Examination of Witnesses (Questions 191-199)
Wednesday 21 May 2003
Mr Richard Kitchen, Mr
Lindsay Harris, Mr David Lambert, Mr Graham Black,
and Mr Rolf Toolin
Q191 Chairman: Gentlemen, welcome
to the Committee. Thank you for fielding such a large gangif
I may put it that way. Could I make the inevitable point that,
perhaps, whoever is the most relevant person to reply to questions
will do so to avoid repetition, and to my colleagues, also, if
we could be fairly economical because there is a lot of us and
a lot of you and, therefore, we need to make sure we keep some
discipline on the way we proceed. Perhaps it would be easier if
I identified you. Mr Richard Kitchen is the Chief Investigating
Officer for the Department of Work and Pensions.
Mr Kitchen: Yes, I am.
Q192 Chairman: Mr Lindsay Harris,
whom I remember, is from the Head of Agricultural Resources and
Better Regulation Division, DEFRA. Names and titles have changed
over the years, I think. Mr David Lambert is the Business Manager
for VAT Operational Policy for Small and Medium Enterprises, Customs
and Excise. Where is Mr Lambert? There he is. Mr Graham Black
is the Assistant Director, Service Delivery Support (Compliance),
Inland Revenue, and Mr Rolf Toolin is the Assistant Director,
UK Immigration Service, Midlands Enforcement Unit.
Mr Toolin: Yes.
Chairman: We are all present and correct.
Q193 Mr Breed: Now we have discovered
the size of the evidence perhaps we can get the scale of the problem.
I think one of the more interesting areas for us to try and get
a real handle on is how big this particular problem is. According
to our notes a recent Government report suggests that up to 50%
of the work done by gang labour is cash-in-hand with false IDs
being supplied. What estimate have you made of the loss to the
Exchequer from VAT, tax and National Insurance and all sorts of
frauds that are perpetrated by the gangmasters?
Mr Kitchen: Perhaps I could start.
You ask about revenue. I make the initial point that actually
the ill that we see manifested in gangmasters is wider than revenue.
You have yourselves had evidence of the social dimensions of the
problems there are with gangmasters. To focus on the revenue issue
is, of course, natural but it is only part of the problem. That
preface does not lead me to a very clear answer, I am afraid,
in relation to the amount of revenue involved. So far as the Department
for Work and Pensions is concerned, which I speak for, we have
people who are claiming benefit and working, which is our main
area of interest, and that is essentially the workers illegally
working on gangmasters. It is one of the issues we deal with in
the Department for Work and Pensions; there is a great deal more
illegal working beyond the single sector of agricultural gangmasters,
and we have no clear estimates of how many of the workers in that
sector are involved in illegal working and claiming benefit. So
I am afraid I cannot assist.
Q194 Mr Breed: But it was a Government
report that suggested it was up to 50%, so presumably, there must
have been, at that stagewe are not talking about something
small, in that sense. 50%half of the whole sort of thing.
We have just heard that Operation Gangmaster, which was done in
1999, has had an up-date of what appears to be half-a-page of
A4a couple of paragraphs. How seriously, thenyou
do not know what the figure is, the Government says it is up to
50%, you do not know what the estimate isare you, as a
department, taking this whole problem?
Mr Kitchen: I think we do have
a handle on the problem, the question you are asking is how much
is the revenue in relation to illegal working. Illegal working
is a term which includes people claiming benefit and working,
but it also includes people who are not entitled to work in the
United Kingdom who are not claiming benefit. So the estimate there
is of illegal workingyou are asking me for a sub-set of
that estimate. When it comes to
Q195 Mr Breed: Could you tell us
what proportion of the total of illegal working you think the
activities of gangmasters are causing you?
Mr Kitchen: I can tell you that
for last year, the year ended 31 March 2003, we estimate there
was £400,000 of benefit involved in those cases we investigated
for the DWP. We did not investigate all the cases there are, and
I dare say that outside of agricultural gangmasters there are
others with amounts of revenue (if you put it like that) that
are of relevance to us. But those are the stats that I have.
Q196 Mr Breed: We are still not getting
very far in trying to get a handle on what it is. Is there a problem
in terms of the co-operation of farmers, packers and everybody
else in the whole sort of area of establishing the size of this
problem? What are the barriers for you being able to really get
to the bottom of the size of this problem?
Mr Kitchen: There is a mismatch
between the question I am being asked and the information which
we do have available which is driving our activities. What we
are engaged in
Q197 Chairman: Do you mean you cannot
answer the question? Is that a rather long way of saying you cannot
answer the question?
Mr Kitchen: I do not think it
is, sir. What I am saying is that the scale of the problem
Q198 Chairman: Do not let government
ministers catch on to that one!
Mr Kitchen: Let me start from
the position that may enable me to get somewhere towards the answer
you are seeking. The scale of the problem is one where we have
a number of people, number unknown, working in agriculture, working
for gangmasters, number unknown, who are themselves engaged in
illegality of a variety of forms. Some of it is tax evasion, some
of it is benefits, some of it is illegal working through those
who are not entitled to work in the UK, some of it is criminality
and there are other facets to the problem that we are trying to
identify and which we are working on. We see the seriousness of
that problem through its effects and we are addressing that problem
through the enforcement powers that the whole community of those
who are in Operation Gangmaster can bring to the party. So the
Inland Revenue are looking at taxation, the Customs are looking
at taxation, Minimum Wage by DEFRA and for the DWP it is about
the level of benefit claimed illegally. The sum effort of those
people addressing that problem is greater than the sum of the
Q199 Mr Breed: We heard from the
previous witnesses that a number of people have been prosecuted
for VAT fraud. Mr Lambert, I think you represent that body, can
you give us any idea from your perspective, as your department
actually seems to have done somethingquite what in terms
of the scale of the problem I am not certainof what the
Mr Lambert: I can tell you how
many people we have prosecuted, which is about 13, I think, in
the last 18 months.