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

Examination of Witnesses (Questions 240-259)

Wednesday 21 May 2003

Mr Richard Kitchen, Mr Lindsay Harris, Mr David Lambert, Mr Graham Black, and Mr Rolf Toolin

  Q240  Alan Simpson: Can we then go through the other departments as well and find out staff and budgets? If you know how much money you have raised or saved that would be helpful.

  Mr Black: From the Revenue perspective we have two specific gangmaster teams with 18 staff in them, but that, I think, is only partial information because those, if you like, are the specific gangmaster teams but there is gangmaster activity going on in all of our 64 risk intelligence and analysis teams throughout the country. I am afraid my information system does not tell us how much of that is spent on gangmaster. We have two specific teams of 18, then we have our risk and analysis teams throughout the country and then we have the gangmaster forum. We do not have a specific budget attached to that; it is 18 people within the team.

  Q241  Alan Simpson: So you have not costed out what it costs the Revenue to work on Operation Gangmaster at all?

  Mr Black: Not in those terms, no.

  Q242  Alan Simpson: On any terms?

  Mr Black: We know what yields we get from the specific inquiries that those two specialist teams undertake; we got 4.6 million and 4.3 million from the 46 inquiries they undertook. It is just a question of where the budgets lie in the department. That is only one aspect; whether we think it is a good use of resource or not we want to be part of the team. If we did not necessarily have to allocate budgets, I think people are the more important aspect—

  Q243  Alan Simpson: I am trying to find out what it is costing us.

  Mr Black: I am sorry, I can get that figure for you but I do not have it to hand.

  Chairman: Can I ask each of you to let us have that figure, as far as you are able to do so.

  Q244  Alan Simpson: When we had these submissions, particularly from the Fresh Produce Consortium, they said that they just did not think there were enough bodies on the ground doing the work. Is that your assessment? If so, by how much are you short in cash and people terms, and where across the spectrum would you know you were short?

  Mr Kitchen: Given that there is uncertainty about the scale of the problem and that we are seeking to establish the scale of the problem and the appropriate actions for tackling it, through an intelligence-led approach, I think that the issue for us within DWP is not the scale of the resource we have, for us it is about efficient deployment of that resource against the problem. The way we are approaching that is to ensure that every time we identify a gangmaster worthy of our attention, where there is suspected to be illegal working, we bring in appropriate resources to work with us to deal with that. So far, we have not hit a resource problem with the Revenue, with the Customs, with DEFRA or anybody. When we ask for assistance on a particular job, when we tackle the job, we have found that the resources are made available from the appropriate government department to tackle the identified problem.

  Q245  Alan Simpson: So you are saying there is not a resource problem?

  Mr Kitchen: I am saying that the issue for us at the moment is appropriate deployment of the resources we have.

  Q246  Chairman: You do not have a standing army, as it were?

  Mr Kitchen: I have 50 officers engaged in Gangmaster full-time, and the issue for me is effectively deploying them.

  Q247  Alan Simpson: I am actually trying to look for reasons for being able to say "We can explain why it is that you have not got a clue what the targets are or why we have not been meeting them". It is about effective deployment. It takes us back to the earlier questions which are to do with what? I am really struggling to know what it is that you think you do. What are we, as a Committee, to understand are the performance targets that any of you guys are working to?

  Mr Black: I think you have to take a slightly broader view. We accept that this sort of integrated working is relatively new; working across five, six or seven departments is relatively new in this area. I think it was not a case of immediately setting up targets. We all recognise that yes, there is tax at stake; yes, there is VAT at stake and there is clearly benefit fraud taking place. Firstly, let us see what happens when we pool our resources. Is what we get from pooling our resources more than we get from actually simply looking at these things on an individual, departmental basis. Yes, it would have been possible to set targets but there was not a history on which we could easily set targets—nor, indeed, is it always easy to say that it is simply pounds, because from the Exchequer viewpoint we are looking, perhaps, at yield but there are other areas, in terms of fairness, justice and exploitation of workers, in which you cannot always say "Exploitation of two workers equals £10,000 tax, equals £15,000 VAT"; it is more difficult than that. To some extent I think you have to allow us a certain amount of scope to experiment to see what actually comes from this closer worker and we can compare what sort of outputs we get from our resources here with what we get when we use them simply in our own individual departments.

