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Gangmasters (Licensing) Bill [Money]

Queen's recommendation having been signified—

9.19 pm

The Minister for Rural Affairs and Local Environmental Quality (Alun Michael): I beg to move,

On Second Reading, I confirmed that the Government were content for the Bill to proceed, and the promoter, my hon. Friend the Member for West Renfrewshire (Jim Sheridan), agreed to work with us in Committee to ensure that the detailed provisions deliver both his and the Government's objective: a reduction in the exploitative activities of gangmasters.

Let us be clear: gangmasters play a necessary role by providing the flexible labour supply required to underpin the production and supply of food. However, for far too long that flexibility has been delivered at the expense of the workers involved, and the current approach fosters illegal working.

The Gangmasters (Licensing) Bill seeks to tackle those abuses through the introduction of a licensing scheme and the creation of a register of licensed gang labour providers. It will introduce welcome transparency to the labour supply chain and ensure that the supermarkets and other purchasers of fresh and other produce can insist that their suppliers use only licensed labour providers.

The Bill will create two new offences—supplying labour without a licence and using an unlicensed labour provider—and the Secretary of State will be authorised to appoint officers to enforce those provisions. Final decisions on the precise role and nature of the body responsible for issuing licences have yet to be taken. We are discussing the best way to work with the industry, trade union representatives, the National Farmers Union and the retail trade. It is clearly in everybody's interests to harness their knowledge and experience and that of legitimate gangmasters who want to work within the law and who should be able to compete effectively in the market while doing so. It is in their interest and ours to work together to create an effective licensing body rather than merely a top-down bureaucratic structure, and I am delighted by the co-operation that I have received since Second Reading.

The code to be observed by licensed gangmasters will be important.

Geraldine Smith (Morecambe and Lunesdale) (Lab): On enforcement, does the Minister agree that if the Bill is to be successful, we need a robust system of enforcement and a lead Minister to take responsibility for it?

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Alun Michael: The Department for Environment, Food and Rural Affairs leads on the legislation. My hon. Friend knows that the Department for Work and Pensions leads on Operation Gangmaster, which has been successful in enforcing the law in a number of ways but is not enough on its own. That is why we support the legislation and the introduction of the licensing system, which was a point argued by my hon. Friend the Member for West Renfrewshire when he introduced the Bill.

Sir Patrick Cormack (South Staffordshire) (Con): Will the right hon. Gentleman go a little further than he did in answering the hon. Member for Morecambe and Lunesdale (Geraldine Smith)? Which Minister in which Department will supervise this important Bill and ensure that it gets on to the statute book?

Alun Michael: Responsibility for the legislation and the licensing system lies with DEFRA, so the Secretary of State for Environment, Food and Rural Affairs is responsible and I deal with the Bill in this place. My noble Friend Lord Whitty has played a considerable part in promoting co-operation on Operation Gangmaster, but I am accountable to this House, as I was on Second Reading and will continue to be as the Bill goes through Parliament.

As I indicated, important issues include not only the question of the licence but the expectations and requirements placed on licensed gangmasters. We are examining the outcomes of the best practice project run by the Ethical Trading Initiative with DEFRA and industry support, which will inform the licensing system and help us to calculate the cost of an adequate monitoring system. Those outcomes will also show us what ethical audit can and cannot do, which will help us to create the right environment to enable enforcement to take place. Lord Whitty and I met representatives this morning for an update on the work of the project.

However it operates, it is intended that the licensing process should be self-funding with a fee charged to cover the cost of the licence applications and periodic renewals. An applicant's business will also be audited to ensure that procedures are compliant with the terms of the licence, which again raises the issue of exactly what the requirements should be.

Andrew George (St. Ives) (LD): The Minister and the Government will not want to involve themselves in unnecessary expense. In view of that, does he agree that it would be far better for the Government to use existing provisions and regulations—for example, the agricultural compliance unit in the Inland Revenue—rather than creating new organisations or regulations when an effective method is already available?

Alun Michael: The hon. Gentleman is right, and that point applies to a number of areas. The Inland Revenue has a considerable interest in ensuring that people pay their tax and national insurance. We have a strong interest in ensuring that the minimum wage is observed and that agricultural rates are paid. The point of the licensing system is that it would draw a line between those who are legitimate and working within the system, and those who are outside it. That would make easier

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the enforcement of such matters as the payment of tax. The current situation makes it easy for people to operate in an exploitative way.

Mr. Roger Gale (North Thanet) (Con): I am worried by what the Minister said a moment ago. In east Kent, we have two problems—a high number of immigrants looking for work and an impoverished farming community—

Madam Deputy Speaker (Sylvia Heal): Order. I do not wish to pre-empt the hon. Gentleman, but I hope that his question will relate to the money resolution.

Mr. Gale: Yes, absolutely. The Minister said that the licence would be self-financing. To me, that means that the farmers in east Kent will end up paying, and they are on the breadline already.

Alun Michael: The hon. Gentleman makes exactly the point that I have been making in our discussions with the industry. We want something that is effective but that does not put excessive burdens on industry. On Second Reading, we discussed the level of fee that might be charged and the hon. Member for Boston and Skegness (Mr. Simmonds) mentioned the figure of £3,000. That should not be necessary and, indeed, a much lower fee should be achievable. We do not want to increase bureaucracy. Rather, we want to work with those who know the industry and how it works—the trade unions and farming organisations—to ensure that bureaucracy is kept to a minimum and effectiveness is maximised. Resources already allocated to the matter must be properly and effectively deployed, and that is why I make the point that the costs involved would be determined, in part, by the conditions attached to the licence. The costs are provisional, but are likely to be considerably less than the figure mentioned on Second Reading.

Robust cost estimates will be prepared once the consultation on the detail of the licensing provisions has been completed, and we will be able to discuss the issue in full in Committee. Much of the detail will have to be worked out in Committee, but we are engaging vigorously with people in the industry to create a scheme that works for the industry, protects those who are currently being exploited and allows legitimate gangmasters to work within the law without being undermined by those who work outside it.

Mr. Michael Fallon (Sevenoaks) (Con): The Minister said that robust estimates would be prepared and that the scheme would be self-financing. Can he give a rough estimate of the public funding that will be required before the cost is covered by fees?

Alun Michael: I cannot do so at the moment, because we are in discussion with the organisations involved about the best way to use the strengths of the industry and those of Government to work together. If the issue of gangmasters could be dealt with easily—if we could wave a magic wand—it would have been done years ago. It is a complex situation, with people working in a complex market to provide labour for farmers such as those mentioned by the hon. Member for North Thanet (Mr. Gale). It would be possible to create a very bureaucratic structure that did not even hit the target.

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I am pleased by the way in which some legitimate gangmasters, the National Farmers Union and the Transport and General Workers Union have proved so prepared to sit down with us and tease out the most effective way to achieve the aspirations set out in the Bill. While the Government must have a commitment to meeting the finance necessary to implement the Bill, we must also ensure that costs—there will of course be set-up costs that will affect the industry—and the impact on the industry are kept to a minimum.

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