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

Examination of Witnesses (Questions 360-379)

Wednesday 4 June 2003

Lord Whitty, and Mr Lindsay Harris

Q360  Paddy Tipping: Do you not think we ought to be doing something more? The ethical trading and the traceability are all things that your Department subscribes to and in fact are pushing quite hard. Is this not another example of where retailers ought to be getting their act together?


Lord Whitty: As I was saying earlier, I think there is a responsibility on the biggest final consumer of the goods at the centre which relates to the supermarkets and to some extent the large processors. Yes, I do think there is a responsibility on the industry as a whole, but we do need to decide first what they are being asked to sign up to and this is why we need to develop what is a more robust system of good practice which does need to involve in that process the gangmasters themselves. Those gangmasters who wish to act responsibly, of whom there are many, need to be engaged in that process rather than have imposed on them by another sector, whether it is the supermarkets or the fresh produce people or the Government, something which they have not participated in. The difficulty for us at the moment, which we are trying to tackle, is getting enough of the gangmasters to be engaged in that process.

Q361  Paddy Tipping: There is a clear choice for you, is there not? You can go down the voluntary good practice route which has got lots of advantages in a way, or you could do what other people have been advocating to us, which is to have a statutory regulatory system. I think you said earlier on you had your own views on which approach was better. Which do you think is better?


Lord Whitty: With either approach there is a prerequisite so that we know what we are talking about in terms of good practice, there is no point being namby-pamby about it, which relates to an operation in what is a very complex and tight labour market and that is why we want to try the voluntary approach to getting more gangmasters involved in that. This is not a Government point of view, it is not even a DEFRA point of view, but my view is that we can get a significant number to sign up to that but it will not be sufficient in number to change the overall situation and therefore we will have to contemplate something further than that. We are not yet at the definitive point where we have to decide that.

Q362  Paddy Tipping: You could have a twin-track approach, could you not?


Lord Whitty: Yes.

Q363  Paddy Tipping: The final point that the retailers made to us is that you are not putting anywhere near enough resources into this area. How would you respond to that? T&G made the same point as well.


Lord Whitty: If you add the total amount of enforcement which goes on in relation to gangmasters then there is significant resource there. It may be that we need to focus that a little bit more and it may be we need to co-ordinate it a bit more, but I am not sure that the additional resources to the total would have a huge marginal benefit. As to their code of practice, then of course the work we have now started may well require more resources in order to deliver it, but we need to be clear of those initial steps, which is the ones we have taken over the last few months.

Q364  Ms Atherton: I want to ask about supermarkets. How much do you think the pressure to keep prices to the absolute minimum is a contributory factor in encouraging illegal activity and would you go further and say that supermarkets are actively turning a blind eye, as are some producers, in this whole process?


Lord Whitty: I do not think supermarkets are consciously engaged in a process that says, "If you cannot do it for that price then you'd better get some cheap labour from somewhere and I don't care how dodgy it is", I do not think there is a supermarket which would be doing that. I think there are some supermarket buyers who are pretty ferocious in their bargaining with suppliers of all sorts, but of course by and large the supermarkets are not dealing directly with the suppliers of labour, they are dealing with people who for the most part are producing products in relatively stable labour forces, from processors or from market gardens or from the wholesale sector who are not themselves the direct or indirect employees of the gangmaster-type operation. So it is two or three stages removed from the supermarkets. That is not to say, if we look at ethical trading and they pride themselves on higher standards and quality control, that there is not some social responsibility on supermarkets to ensure that the people they deal with are themselves dealing with people who obey the law.

Q365  Ms Atherton: You mean ethically produced food?


Lord Whitty: Yes. This is one of the reasons why farmers complain that they are getting a significantly lower proportion of the total value added than they were a few years ago and in some cases the French farmers do or whatever, the way you have got a tightly controlled, very competitive, very well organised and concentrated operation at the end of the chain which pushes costs down and pretty close to the bottom of that chain is the supply of casual labour, so it does have an effect. I am sure the supermarkets would wish to meet the same prices by legal labour.

Q366  Ms Atherton: The Fresh Produce Consortium suggested to us in their evidence that they did not think there was any link between illegal activity and the end result of the product on our supermarket shelf. Would you agree with that statistic?


