Supermarkets: Independent Watchdog (Hansard, 29 April 2004)

§ Lord Triesman
My Lords, the Office of Fair Trading is currently conducting an audit of compliance with the statutory code of practice governing supermarkets' relations with their suppliers. The results are expected to be published by the end of this year. The Government will consider what action may be appropriate in the light of the OFT's conclusions.

§ Lord Beaumont of Whitley
My Lords, I thank the noble Lord for that Answer, which offers me rather more hope than I had expected. The matter is an urgent one. The Prime Minister has admitted that the supermarkets have an armlock on the farmers. The rate of suicide among farmers continues to rise. The rate of salaries paid to people who run supermarkets also continues to rise. That is a crying scandal and a disgrace that should be put right as soon as possible. We should not wait too long.

§ Lord Triesman
My Lords, if I might try to detect a question in what the noble Lord has said, I think that it was to ask whether the Government will act with the greatest possible dispatch in light of all the concerns that he raised. The answer must be "yes". All those matters should concern us. I look forward to seeing the report of the OFT. That report should be based on good evidence, because good evidence is the best way of proceeding. We eagerly await that report and the opportunity to act on it.

§ Lord Davies of Coity
My Lords, supermarkets have for a long time demanded greater returns from suppliers and farmers. They have wanted ever-bigger discounts and have taken ever-larger amounts. That has caused tremendous problems. Is there not a danger, if too much is done in that area, that those supermarkets will then buy their products from overseas and therefore cause much greater difficulty for the current suppliers here?

§ Lord Triesman
My Lords, my noble friend makes an important point. It is vital to the United Kingdom's farming industry that a high proportion of the goods that are sold in supermarkets, food goods in particular, are sourced in the United Kingdom. Supermarkets now provide many non-food goods and services. We would want those to come from United Kingdom producers and service producers if that is possible. While I know that some criticisms have been made of the supermarket industry, supermarkets are major players in the realm of employment. One of them, Tesco, employs more than 200,000 people in just under 2,000 communities across the United Kingdom.
887 Supermarkets are large and dynamic players. If they can be linked with other parts of UK production, that must be in all our interests.

§ Lord Peyton of Yeovil
My Lords, leaving aside for a moment the virtues and vices of supermarkets, does the Minister agree that we already have a sufficiency of watchdogs? One wonders whether there is sufficient, suitable kennel accommodation for them.

§ Lord Triesman
My Lords, I hope that I have made the point that the OFT has the decisive role. Until the OFT reports, and in case its report contains anything on which we should reflect in that regard, we have no plans to change the watchdog. However, watchdogs get the chance to bark only if they see something that they have to bark at. More watchdogs will not alter that fact.

§ Lord Razzall
My Lords, while recognising the important issue that the noble Lord, Lord Beaumont, has raised, we from these Benches would sympathise with the Minister's reply that the answer is to deal with this via the Office of Fair Trading code. Does the Minister agree that there was perhaps a slightly Freudian slip in his first Answer when he said that it was a statutory code? I thought it was a voluntary code for the supermarkets. Does he not also agree that pressure could perhaps be put on the OFT to appoint a dedicated food trade inspector with particular responsibility for this area in order to reassure the public on this vital matter?

§ Lord Triesman
My Lords, I do not know that there is a huge amount to add to my last answer. Until the OFT report is available and we can consider whether there are any proposals of that kind, I am not sure that it would help to increase the number of inspections or inspectorates, although I understand the point. In reality, there is quite a lot of dissatisfaction about the operation of the code. I think that my noble friend Lord Whitty, in a recent press statement, drew attention to that fact. We want to see better relations between suppliers and buyers and we want to ensure that we move in the right direction when the changes take place. I have absolutely no doubt that the noble Lord's suggestion will be among the matters that we consider.

§ Lord Livsey of Talgarth
My Lords, the Minister says that there is no evidence on this subject. Last week, Tesco published profits of £1.5 billion, which is equivalent to half the profits of the British agricultural industry; milk producers are receiving the equivalent of 9 pence per pint for their milk; and 1,700 milk producers went out of business in the past 12 months. What further evidence is required? Surely compliance with the code has to be formally sorted out. The British agricultural industry and British farming will go right down the drain if action is not taken soon.

§ Lord Triesman
My Lords, I did not say there was no evidence; I just said that we needed to collect sufficient 888 evidence to be certain that we are moving in the right direction. I too have read the accounts of the profits of that particular company. I would draw attention in the briefest way to the fact that those profits are generated now out of non-food items including banking arrangements and a very wide range of things. As they are not disaggregated in the annual report it is difficult to tell which parts are due to food and farming production in the first place, although of course that will be significant. Whatever people feel about the proportion of profitability in relation to agriculture, the Consumers' Association has made the point that the whole of the operation has been extremely good for consumers.

§ Baroness Byford
My Lords, I think that the Question deals primarily with food. Does the Minister accept that in many instances there are good relationships between farmers and the supermarkets they supply? Many of them are quite happy with the arrangements. However, others feel aggrieved by the arrangements, and one of their problems is deciding whether to jeopardise their relationship with the supermarkets by giving evidence. Can the Minister give us any guidance on how that problem can be overcome? If the Office of Fair Trading does not have the evidence, it is in a very difficult position.

§ Lord Triesman
My Lords, that is a very fair point. My attention has been drawn to some of the publications particularly in the farming world in which farmers' representatives have made the point that many people are anxious about providing evidence lest it should soil their relationship with the supermarkets. I can only observe that we must try to produce an environment in which people are not fearful. It is extremely hard to take the right steps unless there is as much detailed evidence as possible. I can say with confidence that the Government would take a very severe view of anything that imported undue fear into the minds of people whose evidence we need.