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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