Examination of Witness (Questions 100-120)
16 MARCH 2004
MR ZAD
PADDA
Q100 Mr Breed: I think that is a very
important point which needs to be brought up. There is a responsibility
when you outsource any of your work. May we just look at the Association
of Labour Providers, ALP. What benefits do you think the establishment
of the ALP will bring generally and in respect of this particular
problem we are investigating?
Mr Padda: I am not talking for
the ALP. The Chairman of the ALP is sitting behind me. We have
an independent chair. When we met in September I explained that
I was working with the ETI and one of the courses of action that
we were going to take was to try to get other labour providers
involved in the process because even I realised it was not good
having Fusion as the only people at the table. In October Defra
facilitated a meeting in Peterborough of labour providers. Let
me go back a step. How we found out the information about labour
providers was we used our members who were retailers within the
ETI group to find out from their supply chain who the labour providers
were and we managed to come up with 160 names and at this forum
34 gangmasters turned up representing 24 separate companies. One
of the things that were agreed was to set up some sort of body
to represent gangmasters. I explained the work I was doing, but,
as I said, I do not speak for all of them. The way I see the ALP
is that hopefully it will look after the interests of people within
this trade. It also needs to be borne in mind at the moment that
the ALP is a group of labour providers that agree to work to a
future code of practice and at the moment it is made up of volunteers
and I think we are working with Mark and others to ensure that
the ALP stands alone and represents gangmasters and put our views
across.
Q101 Mr Breed: When we were looking into
this last year we had a gangmaster give us evidence and they were
seeking to do things properly and struggling because of that.
We questioned them along the lines of why is there not some sort
of trade association as there is in many other spheres of activity.
It seems to be incredibly difficult to get those into some sort
of association which could then provide that sort of strength
to create the codes of conduct to be able to negotiate with the
supermarkets and others and everything else so that there is a
very clear line. Why do you think it is so difficult to try and
get the people who provide this labour into some sort of trade
association?
Mr Padda: The ALP is an Association
of Labour Providers. No one had talked to labour providers before.
They had skirted round the issue of making it seem that all gangmasters
were involved in dodgy activities, but people within the industry
knew of gangmasters because anyone going to a packhouse will have
come across the guy who provides labour if he stays there for
a couple of hours and so. It has only been in the last six months
that we have been engaging with these people. I have to say that
I was pleasantly surprised to find all the people who came forward
believe the way I do, that we want to see regulations brought
in to stop the disreputable practices. Hopefully the ALP will
give us an opportunity to expand the membership and bring other
people in.
Q102 Mr Breed: You are talking about
a very small number of people at the moment who have signed up.
In order to get yourself at the top table in many of the discussions
you are going to have to get a lot more members. What is the likelihood
of that amongst many of the current labour providing organisations?
Are they interested or were they really just happy to go their
own way?
Mr Padda: There has been quite
a lot of interest. The funding has not been a major issue because
people have put their hands in their pockets. We need to get this
out into the industry and to talk to other labour providers a
bit more as well. It is a new organisation, it only started in
January and so it is early days. I think there has been interest
shown. If people do not want to be marginalised by whatever licensing
or whatever activities are brought in to deal with this problem
then they need to be part of an association or some sort of body
to represent them.
Q103 Mr Lazarowicz: In the evidence that
the Association of Labour Providers provided for this Committee
it was said that there had been "no strengthening of enforcement
action against disreputable gangmasters since September 2003."
Can you give any evidence to back up that claim? Indeed, it was
also suggested that the enforcement action had diminished since
September 2003. Can you support that claim at all?
Mr Padda: I do not talk for them.
Q104 Mr Lazarowicz: But from your knowledge.
Mr Padda: I have been busy working
with the ETI and doing some other work. I have not looked at what
enforcement action has been going on. In terms of our own company,
what we see around us is pretty normal in that they are still
doing raids and stopping vans and what have you. I would not have
thought it had increased since the date that you mentioned, but
I could not say hand on heart that it has decreased. We are busy
working. We do not sit and chat with the enforcement agencies
and ask them what the numbers are. I am ignorant on that. If the
ALP has put that forward then I am assuming it has got its information
from other members within the ALP who may have seen different
things to me.
Q105 Mr Lazarowicz: Since the incident
in Morecambe Bay have you noticed any change in attitude from
the government or the enforcement agencies?
Mr Padda: I have been working
on this issue prior to Morecambe Bay. When I used to speak at
seminars and say, "I'm Zad Padda and I'm a gangmaster,"
I used to have to justify that and explain that. After Morecambe
Bay every single newspaper in the land was running gangmaster
stories. What they did was construe the fact that all gangmasters
are disreputable. I spent most of my time trying to get across
to people that we provide a valuable service. I do not like the
term gangmasters; we prefer to use the term labour providers.