  Q248  Alan Simpson: Have you got a view, for instance, on the value or otherwise of a statutory registration scheme? Has that been something that you have collectively reflected on?

  Mr Harris: That is something that we in DEFRA are actively looking at at the moment and have been collaborating with a wide variety of representative organisations representing businesses in the food chain. I would start by saying that we have looked at what has been done so far through the codes of practice that you have heard about that the Fresh Produce Consortium and the National Farmers' Union have produced. We hear a fairly unanimous view from the industry that although they have served a purpose, and that they have helped in raising awareness among employers, they are not fundamentally tackling the problem. Where we have got to in looking at that is to say that where there is a gap is that those codes are aimed at the businesses that are using gang labour, whereas the legal responsibility for the abuses that we are trying to get at rests with the gangmaster. What we are doing in DEFRA, which is a specific project which we have recently started, is trying to work with the industry to develop a code of practice and a way, a method, of applying it that would apply to gangmasters which would put the responsibility on gangmasters for demonstrating compliance with the law, and devising an independent audit system that would enable that to be verified. One of the models we are looking at here is the assured food standard—the little red tractor scheme—which is an industry standard which has come to be widely adopted. The idea of this is that you then make it easier for all businesses in the food chain to identify who are the legitimate gangmasters and to apply the goodwill that is there in the businesses in the food chain to do the right thing, to provide a mechanism for them to distinguish between those who are following best practice and those who are not. There is a debate about whether you can actually do that in this situation on a voluntary basis or whether it needs statutory backing. That is a question that ministers have not been asked to take a view on yet. The six-month project that we have embarked on to try and define what gangmaster best practice would look like, and how you can devise systems so that the sort of businesses we are talking about could fairly readily apply compliance checking and how you would audit it, is a necessary first step that you need to take, whether you are going for a voluntary accreditation scheme or whether you are going for statutory registration. If you are going to have a statutory registration scheme you need to have criteria that tell you who can go on the register and who cannot. So this is an issue that we are tackling and we are trying to do the first step to work out in practice how it can work. There is a six-month time-scale on that, as I said, and at the end of that we would aim to advise ministers whether a voluntary-type accreditation scheme could work or whether statutory registration might be necessary.

  Q249  Alan Simpson: Everyone else has been pushing us for a statutory scheme. Was your answer a very long way of saying no, at this stage, you are not advocating a statutory scheme and, also, no, you have not talked with your colleagues? You mentioned the discussions within DEFRA but you did not talk about the collective position taken by the group of you.

  Mr Harris: No, we have been talking to colleagues in other departments about this, certainly. To answer your first question, no, I was not saying no, but there are some prior questions you need to answer before you can say we need legislation. What is the legislation to do? Who are you registering? What are the criteria for registration? So we are doing what you would need to do to prepare well-thought-out legislation. As I say, ministers have not yet taken a view on whether they want to go for legislation or not, but we are doing the preparatory ground work.

  Q250  Alan Simpson: Given whatever quantified resources are going into Operation Gangmaster (which I presume the Committee will be told about and we will be able to tot the figures up) and given that this has been going on for four or five years, and given how little we know, can you say—hand on heart—that as a government we would be any poorer if we just did not employ you to tell us what we do not know rather than having the project running in the way that we are doing and deploying the resources we are doing in order not to know what we do not know?

  Mr Kitchen: I am trying to sort out the question as put. I honestly think, sincere view, that the attempt we are making as separate departments to tackle a particular sector is worthwhile. I put it in the context of the activities that each of us is doing in our own departments on the work which our own departments have. What we have identified is what was identified several years ago, which is that there is the potential to do better working together in this particular area of work. It is an area of work that has evolved over time. The problem has evolved over time. We have now huge amounts of agricultural produce that is imported into this country and has to be packed. Labour is a very important component of the cost of that to the supermarket. We have a population that is swelled by disturbances across the world and migration across the world and we have a population within the UK that is not willing or able to have the flexibility to work in agricultural gangmaster work, or alternatively not prepared to work for the prices paid. There is a ready availability of people who are willing and able and are willing to undertake the disruption of working one week at one end of the country and another week at another end of the country. This has evolved over the last several years to the point where it is clearly a problem. Quantifying the problem when it is an illicit business is not easy, and I am just not prepared to make wild guesses at it. What I will say, and I have tried to say over the last hour, is that it is sufficient of a problem to engage the minds of those who are sitting round this table, it is sufficient of a problem to have been brought to the attention of Lord Grabiner and reflected on in his report of 2000, it is sufficient of a problem for my minister and the ministers of these other departments to commit resources to it across government, and it is sufficient of a problem for us to continue to want to deal with it. I have not prepared for this Committee by seeking statistics that would satisfy you. What we are doing within the department is establishing an approach that we believe will be effective and is worthwhile.

