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Mr. Forth: I am loth to interrupt my hon. Friend in the middle of that interesting and relevant catalogue, but I represent a suburban constituency and wonder whether he can help me with this question: is it so difficult to identify people, either of ethnicity or not, working in open fields in the open country? Given the catalogue that he is reading out, it strikes me, as a city boy, that it would not be rocket science for an enforcement agency to go round fields in the picking season to feel a few collars, ask a few questions and find out which regulations are being breached. He has an intimate knowledge of the countryside; can he help me?

Mr. Paterson: In the case of people picking crops in the open countryside, my right hon. Friend is right. That activity happens in daylight only and the people are easily visible. However, many of the people who fall under the remit of the Bill will work indoors in packing houses and sheds.

There is still more legislation covering those employed by gangmasters. Income tax and national insurance requirements are laid down in a raft of tax legislation—there are far too many such Acts and, as we all know, taxes are far too high—which is enforced by

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the Inland Revenue. On benefit fraud, clear guidelines are laid down in the Social Security and Administration Act 1992 and in the Theft Act 1968, which are enforced by various units working for the DWP. VAT requirements are laid down by the VAT Act 1994, which is enforced by Customs and Excise. Finally—we have already touched on this—health and safety is the most important issue, and the details are set out in the Health and Safety at Work etc. Act 1974, which is enforced by the inspectorate of the HSE. The inspectorate has the power to move in on all workers at all times, whether they are legal or illegal.

Geraldine Smith: One of the problems with the Health and Safety Executive is, obviously, the resources and the number of offices that it has. Would the hon. Gentleman support an increase in public spending to help with some of those enforcement problems?

Mr. Paterson: That is the most pertinent point, and the hon. Lady is absolutely right to suggest that we need to consider how that great raft of legislation should be enforced, because it is not enforced. The Government, whom she supports, spend £50 million of taxpayers' money every hour. It is up to them to sort out how they spend those resources, but I should have thought that there would be enough money to make some rearrangements, so that money is put into the enforcement of that raft of legislation.

Rob Marris: The hon. Gentleman is being generous in giving way. Some of the legislation to which he refers—principally, the Employment Rights Act 1996—states that the remedy for the individual is to go to what is now called an employment tribunal. However, a case that involves an illegal employment contract—for example, where a tax dodge is going on—will be thrown out by an employment tribunal and the individual worker will not have a remedy. That is one of the reasons why we need such a Bill.

Mr. Paterson: That point is pertinent because, obviously, those who work for illegal gangmasters are, in effect, criminals themselves, but they can be picked up under current legislation.

It is clear that there is a massive enforcement failure, and it is interesting to compare the rhetoric of Operation Gangmaster, which was introduced in 1998, with the Government's commitment to solving the problem. Lord Donoughue said:

"There are a significant minority of gangmasters in this country whose activities are simply unacceptable. I am very concerned about the intimidation and abuse of workers' rights, which some of those people are involved in. The Government is also determined to clamp down on gangmasters who abuse the taxation, national insurance, benefit and immigration systems."

Paragraph 45 of the Select Committee report has been mentioned by several hon. Members today, but it provides such devastating criticism of the Government's initiative that it is worth reading out in its totality to get it on the record:

"We are appalled by the lack of priority given to, and political accountability for, what is supposed to be the Government's co-ordinated response to illegal activity by gangmasters. Operation Gangmaster has been little more than an umbrella term for a few local enforcement operations in which the various agencies have exchanged information. Five years after it was established

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Operation Gangmaster has had no significant resources allocated to it, has no targets and no Minister to take overall responsibility for its actions. Nobody could give us a comprehensive picture of what Operation Gangmaster does, how much it has spent and what it has achieved. Far from being 'a good example of joint action by several Government agencies' we conclude that Operation Gangmaster remains a woefully inadequate response to the complex enforcement issues arising from the illegal activities of gangmasters."

That comes from a Committee, with hon. Members of all parties, chaired by my very sober and reasonable right hon. Friend the Member for Skipton and Ripon (Mr. Curry).

The Government's response to the 14th report describes Operation Gangmaster in somewhat different terms. The Government say:

"Operation Gangmaster was originally intended to be a forum in which interested agencies could discuss areas of mutual concern and exchange information and intelligence—in other words an umbrella organisation."

That umbrella organisation has no specific Minister in charge, no targets and none of the enforcement agencies involved allocated any staff or resources specifically to deal with gangmasters. The Government now say in their response to the Select Committee that

"many of the illegal activities of gangmasters fall within the wider, informal economy. The Government's approach to tackling the problems associated with the informal economy is driven by a report on the subject, by Lord Grabiner, which was published in March 2000. Operation Gangmaster needs to be viewed within this context and not in isolation."

The Grabiner report is well worth reading—it contains some very interesting material—and he argues on page 29, paragraph 6.3:

"In many areas, the evidence suggests that Departments could achieve better results simply by investing more in their current investigations and through better co-ordination of their activities, rather than through any new approach".

That was entirely endorsed by my hon. Friend the Member for North-West Norfolk and by the Minister's interventions. The report's central recommendation, on page ii, is that

"the best solution is to improve the rate of detection and the effectiveness of punishment. In order to detect people in the informal economy, Departments must co-ordinate and improve their investigations. They also need to be able to share the information they hold and use information from other sources to check for suspicious signs of fraud."

