Select Committee on Environment, Food and Rural Affairs Written Evidence

Annex 3

Briefing note prepared prior to meeting with Beverley Hughes MP Minister of State for the Home Office, Lord (Larry) Whitty Parliamentary Under Secretary of State for DEFRA (11 March 2003)


  The use of gangmasters and employment agencies as providers of temporary labour is of vital economic importance to the produce industry. They provide the industry with a flexible workforce to meet the seasonal demands of planting, harvesting and packing crops and the market demands of fluctuating daily and seasonal retail requirements.

  It is estimated that the industry employs some 72,000 people on this basis, 50% of whom are supplied by Gangmasters.

  Although this system of temporary work is legal, there is evidence that some providers of temporary labour and their sub-contractors are operating outside the legislative framework. There is also evidence of collusion between the providers, the sub-contractors they employ and the workers they supply, with criminal intent to defraud.

  What evidence is available suggests a system in which abusive, evasive and fraudulent activities are frequent:

    —  non compliance with national and/or agricultural minimum wage;

    —  unlawful deductions from wages;

    —  use of casual workers who are DSS recipients;

    —  use of illegal immigrant labour;

    —  use of underage workers;

    —  acceptance by providers of a bogus self employment status from workers causing a loss of NICs;

    —  evasion of the declaration and payment of tax and NICs;

    —  non-registration for VAT;

    —  evasion of the payment of VAT.


  Action has been taken by both government and industry to ensure that the providers of labour, their sub-contractors and the workers they supply are managed in such a manner that all their activities are brought within the current legislative framework.


  Following an interdepartmental working party's report, Operation Gangmaster was established to co-ordinate the activities of a number of Government agencies involved with enforcing the laws that were being broken. The mainstay of this initiative has been the Agricultural Investigation Team, part of the Department of Work and Pensions fraud investigation service.

  As a result of Operation Gangmaster:

    —  explanatory booklets have been published;

    —  awareness of the issues has been raised;

    —  advice has been given to businesses;

    —  business premises have been raided;

    —  prosecution of Gangmasters has taken place;

    —  regular multi-agency meetings have been held.


  Voluntary Codes of Practice have been developed in collaboration with the Government covering both field and packhouse workers. The supermarkets have adopted the packhouse code of practice as a supplier requirement.

    —  the voluntary codes have been widely circulated;

    —  awareness of the issues has been raised;

    —  supplier meetings have been held;

    —  advice has been given to businesses;

    —  there has been close co-operation with Operation Gangmaster.


  Under the auspices of the Ethical Trading Initiative two very well attended seminars, involving all interested parties, were held last year to review progress on resolving this issue.

  Whilst concrete evidence is difficult to obtain, there was unanimity of opinion that the abuses, evasions and fraudulent activities were getting more widespread. There was also unanimity of opinion that this deteriorating situation would get worse as organised crime becomes progressively more involved in this activity.


  As a result of the seminars a working party was established to determine what further action should be taken. We now wish to propose the following steps that we believe are absolutely essential if this problem is to be resolved:

    (1)  A Code of Practice for the providers of temporary labour be developed.

    (2)  Legislation be passed to enable the statutory registration of providers of temporary labour.

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