Examination of Witnesses (Questions 220-234)
27 APRIL 2004
LORD WHITTY
AND MR
ANDREW LAWRENCE
Q220 Alan Simpson: Can I just press you
on this? I am glad you referred back to the gangmaster hearings,
I think what troubled the Committee is just how little we appear
to know after such a long period of having the operation in place.
This seems to have a very specific dimension that we ought to
know something about. I am just a little concerned. I had expected
to do a follow up on the exact nature of the research that you
commissioned on the impact on the agricultural labour market of
the involvement of accession states. When the Committee were in
Poland it just coincided with David Blunkett's announcement about
the rights of migrant workers and there was no doubt whatsoever
that was the question that we were being pursued with everywhere
we went. What concerns me is, given that it was fairly obvious
that it was going to have an impact, what steps have we made within
the Department to be begin to quantify and understand the implications
that will have for us within the next few weeks and beyond because
that is a big issue? What exactly have we commissioned and what
do we look at directly in terms of the impact on the labour market,
the agricultural labour market?
Lord Whitty: As you know, the
Home Office now sells commission research on seasonal and casual
labour in agriculture as a whole. The exact impact of accession
on that is relatively limited. I think I must have been in Poland
at roughly the same time as you because there certainly was a
major insurgence as to what exactly the British Government was
saying on this at the time I was there, but it was pretty clear
that the majority of those who were looking for employment in
Britain, because we were being more favourably disposed to it
than other Member States were, were not looking for employment
within agriculture.
Chairman: The Committee stands suspended
for ten minutes.
The Committee suspended from 17:22 p.m. to
17.32 p.m. for a division in the House
Chairman: Alan, would you like to continue
your questioning?
Q221 Alan Simpson: I think we were just
in the middle of Lord Whitty's answer. You were cut off mid-sentence,
I think, about the detailed scrutiny that was being commissioned.
You talked about the research that was being commissioned into
labour market implications, but not specifically about the implications
for the agricultural sector, the seasonal workers and the legality/illegality
agenda that we have been trying to address elsewhere. I think
you got the first sentence in.
Lord Whitty: I cannot remember
quite how far I got through the sentence, but the research I was
referring to initially was that the Home Office and ourselves,
in the context of looking at seasonal and casual work which may
or may not be—which in some cases will be illegal, in other
words the whole gangmaster and slightly broader than that context,
then we have commissioned work, which we reported to you in the
course of your gangmaster inquiry, to look at the totality of
that picture and that will throw some light on the origins of
people coming to work in agriculture. The issue that I was making
in relation to workers from the accession states and where they
might seek work is more difficult, not more difficult than getting
a full picture of seasonal work, but it is not easy to say that
they are going to be headed primarily for agriculture. The area
where we have obviously substantial information is in the SAWS
Scheme. That is reviewed annually, in terms of where people came
from in terms of the needs of the industry and the closing of
any gaps in people applying the SAWS set up, which will arise
if people who previously had come through SAWS to operate on a
seasonal or temporary basis are now coming initially under the
Worker Registration Scheme as an EU citizen; but they would not
therefore need to be registered through the SAWS Scheme. They
may go into agriculture, on the other hand they may go somewhere—I
think the agricultural student from Slovakia may go somewhere
entirely different, whereas previously the only option they had,
the only legal option they had, was to go through the SAWS Scheme
and work in agriculture. That may leave a gap in the SAWS Scheme
which means that we would need to be recruiting people elsewhere
into the SAWS Scheme, but it would not necessarily mean that there
were not any people who previously came through the SAWS Scheme
who were not here working.
Q222 Alan Simpson: I understand what
you are saying. However, when the Committee were in Poland one
of their anxieties was quite clearly that if Poland chooses to
fully implement the recommendations about restructuring of the
agriculture sector that the EU are pressing them to do, it means
two-thirds of their current labour force that are involved in
agriculture and have only ever been involved in agriculture will
be displaced from the land. If that proportion comes to the UK
they will only bring with them agricultural skills or experience.
