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


Memorandum submitted by the National Farmers' Union (NFU)

  1.  The NFU welcomes this opportunity to submit evidence to the EFRA Committee inquiry into the activities of gangmasters. The whole area of seasonal/casual-type workers, including those supplied by gangmasters is of immense importance to members of the NFU, particularly those involved in horticulture.

  2.  Before addressing the specific questions raised by the EFRA Committee, the NFU wishes to stress the importance to the agricultural/horticultural industry of labour suppliers/gangmasters. The inability of businesses to attract sufficient staff to harvest, pack and process produce is one of the main elements militating against expansion in the industry. Whilst successive increases in the number of SAWS (Seasonal Agricultural Workers Scheme) permits have been welcomed in this respect, there remains, and in our view will continue to remain, the need for a system of short-term labour supply to deal particularly with peaks of activity. This system in agriculture is currently delivered by gangmasters, although similar systems operate in many other areas of the economy (eg temporary office workers, agency nurses, supply teachers, etc.). Workers supplied by gangmasters are typically used to meet peaks of activity, such as planting, harvesting and packing. The ability to access a pool of such short-term workers underpins the employment of the regular workforce on many holdings. The value of the system, provided it operates legally and ethically, is fully recognised by all stakeholders (references: Operation Gangmaster report—1998; Ethical Trading Initiative Briefing note 2003.)

  3.  For many years the NFU has been concerned about reports of illegal, and exploitative, activities concerning gangmasters. For this reason we have consistently been calling for the introduction of statutory policing and licensing of gangmasters. Successive governments, primarily it appears due to a lack of parliamentary time to bring forward the necessary legislation, have not acted on this request. Whilst hard evidence is, understandably, difficult to come by, experience and information received suggests that the problems surrounding certain gangmasters is getting worse. This is despite efforts by the industry to introduce codes of practice/conduct at both the field and packhouse level. Such codes have played an important role, but lacking the force of underpinning legislation have only partly succeeded in addressing the problem areas. Accordingly, we believe that the time is now right for legislation resulting in the registering and policing of gangmasters.

  4.  Although this system of temporary work is legal, there is evidence that some providers of temporary labour and their sub-contractors are operating outside the legislative framework. There is also evidence of collusion between the providers, the sub-contractors they employ and the workers they supply, with criminal intent to defraud.

  5.  What evidence is available suggests a system in which abusive, evasive and fraudulent activities are frequent:

    —  non-compliance with national and/or agricultural minimum wage—the Agricultural Wages Order (AWO) applies to any worker employed in agriculture anywhere in England and Wales. (Agriculture is defined in the AWO as including 1. Dairy farming. 2. The production of any consumable produce which is grown for sale, or for consumption or other use for the purposes of a trade or business or of any other undertaking (whether carried out for profit or not). 3. The use of land as grazing, meadow or pasture land, or orchard or osier land or woodland or for market gardens or nursery grounds);

    —  non-compliance with Working Time Regulations;

    —  unlawful deductions from wages;

    —  use of casual workers who are DSS recipients;

    —  use of illegal immigrant labour;

    —  use of underage workers;

    —  acceptance by providers of a bogus self employment status from workers causing a loss of NICs;

    —  evasion of the declaration and payment of tax and NICs;

    —  non-registration for VAT; and

    —  evasion of the payment of VAT.

THE IMPACT OF ILLEGAL ACTIVITIES ON FARMERS AND OTHER HIRERS

  6.  Prior to, and since the inception of "Operation Gangmaster" enforcement authorities have taken a particular interest in the illegal activities of gangmasters. Included in these activities has been the employment, by gangmasters, of those who should not be working. This might either be because the individuals are claiming benefits, or their immigration status means that they are not at liberty to undertake work in the United Kingdom. This interest has resulted in visits to farms and packhouses by enforcement officers and in some cases the stopping of minibuses en route to businesses.

