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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