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Licensing and Registration of Gangmasters

12.31 pm

Mr. Mark Simmonds (Boston and Skegness): I beg to move,

To begin with, I should like to pay tribute to my predecessor Sir Richard Body for his tremendous and unstinting work in this area.

The term "gangmaster" is not new. Ganging has been conducted in the fens and East Anglia for as long as anyone can remember. Ganging refers to the provision of casual labour for agricultural work.

The need for such casual labour used to be seasonal, but that is no longer the case. Increased consumer demand and changes in supermarket practices that demand consistency of supply 52 weeks a year for pre-packaged and pre-prepared goods now mean that demand for such casual labour is all-year round. Producers and packhouses now import produce when their own supply cannot meet supermarket demand. These imported goods are prepared, packaged and dispatched to supermarkets around the country 364 days a year.

The gangmaster system is not any longer confined to the agriculture and horticulture industries. Ganging has now spread to any sector where there is demand for casual labour. It pays an important role in the fishing, catering, construction, cleaning and retail industries. These highly organised gangs of labour move around the UK fulfilling different labour requirements in different industries, often on a daily basis.

I do not seek to make the gangmaster system illegal. It has to be recognised that gangmasters play a vital role in many industries, particularly in the agricultural sector. Ganging is an essential tool that provides efficient and cost-effective labour for the production of food in the UK. The role of gangmasters is even more important when considered in the context of the pressure placed on producers and packers by the supermarkets. Being a gangmaster is a legitimate business, providing large numbers of workers at short notice. A number of gangmasters pride themselves on their good working practices.

Historically, gangmasters used to employ labour from the immediate locality to bring in the harvest, but packagers, producers and the industry are now hugely dependent on migrant labour. The point must be made, however, that without that migrant labour the food industry would not be able to operate. It has been said that 95 per cent. of the horticulture industry is now dependent on foreign labour. To give the House a sense of the scale of the problem, half the 72,000 casual workers employed in the industry are provided by gangmasters. It has been calculated that 20,000 workers per annum are employed by the gangmaster system in a 16-mile stretch between Spalding and Boston, and a further 20,000 workers are employed in the stretch between Spalding and Ely. However, the real scale of the problem is unknown. It is out of control to such an extent that gangmasters travel to Europe to recruit workers directly.

I am sorry to have to tell the House that some suppliers of gang labour use abusive, evasive, intimidating, fraudulent and exploitative working

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practices. Regular and significant offences include unlawful deductions from wages; the use of casual workers in receipt of benefits; the use of illegal immigrants; evasion of tax and national insurance payments; non-registration of VAT; evasion of payment of VAT to Customs and Excise; and the use of under-age workers. The implications of those practices are not only the human misery and suffering of the exploited individuals, but significant loss to the Exchequer; damage to legitimate providers of labour owing to undercutting from illegal operators through unfair competition; and damage to the reputation of the entire food chain.

To make life more difficult for the authorities, gangmasters often subcontract to smaller, untraceable labour suppliers, which means that no paper or audit trail is provided. Although the initial gangmaster may be legitimate, the subcontractor may not. It is thus important that all subcontracting gangmasters be included in any scheme, and they must also be licensed.

The House should be under no illusion: this is a multimillion-pound business—so much so that the police believe that professional criminal gangs from around the world have moved into the casual labour market in the UK to exploit the current legislative loophole. Some illegal gangmasters have contacts with migrant importers, who charge people to come to the UK, promising them employment. Once an individual is in the UK, often in massive debt, they are found accommodation, which is often substandard. They are provided with transport to and from their place of work. The transport and accommodation costs are deducted from the worker's pay packet, along with tax and national insurance payments. However, as many of the workers are in this country illegally, there is no justification for many of those deductions, which are inevitably not passed on to the relevant authorities. The worst of the examples brought to my attention is that of an eastern European woman employed by an illegal gangmaster. Her gross wage was £149, but after deductions for accommodation, food and transport her net pay was £19.