I think we need to recognise that, but the critical point is still
is there any sense in which Defra have commissioned or are intending
to quickly commission research specifically into the implications
that this may have for employment in the agricultural sector in
the UK?
Lord Whitty: Only in the two senses
that I have already described. (a) The displacement of people
from agriculture will take place over a considerable period of
time, it will not happen suddenly over night, and (b) it is not
clear from earlier immigration that people who come from rural
areas who have previously worked in agriculture when they reach
the UK, or the United States, or anywhere, actually work in agriculture:
a large proportion of the Punjabi population in the UK come from
villages and have worked in agriculture, but, by and large, they
are not employed in agriculture when they arrive in the UK. So
I am not sure we could make that kind of assessment in quite the
way that you are suggesting. The issue, therefore, is what total
number of Polish workers might over the next three or four years
come to the UK seeking jobs of all sorts, and would that have
a knock-on effect into agriculture? The answer to the first question
is obviously a Home Office issue and one which the Home Office
are seriously concerned with and are doing a number of things
to try and ascertain, but, I think, if you are asking: what have
Defra done on that, the answer is that we are not looking at that,
we are looking at the whole gangmaster issue and we are looking
at the implications for managed migration through SAWS.
Q223 Mr Mitchell: I think you might be
being a bit relaxed on that. It does overflow to the gangmaster
issue, but, as Alan says, people are going to be losing their
jobs in agriculture on quite a scale in Poland; they are going
to want jobs that they know or feel that they know. It is a field
in which there are already contacts, gangmasters and recruitment
systems which can recruit casual workers into this country, in
other words, that can provide them with the necessary documentation
that they are getting a job and casual labour is needed in agricultural
areas. I think that means there is going to be the kind of pressure
that you say is not going to happen. I will give you an instance.
I do not know about farming because I do not know of any farmers
in Grimsby, but the Grimsby FMA (Fish Merchants Association) has
several letters from Eastern European accession countries, as
have other ports, saying, "We can offer you skilled labour—accustomed
to working fishing. Our fishing industry is shedding labour. These
skills are available and we can provide them for you now".
There is a degree of organisation there which makes me wonder
if that is not going to be applied to agriculture too?
Lord Whitty: I am not saying it
will not be applied to agriculture and is being applied to agriculture,
but what I am saying is that agriculture is not the only destination
for people who have previously worked in agriculture. I can be
crude about it in a sense, that the less respectable doubtfully
legal part of gangmasters, provision of documents and so forth,
the way they operate is that people who legally would not have
a right here and who are probably either completely illegal immigrants
or who have not got work permits for operating here and that is
why the borderline with criminality operates in that area, but
when you are talking about EU citizens, that kind of exploitation
is much more difficult. There are other forms of exploitation
that can still operate, but it is not immediately obvious that
those operators, those dubious operators, will now be seeking
EU citizens to fill their books because those EU citizens will
have more rights and they will probably be more expensive and
have more alternatives than the other sources of labour which
they have. So I think there may well be an element of skilled
agricultural labour which becomes available, but it will not significantly
affect that whole gangmaster issue because it is not in the interests
of that end of the gangmaster trade to employ people who have
full EU citizen rights.
Q224 Joan Ruddock: I want to turn to
decision-making in the new EU. I think it is absolutely obvious
to all of us that most of the countries joining are much more
dependent on agriculture than we are or, indeed, some of the other
existing members. I think that there is a suggestion made to us
by the NFU that the countries were doing it together and it would
only need one other member in order to block any kind of reform.
Given how important reform is to us, to what extent do you think
that farm policy reform is going to be slowed down or hindered
by the accession countries?
