House of Commons - Environment, Food and Rural Affairs

Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Memorandum submitted by Jim Sheridan MP

INTRODUCTION

Jim Sheridan MP introduced a Private Member's Bill—the Gangmasters Licensing Bill—to the Commons on 7 January 2004. The Bill successfully passed its Second Reading on 27 February 2004, the accompanying Money Resolution was passed on 8 March 2004 and it is currently awaiting Standing Committee in the Commons.

This contribution to the Efra Select Committee seeks to set out the context of why Jim Sheridan MP believes the time is right for a statutory solution to the problems of gangmasters; highlight the key points of his Bill; and underline the key role of government in licensing and enforcement.

SUMMARY OF KEY POINTS

— Voluntary codes have not and will not prevent the widespread exploitation and illegal activities engaged in by rogue gangmasters. It is therefore time for a statutory solution.

— By operating alongside a public register and by putting in place legal obligations on gangmasters and those who use their services, a licensing scheme would help to protect workers, decent employers and the taxpayer.

— Following the Morecambe Bay tragedy the Government has indicated its support for a statutory licence and register.

— The Bill is seeking to licence and register gangmasters operating in the UK's agricultural and food processing and packaging sectors.

— For a licensing scheme to be effective there must be effective enforcement. The Government must play the lead role in funding and administering a licensing scheme and in enforcing its provisions.

SUBMISSION

1. THE FAILURE OF THE VOLUNTARY APPROACH

In the absence of a legally enshrined framework of monitoring and enforcement unscrupulous gangmasters are not only able to undercut good gangmasters, they are also able—as the Efra Select Committee's Gangmasters Report highlighted—to exploit the workers they employ and supply.

In an attempt to tackle such problems two voluntary codes were introduced. Although well-intentioned initiatives, ultimately they have failed. They have not reduced levels of exploitation of workers, nor have they enticed unscrupulous operators into operating transparently and within the law.

As the Efra Committee itself stated, "it is unrealistic to expect the voluntary codes to prevent widespread illegal activity by gangmasters." Key industry stakeholders are now supporting the Gangmasters Licensing Bill because they believe that voluntarism must be replaced by a statutory solution backed up by effective enforcement (see Appendix A for a list of organisations supporting the Bill).

Since the Efra Report, the failure of voluntary codes has been further exposed by the tragedy at Morecambe Bay and the evidence of exploitation of migrant workers outlined in reports by NACAB ("Nowhere to Turn") and the TUC ("Gone West").

In the face of this growing body of evidence there has been a change in the political climate. In its original evidence to the Efra Committee, and in its subsequent response to the Committee's Report, the Government rejected a statutory licensing scheme. However, during the Second Reading Debate on the Gangmasters Licensing Bill Alun Michael acknowledged 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" (Column 570 Hansard 27 Feb 04).

This change means that, through this Bill, there is now an ideal opportunity to put in place an effective statutory mechanism for regulating gangmasters.

2. THE BENEFITS OF A STATUTORY LICENSING SCHEME

The Efra Committee's Gangmasters Report recognised that "a statutory registration scheme may prove to be necessary". But it acknowledged that such a scheme would "only be effective if it is introduced as part of a wide range of policy initiatives".

By proposing a licence to complement a public register, as well as placing legal obligations both on gangmasters and on those who use their services and their labour, the Gangmasters Licensing Bill puts in place many of the mechanisms required to make statutory registration effective:

— A licence sets out legally enforceable conditions and criteria that a gangmaster must abide by in order to operate. In other words, it has a deterrent value.

— As a physical document a licence empowers and protects those who employ the services of gangmasters—ie the requirement that gangmasters show their licence to those farmers and businesses using gang workers means that they can confirm that the gangmaster supplying those workers is legitimate.

— A licence and register will protect workers because it will create a paper trail for government departments and enforcement agencies to follow. At the moment the Government has no accurate data to tell them how many gangmasters exist, where they operate, who they employ or how they treat their workers.

"savings to the Exchequer in respect of lost tax, national insurance revenue and reductions in benefits fraud"

3. THE GANGMASTERS LICENSING BILL

The Bill secured unanimous cross-party support in the House during its 27 February Second Reading Debate and the 8 March Money Resolution Debate. It seeks to regulate the estimated 3,000 gangmasters operating in the following areas: agriculture, horticulture, the harvesting of shell-fish (eg cockle picking) and food processing and packaging. The Bill would also cover the production of any consumable produce grown and harvested for sale or consumption, whether on land, on cockle-beds, or in market gardens or on nursery grounds.

In essence this Bill would:

— Establish an effective system for registering and licensing gangmasters in the aforementioned sectors.

— Make it illegal for gangmasters to operate without a licence.

— Make it illegal to use the services of an unlicensed gangmaster.

The Bill proposes that, as a condition of the licence, all gangmasters will have to:

— Carry and produce for users of their services photo ID containing their name, company details and licence number.

— Maintain proper records—who they employ, who they supply to, what they pay, what they deduct from wages.

— And co-operate with the proper enforcement agencies and abide by minimum standards.

In addition, it will be a breach of licence to withhold personal documents from gang workers. The Bill will also cover sub-contractors by requiring anyone supplying gang labour to obtain a licence and it will require all gangmasters to keep records of where they obtain their workers from—this would therefore identify any overseas providers of labour.

The Bill leaves the setting of a licence fee to the discretion of the Secretary of State (Defra). Alun Michael has stated that "the licensing process should be self-funding" (Column 1339 Hansard 08 Mar 04).

4. LICENSING, ENFORCEMENT AND THE ROLE OF GOVERNMENT

The Bill leaves the administration and co-ordination of licensing and enforcement to the discretion of the Secretary of State. In doing so, it recognises that pivotal role of central government. It also reflects the Efra Committee's recommendation in its Gangmasters Report that "the Government establish an inter-departmental working group which would report to a Defra Minister of State with overall responsibility for policy on gangmasters".

It is for government to take the political lead on this issue. This could done, for example, through the establishment of a dedicated "Gangmaster Unit" within Defra. There might also be a role for key industry players as an advisory body to government. An industry body could produce and advise on matters such as codes of conduct, minimum standards, licence conditions and the auditing and compliance process. It might also conduct research and policy analysis and feed this into government to aid enforcement and inform policy. It could even have a role in monitoring the effectiveness of the licensing scheme and of enforcement. However, the drive, resourcing, responsibility and accountability for licensing and enforcement must sit with a lead Minister.

So, if licensing and enforcement are to be effective then:

— Enforcement must be properly resourced—and used to bring the full weight of the law down on those who evade the law, breach minimum standards or exploit workers.

— There should be inspectors who vet licence applications and then carry out regular inspections of gangmasters to see if they are abiding by the terms of the licence.

— There must be ministerial responsibility and accountability and also co-ordination with and across other departments and enforcement agencies.

— Enforcement must be proactive—it cannot rely on whistle-blowing when workers are too frightened to blow the whistle.

March 2004

Appendix A: Coalition of Support

Outlined below is a list of those organisations from industry, the unions and wider society supporting Jim Sheridan MP's Gangmasters Licensing Bill:

— The National Farmers' Union

— The Fresh Produce Consortium

— The Recruitment Employment Confederation (which represents employment agencies)

— Fusion Personnel (a legitimate labour provider)

— TUC

— Transport & General Workers Union

— Unison