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(a) a representative of the retail sector;
(b) a representative of the supply sector; and
(c) a consumer representative.’.
Again, these amendments are about the independence of the adjudicator. Although we appreciate that the Secretary of State has a supervisory role, we have to ensure that that does not mean that the adjudicator is consumed by political influence or issues that the Secretary of State wants them to address. Amendment 24 is a simple probing amendment that suggests that an independent review body may be a far better mechanism to review the adjudicator and to provide guidance. Will the Minister consider an independent review panel that would look at the work of the adjudicator and consider their powers? Will she consider reviews being carried out by such a panel, rather than by the Secretary of State?
Amendment 25 sets out what the panel would look like. I appreciate that we do not want to be racking up significant costs or delays through an independent review panel, but if it were chaired by a senior member of the court system and had representatives from the retail and supply sectors and a consumer representative, we would have a really strong system whereby the work of the adjudicator could be reviewed by the very bodies that they are refereeing. That would allow for a healthy debate between consumers, suppliers and the large retailers and for an open and independent review of what was happening with the adjudication unit, rather than that role being taken by the Secretary of State.
I hope that the Minister appreciates that we are trying as best as possible to make the whole project open and transparent and to have a proper dialogue between all the parties involved. An independent review panel would be in a far better position to independently review the work of the adjudicator outwith the powers of the Secretary of State. That would remove any possible accusations of political influence over any of the major issues that the adjudicator may deal with.
As all Committee members have mentioned and the hon. Member for St Ives has emphasised, we hope that the adjudicator will become redundant when the Bill comes in. We hope that the adjudicator will have absolutely nothing to do and that supply chains will work seamlessly. However, if the opposite situation arises and there is a major problem, an independent panel would ensure that it would not appear that the Secretary of State had any political influence over the adjudicator in the review process. That would not only protect the adjudicator but, to a certain extent, would protect the Secretary of State from such accusations. An independent review body would be allowed to examine such issues on a level playing field, with equal representation from all parties involved, and then be able to make recommendations about reviewing the adjudicator.
The amendments are fairly simple, but they are intended to protect the adjudicator and the Secretary of State, and I hope the Committee will accept them.
I hate to disappoint the hon. Member for Edinburgh South. It must sound uncharitable, but I am not particularly minded to accept the amendments. I hope, however, to convince him through the powers of persuasion and argument that his is not the best way to proceed. I understand the issues he raises around independence and ensuring that the adjudicator functions well, but there are a couple of reasons why the amendments are not the right way forward.
First, the adjudicator is a ministerial appointment. It is therefore consistent that it is the Minister—in this case the Secretary of State—who should review their progress and effectiveness. It is important that independent ministerial appointments are ultimately accountable to elected Ministers and, through them, to Parliament. The independent review panel outlined in the hon. Gentleman’s amendment would not have that same accountability function. I want to reassure the Committee, as I have on some earlier groups of amendments, that we absolutely recognise the importance of the adjudicator’s independence. They will have full operational independence, without being subject to political interference.
The adjudicator’s functions can only be carried out by the adjudicator. They will not be a civil servant, and the Secretary of State has only a very limited power to give guidance after a triennial review. The adjudicator can only be removed from office under exceptional circumstances. All those things ensure that there is genuine independence. It is important, however, that at some point, offices established by Government are accountable to Ministers and, through them, to Parliament. That is the purpose of the triennial review, and it is right and proper that the Secretary of State carries that out.
Secondly, while the amendment has a clear desire to give affected parties a stake in the future of the adjudicator, there are better ways to achieve the same ends, which we share. Paragraphs (d) to (f) of clause 15(7) clearly lay out an explicit requirement that the Secretary of State consults representatives of retailers, suppliers and consumers when conducting the triennial review. That will allow stakeholders’ views to be clearly heard in that process, while rightly leaving the final decision in the hands of Ministers.
I hope that those two points have both reassured and persuaded the hon. Gentleman that the adjudicator is properly independent and that stakeholders will be appropriately heard. Ultimate accountability for this public office has to come to Parliament and that is why it is appropriate that the Secretary of State carries out the review.
We tabled the amendments on the review process purely because Traidcraft and other organisations were concerned about the potential politicisation of the process, given the power relationship between the large retailers and the suppliers and that between the large retailers and this place. There were concerns that the Secretary of State conducting that review may feel obliged, one way or another, to be influenced on how the adjudicator operates. I am content with subsection (7), which states that the Secretary of State must consult a number of bodies. We attempted with an earlier amendment to add the devolved Administrations to that list, but I appreciate that there will be that kind of consultation with all the interested parties when the review is being conducted. I beg to ask leave to withdraw the amendment.
