Examination of Witnesses (Questions 320-339)
Wednesday 4 June 2003
Lord Whitty, and Mr
Q320 Mr Lepper: Including
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
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
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
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
Chairman: It is worth
noting in passing, of course, that SAWS students do not pay National
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
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
Lord Whitty: No,
we do not do labour statistics or labour market research in that