I read the press just like anyone else and you hear David Blunkett,
the Home Office and other government departments commenting when
up until that point they had not really entered the debate. I
had been working with Defra ministers principally and with officials
from DWP and health and safety executives up until that time.
I had come across Beverley Hughes, the Immigration Minister, but
the Home Secretary had no input into this. I would think there
has been greater activity since then.
Q106 Mr Lazarowicz: Can I move on to
a different question which is to pursue the point you made about
the role of the supermarkets in forcing the cost of labour down
by putting pressure on the prices that are paid. You were keen
not to get involved in the game of blaming a particular sector
of the industry. Do you think the retailers and the supermarkets
are doing enough to try and ensure that illegal labour is not
being used for the products that end up on their shelves?
Mr Padda: Today I would say they
are because they have been involved in the work that we were doing
through the ETI group working with the T&G to get this Bill
through. If you asked me in six months and they have not taken
this forward then that is a different matter. What I would say
is now is the time to stop talking about it. People understand
what the problems are out there. They can start to recognise them.
People are busy blaming the supermarkets. The work we are doing
is starting to show that you can identify these problems. Now
is the time for them to take this issue forward. Up until this
point they have done everything that has been asked of them, they
have been part of the debate. There has not been anyone saying,
"It's not my problem, Guv". People have sat around the
table and accepted it is part of the supply chain.
Q107 Mr Lazarowicz: Was there much sign
before that from the retailers, supermarkets or food processors
that they were concerned about this issue or is it something that
has started more recently?
Mr Padda: This has been going
on for the last three or four years within the industry. We have
been working for the last two years with people like the ETI,
and the ETI represents all the major retailers. We did some seminars
in 2002 where over 100 different firms and government organisations
turned up. I do not think people have got onto the bandwagon now
because of the tragedy that occurred in Morecambe. Now we are
at a point where we are doing some work and we can take that work
forward and the question then is what are we going to do with
the information that we have gathered so far to make sure that
we do not have the same problems in the future.
Q108 Alan Simpson: What you are saying
to us is really important because it begs the question about where
we end up in terms of our final recommendations. You heard the
evidence that was given earlier on and I am just intrigued to
know what your views would be on two aspects about the enforceability.
If we take the principles that you have set out and the work that
you have done and I am not going to knock any of it, is there
a danger that we could set up a scheme where there would be nationalised
things and the good guys would be licensed and pay a fee and the
bad guys would take evasive action and so the net outcome of this
would be nil effective change? If there is a risk of that, what
have we got to do in terms of government policy to make sure that
we do not put all that effort into something that is not going
to deliver?
Mr Padda: That would not suit
anyone's purposes. We have to make sure that the retail supply
chain—and this includes the National Farmers Union—ensure
that their members are only using licensed gangmasters. The reason
I am supporting the Bill is because one of the recommendations
in the Bill up until now has been that people who use unlicensed
gangmasters are also going to be held to account and I think that
is a major plus. That is tying the whole industry together and
it is making it an industry-wide solution rather than focusing
on one narrow area.
Q109 Alan Simpson: I am glad you put
that straight. We heard earlier that supermarkets are very keen
that there should be a licensing regime and I am also very keen,
but it was not clear whether they wanted to be part of the liability
chain. What you have just said is that unless the supermarkets
and the farmers who supply them are part of the liability chain
it is going to accelerate the problem that you outlined in your
opening comments when you said that every year it becomes more
difficult to win those contracts. Presumably if those who are
issuing the contracts do not have a sense of liability the legal
are going to be squeezed against the terms that would be offered
by the non-legal. Is that a fair summary?
Mr Padda: My opinion, having worked
in this quite extensively over the last couple of years, is that
it is almost a given that if there is a licence the major industry
players would submit to that licence in that they would encourage
their supply chains to use only licensed operators. It will be
illegal not to do so. I always say this is an industry-wide problem,
it is not just for the labour providers and it is not just for
the retailers. We can trace back our products in terms of the
shelf life and the quality of the products. We need to show that
with people as well because the consumer is concerned about that.
I hear these debates about the consumer. I do not think any consumer
wants to read some of the stories that we have seen in the press
in the last couple of years and we have to deal with that. Businesses
like ours can show that we can do it within the current price
regimes, it can work. What might need doing is a bit more research
on what impact it will have on other firms because I cannot speak
for anyone else but ourselves.
