To address the Deputy's last point, my appointment is for a four-year term. I renewed it at the end of that for another three years and said at the time that I would not renew after that. I sincerely think that if I changed my mind, I would be given another three years. I just said I thought seven years was enough and that it was time somebody else had a go.
I wish to clarify something about the word "investigation". Investigation is one of my statutory powers. I have only done two investigations in my term in office, one into Tesco and one into the Co-op. I must be reasonably confident that a retailer is in breach before I initiate an investigation because obviously it is reputationally enormously damaging to the retailer for me even to launch an investigation. If I then find that the retailer is in breach, it must cover all my costs of doing the investigation. Both investigations cost over £1.3 billion, and both times I got that back from the retailer. We do not have anything anywhere near as convoluted as having to have first-hand evidence and so on. I collect evidence while I talk to suppliers. I have my survey and I work collaboratively with the retailers. I tell them when there are issues and give them a chance to put them right, asking them to report back to me when they have done so. It is only really when I feel they have not been able to put something right or that the harm was severe that I end up initiating an investigation.
The Tesco investigation arose out of the profit misstatement that the committee members will have heard about, which ended up being over £300 million. I asked the company to report back to me when it informed me that this was happening. Accountants were examining its figures. I asked the company to report back to me on any potential breaches of the code that these independent accountants found. The company gave me a report and I then said that I wanted it to do some more work. Tesco then compiled another report for me on the background to all of that. I then decided then that I needed to launch an investigation. I was fairly certain of the position by then, without any input from suppliers at all. Once I am in investigative mode, I have statutory powers. Whatever I asked Tesco and the suppliers for, they had to give me. It was quite a big shock to suppliers that there is no cover for their legal costs. Some of them spent six-figure sums gathering the information I requested. I had piles and piles, that would have probably gone from the floor to the ceiling of this room, of printouts of emails from suppliers and from Tesco that I had to go through. Once I am in investigative mode, I have statutory powers and I get whatever I need.
In the Co-op investigation, I was hearing about various issues and I asked the Co-op to report back to me on them. I was not happy with its responses and asked it to do some more work. I was still not happy with its responses. It was an 18-month process before I decided that it had not got the information to be able to find out where the fault lay, that it could be put right and that it could be proven to me that it could never happen again. I am going to have to investigate to find out the extent of what has gone wrong and what the Co-op needs to do differently in the future.
In neither of those cases did I have first-hand written evidence from suppliers. In the context of the questions I was asking the retailers, they were unable to give me responses that made me feel that I was on top of the matter and that it would eventually go away.
I have performed five case studies. Every one of those could have been an investigation. I raised an issue with a retailer, it went away and had a look at it and came back and said that I was right. The retailer put its hands up and stated that it had made a mistake, that it should not have done what it did and that it was doing various things to put it right. When the retailer had demonstrated that every supplier who had been harmed by it had been recompensed and that it had put in place processes to ensure that there would be no recurrence of what had happened, it was only then that I wrote it up as a case study and published it. That was not an investigation. There was some reputational damage involved but it meant that everybody could learn from what had happened.
When I engage in investigations, it is like the cases involving Tesco and the Co-op. The majority of my time is spent raising issues with retailers which they then must put right. I then use the survey to ensure that suppliers have noticed a difference and that things are getting better.
My other statutory power, and Deputy Penrose is correct, relates to arbitration. I have only concluded seven arbitrations since I started. I have made it very clear to retailers that I expect them to resolve issues and that if suppliers have issues, they have their own internal processes. If they bring an arbitration to me, they will generally, unless it is vexatious, have to pay all of my costs. As I have stated previously, I will charge them more on the levy if they cannot sort out something where somebody is bringing an arbitration case. On the whole, something that could go to arbitration is being resolved quickly by the retailers beforehand. The arbitrations that have not been resolved quickly have generally taken about a year. Arbitration is not a quick solution. I wish to make clear that I have been set up as an arbitrator, not as a mediator. There is a role for mediation but I suspect one could not be both the arbitrator and the mediator. Many of the issues that are arising require mediation, not arbitration. There is a need for somebody to get involved in order to try to resolve the difficulties and to get the sides to come together.