Lord Whitty: You mean in terms of quality?

Q367  Ms Atherton: No, in terms of price.


Lord Whitty: It would be almost impossible to define how you would calculate this, but I suspect that you could produce the same product to the same price without engaging in these practices. In other words I do not think they are particularly efficient users of labour and those who use a higher proportion of illegal labour are probably less efficient users than those who by and large follow the rules. I think they are probably right, their cost is one thing, but the convenience and the ability to intimidate or control the labour is another. Whilst you may be not the most efficient provider, there are other considerations which drive people to contemplate dodgy labour places.

Q368  Ms Atherton: Can you see a time when consumers will be choosing the supermarket or the products of their choice that are ethically produced in this country as well as in developing countries?


Lord Whitty: I think some of the consumers of supermarkets already do a bit of that.

Q369  Ms Atherton: But not in this country.


Lord Whitty: I thought you were making a more general point. It is clear that supermarkets have been responsive to a segment of their customers who are concerned about the provenance of the food, the way it has been produced and the way labour has been treated in the way it has been produced, for example in relation to tea and coffee. It may not be a huge proportion of their consumers but it is significant enough for them to take some notice of it in making sure they have on their shelves things which they can genuinely say meet those standards. I believe that segment is growing. It is not one that has hitherto focused very much on the way casual labour is used within this country to produce British-based products. Frankly, there has been more concentration on whether they are organic or animal welfare considerations and the welfare of the workers and I think it may take a change of focus for enough consumers to move into this area. Given that they have moved into these other ethical and quality areas then there is no reason why quite similar sectors of consumers should not move into that area. In order to say something is fair traded or ethically produced or organically produced you have to have a standard and this goes back to the issue of quality control and good practice. Until you have got that in, even if they think about it, they have not got a way of telling.

Q370  Mr Mitchell: This is a sad picture of rural life, a modern A&E houseman with nothing to write about but "Labour fiddles, tax fraud" and "aliens in the agricultural area" and the arguments over parking in Shropshire supermarkets. That is my point for the day. You do not say much about experiences from abroad in other EU countries. You say they use casual labour in this way, you do not say what the experience is there and whether there is anything we can learn from the way they handle the products of casual labour in this way.


Lord Whitty: I think it is a very good area where we do need to know more information. Of course the labour law structures are different in some of these other structures and the structure of agriculture is somewhat different. We probably use a higher proportion of non-local seasonal workers than most of our European counterparts. There are some migrant casual workers in other countries, but a lot of the casual labour in Germany and France is more equivalent to your hazy memories of Lincolnshire or wherever it was in the 1950s in that a lot of labour is provided locally and is mobilised by what may be the equivalent of gangmasters. It is also the case that in some labour law jurisdictions there is more responsibility on the user of the labour than there is in the UK. In the Netherlands, for example, the user of the labour would have some responsibility for ensuring that they or the subcontractor meet various labour standards. I am not sure about the tax side, but certainly in labour law terms they would have that responsibility which we do not have here. There may be something to be learned from that. What I am not aware of is any European country which has effectively created through the various agencies which use casual labour in the whole of the agricultural sector a system which is equivalent to what I am talking about for the registration or accreditation of gangmasters here. It is partly because in Germany, etcetera—and there may be some here who would regard this as part of archaic labour laws—there is more registration of agencies, there is more control over agencies of labour in those countries than there is here anyway and to some extent at least the equivalent of gangmasters would fall under that general employment law. There may be lessons to be learned, but we have to bear in mind there are different agricultural social patterns and there is a different labour law structure in many respects and it is not instantly transferable.

Q371  Mrs Shephard: Minister, I would like to ask you about the statutory registration scheme. A lot of the people who have given evidence to the Committee have felt that a statutory registration scheme would be the panacea to all the problems that we have been identifying. However, it needs regulation and it might be very difficult to do given the fractured nature of the industry. What do you think about it?


Lord Whitty: I think it might be necessary. I think the issue is really whether it is effective or not. If you can establish a basic code of practice, if you can get both the users of labour and the users of the final product to sign up to that system then a voluntary system could work. I am in favour of some form of registration. The question of whether you can do it voluntary is one where we are going to have to test the water and test the water more than we are able to do at the moment. My personal suspicion is that it is quite difficult to get an effective voluntary register because not a very high proportion even of the large gangmasters would sign up to it voluntarily. That may be changed and I may be too cynical and too negative. If we could get a voluntary register, I would prefer that. I suspect that we might need to have some statutory backing for that register in the long run.

