Fair dealing obligations of business purchasers of agricultural products

Agriculture Bill – in a Public Bill Committee at 2:00 pm on 3rd March 2020.

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Photo of Ruth Jones Ruth Jones Labour, Newport West 2:00 pm, 3rd March 2020

I beg to move amendment 77, in clause 27, page 22, line 4, leave out lines 4 to 7 and insert—

“(1) The Secretary of State must, before the end of the period of 12 months beginning with the day on which this Act is passed, make regulations—

(a) imposing obligations on all business purchasers of agricultural products in relation to contracts they make for the purchase of agricultural products from all qualifying sellers;”

Photo of Sir David Amess Sir David Amess Conservative, Southend West

With this it will be convenient to discuss the following:

Amendment 78, in clause 27, page 22, line 11, after “fair” insert “dealing and fair”.

Amendment 79, in clause 27, page 22, line 12, at end insert—

“(2A) The Secretary of State may also make regulations for the purpose set out in subsection (2) in relation to the purchase of agricultural products in one or more of the sectors listed in Schedule 1 by business purchasers from qualifying sellers.”

This amendment would ensure that there is an overarching requirement for fair dealing across the whole agricultural industry, with the ability to develop sector specific regulations to address any particular areas of unfair practice.

Photo of Ruth Jones Ruth Jones Labour, Newport West

It is a pleasure to serve under your chairmanship this afternoon, Sir David. I am pleased to speak to these important amendments.

Over recent weeks, as we have worked our way through the Bill, my hon. Friend the Member for Cambridge and I have moved and spoken to a number of amendments, and I have noted not only the importance of this legislation, but the potential that accompanies it. As we approach this stage in our consideration of the Bill, it is time that we reminded ourselves of the motives and headlines around it.

Before she was sent to the Back Benches, the former Secretary of State, Theresa Villiers, said that the Agriculture Bill

“will transform British farming, enabling a balance between food production and the environment which will safeguard our countryside and farming communities for the future.”

I am sure Members will agree that those are aspirational and noble aims—a vision that nobody could disagree with. I just wish that the content of the Bill matched the media lines published by officials at the Department. However, I say to the Minister that we can deliver that vision together on a cross-party basis if the Government accept our ideas, our advice and our suggestions. There is no better time to start doing so than now, by accepting amendments 77, 78 and 79.

The amendments reflect a great deal of interest from many of the relevant external bodies, and we have received many thoughtful and reflective commentaries from organisations including the National Farmers Union, the Tenant Farmers Association and Greener UK. I am grateful to them all for the hard work they are doing on behalf of their members and sectors, which includes a collective welcoming of the fact that fairness is required in the supply chain; we need to ensure that there is transparency and openness, too. The Bill is particularly weak in those areas.

The Government need to rethink and revisit the supply chain provisions designed to secure a fairer price to farmers for the food they produce. Those provisions have been broadened in this iteration of the Bill, but there is still no duty to use them, and the Government have not published anything about how they intend to use the powers and who would be enforcing, using and safeguarding them. Our amendments would provide some clarification on those questions.

We note that the NFU believes there should be an obligation on a Secretary of State to introduce regulations to ensure a baseline of fair dealings between business purchasers and producers across all sectors, and that those regulations should be brought forward within 12 months of the Bill’s coming into force. They are right to call for speedy implementation of the measures that would give effect to the fairness we all want, so I support those calls from the NFU.

We have heard from a number of stakeholders about the need for a strong and meaningful overarching body, and they are right. We need the Minister to provide some clarity about who that regulator will be, how it will work, and what it will look like. It is clear to us on the Labour Benches that the Government have a vital role to play, and our amendments will help ensure that this role is carried out. We should nail down today the fact that the regulator should be the Groceries Code Adjudicator. The Bill as it stands leaves hanging the question of who the regulator should be, and the last things anyone in the real world needs at this time are uncertainty, indecision and confusion.