If a worker complains or queries deductions from their wages, they can find themselves on the streets, homeless, penniless and passportless. More often than not, however, the van that takes them to work will not turn up, and as many of them are housed in rural areas where transport is limited, if the van fails to arrive there is no work.

There is an atmosphere of intimidation permeating illegal ganging. Stories of verbal and physical abuse are widespread and subsequently generate an understandable reluctance to come forward, so much of the evidence is anecdotal. Indeed, the last reliable statistical data are from 1995; they emanated from the agricultural compliance unit, which identified more than 5,500 gangmasters and, by investigating them at that time, managed to recover £537 million in unpaid tax.

The Government have recognised that the situation is deteriorating and that the prevalence of illegal gangmasters is increasing. In 1998, Operation Gangmaster was established to look into the problems of illegal ganging. However, it is clear from evidence to the recent inquiry into gangmasters conducted by the Select Committee on Environment, Transport and

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Regional Affairs that the Government have so far failed in their efforts to tackle the problem. They admit that no one has any idea of the extent of the difficulties.

Five years on, Operation Gangmaster has no overall budget, reports to no Minister, has no identified aims or goals and no time frame by which anything must be achieved, and the relevant individuals in each Department with responsibility for Operation Gangmaster have not met during the past year. It is no wonder that little is being done, that nothing is being achieved and that the problem is getting worse.

The Government have no idea of the number of migrant workers—illegal and legal—involved in the problem, how long they have been in the UK, where they are located, where they are working, what they are doing, or whether they are being exploited or intimidated. It is essential to confront those issues for the sake of local economies and the workers themselves.

The fundamental step in combating the problem is to establish a legislative framework to introduce a compulsory code of practice. All gangmasters and subcontractors must abide by that code to obtain a licence and to be allowed to organise casual gang labour. Registration must be kept simple and unbureaucratic, unlike the existing voluntary codes, which are clearly not working. If gangmasters fail to comply with the legal obligations, they must be removed from the register and not be allowed to operate as gangmasters. An annual levy would be charged to make the scheme self-financing.

Any scheme must take into account the importance of the need to maintain flexibility in the labour market and must not add further to the burden on the agriculture and horticulture industries. Such schemes have existed before—for example, under the Agricultural Gangs Act 1867. In the 1940s, there was a licensing scheme administered by magistrates. In 1973, a scheme worked reasonably successfully, alongside the White Paper on employment.

Such a self-financing legislative scheme is supported by supermarkets, producers, farmers, packers, the National Farmers Union, the Fresh Produce Consortium, the trade union movement, legitimate gangmasters and many hon. Members.

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In conclusion, it is not acceptable to have many thousands of vulnerable legal and illegal workers being transported across the country and being exploited. It must stop. It is essential that we must encourage the legitimate supply of labour to the detriment of the illegal and illegitimate.

Question put and agreed to.

Bill ordered to be brought in by Mr. Mark Simmonds, Mr. John Hayes, Mr. Peter Luff, Mr. Henry Bellingham, Mr. Mark Prisk, Mr. John Baron, Mr. Mark Hoban, Mr. Mark Field, Mr. George Osborne, Mr. Peter Duncan and Mr. Hugo Swire.

Licensing and Registration of Gangmasters

Mr. Simmonds accordingly presented a Bill to register and license gangmasters in the agricultural and food processing industries: And the same was read the First time; and ordered to be read a Second time on Friday 21 November, and to be printed [Bill 156].

Mr. Patrick McLoughlin (West Derbyshire): On a point of order, Mr. Speaker. You will of course be aware that the House is voting in deferred Divisions at the moment, as indicated on today's Order Paper. Will you perhaps cause that to be looked into, as the House is voting on matters that were debated in early July and thus being asked to reach a decision some two months after they were debated in Committee? That is surely ridiculous, and yet another sign of modernisation going fairly crazy. Should it not be reviewed?

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