Select Committee on Environment, Food and Rural Affairs Fourteenth Report


Demands for a registration scheme

48. An industry consensus is building that the way to combat the illegal activities of gangmasters is a statutory registration scheme under which all gangmasters would be registered, and would be required to meet certain standards. In April and May 2002, the Ethical Trading Initiative (ETI) organised two consultative seminars to discuss problems and identify solutions related to the use of gangmasters in the UK. Over 100 growers, packers, retailers, labour providers, trade unions and manufactures attended.[49] The outcome of these seminars was a call for a statutory registration scheme to be introduced.

49. This consensus is reflected in the evidence submitted to the Committee. Organisations representing the farmers, supermarkets and agricultural workers all advocate statutory registration. It is also supported by legitimate gangmasters who operate within the law but who believe that they are currently being undercut by those operating illegally. Although most of those who submitted evidence to the Committee support the idea of a statutory registration scheme, there is little detail available about how its proponents believe it should operate and be enforced. There are also those who argue that registration schemes have been tried before and have proved unsuccessful.

50. Given the strength of opinion on this issue, we feel it requires some analysis; in particular whether a statutory registration scheme would deal with the complexities at the heart of the problem of illegal activities by gangmasters. This section therefore summarises previous attempts to register gangmasters, sets out the available detail of what is currently being proposed, and considers the arguments.

51. Legislation covering agricultural gangmasters can be traced back to the Agricultural Gangs Act 1867 which was introduced to protect children and women from exploitation. More recently, gangmasters were subject to registration in the period immediately after the war as part of emergency regulations relating to the war effort.[50] The registration scheme had two aims. First, it was designed to stop the movement of casual workers across the country, thus saving valuable transport resources. Second, it aimed to prevent gangmasters exploiting farmers' demand for labour by demanding exorbitant rates for casual labour and pushing up the price of food. The scheme was withdrawn in 1951 and the legislative authority is no longer useable.[51]

52. The post-war registration scheme appears to have been the last attempt specifically to regulate agricultural gangmasters though provisions to license employment agencies under the Employment Agencies Act 1973 did apply to some gangmasters. Some witnesses have made reference to these arrangements in their submissions to the Committee.[52] These sections of the 1973 Act which provided for licensing were repealed with effect from January 1995 by the Deregulation and Contracting Out Act 1994. At the same time, a new power to prohibit unsuitable persons from running agencies and businesses for periods of up to ten years was given to Employment Tribunals.

53. Not all agricultural gangmasters were covered by the 1973 licensing provisions. Whether individual agricultural gangmasters were required to be licensed under the Act depended upon their method of operation. If the hirer of workers exercised control and supervision of workers hired out by a gangmaster, the gangmaster was required to be licensed. If the gangmaster retained control and supervision of the workers, he or she effectively acted as a subcontractor and was outside the Act.

54. In its Memorandum, the Department for Trade and Industry argues that licensing or registration schemes, particularly where a fee is demanded, "are burdensome for business and public authorities alike and the burden falls especially heavily on small enterprises".[53] It draws a distinction between 'licensing' schemes which involve vetting of applicants, and 'registration' schemes which simply require those intending to operate to notify an authority of certain details before commencing business. However, it argues that registration is not significantly less burdensome than licensing. It goes on to suggest that "an effective register could only be maintained if suitable sanctions were created to enable an authority to prevent the business trading whilst unregistered and if mechanisms existed for removing persons from the register".[54]

55. The DTI also argues that such schemes are not effective. When the 1973 licensing of employment agencies provisions were in force only 0.1% of new applicants or licence renewals were rejected. Furthermore, a significant number of complaints concerned agencies which were discovered to be operating without a licence. There were also breaches of regulations amongst those with licences. The Employment Agencies Act is enforced by the Employment Agency Standards (EAS) Inspectorate which now comes under the DTI. The DTI told us that gangmasters first came to the attention of EAS Inspectorate in 1989 following complaints from other employment agencies. Visits to gangmasters were undertaken to seek to enforce the licensing requirements though it appears that there was relatively little action taken. The Memorandum states that the Department is "aware of one case where the Inspectors prosecuted one operator for trading without a licence".[55]

56. The industry continues to argue for a registration scheme. A TGWU paper sets out the principles which it believes need to be at the heart of any registration scheme.[56] These include effective sanctions to be enforced by statutory agencies, open access to the register and certain requirements on those seeking to register. Most of these requirements, such as no deductions from wages without the consent of employees and adequate washing and toilet facilities at the place of work, are already requirements under existing legislation. Of the eleven requirements set out in the TGWU paper, it appears that only two would be new statutory requirements.