The elephant in the room—we spoke earlier about one elephant in the room, but this is another elephant—is our departure from the European Union. There will soon be tough and competing demands on the Government for resources, focus, scrutiny and implementation, but I hope that in the weeks ahead, this Bill will receive the strong and guaranteed focus of Ministers on the Treasury Benches.

Photo of Robert Goodwill Robert Goodwill Conservative, Scarborough and Whitby

Does the hon. Lady accept that there are some areas in the agricultural trade, such as the grain market, where there is no market failure? There are lots of buyers and lots of sellers in that area, and it operates very well.

Photo of Ruth Jones Ruth Jones Labour, Newport West

I thank the right hon. Gentleman for his intervention. Of course, he is an expert in this area and I bow to his superior knowledge, but what we are saying is that we need to clear the matter up for the whole industry, not just for certain sectors that already work well. However, I appreciate his intervention.

I hope that the amendments have shown the Government that there is widespread support for this action. They are about not partisan advantage, but clarity for the sector and an improved set of circumstances and conditions. I am proud to have tabled them.

Photo of Victoria Prentis Victoria Prentis The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

What a pleasure it is to have you back with us, Sir David! I thank the hon. Lady for the amendments, which reflect an obvious desire to ensure that all farmers and producers are spared from unfair trading practices. We absolutely share that goal; our only disagreement is the means proposed to achieve it.

Essentially, we believe in the principle of a targeted solution for a specific problem, and we are keen to take the time to get the solution right. No two agricultural sectors are the same, and neither are the contractual issues that they face. Certain sectors, such as the poultry and grain sectors, may, as my right hon. Friend the Member for Scarborough and Whitby reminded us, be so well integrated that contractual problems do not often arise.

We should have targeted solutions where they are needed, but we need to avoid burdensome new requirements where they are not. To ensure that, the specific detail of each code will be developed in consultation with industry and set out in secondary legislation. Enforcing a time limit on the creation of fair-dealing obligations would prevent regulations accounting for the complex nature of our agricultural market.

Turning to amendment 78, I assure the hon. Member for Newport West that all types of agreement to purchase agricultural products can already be protected by the clause, and the position of farmers in the supply chain will be protected under the current drafting. The clause allows us to regulate for the purposes of fair contractual dealing. That goes beyond a formal, written contract. As the hon. Lady no doubt knows, a contract constitutes any agreement of sale, whether it is formally written down or not. In the dairy sector, it is commonplace to write things down; in other sectors, there are more informal, word-of-mouth arrangements, particularly in the red meat world and parts of the arable world. However, the clause covers all agreements, written or otherwise.

On amendment 79, we deliberately designed the clause to be as flexible as possible. That is a change since the previous iteration of the Bill. Having listened to comments made at the time, we severed the link to the list of sectors in schedule 1 so that future regulations are no longer bound by it. It remains very much our belief that each sector is different and requires a tailored approach. We intend to be forensic in establishing what the needs of each sector are. That will include detailed engagement with industry.

Photo of Daniel Zeichner Daniel Zeichner Labour, Cambridge

I am thinking back to our earlier discussion on data throughout the entire system. Why do some sectors need to be treated differently here, but did not when it came to the collection of data?

Photo of Victoria Prentis Victoria Prentis The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

During our earlier conversation, it was clear that we will have to be forensic and tailored in our approach to data collection. This is very much part of the same theme. We do not want to treat all sectors the same when they raise different issues and come to us with very different current practices.

If issues that are consistent across multiple sectors are revealed, and if they could be addressed under new, comprehensive regulation, we absolutely have the power to deliver that. I therefore ask the hon. Member for Newport West to withdraw the amendment.

Photo of Ruth Jones Ruth Jones Labour, Newport West

I listened very carefully to the Minister. I agree that we do not disagree on the broad principles, but I am seeking to get the regulations tied down so that they are clear and comprehensive for everybody in the agricultural sector. It seems reasonable that the Groceries Code Adjudicator should be the regulator. I do not see any dissent from that, but it would be helpful if we could tie things down in writing rather than, as the Minister says, in verbal agreements.