The amendment is in the name of my hon. Friend the Member for Ogmore, but given that he is still in the Chamber, I will speak to this probing amendment.
The reason for this amendment—the hon. Member for City of Chester might be interested to hear this— is that we are not quite sure what this part of the Bill is for. We are looking for an explanation from the Minister. Our amendment would simply leave out subsection (10).
Allowing third-party evidence was a victory for organisations and the noble Lords in the other place. It strengthened the Bill immeasurably and will help with the adjudicator’s work in identifying and dealing with breaches of the code. The Minister’s predecessor in her role, the now Minister of State, Department of Health, the hon. Member for North Norfolk (Norman Lamb), who has had quite a hearing in this Committee, said earlier this year:
“I have responded to concerns from the Select Committee and others that trade associations should be able to complain to the Adjudicator and have amended the draft Bill to provide for this.”
That was a great step forward, because it widened the scope of the adjudicator. We now have third-party evidence and fines on the face of the Bill. I hope that the Minister will be generous enough to include intermediaries when we get to that part of the Bill on Tuesday. We will wait and see. I hope she has an incredibly good weekend and will be able to accept some of our amendments. One of the key points is anonymity. There is a grave concern that this section of the Bill is unnecessary and may compromise some of that anonymity.
Clause 15(10) says,
“The Secretary of State may by order provide that the following section is to be inserted after section 4 if, as a result of the findings of a review, the Secretary of State thinks that it would be desirable to do so.”
There is no explanation of what would constitute the Secretary of State thinking it would be desirable to do so. There is nothing in the other subsections of the clause that would give rise to whether the Secretary of State may or may not want to include this part of the Bill. Trade associations have the important role of protecting the identity of their members who might want to complain about breaches of the code. It seems that inserting proposed new section 4A into the code would undermine that process. I look forward to the Minister’s explanation.
We do not want to end up with vexatious or malicious complaints, or to have the adjudicator going on fishing missions because a third party has brought forward information for the adjudicator to deal with. Frivolous and malicious complaints will undermine the whole system. I hope the adjudicator will be particularly strong in dealing with those. They have to be given the power to do that.
Importantly, the adjudicator will first have to be satisfied of the veracity and integrity of any complaint before launching an investigation. We discussed the knowledge and expertise of the adjudicator on a previous amendment. This is an area where that will come into play with their ability to deal with information coming forward. Their understanding of the code and the industry will be fundamental. That will go some way to reducing malicious, frivolous or vexatious claims, or abuses that cannot be substantiated.
There is a feeling that the safeguards that have been built into the Bill by successes in the other place are potentially being undermined by the Secretary of State inserting this particular part into the Bill. I say this is at the whim of the Secretary of State but there is no specification in the Bill of the circumstances whereby the Secretary of State might want to use this provision.
Has the BIS Department undertaken any analysis of the likelihood of frivolous claims? Has any modelling been done of how many would come forward?
On the point of inappropriate claims, does the hon. Gentleman accept that clause 10, which would permit the recovery of costs against those whose complaints are demonstrated to have no merit, would be sufficient to address that issue?
Yes, but in instances where costs can be awarded in the employment tribunal system, for example, judges are very reluctant to award costs for frivolous claims. I appreciate that that matter is in the Bill. One often finds at employment tribunals that judges want to hear the facts of a case going down certain avenues until they decide whether it is vexatious or otherwise. They are very reluctant to use cost orders in that example. I hope the adjudicator would feel confident enough to use cost orders in this example. It will be only in practice that we will know whether that is the case. I hope the message goes out from this Committee that we would support the adjudicator in the use of those powers. I hope the adjudicator will use them regularly and appropriately. There will of course be instances when the adjudicator may use the cost powers in the Bill for an issue that the adjudicator feels is vexatious or frivolous and then it turns out not to be. Mistakes will be made but I hope the adjudicator will have confidence. That is a question to put to the Minister.
Was any analysis done before subsection (10) was put in place? On the basis of our concerns, I am asking, through the amendment, whether something can be brought forward on Report to clarify what that subsection is designed to do, because if proposed new section 4A is inserted after section 4, it will confuse the issue in relation to frivolous claims, anonymity and the information that can be supplied to the adjudicator when they are making a proper assessment of whether an investigation should be conducted.
