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New Clause 3 - Sunsetting provisions and replacement of current code on statutory footing

Groceries Code Adjudicator Bill [Lords] – in a Public Bill Committee at 10:45 am on 18th December 2012.

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‘(1) Within three years of this Act coming into force, the Competition Commission shall conduct a review of the effectiveness of the Act’s provisions with regard to levels of compliance with the Groceries Code.

(2) If the review finds that the levels of compliance are unsatisfactory, the Secretary of State shall prepare and lay before Parliament regulations containing analogous provisions to those in the Groceries Code, thereby giving statutory effect to the Code.

(3) “Levels of compliance” as referred to in section (1) shall be deemed unsatisfactory if (without limitation) they have not improved since the bringing into force of the Act.

(4) The Groceries Supply Code of Practice shall thereby be revoked.

(5) Where the Secretary of State proposes to issue or revise a code of practice under subsection (2), he shall prepare a draft of the code (or revised code).

(6) The Secretary of State shall consult the following about the draft—

(a) The Competition Commission;

(b) The Office of Fair Trading;

(c) The retailers mentioned in Article 4(1)(a) and (b) of the Groceries Supply Order;

(d) one or more persons appearing to the Secretary of State to represent the interests of suppliers;

(e) one or more persons appearing to the Secretary of State to represent the interests of consumers; and

(f) any other person the Secretary of State thinks appropriate.

(7) If the Secretary of State determines to proceed with the draft (either in its original form or with modifications) he shall lay the draft before Parliament in the form of regulations.

(8) Such regulations shall be made by Statutory Instrument and may only be made if a draft of them has been laid before and approved by resolution of both Houses of Parliament.

(9) A code (or revised code) issued under subsection (6) shall come into force on such date as the Secretary of State may by order made by statutory instrument appoint.’.—(Ian Murray.)

Brought up, and read the First time.

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

I beg to move, That the clause be read a Second time.

The new clause is fairly self-explanatory. To highlight its thrust, I echo the words of Lord Knight, on Second Reading in the other place:

“It is fundamentally odd that while Parliament is entitled to debate and scrutinise the function and powers of the referee, we are denied the opportunity to give the same scrutiny to the rulebook itself.”—[Official Report, House of Lords, 26 June 2012; Vol. 738, c. GC 80.]

The new clause is almost a sunset clause, whereby in three years’ time the code would cease to exist as an executive order. During that period, the Government would put the code on a statutory footing, which would allow the Secretary of State to consult on a draft code, as in new clause 3(6), with a variety of stakeholders—including the devolved Administrations, which should have been included, but which we seem to have omitted.

The new clause would also allow Parliament to amend the code in future years. Instead of the situation we debated under new clause 2 and other parts of the Bill, whereby the adjudicator makes recommendations to the OFT, which it may either ignore or implement to make the code live, under new clause 3 the Government would, in three years’ time, introduce a statutory code using the knowledge that had been accumulated under the existing adjudicator.

The new clause is fairly straightforward, and we hope that the Minister sees the need to put the code on a statutory footing to make it a living document that both Houses of Parliament may debate and change. That would be better than leaving it to the OFT, under an executive order with no statutory footing, to change the code by way of recommendations to the House.

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 confess that I find the new clause slightly puzzling. The Bill already contains provision for the Secretary of State to review the adjudicator, which is the principal part of the Bill, within three years; that is already due to happen. Responsibility for reviewing public offices should remain with Ministers, who are accountable to Parliament, so I am not sure why the Opposition want to transfer that responsibility to the Competition Commission.

The particular source of puzzlement is subsection (4), which states:

“The Groceries Supply Code of Practice shall thereby be revoked.”

I do not see the benefit of revoking the code and then re-establishing it by statutory order. I know—the hon. Member for Edinburgh South alluded to this—that the matter was discussed in the other place, where the same fundamental point was made: the code is not voluntary. The code, as it stands under the Groceries (Supply Chain Practices) Market Investigation Order 2009, already has full legal force and the requirement to incorporate it into supply agreements is already binding on the large retailers, so I do not see what would be gained by establishing it through a statutory instrument. It would  just be a slight waste of parliamentary time, without any particular benefit, because the legal force would not change.

