Examination of Witnesses (Questions 120-137)
UCATT
27 NOVEMBER 2007
Q120 Mark Hunter: It did not sound
like a glowing endorsement of the Olympic Delivery Authority.
If I were to just press the point a little bit further about how
impressed you have been to date, let's say on a scale of 1-10,
your remark before indicated to me that you probably at best are
mid level on that scale. Would that be accurate?
Mr Ritchie: The way negotiations
are going at the present time you would not be far off the mark.
Mark Hunter: I am being generous, am
I?
Q121 Chairman: A five is it, Mr Ritchie?
Mr Ritchie: Maybe six, but I have
to say that I am happy to sit and try to negotiate a way forward,
but from experience in the construction industry in the UK we
know what happens with projects, we know when we are brought in
at the end of the project to try to resolve the problem it is
too late. As I am saying, we welcome the negotiations and the
discussions, but at the end of the day we still see a lot of problems
there, especially on industrial relations.
Q122 Mike Weir: You mentioned earlier
in one of your answers that one of the reasons T5 seemed to have
a direct employment model was security considerations. How often
is the direct employment model used in other major projects? You
mentioned Wembley as one of the ones where it was not used, and
you clearly are having some difficulty in persuading the ODA to
use it for Olympics. Is T5 an unusual situation because of the
security, or is it one where you feel it has been used in other
major projects, and if so, which ones?
Mr Ritchie: Yes. One of the leading
contractors in the UK at the present time took a decision to move
to direct employment, and he went overnight from two thousand
employees to 8,000 and pays National Insurance. The biggest problem
he had was from the Child Support Agency once an employee was
on the books. And they have been doing a number of major projects
on time and on budget, so there have been some successes with
direct employment. But it all depends. I could turn round and
say that the Government seems to be obsessed on some major projects
with getting the cheapest price possible, but that is very short-term
because what happens is the cost begins to run away with you.
Take Wembley. We got called in to Wembley late on, and it was
unfortunate. You asked me about the ODA, and I am glad to say
at least the ODA have taken the initiative of bringing us in at
the start and are trying to talk about a way forward, but it is
still early days. But there are a number of projects in the UK
that have direct employment, and they have been a success. T5
was one of the biggest, the biggest in Europe, and so that has
been one of the ones where we turn round and saying it has come
to the finish, it is on time, it is on budget. It has been a question
of security but I believe that the company, the client especially,
has had a lot of returns for that as well.
Q123 Mr Wright: In terms of the migrant
worker situation, Alan, you did mention earlier I think specifically
Polish workers coming across on the bogus self-employment scheme.
Do you know what proportion of them would be encouraged to go
on to that self-employment scheme? Has any research been done?
Mr Ritchie: We have had some research,
and it is very hard to get figures for migrant labour, as you
probably can appreciate, from the Government. What we can go by
is what the Polish Government has stated, that 250,000 craftsmen
have left the construction industry in Poland and the majority
came to the UK. Our research has not found any of them directly
employed; they have all been self-employed and classed as self-employed,
and that leads to a lot of exploitation because once you are self-employed
you do not come under industry agreements. We have come across
instances of hot bedding, people with accommodation being deducted,
their passports being withheld, and it is very hard to break in.
But unfortunately our people in the Union that get about on the
sites—and we have got organisers all over the UK—specifically
in construction, are coming back and telling us that all these
workers have been classed as self-employed.
Q124 Mr Wright: You have mentioned
the exploitation. Rather than the fact that they can undercut
the construction workers, and indeed other skills, in terms of
salaries, is it other areas you cover, for instance accommodation
and so on, that is undercutting the British construction workers'
jobs?
Mr Ritchie: I am just looking
at some of the facts here that we have tried to get, because I
do not want to quote any facts that are not true so that they
come back to me and say I have told a lie—
Q125 Chairman: Do you want to give
that to us in writing later?
Mr Ritchie: Yes. What is happening
is, out of these workers that are coming here, they do not have
any employment rights; we do find that their accommodation has
been abused; we do find there is hot-bedding, which means that
one person is in a bed for 8 hours, he is out and the next person
is in 3 hours, there is exploitation here, but really we do not
blame the individuals as such because when you come into a foreign
country you are vulnerable to exploitation. They are promised
maybe 10/12-pounds an hour; they come and are paid 6-pounds an
hour; but they have borrowed money and various things to get here
and they have to pay people back, so yes, there is room for that
exploitation and that is what is happening in the construction
industry.
Q126 Mr Wright: Is there evidence
that there are specific employers that are using migrant workers
and really going out to look for them?
Mr Ritchie: You will never find
an employer standing up and saying: "I have done that, I
am doing it to get cheap labour". What you see is employers
saying: "We expect them to pay the Working Rule Agreement
for the construction industry". But I must admit that when
we have raised it with a number of employers they have got them
off the site. We have come across a number of gangmasters, for
example, and we have got them off the site when we have raised
that.
