Examination of Witnesses (Questions 741
- 759)
TUESDAY 16 MAY 2006
MR MARK
BOLEAT AND
MR CHRIS
KAUFMAN
Q741 Chairman: Good morning, and
thank you very much indeed to both of our first two witnesses
for joining us. Perhaps we could start by you introducing
yourselves briefly, and your organisation, for the Members and
the record.
Mr Boleat: I am Chairman of the
Association of Labour Providers. The Association represents employment
businesses that supply workers to the agriculture and food industries.
Mr Kaufman: I am the National
Secretary of the Transport and General Workers' Union, a member
of the Gangmasters' Licensing Authority—as is Mark—
Mr Boleat: No, I am not!
Mr Kaufman: We will not fall out
to start with—an observer on the Gangmasters' Licensing
Authority, and also on the Agricultural Wages Board, and a Migrant
Workers' Committee of the European Trade Unions.
Q742 Chairman: Good. Thank you very
much. As you know, we have made substantial progress into our
inquiry into the work of the Immigration and Nationality Department
and the focus today at the beginning is on illegal working, its
implications, its regulation and so on. If I start with you, Mr
Boleat, in your evidence you recognise and say that there are
a large number of people living and working in Britain who are
not entitled to be here. In terms of the industries that you know
well, which I think is generally low-skilled work in the agriculture
and food industries, how large a proportion of the work force
would you sense is working here without legal permission?
Mr Boleat: I would be very reluctant
to give an estimate except to say that it is sufficiently large
when combined with tax evasion, and I think the two do go together
to a large extent, to have a significant distorting effect on
the market. The biggest concern that my members have, those that
are trying to operate legally, is they are undercut very
substantially by businesses who are not paying tax, and almost
no enforcement action is taken. Often those businesses are employing
illegal workers but they might not be, so there is an overlap
but it is not total. I cannot give you a number; I have seen other
estimates of around the 300-500,000 mark, but I have no basis
for giving you any figure myself.
Q743 Chairman: But it is significant
enough, in your view, to say there is a discernible effect on
wages and on government revenues and therefore it is something
we should be concerned about?
Mr Boleat: I am not certain there
is a discernible effect on wages. Where there is tax evasion the
worker is often benefiting. The minimum wage law, I think, is
reasonably upheld; my members will certainly pay it. There is
certainly an effect on Government Revenue.
Q744 Chairman: Which parts of the
country and which industries would you say are most affected by
it?
Mr Boleat: The Association I represent
is mainly concerned with the food industry. That is heavily concentrated
in East Anglia so that is where I see the biggest problems, and
clearly where there is a concentration of people who are operating
not entirely in accordance with the law then the market is affected
much more than if it is only one or two, but I suspect there are
similar problems—perhaps to a lesser extent—in other
parts of the country, and I have no doubt the same issues apply
in office cleaning and hospitality.
Q745 Chairman: In those sectors there
obviously is a large legitimate migrant workforce. In your experience,
or to the extent you can tell, would you say the patterns of migration
coming in illegally are coming from the same places or from some
other countries?
Mr Boleat: The entry into the
European Union of the accession states changed matters dramatically.
Before then we had many workers from Eastern Europe working illegally;
most of my members are now bringing in workers from the accession
states and are doing so legally. It is still all too easy for
people to acquire forged or in some cases real documents they
are not entitled to, and I think that is happening from further
east in Europe, from the Ukraine, Russia, Belarus and so on, but
most of my members' workers are coming from Poland, Lithuania
and the other accession states.
Q746 Chairman: Mr Kaufman, does that
chime with your knowledge or sense of irregular working, or do
you want to add anything to that?