Lord Whitty: I think your first
presumption is wrong. Poland clearly is hugely dependent on agriculture
and the structure of agriculture, which is different from most
of Western Europe, but if you take the Czech Republic, Slovakia,
Hungary, Estonia, then we are talking about much smaller proportions
of the population, not dissimilar to that of the rest of the existing
Western Europe, in fact lower than some Western European countries,
so I do not think it is true to say that the agricultural tail
will wag the dog of how they operate and that the interests of,
for example, the Czech Republic in Hungary will be much closer
to the Northern European, if you like, reformers than it will
be to some of our less progressive current colleagues and possibly
Poland. Indeed, even in the case of Poland, the present Polish
Government, as with every Polish Government, is precarious, but
nevertheless is quite insistent that they are on the liberalising
wing of any argument about future agricultural policy because
in the long-term benefits for Polish agriculture will be to engage
in significant restructuring, which is not easy if you base it
on a payment per cow. So it is not clear at all that (a) there
is a commonality of interest across the accession countries, or
(b) that the governments of those countries will see it in their
interests to block agricultural reform; quite the opposite. Of
course, the way in which the initial direct payments are going
to be made is much closer to the way they are going to be operated
within the UK, or in England, than it is to the traditional way
of production-related subsidies based on historic entitlements,
which has been operated historically and will be operated for
some time in relation to France. So I think we will have a more
common interest with many of those Central European countries
than is sometimes suggested and the general view that the huge
proportion of the population of all of these countries involves
agriculture is not true.
Q225 Joan Ruddock: I hate to embarrass
a ministerial colleague, but I was working from a quote from Defra
which said "agriculture plays a larger part in their economies",
speaking generally of the new Member States than in the EU15.
So obviously within the Department there has been a bit of an
assumption that the extent of dependence on agriculture in economies
is rather different?
Lord Whitty: No. If you take the
aggregates, that is true because Poland so dominates the aggregates,
but if you take each of the individual countries and they cast
their votes individually, then I cannot remember what the percentage
exactly is, it is, for example, 1.7%, Slovenia 2%, and so on,
of GDP tied up in agriculture. So Poland, as I say, dominates
both the aggregate numbers and our vision of what Eastern Europe
looks like that we can draw the wrong conclusions from that.
Q226 Joan Ruddock: Let us move on to
accepting the point that there is obviously a diverse group here.
It may be that they would not act as a block, but are there alliances
that might be formed? Has the Department any understanding of
particular types of alliances that might be formed, not necessarily
to stand in the way of reform, but to influence how policy might
develop?
Lord Whitty: I think our relations
with the Czech Government and the Hungarian Government on agriculture
and, indeed, the Baltic Governments would suggest that they would
be on our side of the argument. Indeed, something you may recall,
I have always quoted my Hungarian opposite number as saying, "We
cannot go for historic payments for any length of time",
and he said something like, "You cannot move from a system
that pays somebody for having 10 cows to a system which pays them
for having had 10 cows 10 years ago." He was very much of
my feeling and the UK Government's feeling as to how we should
implement the reform. So I think there are alliances which are
positive alliances not blocking alliances. Poland will obviously
have a significant vote, but, as I say, that is not all one way
either, because Poland, at a minimum, recognises that it needs
to restructure its agricultural policy and you do not do that
by sticking to production-related payments of any sort. I therefore
think that the significant proportion of the new Member States
at least will be of what is generally seen as the reforming wing
of the Agricultural Council rather than the opposite, and we are
certainly determined to maintain our relations with those countries
very positively.
Q227 Joan Ruddock: Finally, I would like
to touch on that most thorny of questions, the new EU, or proposed
EU Constitution. In the EU Constitution it states that the common
agricultural policy will be decided through the co-decision procedure
if the Constitution is adopted, giving the Parliament equal power
with their Council of Ministers. What impact do you think the
co-decision procedure would have on the European agricultural
policy process, particularly given that we are talking about 700
MEPs from states with very different attitudes, as you have suggested?
Lord Whitty: I think it depends
very much on how the European Parliament develops its new responsibilities.
