Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Examination of Witness (Questions 20-39)

Wednesday 7 May 2003

Mr Doug Henderson, Chief Executive, Fresh Produce Consortium, examined.

  Q20  Alan Simpson: I am intrigued by this gap between social responsibility and legal liability. I accept the first part but I am very suspicious about the real commitment to the case you are making when it pulls up short of wanting to be part of the liability chain. If someone was nicking goods from any of your supermarkets and selling them back to another supermarket at a cut price and you were found to be in the middle of that, you would be breaking the law and you would be held legally liable for it. If people are breaking the law here, if they are exploiting cheap labour, are you not dependent upon that and cashing in on it if you are not willing to be part of a liability chain of responsibility?

  Mr Henderson: Let me ask you a question: if you employ a tradesman in your house to carry out a task and you pay that tradesman, you have no liability as to whether the person is legal or illegal any more than the pack-houses have when they employ tradesmen to come in and do work for them. It is exactly the same relationship.

  Q21  Alan Simpson: You do have choices in that. First of all, you have choices about whether you pay the rate for the job. The second is whether you make checks to see whether they are properly qualified and insured. The third is you miss out the step which is that you then sell on the produce. This is not just a transaction between you and the supplier for your home consumption. You are selling the produce of that contract that you have entered into to the wider public so if you are asking for a legal framework I want to push you again and say where do your members fit in that lien of liability? This is what hacks me off about supermarkets. They are very good these days at saying to us as government, "We want other people to be legally responsible", but when you say, "In what ways should you yourselves be legally responsible?" there is always a desire to move it to somewhere else. I want you to say where your members want to be held legally liable?

  Mr Henderson: First of all, this is not the supermarkets because the supermarkets are not employing the gang masters. It is the packers and the farmers who are employing them so it is not a matter for supermarkets. Secondly, this temporary pack-house labour code has been through the various government departments to check that it is legally correct. Part of the requirement of this code is to be able to demonstrate compliance with, for example minimum wages, to ensure that the people themselves are not bogus self-employed people, that they are legal workers, properly authorised to work in the United Kingdom. We have done all this, but there is no legal liability on the packer for the labour supplied by a third party provider.

  Q22  Alan Simpson: Would you be happy first of all to see that code being made a legal duty and would you be happy to see the enforcement route being a continuum from yourselves to the packer and to the employer of field workers so that the code applied there as well?

  Mr Henderson: Yes. Our proposal which was put to Lord Whitty and Beverley Hughes is that we wish to see a similar code of practice developed for gang masters and DEFRA have seconded somebody to work with a gang master to do this. That code of practice would form the basis for statutory registration of gang masters. A gang master would have to demonstrate compliance with the code of practice before he was registered. Our members would then not use gang masters who were not registered. That is how the system would work. It is not complicated. It is quite simple and that is really our solution to tackling this problem.

  Q23  Paddy Tipping: You had a meeting with the AIT some time ago. At their request or at your request they produced this report?

  Mr Henderson: That is correct.

  Q24  Paddy Tipping: They asked you to take it up with ministers?

  Mr Henderson: They were very keen to have the whole backing of the industry to secure the passage of primary legislation. That is the conclusion in the report. "Perhaps it is now time for legislation."

  Q25  Paddy Tipping: What I am puzzled about is that these people who are employed by the AIT are officials and civil servants, which seems to imply that they were using you to take messages to ministers.

  Mr Henderson: I think all of us who have been involved in this have been extremely frustrated about the problem, particularly if you are in the front line, as they are, and you can see the extent of the problem and see it deteriorating. We all wish to find a solution for it. We have worked very hard by voluntary means. We have worked very hard to cooperate with the AIT. Our members will encourage the AIT to raid their premises if they think there is something wrong. They will call them up; they will raid the premises to keep control of this. I think it is fair to say that both the AIT and ourselves from the industry side feel that this is just not sufficient.

