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

Examination of Witnesses (Questions 320-339)

Wednesday 4 June 2003

Lord Whitty, and Mr Lindsay Harris

Q320  Mr Lepper: Including the NFU?


Lord Whitty: We have been in discussion with the NFU about this and the NFU also considered that the practices should be improved.

Q321  Mr Lepper: Improved? Does that mean there should be new regulations introduced or that existing legislation should be used more effectively.


Lord Whitty: I am saying more effective observance of the regulations.

Q322  Mr Lepper: Of existing legislation?


Lord Whitty: Yes.


Mr Lepper: Thank you, Chairman, I am happy with that for the moment.

Q323  Ms Atherton: I would like to talk about the Seasonal Agricultural Workers Scheme, SAWS, from which I have to say I am very grateful that in Cornwall we got an extra 10,000 which will help us next year to lift the Cornish cauliflower crop and that is will be critical, but that does not mean there are not also issues around SAWS. I understand that the Home Office consider it to be a student/youth scheme and very little to do with bridging the supply of labour in agriculture which of course DEFRA would argue. Where do you think the Government really sits on this, is it the Home Office view or the DEFRA view?


Lord Whitty: The two are not necessarily incompatible. From DEFRA's point of view we regard it as a reasonably well-managed scheme which supplies much needed and probably quite high quality labour to the horticultural sector particularly. The qualification for that, in order not to bypass immigration and other issues, is that it is based on students or similar with some agricultural experience, and they regard it therefore as perhaps an example of effective, managed migration on a short-term basis but they do also recognise in the Home Office that it is a labour supply mechanism as well a student scheme as you put it.

Q324  Ms Atherton: Do you think it has an effect on the wages within the industry? If you have got a group of students meeting a quota and that quota is met but there is still a gap in terms of the amount of work that is available, but the wages are being driven down by it effectively being a student cohort that is doing the work, are you are going to end up as a farmer or gangmaster using illegal employees just through the very nature of the pressure downwards by a student group working?


Lord Whitty: I have heard that argument from one of your witnesses and I am not sure I entirely followed the logic of it, I have to say. I have not read the full transcript so that may be an injustice. The SAWS scheme and the Home Office's relationships with people who supply SAWS labour, although there are some improvements which are starting to be introduced, does tend to mean that the minimum wage is in force within the SAWS scheme. I would not necessarily say it was 100% but it is pretty much that, so I would say, if anything, it is keeping the level of wages up and it does mean there is less excuse for people to undercut it and the way in which the wages are being undercut is not so much they are paying a lower wage than the minimum wage, but they are deducting unreasonable amounts of money from the minimum wage and effectively what ends up in the individual workers' pockets is not anything like what is laid down by the Wages Board, but the cost to the user is still the same, so in terms of the economics of the industry you are not pushing the costs down.

Q325  Mr Drew: To what extent, this is just me thinking out loud, have DEFRA thought of much more intervention to this and devising a scheme where you would know how much labour was required? So you would agree with the Home Office to license a certain number of students or migrant workers, it would all be completely regulated, it would have to be done completely legitimately, and this would work from year to year depending on what the industry put in for. Is that possible? If it is possible, where are the cost implications, and is it achievable, dare I say?


Lord Whitty: I think there is a misunderstanding here. I do not think it would be appropriate because gangmaster labour is not by any means entirely immigrant labour, short term or long term, legal or illegal. A lot of gangmaster labour is people who are British citizens and people legally entitled to be here and work here, therefore it is not a question of numbers, therefore I do not think it would be sensible for the Home Office or for us to manage a scheme in quantum terms. Where I think there may be some scope for further intervention is where, either directly or indirectly, the Government could get to a situation or the industry could get to a situation where gangmasters were in some way accredited or registered to meet certain standards and those who fail to do that would in some way suffer some economic penalty. I do not think management of the total labour market is something we would wish to go into.

Q326  Mr Drew: Has it ever been costed or is that just something?


Lord Whitty: Has which been costed?

Q327  Mr Drew: The idea that you would have a more managed flexibility, let us call it?


Lord Whitty: No, we have never contemplated trying to manage what is a very large total in the casual labour force. The cost of that would be very substantial. What I am talking about is simply a registration system which might be used to help raise standards.

Q328  Mr Drew: But that, surely Larry, was the argument that was always employed in the docks and yet 30 years ago we went into quite a clear scheme so that we could regulate it within the options in the market. Clearly it has had all sorts problems because of competitive pressures from all around the world but it is not unknown for government to go in there in a regulatory way and lay down a scheme, because of the tradition of exploitation of people in that industry, to do that. Maybe we would never go as far but that is something that could be conceived of.


