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Rob Marris: Will my right hon. Friend join me in paying tribute to Joseph Arch? I am sure that he will, because last June he and I stood in the rain in Warwickshire commemorating him. Joseph Arch set up the first agricultural workers' union, which became part of the Transport and General Workers Union—my own union. Later on, he became a Member of this place, but before that he was a gangmaster.

Alun Michael: He was also a lay preacher, which demonstrates just how virtuous such people can be. I thank my hon. Friend for reminding me of that day. I am tempted to reflect that I was greeted with a certain amount of wet weather as I made my historical remarks,

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but when he stood up, thunder, lightning and sleet ensued. I am not sure whether that was because of his talent for expressing himself—

Mr. Dobson: He is not a lay preacher.

Alun Michael: That may indeed be the reason—I thank my right hon. Friend for another excellent line.

As my hon. Friend says, this issue has been around for a long time. We need to support and reinforce those who treat labour properly and help labour to meet the needs of those who want to employ it. A certain amount of courage has been shown by some of the people who have come forward to support co-operative activity across the industry and to support the Bill.

The problem is that flexibility is too often delivered at workers' expense. At the extreme, there are gangmasters who trade in human misery, disregard the law, and resort to intimidation and violence in pursuit of their personal power over people and their profits. The Government are committed to tackling the exploitative activities of gangmasters who have no respect for the law or for people. Efforts to end the human misery caused by certain labour providers have been going on for some time, and the Bill gives us an opportunity to strengthen the process.

As many hon. Members have said, there is also the matter of fair play. Legitimate gangmasters pay taxes, but the lawbreakers are responsible for considerable Exchequer fraud, health and safety offences, failure to pay the minimum wage and the use—rather, the abuse—of illegal labour. Other forms of non-compliance are often associated with the exploitation of gang workers.

We do not wish to reduce flexibility or create labour shortages, but we are committed to tackling abuse and promoting the employment of legitimate workers. The only point of my hon. Friend the Member for West Renfrewshire with which I disagreed was his underestimate of the efforts to tackle the difficult issue and of recent progress.

As exploitation of gang workers is not a new problem, let me set out the context for the Bill and the efforts to tackle the problem. The National Farmers Union and the Fresh Produce Consortium have tried to tackle the problem through codes of practice. Although such efforts are to be welcomed, and several hon. Members did so, such soft regulation is clearly not enough on its own. Gangmasters' abuse of workers has continued for far too long, but no one should delude themselves that resolving that will be easy. The worst culprits already break the law in many ways, as the hon. Member for North Shropshire said. Some break a range of laws and large profits are being made illegally.

It is important to fit well with the work of Operation Gangmaster, through which the Government took action to deal with the issue soon after coming to office in 1997. I believe that the Bill does that. Operation Gangmaster has been piloted in Lincolnshire and East Anglia since 1998. However, it became a casualty of foot and mouth disease, which brought most enforcement operations to a halt in 2001. That fact appears to have escaped the notice of the hon. Member for North Shropshire. The operation was relaunched in 2002, with the Department for Work and Pensions co-ordinating

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the activities. My noble Friend Lord Whitty has done a sterling job in representing DEFRA in the team of Ministers that drives the work forward.

Ten regional operations are active under the Operation Gangmaster umbrella—more than at any time in the past. The work supports and complements but does not replace the compliance activity that individual enforcement agencies undertake better. Positive outcomes have been achieved under Operation Gangmaster against gangmasters and their employers. In 2002–03, that included identification by the Department for Work and Pensions of 235 overpayments and 1,023 adjustments to benefit worth £405,000, and securing 138 sanctions and prosecutions. In the same period, the Inland Revenue specialist team settled 46 inquiries and reviews that identified unpaid tax and national insurance worth £4.3 million and led to criminal prosecutions of 14 gangmasters for VAT offences involving VAT of £5.9 million and resulting in prison sentences that totalled 31 years.

I do not claim that that is enough, but we should not discount the efforts that have been made and the lessons that are being learned as a result of the enforcement agencies' work to co-operate more effectively. I entirely accept the views of colleagues in all parties, but especially those on the Labour Benches, that we should be impatient about greater effectiveness. However, let us not pretend that nothing has been done because that would be untrue.

Each of the organisations to which I referred and others, including the police, will have their hand and their capacity for swift intervention greatly strengthened by the creation of a simple offence: operating as a gangmaster while not licensed to do so. If we keep administration to a minimum, we will achieve a simple offence that requires little evidence and therefore does not take up too much time of the courts or the enforcement agencies to secure a prosecution. That is simple in concept, and in terms of evidential requirements and court time.

A significant level of enforcement activity by individual agencies is already going on in parallel with Operation Gangmaster, which itself will continue for the foreseeable future. In the right form, the Bill will strengthen that activity and provide a simple framework to make a lot of hard, arduous and time-consuming work much simpler to pursue.