Q127 Mr Wright: Do you have any statistics
about the number of your members that are unemployed at the present
time?
Mr Ritchie: Not to hand. The construction
industry is obviously booming at the present time, but we do get
phone calls and people saying "I have been laid off the site
and they have brought these East European workers in our place",
and you try to follow that up, but I do not have the statistics
to hand at the present time. The biggest problem is we do have
a boom in the industry at the present time and all estimates say
it is going to continue for the next few years. What we do know
is that the people suffering through this are the young people
in this country at the present time who cannot get craft apprenticeships—
Chairman: Can we stick with gangmasters,
for a second?
Q128 Anne Moffat: It is extraordinary
how you have pre-empted everything we have been going to ask!
My question is about the Gangmasters' Licensing Regulations. Do
you think they should be extended to cover your industry?
Mr Ritchie: Yes, according to
the Gangmaster Licensing Authority there are 10,000 companies
out there, gangmasters, operating outside agricultural food processing,
and unfortunately because it is a casualised industry like construction
they have moved into construction. We have had some evidence on
that. We have also had two officials, organisers, trying to look
at that who have been physically assaulted, so yes, we want to
see the gangmasters' legislation extended into construction, because
it would give a guarantee of some help to some people who have
been exploited at the present time.
Q129 Anne Moffat: But you would not
be surprised that the Construction Confederation said that they
did not want it extended into the construction industry?
Mr Ritchie: I do not see why not
because, if you are operating correctly and you are employing
people properly then you have nothing to fear from the gangmasters'
legislation. The only time you have to fear it is if you are operating
something that is abusing people, so I do not understand their
argument. That is why we need that safety net. I know we talk
about all this so-called red tape and we do not want red tape
in the industry and that is why we want to stop it, but we look
at countries like Dubai in construction who have hundreds of people
being killed every year—
Chairman: You are doing it again. You
are anticipating Mr Weir's question now!
Q130 Mike Weir: I was going to ask
about what appears to be a large increase in mortalities in the
construction industry over the past year. I think in earlier questions
you implied at least this was due to the lack of health and safety
culture where there is a lot of bogus self-employment on sites.
In light of that, do you have any figures and has any research
been done to compare the level of fatalities in a direct employment,
large project of the likes of T5 with one where there is a lot
of self-employment law, like perhaps Wembley? Are there any direct
comparisons that can show that one model or other leads to a better
outcome as far as fatalities on site are concerned?
Mr Ritchie: I think the HSE have
accepted that bogus self-employment makes the industry more dangerous.
We do not have any workers' safety representatives; it reduces
the employer's duty of care to the individual; and what we have
seen is that where the number of deaths has increased the inspection
and enforcement notices have actually decreased in the industry,
and that is a concern for us. If you want to take examples of
where you have people directly employed and you are accountable
to your labour force, one is the Olympics. We went to Australia
and met the CFMU, the Australian trade union, and how they organised
the Olympics and how it was done. From day one they sat down with
the body, they made sure the workers were directly employed; there
was one death in the whole of the Olympics in Australia. You then
go to Greece, where it was done by foreign workers, and they did
not even keep a register of the foreign workers killed. The only
thing they can tell us is that 15 Greek nationals were killed
in the construction of the Olympics, and the foreign workers they
do not know. So here we have two examples of how projects can
be built and where the deaths are and the lack of health and safety,
and how you treat your employees and the workers, and so if you
do not have that respect and that control over the labour force
then deaths will increase. I have heard people turn round and
say: "Look, Alan, it is very hard to pin down in the UK the
figures for self-employment injuries compared to injuries in direct
employment", but direct employment people will be reported
on injuries, self-employed will not. Directly employed people
who may have a claim or whatever will report injuries and go through
the process; self-employed will not, and that is why you have
a decline. That is why the figures are not accurate coming from
HSE.
Mike Weir: We are talking here presumably
about fatalities, and I presume every fatality, whether it is
on a self-employed site or a direct employment site, must be reported
and they could not possibly not report it. I take your point about
injuries and I fully accept that, I understand what you are saying
and I understand the logic behind it, but what I am trying to
get at is whether there is concrete evidence that there is a direct
correlation between direct employment and a better safety culture
in specific large-scale sites, because if you are going into the
Olympics you may be successful at getting direct employment or
you may not, but it is a massive project and it could have a huge
bearing on the result.
Q131 Chairman: Have you got the figures?
Mr Ritchie: I do not have any
figures because one of the problems we have had is, trying to
get the figures from the Health and Safety Executive, what they
have said is because of a fatality on site they class all workers
as employees because it is easier for prosecution. That sometimes
gives a disfigurement of the figures. We have asked how many had
CIS certificates and the HSE has told us we have to go through
the Freedom of Information Act and refused to give us the information,
so we have been trying to collate these figures and have had some
difficulty.