  Q26  Paddy Tipping: Could I ask you how the meeting with Beverley Hughes and Lord Whitty went? Did you come away with the impression that, now you had seen them, things were going to happen?

  Mr Henderson: No. We came away with some specific recommendations and specific actions. First of all, DEFRA were going to look into the issue of competition and, if we have a statutory register of gang masters, how this affects the competition laws. That is one helpful step forward. Secondly, they are going to help us with the code of practice for gang masters which would be the first requirement for setting up a scheme for the registration of gang masters. We are going to meet with them in about six months' time, probably in September, when we will review how we have got on with the development of the code of practice and I guess, if I could use a well known cliché, they have neither ruled in nor ruled out having a statutory register. As we know, the passage of primary legislation is a very time consuming and complex task.

  Q27  Diana Organ: You have talked about trying to develop a code of practice, a registration or trade association for legitimate gang masters. Even with that, there will be the illegal, the fraudulent and the other group that are exploiting people. How does the consumer, the purchaser of these goods, discriminate between buying lettuces from a legitimate gang master and those that are coming from exploiting poor people? In the end, the only way we are going to get it really sorted is for the consumer to make a positive choice that they will go for people not being exploited, through a legitimate route. Are you suggesting that in all this voluntary measure and everything else there should be even more labelling on a salad good? It is not only the red tractor symbol but we have another one which shows that this person is not some poor, illegal asylum seeker that has been housed in some filthy caravan and been exploited or is it clean, happy, smiling workers being paid the minimum wage? Are you expecting to have more labelling on the products?

  Mr Henderson: No.

  Q28  Diana Organ: How is the consumer going to be able to differentiate?

  Mr Henderson: They cannot.

  Q29  Diana Organ: In which case, your members of your association and other consumers will keep going for the cheapest option which is often the illegal option, so the whole of this voluntary code of practice will not work, will it?

  Mr Henderson: I am sorry to disagree with you but, first of all, the cheapest option is not the illegal option. There is no basis or connection between the retail price of goods and whether the person who has harvested or packed them is legal or illegal. Secondly, the produce industry is not the only industry that is bedevilled with this problem. There is a wide range of other industries involved in this as well. It just so happens that we in the produce industry have been particularly proactive in highlighting the problem and trying to get the necessary action to resolve it. Finally, we do not believe that voluntary action is going to solve it. Voluntary action will put legitimate businesses within a framework that we can all see, that is transparent. It will not deal with people who are criminals and who intend to in some way avoid their responsibilities.

  Q30  Diana Organ: You said in your meeting with Beverley Hughes and Lord Whitty that the government had talked about the potential competition law implications of a voluntary registration scheme. I wonder if you could give us a little more information about the indication that the government had given on this?

  Mr Henderson: They said they would investigate.

  Q31  Diana Organ: Are they reporting back at your meeting in September from their investigation?

  Mr Henderson: Yes.

  Q32  David Taylor: There has been an impression given to me—perhaps unfairly—of injured innocence on behalf of your members in that there is not a lot you can do about some of the illegality unless the government acts. You said a moment or two ago that the cheapest option is not necessarily always going to lead to illegality but some of the evidence that we have received from Farmforce who say supermarkets' pricing controls have created a situation where it is uneconomic for directly employed labour to exist in the horticultural food sector and secondly and finally from JE Pickerver & Co, unfair competition is here where labour is a major cost in the process. The ability to squeeze those in the food chain who provide good wages and conditions is put under too much pressure. We have the circumstance where, if I go to my nearest Sainsbury's in south Derbyshire to buy a Lincolnshire lettuce, the costs of that are made up of several slivers, not least the cost of the producer, the packer and the picker and so on. You might be justified in saying, "There's not much we can do about it, guv, because the competition is so vigorous that we have to buy at the absolutely lowest level of price possible" when research shows that the mark-up in British supermarkets in this horticultural area is amongst the highest in Europe. Why do you not pay a decent price to squeeze out the gang masters and to encourage the legitimate businesses employing people at decent wages, in decent conditions, paying, tax, insurance and VAT?