Events of recent weeks have shown that we cannot be complacent about illegal working. We have heard graphic accounts today of some of the abuses perpetrated by gangmasters in several parts of the country. Those abuses affect UK and foreign nationals alike. We also know about the involvement of criminal gangs in people trafficking. Those activities create the conditions that allow gangmasters to exploit vulnerable workers, preventing them from claiming their rights, and profiteer at their expense. That is why the immigration service increased the number of staff working in enforcement from 1,677 in April 2002 to 2,463 by November 2003.

There has been a £60 million investment over three years in the multi-agency anti-trafficking force, Reflex. The new serious organised crime agency will in time pull together police, immigration, Customs and other experts to tackle organised immigration crime. It has

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been recognised that such action is necessary, but it is not the sort of action, nor the sort of organisation, that can be achieved overnight.

We cannot condone illegal working and will do all that we can to stamp it out, but we have a responsibility to those who fall into the hands of the unscrupulous gangmaster, and that again has been reflected in contributions today from both sides of the House.

Mr. Simmonds: Does the Minister have a view on the expansion of the Bill to include areas outside the agricultural and horticultural sectors? My hon. Friend the Member for North Shropshire (Mr. Paterson) and others have made the point that it excludes people in the construction and cleaning industries who operate with the gangmaster system.

Alun Michael: We need to focus on the specific activities covered by the Bill. There has been a particular history of gangmaster activities in agriculture and related areas, as defined in the Bill, and we should focus on that because that is where a simple and straightforward licensing system can be most effective. In many of the other areas of activity, legislation is in place. The hon. Gentleman referred to an overlap with the employment agencies legislation. We will be most productive if we focus on the specific activities in the Bill, including the fisheries issue as a result of the events of recent weeks. It would be wise not to over-extend the Bill's scope. I understand the relationships with other parts of the employment market, but if we create something that is over-complex, we might fall over our own feet and fail to achieve the clarity of outcome that hon. Members clearly want to see.

There has been clear support for statutory licensing from hon. Members on both sides of the House. I recognise that licensing in this sector also has the support of many organisations involved in the food supply chain, and that strengthens the case for it immeasurably, because to have that practical support, provided that the legislation is in place, will be enormously important.

As I have said already, those organisations include the NFU, the Fresh Produce Consortium, the major supermarkets and local government representatives, as well as bodies such as the citizens advice bureaux, the Catholic Church and the Refugee Council, which has seen some of the elements of human misery that have been reflected in contributions today.

In particular, I pay tribute to the Transport and General Workers Union, which has been active in promoting the Bill to the Government and to the public, as well as to my hon. Friend the Member for West Renfrewshire and to Members of Parliament generally.The newly formed Association of Labour Providers, representing legitimate gangmasters, also backs action to curb the exploitative activities of some gangmasters.

We are approaching the measure in a way that will maximise effectiveness while keeping legitimate operators' costs and bureaucracy to a minimum. That is a small price to pay to ensure that all labour providers compete on a fair and equal footing. That is precisely the approach that I discussed with my hon. Friend, and which I believe he is prepared to support.

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It would be wrong to let the occasion pass without recording my concern about the recent tragedy in Morecambe bay. The details of gangmaster involvement in that incident have yet to be established conclusively, but it is clear that the workers who lost their lives were being exploited. The Bill will help to protect some people from unscrupulous gangmasters.

The Morecambe bay tragedy also raises a number of issues that are beyond the Bill's scope. I agree with the hon. Member for North Shropshire that it is not a panacea or a magic wand that deals with everything; rather, it seeks to provide one tool that will be useful in combating illegal activity. However, I can assure Members that we are actively considering what can be done to ensure that working conditions in the bay are made as safe as possible. There are complexities with regard to legislation, but they are being worked on.

The Department for Environment, Food and Rural Affairs has been working closely with the Ethical Trading Initiative in the past few months to develop a best practice guide for labour providers. Such work has brought together key organisations involved in food production, packaging, processing and retailing. The major supermarkets have been closely involved, and their support for this work has been invaluable. When the Bill leads to the establishment of a licensing scheme, this best practice work will be a valuable aid to the industry in determining the conditions to be applied to a licence. I accept that such work is not enough on its own, but it is invaluable in giving body and content to a simple licensing system. It will also be of help in determining how to audit compliance with licence conditions.

Historically, the problems caused by gangmasters have been particularly acute in agriculture and the related fresh produce trades. Much of the work undertaken by the Government and other stakeholders to tackle gangmasters' exploitative activities has therefore concentrated on the agricultural industry. The work done in association with the Ethical Trading Initiative has also been undertaken in an agricultural context. The support for licensing that all the major food chain interests have shown—from producer to retailer—will help to ensure that it is successful in tackling the problem of exploitative gangmasters in this sector. We believe that licensing should target agricultural activities, because as I have said, it is the agricultural sector that has caused the greatest concern in recent years. That will capitalise on the support for action offered by all organisations, including the supermarkets operating in the food chain, and on our knowledge of gangmaster involvement in the agricultural sector.