Mr Kaufman: Again, it is almost
impossible to have accurate figures because of the nature of the
problem; it is a twilight world and for us to be able to measure
in a scientific way is very difficult. But we just have an impression
from our organisers across the country that it is a huge issue,
and if you take agriculture and the food industry most employers
will now say they cannot operate without migrant workers. In terms
of legal or illegal, we do not make a distinction. We think the
issue is about protecting workers and on the Gangmasters' Licensing
Authority there is no distinction made. It is a question of how
you look after vulnerable groups of workers and if they see themselves
portrayed as illegal they feel even more vulnerable and less likely
to contest what is happening to them. But in terms of the scale
and the spread we are talking far outside the agriculture and
the food industry. Right across industry now the T&G is divided
into 14 different trade groups and practically every one has a
large number of migrant workers. The building industry, lorry
drivers, bus drivers, the car industry—practically anyone
you care to name.
Q747 Chairman: Obviously the Committee
will understand entirely the point you make about not drawing
a distinction from the point of view of exploitation of people
at work, and with our inquiry centred very much around immigration
control we inevitably do draw a distinction, but one of the questions
I would like to ask is whether from a trade union point of view
the presence of a large numbers of people who are not legally
present makes it more difficult for a trade union to organise
in order to protect the interests of those who are legitimately
here?
Mr Kaufman: Yes, it does, but
then we tackle that in quite an adult way, I hope. We bring together
the stewards and we say: "What are the problems with in your
sector?" If I take, for example, the poultry industry we
said to them: "Name the top three issues", and one of
those is always migrant workers, often agency workers, so what
would the problem be, and they would say it was the possibility
of undercutting the existing wage levels. But then the discussion
leads on to what we do about it, and the answer is referring to
the Migrant Workers' Charter that we are signed up to, no migrant
workers, whatever their status, should be treated any differently
from those who are employed here. That is inherently right, for
one, and for two, it means that they are not a threat to the existing
terms and conditions.
Q748 Bob Russell: Gentlemen, you
referred to the illegal workforce. How widely known is it within
the food processing distribution and retail sector that illegal
workers are engaged, bearing in mind that 80%, I believe, of all
food stuffs are now sold through four major supermarkets? Would
it be known to the boardrooms of those companies that perhaps
their produce is coming through a system where there are illegal
workers engaged?
Mr Boleat: The 80% I think applies
to the grocery trade because a lot of food does not pass through
the grocery trade; it goes into catering and other sources, but
the supermarkets have worked closely with the unions and ourselves
on this matter, and indeed sometimes they are very zealous in
their auditing requirements. However, it is clearly not wholly
effective. The supermarkets are very competitive organisations;
they do compete strongly with each other; and although there are
people within the supermarkets charged with complying with ethical
guidance and so on there are also people charged with buying carrots
at the cheapest possible price, and there is that inevitable conflict.
However hard they try I suspect the supermarkets cannot alone
police this but on the whole we have worked very closely with
them. We had our annual meeting at Marks & Spencer last week
and we are talking with them about how we can further develop
the work to make sure there is this not sort of abuse.
Mr Kaufman: I think you have to
distinguish between the legitimate and ethical employers and those
who are not always quite so clean, and then there is another delineation,
those who use agency workers. When you have subcontracted the
work you have even less control over what is going on, and that
is a big issue for us because agency workers often, where they
are not themselves complying with the rules or turning a blind
eye, can be exacerbating the problem.
Mr Boleat: If I can explain how
it can happen at times, the supermarkets will monitor their suppliers
far more rigorously than anybody else. If I am running a food
factory supplying a supermarket I will make sure I have immaculate
records in respect of the vast majority of my workers, but I might
have a proportion of my workforce for whom there are no records,
and you cannot expect the supermarkets to be there every day monitoring
everything. Typically, if somebody is seeking to evade tax and
to employ illegal workers they will be very clever to have immaculate
records as part of their business.
Bob Russell: Perhaps we should have the
supermarkets in here, Chairman.