  6.1  In today's highly competitive produce industry it is essential that growers harvest crops at the optimum time. The last thing that a grower needs is being unable to fulfil an order because his workforce, supplied through a gangmaster, is unable to do the work because they have been removed by enforcement officers. The mayhem that such an event can cause to a business could be very expensive and jeopardise commercial relationships.

  6.2  Accordingly most users of gangmasters will do what they can to satisfy themselves of the legitimacy of their gangmaster and the workers the gangmaster supplies. This will very often take the form of physical checks of paperwork and individuals. An example of how this operates, supplied by Exotic Farm Produce Ltd is appended to this evidence.

  6.3  However, it must also be recognised that in an industry mainly made up of micro, small and medium enterprises, not all businesses have the human and managerial resources to go to these lengths, which are obviously time-consuming and expensive.

  6.4  Even when businesses do take all necessary precautions to defend their position, they can still fall foul of unscrupulous gangmasters, resulting in considerable expense. A classic example of this is the case of Donaldsons Flowers Ltd. In February 2001, Donaldsons negotiated with a Hampshire-based labour agency for workers. As recommended by the NFU, Donaldsons insisted on "legal workers" being supplied. In April, Donaldsons requested the paperwork to check on the status of 8 Polish workers. Despite assurances, after a number of weeks the paperwork had not arrived. Then the workers did not arrive and it transpired that they had been working illegally. The agency supplying the labour chased Donaldsons for payment, even though the individuals had been working illegally. After considerable time and expense arguing the case, it culminated in an appearance at Gloucester County Court, where the judge dismissed the claim saying that Donaldsons was not liable for the debt.

THE IMPACT OF ILLEGAL ACTIVITIES ON THE COMPETITIVENESS AND VIABILITY OF CERTAIN AGRICULTURAL PRACTICES

  7.  As stated earlier, the provision of sufficient workers to harvest, pack and process crops is crucial to the success of UK horticulture. The gangmaster system provides a vital role in supplying labour, often in large numbers at short notice. In the experience of the NFU, the impact of illegal activities on competitiveness and viability is negligible. This is because, for example, to secure labour, growers will have to pay the going rate in the marketplace. By their very nature, gangmasters operating illegally are unlikely to undercut the market rate significantly as that would only draw attention to themselves, and reduce their illegal profits.

THE IMPACT OF ILLEGAL ACTIVITIES ON SUPERMARKETS AND OTHER RETAILERS

  8.  A succession of investigative media reports has undoubtedly imposed pressures on major retailers to know what is happening at their suppliers, in terms of labour used. This has witnessed itself in a number of areas, not least the creation of the Ethical Trading Initiative (evidence already submitted to this inquiry) and the increasing imposition of ethical audits on growers and suppliers. Retailers and Trade Associations have co-operated in the production of the various codes of practice previously referred to. Some form of voluntary registration system has also been considered, but retailers in particular are concerned at the competition legislation implications of insisting that suppliers only use labour supplied by an agency on a voluntary register.

  9.  DEFRA has recently seconded an official to work with the Ethical Trading Initiative Working Group in order to define a code of practice for gangmasters and a system for its independent verification. Whilst welcoming this move, the Group still maintains that it is no substitute for a proper statutory register of gangmasters. The NFU is a member of the Group and fully endorses this view.

  10.  In conclusion, the NFU believes that the only means of driving out exploitative and illegal practices in the labour supply industry is to have an adequately resourced and policed statutory register of labour suppliers (gangmasters). Such a register would give all in the chain confidence that illegal practices were being addressed. In our view, such a register would be self-financing as the savings to the nation if the abuses highlighted above were stamped out would outweigh the costs involved. Voluntary actions within the industry have been attempted and worked to some degree. However, evidence suggests that problems continue. Since voluntary actions seem unable to fully address the problems, legislation should be enacted, as a matter of priority.

23 April 2003





 
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