The Groceries Code Adjudicator Bill was announced in the Queen’s Speech on Wednesday. This is an issue which the Liberal Democrats in general, and Andrew George in particular, have campaigned on for many years. I can remember meeting with farmers shortly after I was first elected back in 2001, and hearing from them the difficulties they faced as suppliers for the biggest supermarkets. A commitment to introduce “a powerful independent regulator of Britain’s food market” featured in our last manifesto (in fact, Labour and the Conservative manifestos both included a similar pledge).
Following the Competition Commission’s report in 2008, which highlighted the danger of supermarkets abusing their power by transferring “excessive risk and unexpected costs” to farmers, growers and suppliers, the last Labour government did introduce a statutory Groceries Code of Practice. However, laws aren’t much use without the police and courts to pull up those that break them, and with no body charged with enforcing the Code there was nothing to stop retailers simply ignoring it if they wanted to.
That is why I am delighted that this Government is introducing the Groceries Code Adjudicator Bill, which was published last Friday. This will create an independent ombudsman to ensure that the Code is respected – and to sanction supermarkets if they break it. Those sanctions include naming and shaming offenders, and if that doesn’t prove effective then ministers can give the Adjudicator the power to levy fines.
The Adjudicator will also be able to hear complaints in complete confidence not only from suppliers but also from third party organisations such as the National Farmers Union or War on Want, for example. This means that suppliers don’t have to fear being singled out by supermarkets for putting their head above the parapet.
Supermarkets contribute a great deal to our economy, and bring huge benefits for customers. However, their sheer size and dominance should not be licence to treat suppliers unreasonably.
* Norman Lamb is MP for North Norfolk and was Liberal Democrat Minister of State at the Department of Health until May 2015. He now chairs the Science and Technology Select Committee
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4 Comments
There’s a lot of evidence that the supermarket oligarchy is distorting the food supply market in the UK, so as a liberal who believes in market competition I’m happy to see a counterbalance to that.
However, the problem will be if British farmers getting a fair deal means food prices going up, rather than supermarket profits going down…
Norman Lamb has hit the nail on the head. They must take responsibility for the whole system they operate in. They also need to be transparent on their pricing and margins. However, unless there are more employee-owned retailers, especially cooperatives, it will be difficult for them to have a genuine moral consciousness.
It’s little wonder why the Green Party are about to replace the Lib-Dems as UK’s third party,when the Lib-Dems fail to grasp the stark realities of why UK is falling apart.The Supermarkets contribution Norman Lamb appauds ignores the substantial damage done by the Supermarket monopolies over many years,and the cruel exploitation and slave labour of overseas workers.For every Supermarket that opens there is a NET LOSS of a few hundred jobs.The profits Supermarkets make go to distant shareholders and tax avoiding CEO’s,while the high street and local communities are boarded up for good.Despite this,the three main capitalist political parties work hand in hand with the mega stores,scratching each others back.But it is the jobs market that is the big casualty of all this political apathy by the three main parties .Could you imagine how many jobs would be created tomorrow if 97% of the UK food retail sector,thats dominated currently by the big 4/5 were forced shut ,or more realisticly if the Lib-Dems found the courage to insist on a even playing field,so small retailers could offer goods competitively. MONOPOLY TAX NOW !
Funnily enough, I suspect this might be welcome news for supermarkets as well as suppliers, but the way it seem to be presented is very one-sided.
Supermarkets have no interest in destroying their own suppliers, because by doing so they destroy themselves. But they may also have an imperfect understanding of the realities of suppliers’ businesses – they perhaps cannot distinguish between a supplier complaining in order to increase profit on one hand, and a supplier facing bankruptcy on the other. Maybe opposites also apply. If a supplier destroys a supermarket the alternative is a less efficient distribution system some of whose costs are likely to be borne by the supplier.
The argument about jobs seems to bring a nationalism into the picture which is perhaps not too relevant. A job here and an unemployed person in Sri Lanka makes the same number of jobs and unemployed people as a job in Sri Lanka and an unemployed person here. We can all benefit from trade.
To be fair, supermarkets also need to be able to complain about suppliers – who may in some cases be larger than the supermarkets and so have more market power. And every one needs the freedom to go bust – that possibility is one motive for continuous improvement. A new, fair system would potentially allow competition and normal commercial negotiations to occur, benefiting everyone including customers, and avoiding undesirable extreme consequences.