Q749 Mr Spring: I read your submission
and you talk about the 3D jobs, the "dangerous, dehumanising
and degrading" and you list some of the real problems that
are faced by individuals who find themselves in this position,
and I would like to ask you a very simple question—and I
do so because I am an East Anglian MP and I am aware of the fact
that you have very migratory labour which is seasonal and there
are very specific problems about this—which is really a
qualitative question. You have given these examples of what is
effectively exploitation of migrant workers. Are they substantially
more serious from a qualitative point of view, I suppose that
is the right word, than any kind of exploitation of resident workers,
and I am particularly thinking of those who come here temporarily
at different times of the year. Has there been a distinction in
treatment, in your experience?
Mr Kaufman: It is wrong to run
away with the idea that migrant workers are the only people exploited,
and when the Gangmasters' Bill was going through Parliament and
became an act that led to the authority we stressed very carefully
it was not just about migrant workers. This system that has been
exploiting people, and that is the rogue element of the gangmasters,
was exploiting indigenous workers just as much as much as migrant
workers even before the last flood of migrant workers, but I think
we are talking about migrant workers being more vulnerable because
of their feeling that they are on the edge and, first of all,
they do not understand our culture, they do not understand the
employment laws necessarily, and are vulnerable to more exploitation
than would be people who live in this country.
Q750 Mr Spring: I understand it would
be very difficult to quantify something like this, as you have
accepted, but I thank you for your answer. Just moving on to Mr
Boleat, I notice that in your submission you have talked about
immigration controls being ineffective, and that is a very widely
held view, and you talked about the negative impact of the informal
economy, or the repercussions of that being negative. You also
cite the example of the food factories East Anglia where you say
that, for example, illegal workers will run out of the factory
if people thought to be tax or immigration inspectors arrive.
Believe me, it is an interesting sight when a Member of Parliament
arrives as well—
Mr Boleat: That could be for different
reasons!
Q751 Mr Spring: I just want to ask
you a basic question about this. Where do you think the essential
problem of irregular working lies? We have touched on this through
Mr Russell's question. Workers will go to the most extraordinary
lengths to come to the UK, despite all the difficulties and the
exploitation we have heard about. We know about the use of agencies,
employers and supermarkets; they either do not know or cannot
know or do not want to know about whether irregular workers are
used. Now, is that where this whole issue should be concentrated
on if there is going to be any resolution, or is it simply a matter
of the Government's immigration policy, or both?
Mr Boleat: My Association represents
the agencies, so I do not think all the blame should go there,
and I am not just saying that because I am Chairman. Agencies
are the way that many of the workers are supplied and most of
it is perfectly legitimate, and businesses outsource the whole
of their labour supply to agencies. In my view the problem is
entirely one of tax evasion; that is the economic motive for those
gangmasters who are operating illegally. By evading tax you save
40% of your costs, and that is the issue. Now, there are some
workers who are here illegally who pay tax but many people who
think they are here illegally might be reluctant to pay tax in
the belief—I suspect unfounded—that the Revenue and
the Home Office communicate with each other on such matters. But
the people who clearly believe they are here illegally are not
likely to wish to be in the formal economy. If we did not have
an informal economy, then I suspect the problem would be much
less. We have a thriving informal economy; it is probably the
fastest growing sector of the economy. My car gets the benefit
of it every month being washed on a high street by people who
I very much doubt are legally entitled to be in this country and
I suspect have never heard of the taxman, so that is a very visible
manifestation of it. It seems to me that the tax authorities are
at their very best going through detailed records and not at their
best dealing with businesses who have no records. The people causing
the biggest problems have no tax records; they have a lot of cash.
If we could deal with the informal economy issues I think we would
go a long way to dealing with the illegal migration issues. The
two very much go together and cannot be separated.
Q752 Mr Spring: That is accepted,
absolutely, but we are trying to find a way forward as to exactly
how you deal with this problem. Are we talking about government
immigration policy, access to this country? You talk about the
tax implications of this but how you actually achieve this is
really something we need to try to understand.