There is a logic in agriculture or at least the strategic decisions
on agriculture going for co-decision, in that all other areas,
or virtually all, not quite, but almost all areas which are determined
at the Council of Ministers level by QMV are now subject to co-decision
and will be subject to co-decision as a result of Amsterdam and
Nice and now the Constitution, the Convention. I am uneasy about
that operating for agriculture, but I can see the constitutional
logic of it. I am uneasy because the Agriculture Committee in
the European Parliament tends to consist largely, but not entirely,
of the least progressive farmers from their countries who manage
to get themselves elected office, and they are one of the least
progressive elements within the European equation in terms of
agricultural reform and I think it will be necessary, if co-decision
applies to agriculture, for the European Parliament not to leave
decisions on agriculture where there is a conflict, or a potential
conflict, between themselves and the Council solely to the Agriculture
Committee. I think this can apply in one or two other areas as
well, but it particularly applies in relation to agriculture.
I think, therefore, they would need to mainstream agriculture
or change who they put on the Agricultural Committee so that it
is more representative as set out in the European Parliament.
If it became the latter, then I do not see any problem with co-decision,
but I have some nervousness about it certainly in the short-term.
Q228 Chairman: In the negotiations that
are to come there are some issues which are called "red-line
issues". Is this a sort of sludgy pink issue, because you
have expressed with some candour, and I am grateful, the fact
that you have some reservations about this. Does that mean to
say that you are going to try and influence the Government when
it comes to the discussions in Council and the inter-governmental
meeting in June to move away from this or whatever: because one
of the things that does not seem to be the gift of any government
is to determine what the membership of the Agriculture Committee
for Parliament is going to be?
Lord Whitty: No, indeed, and it
has been one of the areas in which we and Defra have signalled
some anxiety about the way the Convention was going. It is not
an area on which we would expect vast support from other Member
States.
Q229 Chairman: What about in the United
Kingdom Government? Are you getting support from other parts of
the Government to your concerns? Do they recognise them?
Lord Whitty: They recognise them,
but, as compared with certain other rather major issues which
arise in the Convention, I do not think this would qualify for
a red-line issue. It is, nevertheless, one which we would hope
to resolve or at least flag up as a potential difficulty and take
it from there, I think, but if it is a crude issue of preventing
co-decision as the final negotiation for the Convention or any
co-decision approaching agriculture, then on that issue on its
own you would not get the majority support from the rest of the
countries. Where it had been part of an overall package, then
it is possible. So I think we have to watch this space. I think
in the long run you are right to say that no nation, state or
even council minister ought to tell the European Parliament how
to conduct its business, but I think there is an inexorable logic
to the European Parliament eventually coming to mainstream agriculture.
It is a question of how long it takes them to get there. I do
not have a fundamental opposition to it, but I do have a tactical
opposition to it and I would like concern about it.
Q230 Mr Mitchell: Surely in terms of
interest it is in the interests of all these states that more
is spent on a common agricultural policy, whereas it is in our
interests that less be spent. We have been saying we are going
to have a fundamental reform and it is going to cost less for
many years, and that is an interest which is going to be directly
damaging to ours?
Lord Whitty: Well, for the immediate
perspective there is a ceiling on CAP reform which will have to
be spread over more states, a CAP expenditure which will have
to be spread—
Q231 Mr Mitchell: So they get more and
they are going to want to maintain it, whereas we want it down?
Lord Whitty: We want some of it
transferred into Pillar 2 and it is not necessary in the interests
of—it certainly would be in the interests of many of the
accession states to have more of the CAP in Pillar 2 than in Pillar
1, but it will shift some of the resources into Pillar 2. It is
not necessarily in their interests for any given size of budget
ceiling, total budget ceiling, for them to want more money spent
on agriculture. They may have other serious needs in terms of
a ceiling called structural cohesion funds, a social fund, and
so on, so I am not sure it is true to say for every accession
country it is in their interests to get more expenditure on agriculture,
and, in any case, even if they did all act together in the way
that Ms Ruddock was suggesting, they can still be out-voted on
a budgetary issue.
Q232 Chairman: To follow that line of
thinking. One of the concerns that I think we have had expressed
to us is that the system of payments which the accession countries
have is (a) unfair to them compared to the CAP regime that the
existing members enjoy and (b) that the phasing-in periods of
the change to move to a full payment regime is too long. Will
that influence the politics of the way that accession countries
deal with this area? Have you picked up any signs of discontent
in your many ministerial contexts as you have gone around in the
meeting of the new accession state Minister of Agriculture?
