The Rt Hon Vince Cable, MP
Secretary of State for Business, Innovation, and Skills
1 Victoria Street
London
SW1H 0ET

3rd February 2012

Dear Vince,

Groceries Code Adjudicator

You may remember that I wrote to you very near the beginning of this Parliament to urge the Government to create an ombudsman to oversee the activities of supermarket chains. This issue was raised again in a Commons debate on the 23 January and I would like to join Members from all parties in urging you to ensure the creation of a Groceries Code Adjudicator (GCA) following the next Queen's Speech.

The economic hardship faced by many consumers is putting ever-greater pressure on supermarkets to cut prices, which in turn puts immense strain on small producers and suppliers who struggle to meet the demands for ever-cheaper food. In the middle are the supermarkets, which, without robust scrutiny and the prospect of incurring penalties, use their powerful position to squeeze both consumers and producers in pursuit of ever-higher profits. An effective watchdog is urgently needed if the UK is to emerge from these tough economic times with an agriculture sector that has not been decimated by the mercenary purchasing policies of the larger supermarkets.

I am sure you will have also shared my alarm at a recent report from the Fair Pay Network, called Face the Difference, which exposes the extent to which, despite massive remuneration packages at the top levels of the major supermarkets, none have seen fit to implement living wage policies for staff at the opposite end of the scale.

The Environment Secretary's contribution to last Monday's debate failed to present a convincing argument for further voluntary measures in this area. Her assumption that ‘reputational damage' will be a deterrent to irresponsible behaviour is simply wrong: the major supermarkets, Tesco in particular, have for years received extensive negative publicity due to their unscrupulous commercial practices, but there is little evidence that this has any effect on sales - especially in areas where consumer choice is limited by the domination of a single retailer.

There is a strong case for giving the GCA the power to impose fines: as you will be aware, the Business, Innovation and Skills Committee itself recommended such a power following its scrutiny of the draft Bill. I hope you will agree that the experience of many years under the last Government shows that a ‘light touch' approach in this area does not work. I urge you to see that the GCA is granted robust powers to fine supermarkets that fall foul of the code of practice.

Finally, I would urge you to take up the BIS Committee's recommendation that third parties be eligible to make complaints to the Adjudicator. Suppliers and small producers are the most directly affected by supermarkets' practices, but there is a long list of stakeholders, from consumers to trade associations to non-profit organisations, who are well-placed to discuss the effects and consequences of supermarkets' behaviour, and who deserve an opportunity to participate in a mechanism designed to ensure that these companies operate in a responsible manner.

I would be grateful for your views on these points.

Yours sincerely,

Caroline Lucas, MP, Brighton Pavilion