  Mr Henderson: The gang masters, when they contract with the packer or grower, quote a rate for the job. That rate will be on the surface a reasonable rate for the job. Unfortunately, the packer or grower does not know precisely what the gang master pays the worker and does not know whether VAT and national insurance have been paid either. Part of the work with the voluntary code that we have is to establish that the minimum wage is being paid to these people, but the evidence is that, despite all the efforts that we have made on this, it is not enough.

  Q33  David Taylor: The central point is that the evidence we had suggested that, if you were to pay a "fairer" price for agricultural and horticultural produce, there would be the opportunity for legitimate firms to flourish in the way that is not there at the moment. You are driving out the good in favour of the bad.

  Mr Henderson: Not all the gang masters are criminals. It is only an element. I do not think that increasing the amount of money that you pay the gang masters is going to make a criminal reform his ways. I do not think there is any evidence anywhere that paying a criminal more money is going to make him change his ways.

  Q34  David Taylor: As long as it is only legitimate gang masters, no matter how few in number, it is acceptable to turn a blind eye to the activities of the rest?

  Mr Henderson: We are trying to do the opposite. Everything that we have done is to focus attention on the gang masters who are acting with criminal intent, to flush them out and to squeeze them out of the system. Paying them more money is not going to squeeze them out of the system. Squeezing them out of the system can only be done, we believe, by bringing the full weight of the law enforcement on them and making it much easier, on the one hand, to enforce the law against them and, on the other hand, to allow the packers and the growers and the supermarkets to be able to clearly identify those gang masters who are legitimate through a proper, registered system of gang masters. Then the industry can say, "We will only deal with legitimate gang masters. We will not deal with people who are not registered." That way, the criminal element will be marginalised.

  Q35  David Taylor: I would put to you that squeezing the excessive profit margins which some say your members enjoy in this area, in the interests of paying a higher price to the various people down the chain, would encourage and allow greater numbers of legitimate firms to expand or to operate.

  Mr Henderson: It would also allow the criminals to expand and operate.

  Q36  Mr Mitchell: I can see your point in the sense that you are saying paying more money does not necessarily eliminate illegalities. At the same time, surely it must be agreed that the people you represent, the Tescos, the Sainsbury's and the Asdas, by constantly screwing down the price they pay for their produce to sell in order to screw up their own profits, are basically the cause of the problem.

  Mr Henderson: I do not think that is the case at all. You can hardly link the price that people pay for services with criminality.

  Q37  Mr Mitchell: No, but by constantly screwing down prices it makes a mean system in which it pays to behave in this kind of fashion.

  Mr Henderson: No. By constantly not enforcing the law as it ought to be enforced—

  Q38  Mr Mitchell: That is passing the buck to somebody else.

  Mr Henderson: No, it is not. The enforcement of the law is not a case of passing the buck to anybody. People are responsible for the enforcement of the law and if it is not being enforced properly and effectively that, as we all know, encourages criminality and that is the route cause here. By trying to switch the responsibility onto supermarkets, it is taking our eye away from what the real issue is.

  Q39  Mr Mitchell: This is all news to me. I am just amazed by what I am hearing this afternoon. Thank you for the information you are giving us. It sounds like a similar situation to the one existing in California where illegal immigrants are exploited, but in California it has been dealt with because even illegals have rights. Secondly, because there has been unionisation. That does not apply in this country because if these are asylum seekers everybody hates their guts, they have no rights and no protection; they are lucky to be working at all because we pay them such mean benefits but the unions are not going to touch them and cannot touch them if they want to so there is no way out from the same forces that operated in California.

  Mr Henderson: I disagree with you because we have worked very closely with the TUC and with the Transport and General Workers' Union on this whole issue. We would not accept what you are saying, that these people do not have rights and should not be protected, whether they are legal or illegal. They are human beings and they are entitled to be treated as human beings. We wish to ensure that that happens.

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