Mr Boleat: I have made a suggestion
to the Revenue about how I think they should approach it. Going
after individual labour providers is not likely to be effective;
it is far better to go after their customers, and I have given
names and addresses to the tax authorities of large food plants
that I know are evading tax because the rates they are paying
to my members or offering to my members are not enough to enable
the legal minimum wage to be paid. I think if the Revenue went
into these organisations with a big van saying "Revenue Investigations
Department" they would disrupt those businesses, first of
all, because many of the workers would be out the door, and they
should then go through the records very carefully and pursue the
labour providers who are breaking the law, but at present there
is little evidence of that activity and as long as somebody running
a food factory believes he can get away with it they will continue
to do so because they are under such cost pressures from the supermarkets
and they have to try and make a living. Indeed, I had one of my
own members yesterday—or not a member but somebody thinking
of joining—saying: "Look, I have started paying tax
and national insurance in the last year but I am about to go bust",
and that is the position that some of them find themselves in.
Do they wish to be in business or not? We would all love to be
in a position whereby a labour provider can pay the minimum wage
at least and all the legal add-ons and get business, but in some
parts of the country it is difficult and if the tax authorities
could concentrate on that part of the business then I think we
may be making some progress.
Q753 Mr Spring: Next, arising out
of this, and to some extent you have answered the question, although
you prefaced your comments about the role of government in this
from a broad point of view as far as regulating immigration control
is concerned, what you are really talking about are new civil
penalties which are there and available to be used rather than
favouring criminal penalties, but what you seem to be saying is
that it is really a question of will and enforcement to do this
at that level and that is not happening. Is that what you are
saying?
Mr Boleat: Yes, I think this applies
across the board. Parliament is very concerned about passing laws,
as, indeed, is government and sometimes the media: "Here
is a problem, we will pass a law and the problem will go away",
and indeed that applies to the Gangmasters' Licensing Act. In
introducing the legislation it was argued that these gangmasters
are breaking five laws; what we need to do is license them. A
possible solution is to start enforcing the five laws. So I do
not think we need any more laws; tax evasion is a crime; it is
illegal for employers to employ workers who are not entitled to
be here, if we enforce some of those laws in a way to set an example
to others. At the moment, and I have said this to the tax authorities,
the belief is that you are not going to be pursued, and if that
belief is changed by some well-judged action, possibly with a
bit of publicity, that would help, but it has to be real. I have
been asked in the past to do TV interviews about raids by the
immigration authorities that will take place, and they are great
for TV. There was one in Scotland that was on TV and my member
phoned up from Scotland laughing in the afternoon saying "The
workers are all back at work having been arrested and on the news".
So it has to be real. People have to understand if they are breaking
the law, they are going to be prosecuted.
Q754 Mr Spring: You have made this
the central part of your argument, which is enforcement by the
Revenue on this tax front. When you have made this argument to
the Revenue, and presumably the Revenue has an interest in acquiring
revenue, what is the answer, and why has there not been this particular
enforcement—if you believe this is the way it can be most
successfully dealt with?
Mr Boleat: I have found the people
I have spoken to at the Revenue very co-operative and helpful
in principle. However, they have targets, and I think their targets
are probably more geared to recovering tax that has been assessed
and is due and has not been paid than it is to dealing with this
problem. The people we are concerned about are not known to the
tax authorities. Also, the traditional tools they have at their
disposal and their approach is not as well-equipped for dealing
with this. As a self-employed person I was investigated by the
Revenue fully three years ago. They went through my immaculate
file with a fine tooth comb, and disallowed £200 of expenses.
Well, they have to disallow something. Had I wished to evade tax,
of course, it would be on income, not expenditure, and I found
the whole process baffling, but they loved going through my immaculate
records and checking the spreadsheets against the receipts and
the invoices. As I said, the people I am concerned about do not
have records.