I must apologise to the right hon. Member for Scarborough and Whitby—I misheard his earlier intervention; I thought he was talking about the “grey” area, not the “grain”. I misunderstood completely. I apologise, and will wash out my ears.

I welcome the Minister’s assurances—she is listening and wants to make things run as smoothly as possible. However, given this time of general unclarity, as we leave the EU, with all the uncertainty that is throwing up, we need things set in writing now for the months and years ahead, to prevent any misunderstandings or anything going wrong in that respect. I accept that the Minister has described the Bill as a new iteration, and we accept that it is improved, but at the same time we still need clarity, transparency and openness. We will therefore press the amendment to a vote.

Division number 16 Agriculture Bill — Fair dealing obligations of business purchasers of agricultural products

Aye: 5 MPs

No: 10 MPs

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The Committee divided: Ayes 5, Noes 10.

Question accordingly negatived.

Photo of Deidre Brock Deidre Brock Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Environment, Food and Rural Affairs)

I beg to move amendment 19, in clause 27, page 22, line 9, at end insert—

“(1A) Regulations under this section containing provision that extends to Scotland may be made only with the consent of the Scottish Ministers.”

This amendment would require that regulations containing provisions that extend to Scotland may be made only with the consent of the Scottish Ministers.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

With this it will be convenient to discuss amendment 20, in clause 27, page 23, line 27, at end insert—

“(10A) Before making regulations under this section, the Secretary of State must consult persons—

(a) who are representative of—

(i) qualifying sellers of, or

(ii) business purchasers of, the agricultural products to which the regulations will apply, or

(b) who may otherwise be affected by the regulations.”

Photo of Deidre Brock Deidre Brock Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Environment, Food and Rural Affairs)

It is, as always, a pleasure to serve under your chairmanship, Sir David.

It might help the Committee if I lay out briefly a little of the SNP’s reasoning behind our approach to the Bill and to the amendments. Scottish agriculture has always followed a different line from UK agricultural policy. Different circumstances—very different, in many cases—demanded that. Agricultural policy had administrative devolution long before the modern era of democratic devolution.

In the days before the Scottish Parliament was reconvened, the old Scottish Office, which I am sure you remember, Sir David, had responsibility for agricultural policy in Scotland, just as it did for many other areas of policy. It was administratively devolved, and the re-establishment of the Scottish Parliament in 1999 simply democratised that devolution. In fact, stories tell of Scottish Ministers of old doing battle with their UK counterparts on such issues, arguing the case for that devolution settlement to be respected, way back as far as Mrs Thatcher’s Government and George Younger’s ding-dongs with colleagues.

The SNP is simply seeking to protect the decision-making powers of the Scottish institutions in the Bill, to ensure that the policies applied can be the best fit for the farmers and crofters concerned. That is why we have argued and continue to make the case for the Scottish Parliament and its Ministers to hold the powers for Scottish agriculture and food production. That is why I am in Committee now: I will make a case that some present might not give two hoots about. Despite all that, I will continue to argue it.

Amendment 19 specifically mandates that Scottish Ministers retain their devolved powers and that when, and only when, regulations made under the clause extend to Scotland, the Scottish Government will have to consent to them. I have been following the Tory leadership election in Scotland; I understand that the current Scottish Tory leader intends to be the next First Minister, so enshrining that principle in legislation would clearly be a big help to him. Perhaps the Minister will bear that in mind. It would also have the benefit of being the right thing to do, and it respects the devolution settlement. I certainly hope the Government will support the amendment.

Amendment 20 would sensibly ensure that the businesses most closely affected by the regulations are consulted before the regulations are created. That is an extremely sensible way to conduct Government, and it helps to ensure that unintended consequences are kept to the bare minimum and that the industry buys into the regulations. It seems to be a sensible and measured amendment, and I hope the Minister will support it.