Q110 Alan Simpson: You made the point
that the reason you support the Bill is that it includes everyone
in the industry in that liability frame. If you were then faced
with a Bill that was amended in Committee Stage that limited liability
only to the labour providers, what you are saying is that it would
be an invitation to those who purchased the products to look outside
the legal framework?
Mr Padda: Yes. On a commercial
basis the licence should lead to more business for the reputable
operators. Maybe I am a simple person, but if that does not happen
there is no point in going down this road. This needs the whole
industry to take responsibility for it. I have never ducked responsibility.
The liability is down to the gangmasters per se in terms
of the offences. What the Bill states at the moment is that it
will be illegal to take on unlicensed gangmasters and I fully
support that. If that changed at Committee Stage then I would
think that would be a bit of a problem.
Q111 Chairman: Can I ask why, if the
Bill is so good, you are busy working hard on this Ethical Trading
Initiative?
Mr Padda: When I got involved
in this industry people were calling for this registration, legislation,
whatever you want to call it, but no one knew how we operated.
The work we have been doing with the ETI in terms of the code
of practice is what I hoped would underpin any licensing regime
because up until now they did not understand how we operated and
the work that the code of practice has done is to highlight the
areas a gangmaster should be looking at, ie the minimum wage,
health and safety etcetera. What had not been done before the
work that we did with the ETI was there was no guidance for gangmasters/labour
providers on how to operate in a legal or ethical manner.
Q112 Chairman: Sometimes in the world
of fresh produce the supply chain can be quite torturous. You
can have a situation where a company has a packhouse and it is
the company with the packhouse who has the arrangement to supply
the supermarket. That company may work with a series of growers
who may be programmed to supply the packhouse with a range of
crops, but you are dealing with natural products. Let us say that
that range of crops was not able to deliver the total volume that
was required for the packhouse but we knew there was a grower
just down the road who had exactly what we required and the guy
in the packhouse rings up Joe and says, "Can you send me
a truck of cabbage? I'm desperate. The other lads cannot supply."
How is this carefully constructed arrangement either by virtue
of the Bill or the Ethical Trading Initiative going to operate
when at the end of the day one white cabbage is the same as another
white cabbage and you have got one harvested by a group of illegals
and one harvested by a group of people playing by the ethical
code of practice and the Bill? How are we going to police it?
How is it going to work?
Mr Padda: There was a similar
argument before they started the Assured Produce Scheme, you might
have seen the little red tractors. We are an Indian family so
we have gone into other businesses and one of them is growing
strawberries in this country and in order to supply those to the
major retailers we have to grow through the Farm Assured Standard
and you are able to put that on your product and you are audited
once a year against the standard and they do spot checks. That
differentiates our strawberry from the guy who is not farm assured.
That is what we would hope for in terms of the code of practice.
If it was going to be a purely industry driven approach, that
would be how you would differentiate between the products of one
lettuce grower and another. Where the industry falls down on this
is the criminal activities that go on in this industry. It is
not for the industry to deal with criminal gangs and I think that
is why we need underpinning legislation to support the work going
on at the moment. In terms of the supply chain, people are used
to codes of practice, this is how the fresh produce supply chain
regulates itself at the moment.
Q113 Chairman: It is still quite possible
then, if I have interpreted you correctly, notwithstanding the
code of practice that you are working on and the Bill, that that
product could be harvested by illegal activity and still find
its way into a legitimate supply chain.
Mr Padda: I think this is where
the co-operation between industry and the statutory bodies needs
to be more fluent. If it was a purely statutory driven approach
that could happen because people can get round licensing and things
such as this, but this is where the industry driven approach comes
into it. I can say with some boldness that the Assured Produce
Scheme seems to have worked in the sense that they have managed
to keep the number of people working outside the scheme to a minimum.
Q114 Chairman: I asked the question earlier
about people re-inventing themselves. Let us say somebody in East
Anglia who up to now had operated illegally decided that all of
this officialdom really was not for them and they decided to buy
a small farm and they become a grower and they have a very large
labour force which quite fraternally they lend out to their mates
down the road and money exchanges hands. In other words, we are
not dealing with gangmasters, we are just dealing with the grower
next door who just happens to have ten times more labour than
a holding of that size ought to have, but, good heavens, he is
a very generous man and he lends his labour force out and in the
pub at night money is exchanged, things are harvested, things
are done, exploitation takes place. I presume you would say that
such activity could, in theory, happen even with the Bill and
a code of practice?
Mr Padda: It is quite an interesting
Bill and it covers that type of activity. Things are changing
all the time. Even this morning I received more information. I
think that will be covered. The farmer who is supplying the labour
to his next door neighbour still has to be paying the minimum
wage and he still has to be paying National Insurance contributions
towards those workers. He cannot cop out of his employment responsibilities.