Lord Whitty: I think the docks sector, if I can drag myself back a few decades, is an entirely different situation. The casual labour in docks is relatively few workplaces—

Q329  Mr Drew: It was not in those days.


Lord Whitty: —Who had variable workloads and multiple employers all on one site. What we are talking about in relation to agriculture is a very large number of individual holdings who for very limited periods require more labour than the family or the permanently employed people can provide. It is a much, much more complex system and we are talking about probably 2,000 or so gangmasters some of whose standards would fall below what we would wish to see and the only intervention I think it is sensible to contemplate is whether one should try and have a more quality control system over the gangmasters themselves. I do not think government trying to intervene to direct or control the allocation of labour would be appropriate.


Chairman: It is worth noting in passing, of course, that SAWS students do not pay National Insurance contributions.

Q330  David Taylor: You said a few moments ago that around 2,000 gangmasters are operating in the United Kingdom some of whom are falling below the standards we would like to see in place. That "some" would be what, a tiny minority, a small minority, a large minority, a majority?


Lord Whitty: The problem with that is we do not know.

Q331  David Taylor: What would you suggest?


Lord Whitty: My feel is that too many of them have some practices that do not meet the full standards. One of the problems with the initiative which DEFRA have taken recently to look at whether we could set a voluntary code of practice and help the industry to do that is that there are not a lot of gangmasters volunteering to be party to that. That of itself speaks volumes. There are problems of getting the industry together to sign up to standards which many of them at present are not observing. I do not think we have enough information on the extent to which they are not observing and the degree to which they are not observing.

Q332  David Taylor: Is there a close correlation between their tendency to observe legal norms and the size of the gangmaster's operation, in other words are, the larger ones likely to be observing the law?


Lord Whitty: I do not think it is entirely a matter of size. I think some of the very localised ones are less likely to abuse the system because they would have a more permanent workforce and a more permanent and smaller number of users. To that extent it is a question of the multiplicity of the operation rather than the absolute size. I think some of the larger ones are actually better than some of the smaller ones in practice.

Q333  Alan Simpson: Some of the evidence sessions of this Committee have looked frighteningly like an episode of Bremner, Bird & Fortune. We started out with a fairly clear set of questions about what do we know about the exploitation of labour in the agricultural and horticultural sectors, to what extent is that focused on the use of illegal migrant labour and to what extent are illegal gangmasters a central part of the problem. The evidence that we have had from a succession of people basically sitting in the same position you are is: "Me? I know nothing." We had a panel of representatives of the government who I think looked to us to be reassured that collectively they also knew nothing, and they had not even got round to meeting together on a once-a-year basis to share what they did not know. Can you just take us through what research DEFRA has done in this.


Lord Whitty: DEFRA has not commissioned any specific research. Clearly there is a lot of information which arises from various employment studies and migration studies which the Home Office and the Department for Work and Pensions are the lead departments on. Nevertheless, it is true that we do not have a sufficiently comprehensive view of the situation, as was indicated in my reply to Mr Taylor just then. It is not however true that we do not know anything. Each of those officials made it clear that from their own investigations in their own areas there was a substantial amount of problems on the tax, on social security, from our point of view in relation to the minimum wage, and from the Home Office's point of view in terms of illegal migrants and people working without work permits. So we have instances of what the system throws up. What I cannot tell you is how may in reality are doing that because, by definition, what they are doing is illegal and nobody is keeping any statistics on it, but we know a lot of these practices are happening. I would also challenge that we have not worked together. I think there is a lot of inter-departmental discussion on this, although one can argue that the reason Operation Gangmaster was the set up by MAFF at that time, and Lord Donoughue was doing my job at the time, was because it was recognised there was not enough co-ordination on the ground and so that was why Operation Gangmaster was initiated in the first instance. So the Government has recognised the need for pulling a lot of this together but it would be wrong to draw the conclusion that the Government does not co-ordinate and the Government does not know the type of thing that is happening.

Q334  Alan Simpson: The Government, though, has been monitoring this for 15 years and I do not understand, and I would like you just to tell the Committee, why after 15 years of monitoring the role of gangmasters we still rely on anecdotal evidence, I think Mr Lazarowicz called it rogue evidence, that is given to us on the basis of, "Trust me, I know something," when in fact statistically and analytically we are not in a position to say anything about the exact nature of the situation the Government has been monitoring? Why are we still in this position?