Chairman: Training questions.
Q132 Mr Bailey: You have already
implied that in effect one of the reasons only 7,000 places were
offered for apprenticeship was because of the migrant labour.
Why do you think employers prefer migrant labour over training
labour for the long-term, apart from the obvious reason of cheapness.
Is it short-termism? Is it the cyclical nature of the industry,
or what?
Mr Ritchie: It is not just down
to migrant labour; it is inherent with the CIS certificate within
the industry in different parts of the country. If you come up
from Scotland, for example, where I was secretary of the Scottish
Building Apprenticeship Training Council, they are now training
27% of all craftsmen in the industry in the UK, a population of
6 million—absolute disgrace—and when you come further
down the country, the CIS really begins to bite and that is why
you will not get the training, because you do not employ anyone.
What happens at the present time is that to people who are employed
you pay a training levy grant off your wages bill of 2% by law.
You avoid it; you do not pay it; because you have no wages bill.
They are all self-employed. So the problem we have with apprentices
and bringing young people into the industry is inherent in the
CIS card, and that includes foreign labour that is coming in.
But you are right; there is a short-term approach by a number
of employers who think they can use the skills of East European
labour, but it is short-termism in our opinion.
Q133 Mr Bailey: What do you think
can be done to the CIS levy to change things? Does it need to
be changed?
Mr Ritchie: Yes, it has to be
changed. I think there have to be more stringent initiatives taken
by the Inland Revenue. I am going to make it absolutely clear,
we are not opposed to people who are self-employed. I am not going
to stop people who are self-employed. We have got people on sites
who are self-employed, genuinely self-employed with their own
digger, their own company, and we do not have a problem with that.
But there is a mass of abuse going on and what the Inland Revenue
has got to do is make examples of some of these companies which
are abusing the system, because at the end of the day this is
a hidden subsidy to these companies; it is the taxpayers, you
and I, and your constituents, paying for it, so there is no excuse
and it cannot be acceptable. The Inland Revenue have to do their
job, which is to look at the industry and police the industry
effectively.
Q134 Mr Bailey: Summing up, in effect
what you are saying is that more stringent inspections would deter
employers from using bogus self-employment, there would be more
legitimate direct employment, and that in turn would improve the
level of funding for the skills levy, which we hope would increase
the number of placements for apprenticeship?
Mr Ritchie: I think there are
a number of issues regarding the skills levy. One is that we want
to see it directly just for training of apprentices and financing
that but, by that, even increasing the levy will not necessarily
mean that we will get more young people on the site. The only
way you are going to get young people on the site is if people
on the site are directly employed. That is where you will get
them trained, so that is where the crunch is going to be. If you
are asking me what the Inland Revenue has got to do, they give
out these CISs too readily. There has to be a stringent background
report of individuals coming forward to say they are self-employed
and there should be some sort of evidence to prove they are actually
self-employed. Any one can go to the Inland Revenue today and
get a CIS certificate. What does that mean? It is too easily given
out. Then there have to be checks made by the Inland Revenue once
these individuals get them, and that is not happening in the industry
either.
Q135 Mr Bailey: So effectively the
driver is direct employment rather than the actual levy itself?
Mr Ritchie: Yes.
Q136 Chairman: Just to be clear,
why is union membership so low in the construction sector? What
you have said today has been very convincing and powerful, you
have made a very strong case for your union's position; I think
you claim 125,000 members but only sent out something like 65,000
ballot papers to members, so it is low, your membership. Why?
What is wrong?
Mr Ritchie: One of the reasons
is that we have a high turnover. Unlike other trade unions we
are a specialised trade union, not a general one, so we specifically
deal with the construction industry. The problem is we organise
and get members on the site and then the site closes so we have
to reorganise them and recruit them. We have a very high turnover
in our union of membership and so it has been very difficult for
us, but because of the stringent laws that are there we have to
make sure that only people who are in compliance receive a ballot
paper, so to go on the side of caution we have stringent rules
to make surely those ballot papers go out to make sure people
are paid up and have paid at the present time. And when somebody
contacts me to make sure they get a ballot paper we do check they
are paid up, and we do have very stringent laws. Regarding the
two million in the industry, we only organise craft workers and
labourers, blue collar in a sense, not architects and civil engineers,
the staff, and all those sections of the industry, so 30% is self-employed
and is all within that sector, and you can be a trade union and
negotiate the wages and conditions and the rights of an employee,
but if an employee does not have them to start with then you cannot
represent them.
Q137 Chairman: Mr Ritchie, you have
done your members proud today and we are very grateful for your
evidence. Thank you very much indeed.
Mr Ritchie: Thank you.
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