Photo of Victoria Prentis Victoria Prentis The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs 2:15 pm, 3rd March 2020

I appreciate the hon. Lady’s clear desire to ensure that any statutory codes are fit for purpose, and we are equally committed to ensuring just that. We want to see consistent protection against unfair trading practices for farmers wherever they are in the United Kingdom. We continue to consult widely and meaningfully with everyone who will be affected by our new codes of conduct, including the devolved Administrations and producers in those territories. Their views will be listened to and respected.

Amendment 19 is designed to require the consent of Scottish Ministers in respect of the regulations, thereby potentially preventing the UK Parliament from developing codes of conduct that would apply across the UK. We do not think it appropriate, nor is it in line with the devolution settlement. The objective of clause 27 is to promote fair contractual dealing and to prevent the abuse of a dominant market position. The Department for Environment, Food and Rural Affairs sought a view from the Competition and Markets Authority on whether that is a devolved matter. The CMA’s view is that the purpose of promoting fair contractual dealing is definitely related to the regulation of competition. Competition is a matter reserved to the UK Parliament. As such, clause 27 is reserved and we should not be seeking legislative consent to exercise powers that are reserved to the UK Parliament. Amendment 20 deals with the obligation for broader consultation, and we are committed to using those powers in the most effective and least burdensome way possible.

We fully acknowledge that it is crucial for any new codes to be the product of a deep partnership between Government and industry. Thorough consultations will be conducted prior to the design and introduction of the new statutory codes. However, placing a requirement to consult in primary legislation would be burdensome, especially for regulations that make only minor and technical changes. I therefore ask the hon. Lady to consider withdrawing the amendment.

Photo of Deidre Brock Deidre Brock Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Environment, Food and Rural Affairs)

I thank the Minister for her response, but I am afraid that we will have to agree to disagree. It is very much the SNP’s view that these competencies rest with Scottish Ministers. Where common frameworks are to be decided on, they should be agreed, not imposed. That lies at the heart of what we are talking about. I appreciate the Minister’s honesty on this issue, but I will ask for the amendments to be pushed to a vote.

Question put, That the amendment be made.

Division number 17 Agriculture Bill — Fair dealing obligations of business purchasers of agricultural products

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The Committee divided: Ayes 2, Noes 15.

Question accordingly negatived.

Amendment proposed: 78, in clause 27, page 22, line 11, after “fair” insert “dealing and fair”.—(Daniel Zeichner.)

Division number 18 Agriculture Bill — Fair dealing obligations of business purchasers of agricultural products

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No: 10 MPs

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The Committee divided: Ayes 5, Noes 10.

Question accordingly negatived.

Photo of Ruth Jones Ruth Jones Labour, Newport West

I beg to move amendment 82, in clause 27, page 23, line 15, leave out “a specified person” and insert “the Groceries Code Adjudicator”.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

With this it will be convenient to discuss the following:

Amendment 83, in clause 27, page 23, line 23, at end insert—

‘(8A) The Groceries Code Adjudicator Act 2013 is amended, by inserting after section 2 (Arbitration)—

“2A Fair dealing: determination of complaints alleging non-compliance

(1) If a complaint relating to alleged non-compliance is referred to the Adjudicator under section 27(8)(a) of the Agriculture Act 2020, the Adjudicator must determine the complaint.

(2) In determining any allegation of non-compliance under subsection (1), the Adjudicator must act in accordance with any regulations made under subsection (1) of section 27 of the Agriculture Act 2020 which make provision for investigation of complaints, imposition of penalties or a requirement to pay compensation, as specified by subsection (8) of section 27 of that Act.”’

Amendment 80, in clause 27, page 23, line 25, after “any” insert “competent and appropriate”.