57. The DTI has "no plans to re-introduce licensing or bring in a form of registration as it is considered that neither would result in an effective regime".[57] In its Memorandum to the Committee, Defra told us that the Government "has yet to take a considered view on the question of legislation on compulsory registration of gangmasters".[58] Lord Whitty told us that he thought "it [compulsory registration] might be necessary". He went on to say that "I think the issue is really whether it is effective or not."[59]

58. We are not convinced that a statutory registration scheme offers a stand-alone solution to the problems of illegal gangmasters. Certainly, without concerted action to remedy the shortcomings in enforcement that we have highlighted in this Report, a statutory registration scheme, introduced as a single policy response, will solve nothing. It is difficult to imagine that those individuals engaged in the types of illegal activity about which we received evidence would be affected by a registration scheme unless it were rigorously enforced. A statutory registration scheme may prove to be necessary, but it will only be effective if it is introduced as part of a wide range of policy initiatives designed to confront the difficulties associated with the supply of temporary labour to the agriculture and horticulture industries. We set out some complementary policy options in the next section.

Other policy responses


59. The Government told us that some in the industry had suggested "a good practice blueprint for labour providers, which would put the onus of checking and legal compliance on the gangmaster, linked to a system of independent verification".[60] This would help suppliers check the legitimacy of the labour supplied by gangmasters and the supermarkets check that farmers and packhouses supplying them are meeting the required standards. Defra Ministers agreed to the secondment of a member of its staff to work with an Evesham-based gangmaster who is widely recognised in the industry and in Government as being an example of good practice. The aim is to develop these ideas with the industry.

60. We support this work but believe it could go further. Many of the gangmasters we spoke to said that they had great difficulty verifying the legal status of people coming from abroad. They suggested that the emphasis of the Immigration and Nationality Services Directorate was concentrated on removing illegal asylum seekers but was paying insufficient attention to the issue of illegal working. Gangmasters to whom we spoke at a meeting in Cambridge said that they received little help from the authorities on how to identify false documents and people working illegally. They also offered valuable insights into the way abuses of the asylum and immigration system are perpetrated, and could be prevented.

61. We are concerned that those gangmasters who are striving to operate within the law are given little support, especially in relation to immigration and illegal working. We were told that the law in this area is complicated with many 'grey areas' but there are few reliable sources of advice. Similarly, the documentation issued to people from abroad, especially those who first entered the country a number of years ago, is easily forged and difficult to verify. Gangmasters claimed that staff from the immigration authorities had insufficient resources to help verify identities and were often unable to help confirm an individual's immigration status.

62. There are also issues for other Government Departments. Gangmasters told us how the application of the Agricultural Wages Order and the National Minimum Wage created anomalies and potential loopholes which could be exploited. For example, workers in packhouses sited on the farm where the produce was grown are entitled to the agricultural minimum wage; those packing produce from another farm are entitled to the National Minimum Wage. Minimum rates of pay under the Agricultural Wages Order are approximately 15% higher than the National Minimum Wage. Gangmasters in Cambridge told us that it was common for suppliers to pack their own produce on neighbouring farms to avoid paying the higher rate. This is an appalling indictment of how the current system works.

63. We recommend that the scope of the pilot work that Defra is carrying out with a firm of gangmasters is extended. The enforcement issues cross many different Government Departments; a cross-departmental approach is therefore required. Specifically, we recommend that an official from the Immigration and Nationality Directorate is seconded to work with the Defra official to help develop a good practice blueprint linked to a system of independent verification of individuals' employment and immigration status. Officials from other Government Departments such as the Inland Revenue and the Department for Work and Pensions should also work closely with the project and use its findings to inform policy.

64. The Evesham gangmaster who is working with Defra on a good-practice blueprint is also working with his local Regional Development Agency, Advantage West Midlands, and the Government Office for the West Midlands to develop what he describes as a 'gateway centre'. This would consist of an adult training establishment and food processing operation which would help create links between the urban areas from where gang labour is often drawn and the rural areas where it is used. The proposals are still being developed but it is envisaged it could offer advice and training to those working in the industry and a potential clearing house for those who work for gangmasters. This idea has the potential for further development.

65. We believe there is a role for Regional Development Agencies and Government Offices in those parts of the country where gang labour is commonly used. We recommend that the pilot project being developed in the West Midlands is monitored and, if successful, should be developed in other parts of the country. We also believe that there is scope for private funding of such projects. The supermarkets told us that they took the problems associated with gang labour very seriously: such initiatives provide them with an opportunity to support projects which would help prevent these problems.

Immigrant labour

66. It is clear from the evidence we received that many of the people now working as casual labour in the agricultural and horticultural industries are coming from abroad. It is important to note that many of these are working legally. For example, some come from countries within the European Union and as such are entitled to work in the United Kingdom. Some of the evidence we received suggests that even those working legally are often not aware of their rights under UK law. This has resulted in them being exploited by unscrupulous gangmasters.

67. There appears to be a particular problem associated with Portuguese workers in East Anglia. Following a campaign by a local Citizens Advice Bureau and articles by a Portuguese journalist, we have been told that Government Ministers from the UK and their Portuguese counterparts are working on a joint information campaign to warn Portuguese workers about unscrupulous agents who are recruiting people to work in the agriculture industry in East Anglia. The Thetford Citizens Advice Bureau is developing a leaflet in employment rights and other issues on which foreign workers are seeking advice. The leaflet will be distributed in job centres and local authority offices.