If the intention of the new clause is to allow the Secretary of State or Parliament to modify the code—I think the hon. Gentleman suggested that—that is not appropriate. We have just had a lengthy discussion of the means by which the code could be amended, and that is an issue for the competition authorities, as it is a competition remedy. If the Government were to intervene in that way, it should be done through the competition authorities, not as a result of whatever Parliament happened to think should suddenly change. That would be a detailed thing for Parliament to do.

The new clause is not needed. We already have a good Bill in front of us, which has the proper channels of accountability, with the possibility of the code being amended or recommendations being made to that effect where necessary. The code also has full legal force, so I am struggling to the see the benefit that the new clause would offer. Perhaps the hon. Member for Corby can enlighten me.

Photo of Andy Sawford Andy Sawford Labour, Corby

As the new clause asks us to look three years ahead, can the Minister, like me, imagine a scenario where, following the general election campaign in two and a half years, she and I find ourselves freshly re-elected having had conversations with farmers and others in our constituencies who feel that, despite our best efforts in what is a great, but not fantastic, Bill, the adjudicator’s role has not transformed the real problems that we and the OFT have found? Imagine how satisfied she and I would be to find that, through a statutory instrument, we could offer additional force and ensure that we achieved the transformation we hoped for.

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 tempts me to envisage a scenario where huge power is available to Parliament through a statutory instrument, but his comments express a general unease among some Opposition Members that these problems in competition should be looked at and remedied by the competition authorities. As I outlined earlier, Government and Parliament should be pretty wary of intervening in business-to-business relationships.

As far as possible, we should let businesses get on with the job, rather than getting in the way. Therefore, if there is a case for the Government to take action, it has to be made through specific channels. The Enterprise Act 2002, which was passed under the Labour Government, sets out the framework through which that should happen. That is the proper way to do things; the order and the code should be left to the competition authorities. That structure and framework are in place, and the Bill will create the role of adjudicator to ensure the proper enforcement of those things that have been deemed to involve how the rules can be structured so that detriment does not occur. That is the role of the Bill. I therefore do not think that the new clause would add to the Bill and I encourage the hon. Member for Edinburgh South to withdraw it.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills) 11:00 am, 18th December 2012

Given that the groceries code is merely an executive order, it can be revoked at any moment. As my hon. Friend the Member for Corby says, when we  arrive back in the House fresh from the 2015 election campaign, and, rather than having this wonderful view of the Thames, are sitting on the Government Benches and facing the wall, we may wish to be able to amend the code by way of a statutory instrument. Having the code on a statutory footing would allow us to do so.

We have been very measured with the new clause, which would establish a three-year time frame to allow the Government to consider what they wished the code to look like. They would have the experience of the adjudicator to draw on and could take in all the information that arose from the adjudicator’s investigations and recommendations. They could then put the code on a statutory footing. If there were any breaches of the code or any competition issues, the Government could, as in many other instances, refer such issues to the Competition Commission or the OFT.

Jo Swinson rose—

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

In the interests of festive spirit and congeniality, I am happy to give 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

I thank the shadow Minister greatly for that. He said that the code can be revoked at any time, but, to provide further reassurance to the Committee, that could proceed only on the basis of a change in circumstances and evidence, for example, that the code was not needed any more. I hope that that quells concerns that the code might suddenly be done away with on a whim.

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

I somewhat wish that the Minister had not intervened, because the Government do not have a particularly good track record of basing anything on evidence. Indeed, last night, my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) spoke in the Chamber of policy by prejudice, which is a pretty good notion to express and one that was roundly welcomed.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

That argument is rich from the party that introduced the dodgy dossier that took us to war.

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

The hon. Member for St Ives never disappoints me. We have given him tremendous credit for what he has done on the issue. Indeed, on Second Reading, I had two paragraphs of praise for him, but just before I got to them he made an intervention very similar in tone to the one he has just made. However, we are not begrudging, and on Second Reading I gave him the praise he deserved. I do not know whether that can be scratched from the record; perhaps we can try at some future point.

I will not press the new clause to a vote. I will merely say that we might look at the issue again on Report in the House, as the national farmers unions of Scotland, Northern Ireland, England and Wales were quite keen for us to look at a statutory footing for the code. However, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Question proposed, That the Chair do report the Bill, as amended, to the House.

