Examination of Witnesses (Questions 178-199)
UNITE-THE
UNION
27 NOVEMBER 2007
Q178 Chairman: Welcome to this final
part of today's evidence session on this inquiry into construction.
I think you have sat through the previous evidence sessions because
I have already been offered a telephone number to have my boiler
repaired, so it is quite clear that you have been here for the
earlier sessions and thank you for that, so you have heard what
has been said before. I would like to begin, if I may, by asking
you, as I have done previous witnesses, to introduce yourselves
and just to explain a bit about Unite's role in the construction
sector.
Mr Hardacre: I am Tom Hardacre
and I am the National Officer for the Amicus section of Unite.
My responsibilities are for the electrical contracting industry,
otherwise known as the JIB (Joint Industry Board) for Electrical
Contracting, the NAEC Agreement, which is the National Agreement
for the Engineering Construction Industry, the HV Agreement, which
is the Heating and Vent Agreement, and I am also on a number of
committees and boards, as you would imagine, but those are principally
the agreements that I have a responsibility for in construction,
Mr Chairman.
Mr Blackman: I am Bob Blackman
and I am the National Secretary of Construction for the T&G
section of Unite. I look after building, civil engineering and
indeed the supplies and materials sector for the T&G section
of Unite. That means that I effectively look after the main working
rule agreements for building on the civil side of the industry,
which is effectively the Construction Industry Joint Council Agreement
which big projects use and a number of other agreements that are
sort of specialist areas of the industry.
Q179 Chairman: Do you think your
merger has any practical implications for the construction sector?
It obviously has implications for you, as the union, but does
it have implications for the sector you are working within?
Mr Blackman: Yes, I think it does.
What it does is it creates a union that has effectively a role
in every sector of the construction process, so it is effectively
from the groundworks through to actually fitting out the electrics
and plumbing, so in just about every sector of the industry now
Unite is a signatory to the national agreement within that sector
of the industry.
Q180 Mr Hoyle: What do you think
the membership is within construction on both sides of the union?
Mr Hardacre: It is difficult to
estimate, but I would say that the Unite section could probably
lay claim to something in the order of anywhere between 80,000
and 100,000 across the whole M&E and electrical sectors.
Q181 Mr Hoyle: Chairman, I am a member
of Unite and I must just declare that for the record. Can I take
you on to bogus self-employment now. What are your estimates of
the prevalence of bogus self-employment in the construction sector?
Mr Hardacre: Again it is a difficult
one to quantify. I heard a colleague this morning talking about
something in excess of 50% across the whole industry, Alan Ritchie,
and he is probably correct in that, but I can give you an example
of the Emirates Stadium that was built a couple of years ago and
it is documented that 77% of the labour that was employed on that
site was actually non-direct, which could be considered to be
bogusly self-employed people. By the way, when you talk about
self-employment and bogus self-employment, there are a number
of variations on the theme.
Mr Blackman: A number of speakers
have said that, as you get down to the South, the situation gets
worse and that is right, but I think if you look at some levels
of bogus self-employment in London, for instance, and if you look,
for instance, at painters and decorators, in some of the surveys
I have seen recently the level of bogus self-employment or self-employment
in that sector is over 92%, which is why there is no painting
and decorating training in the capital that I am aware of.
Q182 Mr Hoyle: What is also interesting
is that in your evidence you state quite clearly that you believe
that bogus self-employment presents a particular obstacle to more
women and ethnic minorities entering the industry. Why do you
think that is? Why do you have a feel for that?
Mr Blackman: I think the whole
sort of bogus self-employment culture is one of casualisation.
It is about hire and fire. It is about employers who are not prepared
to take ownership of, or responsibility for, the workforce. It
is about people being employed on a job-to-job basis without any
permanency and I think that is something that is alien to a lot
of groups, women in particular, I think. I think the other reason
is that there is little family-friendly consideration in construction,
particularly for women, and you are expected to travel long distances,
you work long hours and indeed there are not any sort of family
considerations, but I think generally, particularly in terms of
visible ethnic minorities, the self-employed culture is about
people being recruited casually, by word of mouth usually, and
they do not really fit into that and it is difficult to break
into that actually.
Mr Hardacre: In terms of women
working in the industry, it is very much seen as a masculine industry,
and this is not a personal opinion, I do not want to get myself
in trouble here, but it is not seen as an industry that is fit
for women in terms of the physical nature of the industry and
the conditions that apply in the industry.
Q183 Mr Clapham: Could I ask you
both, what is your view of this online registration system for
self-employment? You heard what UCATT had to say, but do you share
the same view, that it is bound to make things worse rather than
make them better?
Mr Hardacre: Well, if this is
an online registration in terms of it is the individual's responsibility,
I do not think that would work, as a simple answer, if that is
the nature of the suggestion, if you like.
Mr Blackman: I think the problem
is that you set up an online system to make it easier for people
to go through that process and I think it will make it much easier
for people to become self-employed irrespective of their employment
relationship, so I think it is a big mistake. The other thing
is that usually on a CIS certificate you have had to have a photograph
so that the person you were speaking to was the person in the
photograph and that is not going to be required anymore, so what
we will find, like we do with all things without a photograph,
is that it will be passed around and really you will not know
whether the person that you are speaking to is the person who
has the certificate. One of the problems of course with so many
migrant workers is that somehow the majority of people that arrive
in this country and work on major sites become self-employed.