Lord Whitty: I am not sure what precisely you think the Government should know that we do not know. If you are saying can we by definition know the number of illegalities that are being perpetrated, then the answer in this field is no, we cannot. Do we have an indication of what the kind of malpractices are? There the answer is yes, we do have a pretty clear idea of that, but whether it involves 50% of gangmasters or 90% or 10%, I cannot answer. It is reasonable for you to say there should be more research on it but what is not reasonable is to conclude that the Government has not recognised the problem and the Government is not engaged in a co-ordinated approach to it, because we are.

Q335  Alan Simpson: Just before you came in, Dr Frances said to us in her evidence that although there was a problem in the past she believed that the mechanisms were now in place to identify the size of the problem. Do you have any idea what those mechanisms are for identifying precisely the size of the problem that we are trying to address?


Lord Whitty: I am not sure what she was talking about certainly. In terms of the individual enforcement efforts they, through the activities over the past few years, have been able to identify the likelihood of malpractices arising in particular instances and you would have to pursue that with the individual enforcement bodies, so there is more knowledge in that sense, but I am not sure what she meant by "precise" mechanisms.

Q336  Alan Simpson: It is just about the size of the problem, the role being played by illegal gangmasters and the illegal employment of labour and exploitation. What are the mechanisms that we are now putting in place that allow us to claim objectively that we know about the nature and size of the problem?


Lord Whitty: I am not sure there is a satisfactory answer to that question because, as with many other areas, if you ask me or the Inland Revenue how many people are not being paid the minimum wage they will not be able to give you an exact figure. They would know how many people they caught, they could probably make some estimate of that, but there is no figure for people acting illegally because most of them, frankly, are not caught. The question for the Government is not to strive away to have an absolutely comprehensive view of the picture, if we know things are wrong; if we know, on the other hand, that the system is of benefit to the industry and we want it cleaned up, then we have to consider whether there are ways in which we can do it over and above the current enforcement mechanisms. I do not think we necessarily need to have what I think you are striving for which is a comprehensive picture with firmly based estimates of how widespread each of those malpractices may be.

Q337  Mr Lazarowicz: Is quantification not really important because it goes to the heart of what the right policy response is to the problem. If it is just a marginal issue as I got the impression from what you were saying when you started, then you deal with it one way, but if, as I got the impression from earlier when you said it is fundamental to the industry, in some parts of the country, at least, then a different type of response is required. Taking your point that you cannot get an exact quantification, surely we could have some indication of how widespread the problem is, at least in broad terms?


Lord Whitty: Can I take you up on your premise. A supply of flexible labour is essential to the industry; it is not essential to the industry to have these malpractices. The NFU would agree with me on that and most individual farmers would agree with me on that. What your questions and Mr Simpson's questions seem to be driving at is can I come here and give you a total picture. The answer to that is no, I cannot. We as the Government are looking at it, certainly from the Operation Gangmaster/DEFRA point of view, in a slightly different way. We are recognising that there are bad practices but nevertheless recognising the function of the system is desirable, and we are looking at whether we can achieve a better code of practice or something similar with gangmasters which would help minimise this tendency to commit malpractice. We are at relatively early stage in that project and the degree to which we can get a significant proportion of gangmasters on board voluntarily with that project will of itself be significant. We think that is the way rather than to strive after what I think is probably not possible to achieve which is a total picture of how the situation works. After all, the situation in the field today literally is going to be dramatically different tomorrow, by definition of the way the industry operates.

Q338  Mr Lazarowicz: I do not want to over-egg this point but the problem seems to me not a question of having a total picture, I do not think anyone is suggesting that you should have a total and complete picture, but the impression I get is there is no picture at all of how widespread the problem is, if there is a problem, and that seems to me to be fundamental in tackling the issue.


Lord Whitty: My conclusion from the evidence we do have, which is not comprehensive and is unlikely ever to be comprehensive, is that the system has too many malpractices for us to leave it as it is. The system has significant economic advantages but they could be achieved without the malpractices and therefore there is an issue for what government should be doing about it over and above strengthening the individual enforcement mechanisms. That is why we have come to the conclusion that we ought to try to start instilling a good practice ethos within the sector.

Q339  Mr Lazarowicz: Has DEFRA ever done any qualitative or quantitative research on the problem?


Lord Whitty: No, we do not do labour statistics or labour market research in that sense.

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