  Q251  Mr Borrow: Just a very brief point: I think part of the difficulty we have had this afternoon has been trying to get a handle on the scale of the problem. In many ways it seems that Operation Gangmaster was not set up to get a handle on the scale of the problem, it was set up to ensure there was some co-ordination in the way in which the problem was tackled. What we have not seen today is the inquiry that I certainly think is necessary to identify the scale of the problem. Would you agree with me that perhaps—and it is not your responsibility—ministers ought to look seriously at setting up some sort of inquiry, some sort of mechanism, that can identify across the whole scale of these different areas, whether it is immigration, whether it is the Inland Revenue, whether it is DWP, the whole range of issues—some sort of inquiry which will give the scale of the problem? Having identified the scale of the problem, government, across departments, will be in a better position then to judge the scale of resources that are needed and the best operating method to tackle the problem. At the moment, we do not know what the scale of the problem is. Your people in your departments are doing their best to work together to tackle the problem that they know is there without knowing the scale of the problem, the amount of resources that are needed or whether they are actually working within the best operating system to actually deal with that problem. Have I made a reasonable assessment?

  Mr Black: Certainly there is a good deal there that we would all agree with, in the sense that we certainly do not have the mark that I think everyone round the table would like us to have. However, I think it would be wrong to think that we have not started doing that; it just takes time The decision was taken that there was a problem, it was a recognisable problem and we ought to be doing something about that now rather than necessarily putting everything on the back burner for 18 months until we actually know the full scale of the problem. I do not think anybody has said that everything is happening right, but that work is already under way across all the departments.

  Mr Toolin: I hate the idea of this making rather light of what has been achieved. I know that we have been stuck with the resources, but there are difficulties. You cannot have everything. We have moved on in the last few years from government departments that never even spoke to each other—refused to speak to one another—to a group of diverse organisations. I am sorry, yes, I have not met with my colleagues; we are here for a specific purpose but my people meet with people from their departments on a regular and continuous basis. We talk to one another. My department has gained access to industries that it would not have been able to do to take out areas where there has been exploitation and where there is illegal working, which has been on the back of the DWP. We have worked together with the agricultural investigation teams, and I do not think we should just throw out the baby with the bath water. It is evolving; it takes it time, it may not be going quickly enough for some of you but it is moving, and the only way you will identify the scale of the problem in any quantifiable terms is if we continue with this work and our organisations continue to work together. We do not always work with the Revenue, we do not always work with the DWP—they sometimes do—and it depends where our respective interests coincide. To try and quantify the abuse of the system—well, it is large. I will not put a figure on it but it is large. It is important enough for us all to continue to work effectively to try and bring about the changes that are needed to bring in some rationale and some legality to the system.

  Q252  Mr Borrow: Before Mr Kitchen comes in, I was not meaning to be critical of the work you are doing, but it is whether or not the best method of getting a handle on the scale of the problem is through Operation Gangmaster or whether some other inquiry which allows Operation Gangmaster to tackle, on a day-to-day basis, the problem is the appropriate way of dealing with it. I am not clear in my own mind whether trying to deal with the day-to-day issues as well as getting information to get a handle on the scale of the problem is the best way. If you are saying it is then that is evidence that will be useful to the Committee.