The Committee pausing for a moment to debate this issue is worth while, so I am grateful to the hon. Member for Edinburgh South for raising it. A very important milestone in the development of the Bill was reached as a result of people expressing concern—the Select Committees also raised the issue—that in view of the climate of fear, suppliers would not use the code to complain directly about their treatment by supermarkets and that there had to be a mechanism by which information presented to the adjudicator could be dealt with in a protected manner. This is not just about trade associations publishing material on the current state of the milk supply chain or whatever it may be. Trade associations and others may also seek to provide information to the adjudicator indirectly, perhaps by means of a collection of suppliers. Therefore, any reassurance that the Minister can give that the adjudicator has the power to instigate investigations on the basis of what one might broadly describe as market intelligence in that manner is very important.
Also, there appears to be an internal contradiction between subsections (1) and (2) of proposed new section 4A. Subsection (1) states that the adjudicator “may consider only” certain limited items, in paragraphs (a) to (d), yet subsection (2) says that the adjudicator
“is not limited to considering the information mentioned in subsection (1).”
I admit to being rather confused by that, because it seems that subsection (2) in effect strikes out subsection (1) and more or less says that any information is appropriate. It seems to make subsection (1) rather superfluous.
I appreciate the opportunity for us to discuss this issue in Committee. I am very happy to explain the background of how we have got to this point, with clause 15(10) being part of the Bill. The wider issue was discussed extensively during the pre-legislative scrutiny phase. I am referring to the issue of who should be able to complain to the adjudicator and what can be a trigger for starting an investigation. As has been outlined, when the Bill was originally published, clause 4 was much more restrictive about how an investigation by the adjudicator could be triggered. One could be triggered only by information from suppliers or information that was already in the public domain when they were deciding whether to start an investigation. It is fair to say that suppliers are the most likely parties to have information that would show that a breach of the code has taken place, and we do not want the adjudicator to be deluged by large amounts of information that does not necessarily relate directly to issues that they should be dealing with.
However, we did listen carefully because, at the pre-legislative scrutiny stage, the BIS Committee made a clear recommendation that we remove the restriction and allow the adjudicator to consider information from any source that came forward. As my hon. Friend the Member for St Ives and others have mentioned, a range of supplier groups put forward a coherent argument that that climate of fear and concern could mean that the additional protection of being able to complain through a third party—a trade association—would be helpful. That might also be able to give more of a context to the types of practices that are going on, because it would not just be about an individual supplier, as a trade association might have experiences from several suppliers and could therefore point to broad patterns of behaviours. We accordingly listened and amended the Bill to allow the adjudicator to look at information from any source. I absolutely stand by that; it was the right thing to do, because it is likely to be more successful if that information can be considered.
That does not mean, however, that our concern about the adjudicator being deluged by irrelevant information has entirely gone away. We touched on that earlier, when discussing whether advising the public should be expressly written into the Bill. In the example of the recent dairy issues in the industry, had the adjudicator been up and running, it could have had a deluge of contact.
On vexatious and frivolous complaints, it is right that because of the awarding of costs outlined in clause 10(2), some protection is provided against such complaints. However, the adjudicator will have a small budget and a small team of staff, and they really need to be focused on particular breaches of the code, rather than having a wide, overseeing role. There is the fear that through the best of intentions, third parties could bring forward lots of information, perhaps through campaigns or otherwise, with much of it potentially irrelevant or even misleading. That could lead to a situation we do not want to see, where there is a big strain on the adjudicator’s time and resources, and unnecessary burdens on retailers. That is why we looked—at the same time as bringing forward the ability to have information coming from any source—at having a backstop, in case the issues we were concerned about came to pass.
I wonder whether the Minister can provide clarity. Is she saying that while the Government have amended the Bill to allow trade-association third parties to provide information, the Secretary of State is reserving the right to reinsert a provision into the Bill to stop it from happening in future? If that is the case, what is the mechanism for that to be removed from the Bill, if the Secretary of State thinks it is appropriate? I think that the Minister mentioned a triennial review previously, so that could mean that trade associations are able to bring forward such complaints to the adjudicator for that period of time.