If he supplies them to his next door neighbour then he becomes,
in theory, a gangmaster according to the Bill. The way the Bill
is worded at the moment means it would cover this guy who is trying
that stroke.
Q115 Chairman: I hope you are right.
There are some sharp minds out there and I think we got a flavour
from our previous witnesses of the degree of sophistication that
we are up against. Why do you think your ethical code is going
to work when all previous attempts seem to have failed?
Mr Padda: I am not saying it is
going to work because if it was going to work on its own I would
not personally be supporting the T&G Bill to bring licensing
in. I think the code is a way of showing some guidance notes to
people in our industry instead of assuming they are all guilty
until proven innocent. The work I have done has been in developing
labour provider/gangmaster tools on how you should do your job
properly, what your terms and conditions should look like, health
and safety. Up until now there was no code of conduct for labour
providers per se. It does not work on its own, but I hope
it will work with the T&G Licensing Bill. You guys understand
better than me how these things change in Committees Stage. I
see this Bill as a start in an industry that if we are not too
careful will get out of hand come May with the influx of new countries
coming into it. We will have to work together and try to affect
some positive change and the Bill is a way of doing that.
Q116 Patrick Hall: I just want to be
clear about something you said earlier on where you described
a situation in which the exploitive area of gangmaster operations
has taken over from the non-exploitive side in terms of getting
the majority of contracts. Could you say where you think those
contracts are coming from? What parts of the industry that used
to go to the legitimate gangmasters are now going instead to the
more dubious parts on the basis of cost?
Mr Padda: I do not think it is
just that. Legitimate gangmasters are losing contracts to things
such as the SAW Scheme (Student Agricultural Workers' Scheme)
where the growers are now going and getting SAW students because
they find it problematic getting legal labour. A lot of gangmasters
like ourselves who were recruiting from the big cities were working
with growers last year but are not doing so this year because
the farmer has brought SAW students in. One of the reasons the
SAW Scheme is so useful is that you do not pay National Insurance
contributions. So it is not disreputable practices, I just think
there is no knowledge on a broader level of what is going on in
the industry. What we are seeing is that the disreputable practices
seem to be a bit broader because in the past we would win contracts.
I do not know whether it is purely on price that we are losing
the contracts or if other people like ourselves are losing the
contracts, but we see the newspaper stories and the headlines
every week as well as anybody else does. My dad is ringing companies
up on a daily basis to provide labour and they are not interested
because the rate that we are charging does not marry up with what
they want to pay.
Q117 Chairman: Are there parts of the
industry that are more susceptible and who are not bothering about
who is supplying it than others?
Mr Padda: I would say right now
that the fresh produce industry is probably far ahead of other
sectors because of the work we have been doing and I could not
have said that two years ago. In other sectors there is still
the notion of them having no problems.
Q118 Chairman: The fresh produce is way
ahead in what sense?
Mr Padda: It recognises this as
a problem within its industry and that is why we sat down with
the supermarket members and the T&G. There are other areas
of the industry which do not seem to be tackling it in such a
robust manner so they may well have greater problems than the
fresh produce industry. The first thing to do is to admit you
have a problem and within the fresh produce industry there is
work currently being undertaken.
Q119 Mr Mitchell: Have you made any estimates
of how much it would cost you to operate under the Gangmasters
(Licensing) Bill? How much would it add to your costs?
Mr Padda: I have received the
Regulatory Impact Assessment, I was reading through it on the
way here, it is anything between £1,500 and £3,000.
I think £1,500 makes a lot of sense to us if that includes
the audit scheme. People have to understand that the reputable
gangmasters/labour providers are working on small margins just
like anyone else in the industry. That might be to the aid of
the bigger boys rather than some of the people who work in a reputable
manner. When we come to discussing it I suppose that is where
we will come in.
Q120 Mr Mitchell: If your father is ringing
round and people are saying they can get it cheaper from somebody
else it will impose higher costs on the competitors.
Mr Padda: Yes. It is not going
to be the case that they will be able to go and get a licence.
They are going to have to show that they are paying the minimum
wage, paying their taxes, looking after health and safety. We
would assume that would impact on their costs and the way they
are able to trade anyway. It is not just going to be the cost
of the licence, that will be nominal in the scheme of things,
we had hoped the licence would introduce practices which would
raise the price to the disreputable people who are doing it below
the right price anyway.
Chairman: Mr Padda, thank you very much
for bringing a note of realism to our proceedings. We are very
grateful to you and again our sincere thanks for your patience
in staying to give us this evidence, and please send our thanks
to your father for releasing his right-hand man to come and talk
to us this afternoon. Thank you very much.
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