  Mr Kitchen: The only difficulty I have with the way you put it is that, of course, the DWP and, separately, Customs and, separately, the Revenue have quantified the problems they are dealing with. In the DWP case, we have quantified the level of fraud there is in the benefit system. This is very much a sub-set of that, and a sub-set of a sub-set. If we are going to start quantifying at this level those sub-sets of a sub-set—I can see the benefit of it but the time and effort that will be spent on that, firstly, identifying how many people are involved in gangmaster, secondly, how many of them are working illegally, thirdly, what type of illegality—is it benefit fraud, is it immigration fraud—fourthly, is it some tax fraud but they are clean for benefits, and then to start to sub-divide it again and then recognise that there is also the rag trade, there is also the fast food trade, and so on and so forth—you are asking for a level of detail that would require significant resource across the whole picture. What we do at present, and put a great deal of effort into for the DWP, is identify the amount of fraud and error there is in the welfare benefit systems that we administer.

  Q253  Mr Mitchell: You have put your own finger on the difficulty when you were saying in answer to Alan's question that either the population was not flexible enough (meaning they are not prepared to accept low-enough wages) or they were not willing. The real cause of this problem is the refusal of farmers and the supermarkets and the whole industry to pay people adequate pay for a hard job. That is the real problem, is it not?

  Mr Kitchen: There are social issues, there are business issues and there are economics, and they are all acting as drivers on this.

  Q254  Mr Mitchell: I was particularly interested in Operation Shark—which is rather a nice name. Fifty per cent of the people working in the fish processing factories were foreigners and of those a third were here illegally, whereas 20% of the natives were actually taking benefits that they were not entitled to. Is that a one-off or is this something you expect to be parallelled in other parts of the fish industry?

  Mr Kitchen: Percentages vary but they vary between the different trades to do with fish. The location on the Scottish ports is relevant, the geography and the demographics of the area are relevant to the availability of a workforce to work in the low-pay economics of the area. It will vary according to those factors. I would not be at all surprised in most of the gangmaster operations that we deal with to find a significant level of illegal workers who are not entitled to work in the UK, a less significant number of benefit fraudsters and a small proportion of people who are working locally in their own industry.

  Q255  Mr Mitchell: Is there any assessment of the impact this has had on the industry? Has it shocked people into using fewer of these practices, or has it really just exposed the scale of the problem?

  Mr Kitchen: It has caused a flutter of concern.

  Q256  Mr Mitchell: That is right.

  Mr Kitchen: And a greater awareness of responsibility. Let us face it, part of what we are trying to do is point out that employers have a responsibility here, and raising the level of awareness and educating people in their responsibilities is part of the effect we seek to achieve.

  Q257  Mr Mitchell: So a few more, well-publicised operations like this will have a very beneficial effect?

  Mr Kitchen: I do law enforcement, I have colleagues who deal with getting people jobs and I have people involved in regeneration of areas of urban deprivation across the department—not in my direct area of responsibility but these matters all have to be integrated..

  Q258  Mr Mitchell: You have not assessed the lessons learned from Operation Twin Stem yet. Is there any kind of preliminary assessment of the lessons from that?

  Mr Kitchen: I have some notes, yes. From the DWP perspective we have about 100 instances of benefit fraud. The total value of benefit fraud is still being calculated but there are sanctions possible. From what I understand from the UK Immigration Service there were 85 arrests for immigration offences and a total of 25 runners thought to be involved with immigration.

  Q259  Mr Lepper: We began this afternoon hearing from the Transport & General Workers' Union. During the time that Operation Gangmaster has been in being they have produced three reports: one on Birmingham and the Vale of Evesham; one on East Anglia and one on Sussex. Just one question really: have you collectively looked at those reports and have you, from the point of view of your different disciplines, investigated Total Recruitment based in Littlehampton, Staff Employment Services based in Chichester, the Phoenix Agency based in Brighton and Mr G, based in Southampton? I am not suggesting that any of those organisations are doing anything illegal but they are named in the report. The second one I mentioned, Staff Employment Services, Chichester, we are told, came into being emerging from a previous agency which had been closed down following a Department of Employment investigation. I just want some assurance that you have looked at the Transport & General Workers' Union reports and that you have satisfied yourselves about those particular agencies which I have named. If you cannot give me that assurance now could you, perhaps, provide it to me afterwards?

  Mr Kitchen: I cannot give it to you now.

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