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

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 gang—if 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 stage—we 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 A4—a couple of paragraphs. How seriously, then—you do not know what the figure is, the Government says it is up to 50%, you do not know what the estimate is—are 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 working—you 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 parts.

  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 something—quite what in terms of the scale of the problem I am not certain—of what the problem is?

  Mr Lambert: I can tell you how many people we have prosecuted, which is about 13, I think, in the last 18 months.

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