any way she could provide us with any draft guidance that was in the mind of her officials at the moment. That would clarify not only for serving Committee members but other Members of Parliament who will see this on Report exactly what should be brought forward and when. As she has just said, that could well be in guidance and a great short period exercise for her expert team to bring forward.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I would not want the hon. Gentleman to misunderstand what I mean by guidance. That would clearly be guidance that the adjudicator will be working on. I think it is right for them to work on the guidance that they will issue. They will be best placed to do that and, given that we are establishing the adjudicator to carry out and enforce exactly that role, then it would not be right for Department officials to jump the gun and prejudge what they would wish to be in that guidance. Just for clarity, that is the situation. I am sure that in that process of developing the guidance the adjudicator will be interested in working alongside a whole range of stakeholders, which I am sure will include Members of Parliament, particularly those who have taken a specific interest in this Bill.

I hope I have been able to give some reassurance to the Committee and particularly to my hon. Friend, the Member for St Ives such that he does not feel the need to press his amendments.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

This has proven to be an even more useful debate and interlude in the proceedings than I had anticipated. There is still an issue that we need to consider on Report. I hope the Minister will agree. As the hon. Member for Ogmore suggested, it might help if the Minister provided further draft guidance. That might be instructive.

A problem remains with the fundamental principle, and I should like to illustrate it with a metaphor. The law prohibiting the mugging of people could not be enforced in a parish with no police officer; it could be applied only from the day when a police officer was appointed. Retrospective evidence could not be taken to enforce that law, so those who had been mugged previously would not be able to have their grievances addressed even after the police officer’s appointment. In a sense, that is the metaphor for where we are with the issue, and I hope that my hon. Friend will reflect on it in those terms.

My hon. Friend helpfully emphasised the distinction—as I was attempting to do, although not as articulately as she did—between the code and the consequences and sanctions that will be available under the regulation when it is enacted. That might be the helpful thought line between the two of us, and perhaps it would be appropriate in certain circumstances for the adjudicator to undertake investigations into breaches that might have happened since the code was enacted on 4 February 2010, but were no longer happening at the time on which the adjudicator was appointed. It is reasonable to have that availability.

My hon. Friend might also have trammelled the tightrope between advice and law. I am still not clear whether she suggested that, for example, the adjudicator will want to reach wise conclusions about how to deploy properly what will inevitably be a limited resource. That  will mean that they will have to prioritise—to use her expression—and that must be right if, as I said, the GLA will be bringing forward 1,000 examples of alleged breaches.

I would simply leave matters to the adjudicator, who will not be coming wide-eyed, blinking, bushy tailed and rather naive into such investigations. I am sure that they will be an experienced, wise and able person. Let us leave it to the adjudicator to make the judgment about how best to deploy their resources and, on the basis of the quality of the evidence with which they are presented, to decide whether or not it would be wise to pursue a particular line of inquiry and whether they could be engaged in perennial fishing expeditions that could tie their hands and resources when they should be considering the present circumstances and looking forward, rather than in the past.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

To help my hon. Friend, I want to say that the adjudicator will have a fair degree of flexibility, but within the bounds of the law whereby the issue is a live breach after the date of commencement. The flexibility will be that the adjudicator will decide whether there are reasonable grounds to consider that that is the case. That test is set out under law, but it will it will be up to the adjudicator to determine the reasonable grounds of suspicion.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

I fully understand and accept what my hon. Friend has said, but I am just dealing with the argument that, somehow, the adjudicator would not be able to discriminate between useful and appropriate evidence that might instigate an investigation and other evidence that would be insufficient to instigate such an investigation.

With regard to my hon. Friend’s intervention, she said that the issue was about the establishment of the statute and implied that, in fact, day one commences when the Bill becomes an Act, and the adjudicator is in place. My argument is that day one began on 4 February 2010, and that was the statute date. I entirely accept what she said about retrospectivity and applying the code to 3 February 2010 because that would be improper. However, bringing in the referee, or the policemen to investigate mugging incidents that happened two years previously, is, in fact, an appropriate thing to do.

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs)

I agree that this has been a useful exploratory debate. However, even with the good reassurances given by the Minister, it may be worth returning to the matter on Report. I am concerned that Committee members are saying, “Yes, we want light-touch regulation, but we do not want the adjudicator to do certain things.” I should like the Minister, perhaps on Report, to say that we would want the adjudicator to use their discretion positively to gather the information that they need, from the commencement of the code, including recent things that might be directly pertinent to a live investigation. However, we seem to be phrasing that with negativity, rather than saying, “Go on. Do the job intelligently in the way that you should be doing it.”

Photo of Andrew George Andrew George Liberal Democrat, St Ives 3:00 pm, 11th December 2012

I agree, although it would be far better for Parliament to support the Government in empowering the adjudicator to use their discretion and  not to tie or constrain their capacity for discretion when determining what are reasonable grounds and what period of time applies when reasonable grounds are being assessed.

Sir Roger, you identified a technical breach in the drafting of amendment 37, which further emphasises that it is a probing amendment. As the hon. Member for Ogmore said, this useful debate has teased out a number of issues. I hope that my hon. Friend the Minister, who has responded helpfully, fully and generously to the points that have been raised, will reflect on whether we can clarify some points on Report.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Roger Gale Roger Gale Parliamentary Assembly of the Council of Europe (Full Member)

Before we move on, first, could I gently, through the shadow Minister, remind all Committee members that, although in the Scottish Parliament it is in order to address an hon. Member directly with the term “you”, in the Parliament of the United Kingdom we go through the Chair and refer to the third party. Sometimes, although not at the moment in this Committee, it leads to a more peaceful life.