Lord Whitty: In the period when
negotiations had not yet been concluded this was the number one
complaint, that they would not get access to the direct payments,
except 25% in the first year extending over into 2012-13. The
problem if there is a clash of two logics: one is the direct payments
are supposed to be compensation for previous entitlement to price
support. Since the Central Europeans never got that price support,
what are they being compensated for? So there is a logic that
says they should not get anything, and there is a logic that if
you are on a level playing field they should get everything. Eventually
it was a compromise in the Commission's position and in the negotiations:
because over that period the budget mechanisms will no doubt click
in and direct payments will be a diminishing part of what we are
talking about. So I think it is reasonable for them to say that
it has taken us too long to get to parity, but, in fact, as the
total amount of direct payments comes down and their share goes
up, there will be a cross-over point rather before 2013. So, yes,
I think it was a major issue, it is still an issue of some disgruntlement
but that was the deal, and what I say to them is: you have got
an awful lot more out of this in total in terms of accession talks
and eventually you will be operating on a level playing field.
Q233 Mr Lepper: We have talked about
the potential for our own agriculture and food sectors in the
accession states. We have talked about Tesco and retail in Hungary
and Poland and possibly elsewhere in the accession states. Can
we just think for a moment about the potential for UK investment
in agriculture in the accession states? The European Commission
published a report in which they said that potential investors
suggest that they are meeting deliberate obstacles which discourage
their investment[12]
and the NFU told us in their evidence[13]
that there were many restrictions on the sale of agricultural
land currently in the candidate, the soon to be Member Countries.
Has Defra looked at this issue and is there anything Defra could
do to facilitate UK investment in the agriculture and food sectors
in the new Member States?
Lord Whitty: In many of the new
Member States there are derogations relating to land sales and
the freedom of access to land, which we will ask them to—
Mr Lawrence: Seven years for most
and 12 for Poland.
Lord Whitty: So there are restrictions
on the purchase of land, but, of course, there are other ways
in which British agricultural interest can make investment by
joint ventures and so forth, and certainly our embassies and our
trade people are ready with advice for potential investors in
order to meet all the regulations on ensuring that is the case,
but, as we were saying earlier, it is certainly still true that
there has been significant investment from other existing EU countries
compared with UK agricultural investment. There has been some
and some quite successful agricultural investment, but it is not
as big as, for example, German investment.
Q234 Mr Lepper: Is it wariness on the
part of those who might be potential investors or the complications
of the legal systems and the derogations that you have talked
about, certainly in terms of ownership?
Lord Whitty: I think you have
to bear in mind that British agriculture has not had a huge amount
of money to spare in the last few years and therefore, at the
time we are talking about, where the figures would have shown
up, there was not a lot of investment, and although farmers kept
talking about, "I might as well go and buy up some land",
in whichever republic, or somewhere, not many of them had the
money to do it. So there has not been . . . With the recovery
of farming and the whole profitability to some extent in the UK
there might be more resources available to do that, and I suspect
there will be an increase in the amount of investment one way
or another, but it will not be dramatic, in my view, and it will
not be on the same scale as German investment?
Chairman: We have only a few days to
go before we will be able to test, with the experience of reality,
some of the things that we have been talking about, I will not
say quite in theory because there is certainly an eager sense
of anticipation amongst the aspiring members to become full members—they
are very keen about it—and we certainly enjoyed our trip
to Hungary and to Poland. That said, we are most grateful to you,
Lord Whitty and Mr Lawrence, for your contribution. If there is
anything further that you wish to contribute, if you would follow
the traditional fashion and write to us at your earliest convenience.
May I thank you both for coming and giving evidence to us this
afternoon.
Lord Whitty: Thank you very much.
12 Network of Independent Agricultural Experts in the
CEE Candidate Countries, Key developments in the agri-food
chain and on restructuring and privatisation in the CEE candidate
countries, February 2003, p35. Back
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