Q372  Mrs Shephard: Obviously the supermarkets themselves, the retailers, would have to be involved because there would be no point in having a registration scheme unless that knowledge was passed on to the consumer, and Ms Atherton has already asked you a question about fair trade principles being applied to food that is produced here. Have you had any discussions with major retailers about ways forward in this respect?


Lord Whitty: Part of the project we are talking about will apply to the supermarkets and wholesalers as it will to the gangmasters. We have not had any systematic discussion with the whole supermarkets sector.

Q373  Mrs Shephard: Is it in your mind to do so?


Lord Whitty: Yes. Part of the project will be looking at the supermarket end of it.

Q374  Mrs Shephard: Do you have any other ideas about how you might pursue gangmasters operating illegally? I have particularly in mind foreign workers who may or may not be being employed illegally. The main point is that you cannot know because there is no record of the numbers, we do not know where they live, they come and go, they are brought in to work, they disperse and some of them may well be being illegally employed, but they may also be being exploited.


Lord Whitty: Yes.

Q375  Mrs Shephard: Clearly you are aware of that problem. What is being done within DEFRA?


Lord Whitty: The issue of control of migration would not be a matter for DEFRA. Clearly there are problems which might be identified in our investigations or our knowledge of the industry which we would then have to pass on to the Immigration or Home Office authorities and of course there is an overall look at what I called earlier grey labour market practices involving migrant labour following the Grabiner inquiry which is led by the Home Office rather than ourselves.

Q376  Mrs Shephard: This does rather come back to the point where I certainly came in to this discussion with you and that is that nobody is in charge. Does anybody mind?


Lord Whitty: People are in charge of illegal migration and illegal working and of course we have talked as if a gangmaster system in agriculture is a single and unique phenomena, but the provision of casual labour for various means in other sectors can equally be subject to people working illegally, themselves being illegal immigrants, not having work permits or whatever. Catering, retail, construction, all of those areas also suffer from those same problems and particularly in areas like construction and catering the problem of people being one place one day and somewhere else the next day also applies. So it is important that that is dealt with by the immigration authorities in a cohesive way rather than being led to it via the gangmaster route.

Q377  Mrs Shephard: The Chief Immigration Officer in Norfolk told me that he is so far from that pipe-dream of being able to deal with the matter at all that he and his officers have ceased even to bother to identify whether people are from Brazil or Portugal, they do not have the resources.


Lord Whitty: I am afraid I am not really able to respond on the resources for the Immigration Service, you would have to summon a Home Office minister for that.


Mrs Shephard: I have no doubt we will. Thank you.

Q378  Chairman: You said earlier that there was already a framework of law in place and that all the various government bodies represented on the operation of gangmaster were pursuing people who were breaking existing laws. I am not absolutely sure what you would expect a registration scheme backed up by statute to deliver for you. What would you expect to be able to do with it that you cannot do without it?


Lord Whitty: Effectively squeeze out those who are relying totally on illegal practices because once you have an accreditation scheme then respectable farmers would only use people who are registered, respectable supermarkets would seek to ensure that—of course all supermarkets are respectable—and they would use those suppliers who themselves were using only accredited labour suppliers. The effect over time would be that those outside of that system would be squeezed out.

Q379  Chairman: But that implies, does it not, really administratively a terribly onerous process of monitoring the practices of those who have been registered or monitoring before they register and a continuous monitoring of how they operate? One of the things Government is concerned about—I know from my own experience—is the administrative burden of schemes which are very resource intensive. That is going to take a lot of money, a lot of application, without the certainty of being able to keep a clean sheet.


Lord Whitty: Clearly it has some resource implication but it is not resource implication in the same way as setting up a new taxation system where you have to investigate everybody every year. We are talking about a system which would be subject probably to spot checks by whoever was running the system. If it was a voluntary system you would have a relatively small staff checking that everybody was following the procedures that they had signed up to, but you would not investigate everybody on that list every year.

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