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

On a point of order, Mr Williams. I want to put on record my gratitude for your fantastic chairmanship of the Committee, and indeed that of Sir Roger. You have very much kept us to topic. I am grateful to all those involved in making the Committee run smoothly and efficiently: the Clerks, the doorkeepers, the Hansard reporters and so on. I am also grateful to the members of the Committee, who have performed their scrutiny role admirably. The shadow Ministers have, in their customary fashion, conducted themselves with good humour. It is particularly lovely to have inducted two new Members, the hon. Members for Corby and for Manchester Central, to the wonderful world of Public Bill Committees.

My hon. Friends have perhaps been a little less vocal than some Opposition Members, but, none the less, my hon. Friends the Members for Tiverton and Honiton, for Camborne and Redruth, for Sherwood and for City of Chester have put their points on the record succinctly and at opportune times. The Whips have done their job fantastically; indeed, the stand-in Whip, my hon. Friend the Member for Mid Worcestershire, was excellent. Perhaps my hon. Friend the Member for Preseli Pembrokeshire should look out. I also thank my Parliamentary Private Secretary, who was wonderful—

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

And the Opposition Whip, who coined the phrase “off-trolley”, which we will never forget.

I feel a slight guilt about my cold, and I should perhaps say, in the way they do on “Sesame Street”, that this Committee has been brought to you by many cold and flu remedies, Ultra Balm tissues and throat sweets. While I hope my cold is not a present that I have given hon. Members for Christmas, I have enjoyed this experience.

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

Further to that point of order, Mr Williams. I hope this is a point of order. May I, too, offer my thanks to you and your colleague in the Chair, Sir Roger Gale? You have presided over us with a firm hand, but also with good humour, and you have given us a little latitude in our discussions.

May I thank the Hansard staff, who have kept up with the frantic pace with which we have gone through the Bill, and the doorkeepers for all their work? Of course, there are also the BIS officials, who are always here, working hard and frantically scribbling notes to keep the Minister not only inspired, but on message. We are delighted that they do, and we thank them.

I pay particular thanks to the Clerk to the Committee, Mr Caulfield, who has helped us on numerous occasions late into the evening to put together our amendments. The hon. Member for City of Chester said last week that none of the Opposition’s amendments made sense—there is an intervention we can appreciate—so I will deflect that criticism of the shadow ministerial team straight to the Clerk’s office, adding some tinsel and baubles, given the time of year.

I pay tribute to the Government Members on the Committee, who have been in good humour. I am delighted that the temporary Whip, the hon. Member for Mid Worcestershire, who had a temporary promotion, did a wonderful job. I am not sure whether you were in  the Chair, Mr Williams, when we defeated the Government on schedule 3, but the hon. Gentleman’s record is currently at 0%. I also pay tribute to the Government Whip, who has kept us to time; indeed, we have finished early.

It has been a great pleasure to serve under our own Whip, my hon. Friend the Member for Vale of Clwyd, who has been efficient and effective, it says here. He coined the term “off-trolley”, which will always be used in the parlance of the groceries code adjudicator; indeed, I hope my hon. Friend purchases off-trolley.com at some time in the future.

Like the Minister, I pay tribute to the two new Members on the Committee. They have both made valuable contributions, particularly my hon. Friend the Member for Corby. When, over his Christmas lunch, he reflects on his first few weeks in this place, he may wonder why he ever attempted to get elected in the first place.

I pay tribute to the Minister, who, in her good mood, has spread good will and good wishes in the Committee.

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

And germs. In the same spirit in which we have tabled amendments to strengthen the Bill, the Minister has been welcoming in realising the intention behind those amendments.

Finally, I pay tribute to the hon. Member for St Ives —I had scored those words out, but I have decided to pay tribute to him. After many years of discussion, cajoling and debate, we have reached the end of consideration in Committee having put in place a groceries code adjudicator. All the suppliers who feel a little better this Christmas can thank the hon. Gentleman, my hon. Friend the Member for Ynys Môn (Albert Owen) and other Members of the House who have pushed the issue.

We have had tigers, dogs, hamsters, teeth—indeed, two sets of teeth—and “off-trolley”. We have had quite a good Committee, and we are now reporting the Bill to the House. All that remains for me to say is merry Christmas.

Question put and agreed to.

Bill, as amended, accordingly to be reported.

Committee rose.