Secondly, we have had a thorough debate and I am not minded to permit a stand part debate. I mention that now in case there is anything particular that the hon. Member for Edinburgh South, or any other Committee member, wishes to raise before we get to stand part.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

I beg to move amendment 61, in clause 4, page 2, line 10, at end insert—

‘(2A) The powers to require provision of information as set out in Schedule 2 shall be exercisable from the day on which this Act is passed.’.

Again, it is a great pleasure to be involved in a Committee that you are chairing, Sir Roger. We have had a full debate on the clause. Nothing stirs the loins more in this Committee than those on the Opposition Benches discussing clause 4. Perhaps the Committee will indulge me for slightly longer.

The hon. Member for St Ives has passed the probing baton. Our amendments are similar, with subtle differences in respect of what we should like to achieve. I appreciate and understand what the Minister said. She has been helpful in reassuring the Committee and will perhaps share some draft guidance with its members. She will no doubt reflect on the debate before Report.

No Committee member would expect any legislation to be retrospective, but the point is where retrospective legislation starts. The groceries code came into force in February 2010 and that may be where to draw a line in the sand, because as I said in my intervention on the hon. Member for St Ives, if the code is broken the code is broken. In terms of natural justice, it is right that some remedy could be sought.

The anonymity and third party aspects of the Bill, introduced through debate in the other place, would perhaps give people who would not have brought a case previously some cover in doing so now. It is worthwhile considering that.

Our amendment looks at the period between the Bill having Royal Assent, the adjudicator or shadow adjudicator being appointed and an investigation being able to start in full. We are trying to get some reassurance that there  will not be another hiatus when suppliers and third parties—the GLA has been mentioned already, a hugely important body—have gathered some information and are waiting to hit the start button when the adjudicator is appointed but before all the guidance referred to in clause 4(3) has been published. If the Minister is saying that the adjudicator will be able to look only at live cases—those live cases being when the adjudicator is fully up and running—then the adjudicator should at least have the power to start collecting the evidence as soon as is practically possible once they are appointed.

The day one issues are vital. We have used analogies such as the adjudicator will be fresh faced or a rabbit in the headlights. However we describe it, we do not want to swamp the adjudicator. But if there is a real and tangible set of information and evidence out there that points to a significant and almost catastrophic breach of the code, I hope that information could be collected from day one before the guidance required by clause 12(1) has been put in place. I will not detain the Committee any longer. The hon. Member for Somerton and Frome gave a commitment that we should probe this in Committee. The hon. Member for St Ives has probed where the adjudicator should lie in terms of retrospectivity going back to when the code came into force. The date at which the adjudicator is appointed to the point at which the adjudicator can start investigations is also important. The power should be in the Bill for that evidence and information to be collected as soon as possible after the adjudicator is appointed.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I thank hon. Members for the amendment. I recognise the spirit in which it has been tabled and I am grateful for the kind words from the shadow Minister. Everyone is keen to ensure that the adjudicator is up and running as soon as possible and that they can conduct effective investigations. I will ask the shadow Minister to withdraw his amendment and I hope to be able to convince him that it does not make much practical sense for these powers to start on the day the Bill is enacted when the Bill as a whole will not come into force on that date. Instead, it will come into force on a date that the Secretary of State will set out by order. I will give the reassurance that he and others members of the Committee are keen to have. We are committed to ensuring that the Bill comes into force as soon as possible and our intention is to commence all parts of the Bill at the same time, basically because it does not make sense for different parts to start at different times.

It is important to remind the Committee that the information-gathering powers under schedule 2 will relate to when there is an investigation. Paragraph 1(1) states:

“The Adjudicator may, for the purposes of an investigation, require”.

Therefore, to have these powers starting before the ability to start an investigation exists does not make a lot of sense. The investigation power will come into play only when the guidance has been published and it is clear that everybody involved knows the framework within which they are working. The specific powers in schedule 2 relate to investigations. That does not for a second mean that the adjudicator cannot ask for  information when they are adjudicator-designate. Of course they can. They can ask for and consider any information that they would like at any juncture. Indeed, after our discussions in Committee, it is quite likely that they will be receiving information from suppliers as soon as they are appointed and before the Bill has fully commenced, so they will be able to do that, if relevant. However, it makes sense for the specific power to require such information, with all the sanctions and penalties for not providing it, to come into force with the rest of the Bill when the guidance is published. I hope that I can reassure the Committee that there will be no further delays.

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Environment, Food and Rural Affairs)

I am mindful of your caution around the clause stand part debate, Sir Roger. The Minister said that an adjudicator investigation could not start until the guidance had been produced. Does she anticipate the adjudicator being there in a shadow role, during which time the guidance will be consulted on and produced, so that an investigation can be carried out at the earliest possible opportunity?

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

The short answer to that is yes. More resources and time will be available once full commencement occurs, but as soon as the adjudicator is appointed, they will be having discussions with stakeholders, so that they can look at information. The formal consultation will obviously take place once the adjudicator formally takes up the role, but in that shadow period, as we discussed in the debate on the previous group of amendments, they will be in discussions with stakeholders, which will be helpful. That will mean that they are in a better position for the formal consultation. Of course, there is a six-month deadline after commencement for the guidance to be in place. It is important that we get it right, but it is also important that it is done in a timely fashion. I hope that that answers the hon. Gentleman’s question.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I thought that the hon. Gentleman was primed to ask something else, but I seem to have satisfied him on that front, which is delightful. I hope that I have also satisfied the rest of the Committee and that the hon. Member for Edinburgh South can withdraw the amendment.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

The Minister is being incredibly generous in giving us assurances, and, on that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 ordered to stand part of the Bill.

Schedule 2 agreed to.