The hon. Gentleman asks a good question. If the Secretary of State finds that there is a problem when looking at the overall workings of the adjudicator through the triennial review, proposed new section 4A could become part of the Bill. That would be done through secondary legislation, so it would not be without parliamentary scrutiny, as Parliament would ultimately have to agree to it. However, the change would be possible without the need for new primary legislation. Such matters would have to be looked at in the years that the triennial review takes place. Protection is provided in terms of further parliamentary approval being required. It is important to note that we absolutely envisage this as a backstop safeguard, only used if, as the result of a review—in which there would also be full consultation, as we have discussed in earlier clauses—it was decided to make the order restricting the sources of information that could be brought forward.
An issue was raised about whether this would lead to problems with anonymity, and the protections that are outlined in clause 18 would still apply. A supplier could bring a complaint to the adjudicator if proposed new section 4A was in place, but they would still be able to be treated anonymously by the adjudicator. It is fair to recognise that that one additional layer of confidentiality or anonymity—if the complaint were made through the trade body—would be gone were this enacted, but the overall protection on anonymity would none the less still be there.
The Minister talks about anonymity in a later clause, but surely she must appreciate—she said so herself—that removing the layer of trade associations or third parties removes a layer of anonymity. If someone is the only chanterelle mushroom producer in the country, a complaint to the adjudicator is hardly anonymous if the complaint is about chanterelle suppliers, of which there is only one to that supermarket. The Mushroom Growers Association could take a complaint to the adjudicator on the basis that it thinks that something is going on that is not directly related to that particular supplier, and therefore that supplier is protected.
I welcome the hon. Gentleman’s intervention. His knowledge of different mushroom types exceeds mine, but they are not my favourite food. In the scenario that he outlined, the chanterelle mushroom supplier would none the less have protection in terms of confidentiality. It would be up to the adjudicator to decide the terms of the investigation and they would be able to know that this was the only chanterelle mushroom supplier. For example, they might decide to undertake an investigation into all mushrooms—chanterelle, shiitake and various other types. My list of mushrooms is drying up.
Indeed. There is a whole range. I hope that I have reassured the Committee.
I am very sad to hear that the hon. Member for Edinburgh South suggest deep-fried mushrooms, unwittingly confirming some of the worst stereotypes of Scottish food, which I wholeheartedly refute. I am sure he said it only in jest.
My hon. Friend the Member for St Ives wanted further clarification on the drafting of proposed new section 4A(1) and (2). He pointed out that subsection (2) gives the adjudicator wide powers in terms of the information that they could consider from a wide range of sources, which would include trade associations. The difference is that that would be when they are carrying out an investigation and the trigger point is whether to carry out an investigation.
This section gives a power if there is a real concern that the resources of the adjudicator are being clogged up by irrelevant or unnecessary information. As a public authority, the adjudicator would have a duty to respond to that in a reasonable manner. If they ended up in that situation, the Secretary of State, following a full review and consultation that went along with that review, could then make a recommendation. There would then need to be parliamentary approval for that, and that would mean that investigations could be triggered only by the different types of information outlined in proposed new section 4A(1). However, once an investigation has been triggered, any information would be able to be considered as part of the investigation.
I am grateful to my hon. Friend for clarifying that point. I understand that there is a narrow interpretation of what is appropriate at the point of deciding whether an investigation should be instigated. However, I am troubled by what the Minister said earlier, and indeed on many occasions. She said that the adjudicator should be left, as far as possible, with the discretion. Given that we have clause 13, which allows the adjudicator to review their powers, if they have been snowed under with too much evidence, they can define and indeed write their own amendment to the code.
Rather than have a prescribed solution pre-prepared in advance of the event, is it not appropriate for the adjudicator to be given discretion to come up with their own solution and propose something that will work, instead of narrowing down their scope of manoeuvre?
We certainly want to give the adjudicator a wide range of discretion in what they will do. Clause 13, which we were discussing recently, will give the adjudicator the power to make recommendations to the Office of Fair Trading if they think any changes need to be made to the code. However, it will not give them any power to review what is in the Bill, which is, rightly, a matter for Parliament rather than the adjudicator. That is the real difference. If we did not include the proposed new section in the Bill, further primary legislation would need to be tabled. That would inevitably lead to delay, and we could end up with a situation in which the adjudicator was not able to be as effective as they would like to be.
Returning to the process that would need to be followed in order for proposed new section 4A to come into force, we would need to have the triennial review, during which there will be a full consultation, which will include the adjudicator. They will not get to decide what powers are in the legislation, but they can propose what they think is necessary. The Secretary of State would then have to lay an order before Parliament, which would have to approve it. Only when all those steps have taken place would proposed new section 4A become part of the legislation. Significant hurdles have to be overcome.