If I came across any evidence of cartels, I would probably go straight to the Competition and Markets Authority because the matter has nothing to do with me; it is a competition issue. There have been times when suppliers have told me things and I have said that it is a competition issue and that the party involved should the inform the Competition and Markets Authority.
Members also referred to sorting out the big players. The people I am working with are the big players. If I am honest, I have only had one retailer with which I struggled to engage collaboratively. At that point, I ended up informing it that our relationship was clearly not working. Every time I asked that retailer for a report, it was doing the absolute minimum. It was not sharing anything with me and we were not learning from each other. I told the retailer that if it did not want to work collaboratively with me, we could stop and it would then hear from me when I was about to carry out an investigation. The retailer was absolutely horrified and had no idea that I felt like that. It did not realise that it was far less collaborative than everybody else. The retailer asked if we could give it another go. It is now one of the retailers that I most enjoy working with because it really responds and does things. The threat of removing the collaborative approach was quite effective.
Whenever I am doing anything, I will give the retailer a response or red, amber, green, RAG, rating and state that it is running a very high risk of potentially breaching the code or that, compared with other retailers, it was doing very well. I will now show members one of the slides I brought along to support my comments. What they are seeing on screen is an example of where the first thing happening is the incurring of significant costs and where the cause of this is inaccurate forecasting by the retailer. I give each retailer its scores and if one gets a red score, I am basically saying, from the supplier's point of view, that it is running a relatively high risk of needing me to investigate in the areas highlighted. I tend to do that by showing them where the risk lies. This is very helpful for me in understanding which retailers I need to be working more closely with.
To give the committee an idea, this really plans my work out for the year, that is, knowing what the retailers are doing wrong. I thought, if this is my final year, maybe I should not carry out a survey because I will not be here to see it through and to push through the various actions that the next adjudicator might not want to do or to even use. When I first visited Aldi - the company has come top in that survey every year for six years - I asked if it wanted me to carry out a survey the following year. In terms of the survey, Aldi is obviously at risk of falling from the top position but it was the first retailer to say that it would really want me to do one. It indicated that when it is working on particular areas, it likes to see the progress and needs to know if there are any issues arising. I visited three more retailers who I asked and they all said exactly the same thing. They asked that I please do the survey as it was very helpful to them. I have not struggled in getting these so-called big players to work with me.
I answered a question earlier about the EU directive. Interestingly, there is something in the EU directive about intellectual property whereby if one is receiving information, that it should only be used for the causes for which one stated one wanted the information. That is quite an interesting one that we do not have in the UK, which I maybe look at with envy. The EU directive also refers to 30-day payment terms. When implemented, I expect it will state, "unless contracted otherwise". The idea of mandatory 30-day payment terms for food or perishable products is very interesting.
In the UK, we have also now got - this has nothing to do with me, it comes under BEIS - a duty to report where all businesses over a certain size have to report how fast they are paying people. It asks them for average figures. There has been an interesting dynamic in retail where retailers have worked out that if they pay all of their small suppliers really quickly, it makes one's average look really good. Quite a few of them are paying their small suppliers within 14 days. Incidentally, payment terms are not the responsibility of my office; I only ensure that people are paid on time. If someone has agreed to a 120-day payment term, I ensure that it does not take 125 days for payment to issue. The duty to report has had an interesting impact. We have also had a look at those figures and the retailers are now, compared with the rest of the sector, exemplary in paying on time and also as to the speed of payment.
The suppliers to the retailers who I am protecting are on the whole much worse. This is quite interesting as well in that are we doing the right thing in only regulating the retailers? There are other impacts, which is very much what this committee has been talking about, which is that if the people who are supplying the retailers are paying slower and late, that is then working towards the primary producers.