Q755 Mr Spring: We have to try and
find a solution to this. You have raised the argument that they
should investigate this, but then you are saying they have no
records but we have to find some way of dealing with it.
Mr Boleat: You go after the people
they are supplying, and we know who those people are. I have given
details. We have a very simple calculation. The minimum wage is
£5.05. If you take the essential add-ons, you are looking
at something like £6.50 an hour to cover it, you can argue
about whether it is £6.30 or £6.70, yet there are labour
users paying £6 an hour and when my members say: "I
cannot do it for £6", they say "There are plenty
of others who can" and as long as that continues—
Q756 Chairman: The Committee in the
last few weeks has travelled all over the world, to India, Pakistan,
and even to Calais, talking to hundreds of staff whose job is
to prevent illegal immigrants coming into this country. What you
are essentially saying to us is we have been looking in the wrong
place for where we need the staff to deal with illegal labour;
that we need people here doing enforcement here of the existing
laws and tackling exploitation that is the centre of Mr Kaufman's
concerns too. Is that right?
Mr Boleat: I think there are different
issues in respect of Asia and Eastern Europe, Russia and so on.
There is still a big issue of forged documents.
Q757 Chairman: But in terms of where
you would say, if you had 100 extra staff, it sounds to me as
though you would put them in the UK and not—
Mr Boleat: Entirely on tax. My
understanding from research I have seen and maybe in the IPPR
study, most of the people here illegally do not come in illegally.
They can come in on a student visa or a tourist visa, and then
it is very easy to operate in the informal economy.
Mr Kaufman: Where we are coming
from is we think that the best protection against the whole background
of this is trade union organisation. The committee that I sit
on in Europe goes to the countries of origin of the migrant workers
and tries to tell them what the terms and conditions should be
in the country. So that when people come over here they do not
feel, for example, if they come from Poland, "Oh, well, we
are doing pretty well if we are earning £2 an hour because
that is pretty good compared with what we are getting in Poland."
We point out "No, the minimum wage here is £5.30 and
therefore you need to know what your rights are." So there
is a big job to be done, again in this country, letting people
know what their employment rights are, and as a union what we
try to do is we have a migrant workers helpline that helps people
about how, for example, they want to send money back home, how
they do that, and which tries to lay on language courses, makes
agreements with employers about induction courses for migrant
workers—so there is a lot going on, but that will always
be undermined the bigger becomes the twilight world. So we try
to get a hold of it as much as we can but the ultimate protection
is for organisation on the ground.
Q758 Mr Winnick: I think some of
us at least would take the view that the work your union does
in trying to avoid one group of people being demonised by others
is highly commendable and opposing racism wherever it can be found,
but can I put this point to you? In your paper you say: "Public
policy must turn its attentions away from vilifying irregular
workers and towards measures that tackle both the conditions for
exploitation and those who exploit." Then you go on and say
such measures should also include giving amnesty to those who
are here on a regular basis and, going on, establishing a process
whereby future migrants can regularise their status. What I would
put to you, Mr Kaufman, is simply this. Is this not a direct encouragement
for people to come here illegally, work illegally, and moreover
encourage at the same time the criminal gang to use every opportunity
for very obvious reasons to bring people to this country?
Mr Kaufman: No. I think it is
a complex question, there is no absolute right and wrong on this,
but, for example, on the question of amnesty you are tacitly saying
that they have been "criminal" in the past and you are
not also looking at what happens in the future. Nonetheless, on
balance that is our view. But in terms of how you tackle the larger
question you raise, it is better to have some form of control
than being constantly in the thrall of a situation that expands
the black/grey economy where you have less and less hold or grasp
on what can be done.
Q759 Mr Winnick: But you are not
saying—perhaps you are and if so you will tell us—that
there should not be any form of immigration controls on people
coming into this country?
Mr Kaufman: No, I am not saying
that, but we are not as a union in a position where we are taking
a particular line on it. We see ourselves simply as protecting
the workforce however they get here.
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