68. We applaud the work that the Thetford Citizens Advice Bureau has undertaken to support Portuguese workers who are facing exploitation by gangmasters. We recommend that in areas where gang labour is commonly used, local authorities, job centres and advice agencies form local forums to co-ordinate responses to ensure that workers, particularly those from abroad, know their rights. Defra should provide the small amount of funding such projects would require as part of its rural affairs remit.

69. The other main source of legal foreign labour for casual work in the agriculture and horticulture industries is provided through the Seasonal Agricultural Workers Scheme (SAWS). This is a Home Office scheme under which a certain number of students from countries outside the European Union are allowed to work in the UK agriculture industry. The Government's memorandum notes that the quota of students allowed under the scheme has increased from 5,500 in 1996 to 18,700 in 2002.[61] The quota is due to rise to 25,000 this year as part of an expansion of the scheme.

70. We heard conflicting evidence on SAWS. The NFU told us that it was "a robust system" and the "students are well regulated and organised".[62] Similarly, the TGWU said that there had "not been a high level of complaint" about the way students are treated under the scheme.[63] However, we heard that students under SAWS were being used for skilled labour which is not allowed under the rules of the scheme.[64] Also, the evidence from Citizens Advice described how a Russian student brought to the UK under the scheme had left after four months "as the working and living conditions were so dreadful".[65]

71. There are also concerns that SAWS students provide a cheap source of labour which further depresses the price which is paid for temporary labour. Lord Whitty rejected this argument pointing out that SAWS students were required to be paid at least the agricultural minimum wage.[66] This misses the important point that those who take SAWS students are not required to pay National Insurance for them. They therefore offer a cheaper source of labour to, for example, UK-based workers being paid the agricultural minimum wage. In a market where margins are very tight this has the potential to create an environment where those who cannot recruit sufficient workers through SAWS are at least disinclined to ask too many questions about the National Insurance and tax status of those provided by other providers of temporary labour.

72. There appears to be a lack of joined-up thinking within Government in relation to SAWS. Defra told us that as a result of the fall in the supply of traditional sources of seasonal labour in recent years, "the Seasonal Agricultural Workers Scheme has become an increasingly important source of seasonal and casual workers for the agricultural and horticultural industries".[67] In its evidence to the Trade and Industry Committee in July 2000, the Home Office, which runs the scheme, said that SAWS "was essentially a youth mobility scheme and is not primarily designed to meet manpower shortages in the agricultural industry".[68] Lord Whitty suggested that these two positions are "not necessarily incompatible".[69]

73. We recognise that the Seasonal Agricultural Workers Scheme (SAWS) provides a useful source of temporary labour for the agriculture industry. Similarly, workers from EU countries who are able to work in the UK help to meet the shortfall between the demand and supply for casual labour in rural areas. This legal source of foreign labour is likely to increase with the accession of the new Member States to the European Union. Nevertheless there appears to be a lack of co-ordination between Government Departments in the management of migrant labour. Earlier in the Report, we recommended that Defra carry out a detailed study into the use of casual labour in the agricultural and horticultural industries. This work should assess the demand for foreign workers and be used to inform decisions about SAWS.

74. If the demand for casual labour in the agricultural and horticultural industries continues to be met by workers from abroad because local people are not attracted by the terms and conditions offered, there may be wider issues for the Government to consider. Defra has a rural affairs remit. In its assessment of the temporary labour market, it should consider the implications for rural services and how these can be best managed. Projects such as the proposed Gateway scheme in the West Midlands could make an important contribution to policy in this area. Defra needs to take a lead on these issues and ensure that it has sufficient information available to enable it to suggest appropriate policy responses, including a review of the current system of work permits.

49   Ev 96, para. 3 Back

50   MAFF, Report of the Interdepartmental Working Party on Agricultural Gangmasters, June 1998, para. 8 Back

51   Ibid, para. 17 Back

52   Ev 8; Ev 9 Back

53   Ev 101, para. 3 Back

54   Ibid, para. 4 Back

55   Ev 102, para. 11 Back

56   Annex to memorandum, entitled Registration of Gangmasters [not printed] Back

57   Ev 102, para. 15 Back

58   Ev 75, para. 81 Back

59   Q 371 Back

60   Ev 75, para. 80 Back

61   Ev 74, para. 71 Back

62   Q 88 Back

63   Q 180 Back

64   Q 71 Back

65   Ev 92, para 3.7 Back

66   Q 324 Back

67   Ev 68, para 10 Back

68   Trade and Indsutry Committee, Indsutrial and trade relations with the Baltic States, Twelfth Report HC 835 1999-2000 20 July 2000, p 18 Back

69   Q 323 Back

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