This amendment would ensure that the role of regulating agricultural contracts is given to a body which is competent to undertake qualitative assessments; for example, the Groceries Code Adjudicator’s office.

Amendment 81, in clause 27, page 23, line 26, after “provide for a” insert “competent and appropriate”.

This amendment would ensure that the role of regulating agricultural contracts is given to a body which is competent to undertake qualitative assessments; for example, the Groceries Code Adjudicator’s office.

Photo of Ruth Jones Ruth Jones Labour, Newport West

I will speak to all the amendments together. Being mindful of time, I will not read out the wording of the amendments. I know that hon. Members are grateful for that.

The amendments would ensure that the role of regulating agricultural contracts is given to a body that is competent to undertake qualitative assessments, such as the Groceries Code Adjudicator’s office. That sensible suggestion would ensure that effective and authoritative oversight and assessment takes place.

External organisations such as the Tenant Farmers Association believe that the Government have a vital role in the face of significant market failure in agriculture and food supply chains, but it is concerning that the Government do not see that as forming part of an expanded role for the Groceries Code Adjudicator. It has been proposed instead that the Rural Payments Agency would be an appropriate regulator. The Government need to explain why they think that the RPA has sufficient expertise in that area; I look forward to the Minister’s explanation on that specific point. There seems to be no reason why the responsibility should be placed anywhere other than with the Groceries Code Adjudicator.

The Government have previously decided not to broaden the scope of the Groceries Code Adjudicator. Those decisions suggest that, without a clear duty, they will come under pressure from retailers to row back on the provisions. We need to be focused and tenacious in how we monitor the assessment process, including the criteria used. Importantly, the amendments would provide the clarity and certainty that are desperately needed by our farmers and the agricultural sector more generally.

We need to drill down to the detail and explicitly identify which regulatory body will be in charge and what expertise and experience the Government expect it to have. When will the Government see fit to provide a clear answer on that? I look forward to the Minister’s response to these probing amendments.

Photo of Victoria Prentis Victoria Prentis The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

We are committed to tackling supply chain injustices, and an effective enforcement regime is a crucial part of that process. It is important to state that no decisions have yet been made about the nature of enforcement or the body responsible for it. We intend to listen to the ideas and concerns of the industry before any decisions are made, and we will of course exercise due diligence in designing the enforcement regime when we appoint the regulator.

I understand the attraction of replicating the success of the GCA elsewhere in the food supply chain, but it is important to recognise that the GCA works so well because it has a very targeted focus on the behaviours of extremely large retailers that deal with their direct suppliers and have a good understanding of how that particular supply chain works.

A 2018 Government review found insufficient evidence of widespread problems further down the groceries supply chain to justify extending the remit of the GCA to indirect suppliers. The issues that the review identified were sector-specific and are best addressed with the proportionate and targeted interventions contained in the Bill.

No decisions have yet been made about enforcement. Although the RPA has undoubtedly had difficulties with direct payments in the past, it has a wealth of experience in the agricultural markets. We will take a measured approach to arrive at the best possible decision. I ask the hon. Lady not to press the amendment to a vote.

Photo of Ruth Jones Ruth Jones Labour, Newport West

I thank the Minister for her explanation. Obviously, external bodies and stakeholders will be actively encouraged to lobby the Government on the matter, and I hope that they will take the opportunity to do so. In the meantime, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 20, in clause 27, page 23, line 27, at end insert—

“(10A) Before making regulations under this section, the Secretary of State must consult persons—

(a) who are representative of—

(i) qualifying sellers of, or

(ii) business purchasers of,

the agricultural products to which the regulations will apply, or

(b) who may otherwise be affected by the regulations.”—

Question put, That the amendment be made.

Division number 19 Agriculture Bill — Fair dealing obligations of business purchasers of agricultural products

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No: 15 MPs

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The Committee divided: Ayes 2, Noes 15.

Question accordingly negatived.

Clause 27 ordered to stand part of the Bill.