We believe that the time is right to introduce statutory control of labour providers operating in agriculture and related areas, so we support the concept of a statutory licensing scheme. I am pleased that my hon. Friend the Member for West Renfrewshire has agreed to work with us to amend his Bill in Committee, in order to introduce a licensing scheme that the Government can support. Many of the contributions to today's debate have helped us to move in the direction that he and I have already discussed.

It is envisaged that the Bill in its amended form will be specifically limited to gang workers who are supplied or used to undertake work in agriculture, horticulture,

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shellfish-gathering and related areas and activities; that it will apply to primary labour providers and to subcontractors; that it will define clearly the form of licensing to be used and its boundaries; that it will make provision for the Secretary of State to recognise or establish a licensing scheme and the associated register of licensed gangmasters through secondary legislation; that it will agree to, or make provision for, appeals in relation to a refusal to issue a licence, or a decision to revoke a licence; that it will provide for charges to be made for licences to cover full costs, with the level to be set through secondary legislation; and that it will establish the offences of operating as a gang labour provider while not being registered, and of engaging the services of an unlicensed gangmaster. I recognise the need for protection to ensure that that is not an overbearing penalty, but the provision is important to ensure that there is buy-in, and that there is no reward for those who are willing to ignore the legislation.

It is also envisaged that the amended Bill will give the Secretary of State the authority to designate officers from existing enforcement agencies to deal with the offences of operating while not being registered and of using unlicensed gangmasters, and that it will set out the powers of enforcement officers and ensure that officers from different departments are able to share information, work together and target those who are the main concern of all who have contributed to today's debate, without placing onerous burdens on others.

As has been said, we will need to avoid duplicating other legislation, such as the Employment Agencies Act 1973, which covers labour providers. However, we need to do so in a way that ensures that there is no loophole, and that gangmasters are not able to evade the intentions behind the Bill: that we can proceed against illegitimate gangmasters however they operate, and that they cannot evade the legislation.

In that form and with those changes, we believe that the Bill will significantly strengthen our attempts to curb the exploitative activities of gangmasters without introducing unnecessary new regulatory burdens. The sort of amendments that we are suggesting will enhance the Bill, and in no way divert from the direction and intentions that led my hon. Friend the Member for West Renfrewshire to bring the Bill in its present form before the House. We will use existing enforcement mechanisms, as it is not our intention to create an additional layer of inspection and bureaucracy.

The proposed provision to allow information about gangmasters to be shared among enforcement agencies will help to ensure much more effective co-ordination of enforcement activities. As I have said, in combating crime we have found that misunderstandings are sometimes made about the exchange of information, which is usually for quite legitimate purposes. We intend to deal with that matter so that there is no doubt about it in the Bill. The provision will greatly strengthen our ability to enforce existing legislation governing the conduct of gangmasters.

The primary offence that the Bill creates will be easy to prove and it will aid enforcement in respect of other offences. It will enable people to be put out of business if they are breaking the law. A successful prosecution will lead to the loss of a licence. That, combined with the commitments made by buying organisations in the food chain, will help to prevent such businesses from

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continuing to act as labour providers. In other words, it will remove the incentive for people to break the law. Experience from Operation Gangmaster suggests that the benefits to the Exchequer could be substantial.

We acknowledge that the introduction of licensing could mean some small increases in labour costs and a marginal increase in prices. However, it will place a much bigger burden on the illegal competitors, so it will promote fair competition. We therefore believe that the balance will be favourable. In any event, keeping labour costs down at the expense of workers' rights, welfare and safety cannot be condoned. I hope that nothing said in the Chamber today was intended to suggest that that is not the case, and I am grateful to the hon. Member for North Shropshire for confirming that I am right in that interpretation. Neither can it be right to allow legitimate gangmasters to be squeezed out by the unscrupulous ones.

I am pleased that the supermarkets have given their backing to statutory licensing to underpin the introduction of ethical labour supply practices in the food chain. I noted the earlier remarks of the hon. Member for St. Ives, which were intended to encourage supermarkets to go further in their ethical policies. I am sure that that would win support on both sides of the House, but the supermarkets are supporting the propositions underlying the Bill, which is welcome. I hope that they will work with us to ensure that there is no place for unlicensed gangmasters in the future.

I commend the Bill as a positive response to the problems caused by gangmasters, and I look forward to working with my hon. Friend the Member for West Renfrewshire to develop and amend the Bill in Committee. I hope that, as the Bill moves forward from Second Reading, it will gain support from both sides of the House and that we will all seek to make it a non-bureaucratic but effective and cost-effective measure. I hope to hear that my hon. Friend supports the approach that I have spelled out in my response.

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