In the body of his report, Lord Grabiner elaborates, in paragraph 6.9:

"One common finding is that, in certain classes of business, there is a culture of tax evasion that spans different tax regimes, and either collusion with benefit fraud by employees, or turning a blind eye. This leads to significant loss of revenue and is a major source of benefit fraud. It also gives the business an unfair advantage over honest competitors. As indicated in Chapter 2, it is especially common in labour-intensive sectors where the competitive pressures to hold down pay-roll costs are strongest."

He continues, in paragraph 6.10:

"It seems to me that such a multi-faceted problem requires a more co-ordinated approach across the relevant Departments and Agencies."

The right hon. Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) touched on that. The paragraph continues:

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"As listed above, there are examples of joint working, but they are not the norm. And, as long as individual Departments pursue their investigations separately, there is a danger that they will only see the aspect that concerns them—and that it may not, on its own, be serious enough for them to take action against the business. Joint investigation would reveal the total cost to the taxpayer of combined tax and benefit fraud."

That is exactly what the hon. Member for Morecambe and Lunesdale found. She discovered that the immigration authorities were not going to get involved in health and safety aspects, and what she said on that was most helpful, because it completely confirms what Lord Grabiner said.

Lord Grabiner concluded, on page 32:

"I recommend that the most realistic way to overcome this barrier is to set up a specific Government function or line of work, accountable for investigating businesses in the informal economy. This would be specifically funded for, and capable of, taking action against the range of tax and benefit offences associated with the informal economy. It would provide a mechanism for bringing greater coherence to work across Departments, building on the good practice which exists in several places. The key is accountability, and appropriate resourcing."

That is exactly what the right hon. Member for Newcastle upon Tyne, East and Wallsend said, drawing on his interesting experience as a Minister.

We therefore come right back to the beginning: to enforcement and the need for the different agencies to work together to share information; to the need for adequate resourcing; and, so far as accountability is concerned, to the need for a single Minister to be in charge. That cannot happen unless there are the resources, the political will and clear political direction. Despite the good intentions behind it, the Bill as currently drafted does not help. The Select Committee report conveys the complexity of the gangmaster structure, in which one gangmaster, who might be legitimate, often subcontracts to another, who will use another, who will use another, and so on.

Under the Employment Agencies Act 1973, whose licensing and registration requirements were repealed under the Deregulation and Contracting Out Act 1994—a Conservative initiative—the legitimate agencies registered, but most complaints concerned unregistered agencies. I draw the attention of the right hon. Member for Newcastle upon Tyne, East and Wallsend to the Department of Trade and Industry's submission on page 100 of the Select Committee report, which somewhat refutes his comments on the impact of that Tory reform. Even if we had licensing, there would be a major detection job in picking up the illegal operations that had not applied for a licence. Paragraph 5 of the DTI submission says:

"A proportion of persons acting as gangmasters have continued to be found to be in breach of a range of legislation that is enforced by the inspection bodies of a number of Government Departments. It is considered unlikely that a statutory registration scheme would prevent individuals, who currently operate illegally and in defiance of existing legislation, from continuing to work in that manner."

Mark Boleat of the Association of Labour Providers—the ALP is the newly formed trade association for gangmaster—has offered powerful logic on that issue. He writes that if the Chinese cockle pickers, who so tragically died in Morecambe bay, had been working for a man who was selling the cockles on to a wholesaler—as appears to have been the case—then

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technically he would not have been a gangmaster as defined by the Bill and such operations will not be covered by it. He adds that illegal gangmasters do not confine their activity to agricultural work; they are highly flexible and will fill any niche where there is a buck to be made. He also explains that his association supports the principles of the Bill, but believes that there are difficulties confining it to agriculture.

Lord Grabiner explains on page 16 of his report that the sectors where

"illegal immigrants are usually found working are those where casual and cash-in-hand work is widespread".

He cited catering, contract cleaning, farm working and the clothing industry. He could equally well have mentioned construction. I was interested to hear the hon. Member for West Renfrewshire say that possibly even health workers are getting involved in such activities.

My major criticism is that we are dealing with a symptom of the black economy, but the Bill focuses on only a narrow part of it—the agricultural sector. The problem is much wider than that, something on which the Grabiner report elaborates. If there is heavy enforcement in the agricultural sector without similar activity elsewhere, it is likely that the criminal gangmasters will move into other less well policed sectors. That will always happen if we target a sector rather than the criminal because we simply displace the problem without solving it. That is the essence of the Grabiner report and his call to see the problem in the wider context of the informal economy, a stratagem that the Government endorse. As drafted, the Bill does not address the wider issues.

The Grabiner report makes other good recommendations, addressing how to facilitate interdepartmental co-operation, which would help to track gangmasters. Again, the Bill does not deal with that. It would create a new offence of not registering and would apply statutory codes of practice, which create yet more offences, most of which are covered by existing legislation. The hon. Gentleman proposes a separate authority, which some might call a quango, to administer and police the licensing system. It appears from schedule 1(d)—

"the payment of a fee to accompany the application for the grant of a licence"—

that the body would be self-financing, its costs covered by licence fees.

The figure of £3,000 has been bandied around, and the hon. Gentleman says that there will be a fee scale. I am sceptical about whether that would work because the honest gangmasters would be hit by a double whammy of increased costs and increased regulation, which would make them even less competitive in comparison with illegal gangmasters. So the licensing system could make the problem worse by making the cut-rate gangs' labour and product more attractive.

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