The hon. Member for Edinburgh South asked to what extent we think there will be lots of frivolous complaints and the extent to which the adjudicator will be snowed under. That is not necessarily what we would expect to happen. Clearly, the campaign groups and trade bodies that have been involved in arguing for the Bill have generally acted in an appropriate, helpful and reasonable manner. We would expect that to continue. It is important that the safeguard is present, not least because it will be a further incentive for everyone involved to raise issues with the adjudicator in a reasonable way, rather than deluge them with irrelevant or unnecessary requests for information. As a public authority, the adjudicator will be required to respond to such requests. We do not want all their resources to be used to respond to complaints that are not key to the focus that we want them to have.
That is very much a hypothetical situation. The place of Committee is to debate and discuss the hypotheticals and to try to think through and anticipate what can happen. That is why we have included the provision in the Bill in conjunction with allowing more information to be considered in triggering investigations, which has been welcomed. Proposed new section 4A would put a safeguard in the legislation at the same time. It is probable—I very much hope that this will be the case—that it will never be necessary to use the power. However, the fact that it is present will provide a clear incentive for third parties to act responsibly while still playing an important role in contributing to the adjudicator’s work.
I hope that that gives some reassurance to the Committee regarding the hoops that have to be jumped through before the power in proposed new section 4A may be used. It is intended only as a backstop safeguard. None the less, because of the changes we have made in allowing third party complaints, it will have some value. I hope that, on that basis, the hon. Member for Edinburgh South will be happy to withdraw the amendment.
I am going to break with tradition, because I do not feel reassured by the explanation. I return to the point that I made when moving the amendment: I cannot see the point of subsection (10) in the first place. I would hope that trade associations and third parties—for example, the National Farmers Union—would act responsibly as a filter in the first instance before suppliers took action with the adjudicator. Not only would they wish to take cases that they think have merit, but they would want to protect their reputations and that of the adjudicator. In that sense, it is important that the adjudicator is able to take those examples.
I understand the issue of being swamped, and I understand that this is a reserved power that the Secretary of State would only use after a triennial review. The Minister did not answer the question about how it would be removed from the Bill. Would another review period be needed for that to happen? Perhaps she will reflect on that.
There is the issue of anonymity. I gave the example of mushrooms because supermarkets stock some very niche products. The adjudicator can trigger an investigation on the basis of a claim from a particular supplier, without a trade association providing the supplier with a second level of anonymity. I understand that the adjudicator will take a nuanced approach. If they thought that the confidentiality and anonymity of a supplier could be compromised, they might widen the scope of an investigation to the whole of a particular product range. They might investigate all mushrooms, for example. However, that will not protect anonymity in all instances. If there has already been a relationship breakdown between a supplier and a supermarket, and there is an investigation into all mushroom suppliers to that large retailer, there may be a situation in which that relationship and that anonymity is compromised.
I appreciate the distinction that the hon. Member for St Ives made between an adjudicator’s decision whether to carry out an investigation, and how it carries out the investigation. There is a distinction between those two things, which almost contradicts the need for the clause. What is to stop a trade association or a third party from approaching a supplier that it feels has a problem and saying, “I think you should approach the adjudicator to see whether it will trigger an investigation”? When the investigation is triggered, the third party or trade association can supply evidence. In that sense, there is no safeguard if the Secretary of State decides to use this power. Although trade associations and third parties will be unable to petition the adjudicator to carry out an investigation, they can trigger an investigation through a supplier. Proposed new section 4A(2) allows them to supply information. That would seem to negate the need to have this proposal in the first place.
I have not been wholly reassured about the clause. I am always incredibly uncomfortable when the Secretary of State is given an open-ended power to review something without steps being put in place to say why that should be the case. I appreciate that the Minister said that it would be in the context of the review, with all the review consultees that are included in the clause. However that is not what the clause says. It says that if
“The Secretary of State thinks that it is desirable to do so” they will do it. That gives me some concern, based on the first draft of the Bill that we have seen. I will withdraw the amendment, reflect on what the Minister said and perhaps bring something to the House on Report.
Before we leave, I wish to say that Mr Williams will be taking both sittings on Tuesday, if there are two, which means that I shall not see you again on this Committee. I take this opportunity to thank you all for your courtesy and the manner in which this has been handled, and I wish you all a very happy Christmas.