When they get on the plane in Eastern Europe, they have never
heard of the UK tax system, yet when they come here the overwhelming
majority of them become self-employed and it is the ownership
thing, and they are directed to do that and they currently would
not know about self-employment otherwise.
Q184 Mr Clapham: So bogus self-employment
is a real problem. Have you got any practical ideas on how the
Government might tackle it to at least sort of bring people into,
if you like, the bounds of taxation and at the same time to help
to make the industry a safer industry?
Mr Hardacre: I believe, as has
already been suggested previously, that what we need is a strict
kind of regime where people who are purporting to be genuinely
self-employed on sites, and there are people who are genuinely
self-employed, I accept that, but there is a strict regime where
there is a test for those people and what you need is regular
inspections on these sites in order to make sure that the people
who are working there who are supposed to be self-employed are
genuinely that and they can stand the test. Perhaps there is a
responsibility that should be placed also on the client to make
sure that the people who are there who are supposed to be self-employed
are genuinely self-employed. We also believe that the maintenance
of the national agreements is a good way of ensuring that people
working on sites are working in compliance with the tax regimes
because most of our agreements have a strict provision for direct
employment. Now, if we had that in its totality, we would not
be sat here today, gentlemen and ladies.
Mr Blackman: Just to add to what
Tom has said, it has already been mentioned that the largest client
is the Government and really they could set standards here in
terms of an employment culture and requirement. There is not any
reason that they could not do what BAA did at Terminal 5 and say,
"If you're going to work on our project, you're going to
be properly employed". There is no reason at all why they
could not do that and that could be part of a procurement process.
Q185 Chairman: How do you explain
to me, and this is not a partisan question, why it is that a government
that the trade unions have the ear of and which is committed to
closing tax loopholes and committed rightly to all those things,
the noble objectives of the workforce, has moved in a direction
which makes the issues you are addressing more difficult to solve
rather than easier? I am genuinely a bit puzzled by this.
Mr Blackman: It is difficult to
understand, but I think, if I am really honest, somebody is saying
to the Government, "Do you realise, if you go down the road
of direct employment, you will increase the costs and any cost,
whether it be an NI contribution from an employer, will cut back
to you because you are the paymaster. As the client, you will
meet the bill". I think that what happens is that people
are given two-tier information, "If you do it like the industry
normally does it with the majority of people self-employed, you
won't pay any redundancy pay, you won't give any notice pay, you
won't have to pay sick pay, you won't have to pay NI contributions,
or you can do it in a strategic way and a proper way with proper,
bona fide employment, but that will have a cost to it", and
I think there is almost a two-tier price and you can see that.
We could pick that up when we are talking to people on the Olympics.
Q186 Chairman: So the Treasury is
prepared to take some loss on National Insurance income to get
lower costs for construction projects in the public sector?
Mr Blackman: I think they believe
that there will be a cost and it will be passed back on to them.
Mr Hardacre: I think that is a
fair statement. Also, of course you have got the experts in the
industry who are looking for ways and means in order to get cheap
labour through tax avoidance and things of that nature who are
mainly, I think, providing agencies with this kind of information.
We had the situation last year with the composite arrangements
which we were able to do something about, but straightaway, having
done something about that, then you get other ideas beginning
to surface, so it is a continual battle, Mr Chairman.
Q187 Mr Bailey: I just want to try
and tease out some of the public finance implications of this
put-together approach. Earlier, we had UCATT pointing out that
Terminal 5 was, if you like, an object lesson of how to go about
a major procurement process and that compares in terms of delivering
much more favourably than others, Wembley being just one example.
Has any work been done by either yourselves or any other body
on the financial implications to the Government of these different
projects?
Mr Blackman: I think there has
been some work done in a number of organisations. I know in my
organisation we worked quite closely at the time with UCATT and
there was an estimate that the loss to the Treasury was about
£2.5 billion in terms of NI contributions that they are not
receiving that they would receive if the self-employed were actually
contributing.
Q188 Mr Bailey: So in effect it is
a false economy?
Mr Blackman: It is, yes.
Mr Hardacre: And the Amicus section
of Unite have done similar exercises, but these are estimates
and there is no fairly exact kind of information, so they are
estimated, yes.
Q189 Mr Bailey: But it would seem
to me that there is an area that would be worthy of a detailed
academic investigation to provide robust statistics rather than
those that might be interpreted as being related to an organisation's
vested interests.
Mr Hardacre: Yes.
Q190 Mr Bailey: This again is on
skills and training and we have heard UCATT's observations beforehand.
Why do you think so few employers are willing to offer places
to young apprentices?
Mr Hardacre: Well, the culture
of the industry over the past 20/30 years has changed. Most employers
in the construction industry would regularly take on apprentices,
but the culture has changed in that a lot of employers, major
companies, now do not hire a lot of labour. They hire labour from
agencies and agencies do not train. It is not their function,
so they do not train. That is one of the major reasons why I believe
that we have not got the apprentices in the industry that we need.
Q191 Mr Bailey: Is it that there
are not the apprentices or that there are and they cannot find
employment?
Mr Hardacre: There are enough
applications, but there is not the take-up for those applications,
and I will give you an example. I think it was probably as recent
as five years ago, and my research will tell me afterwards whether
I am right in this or not, but as recent as five years ago the
JIB for the electrical contracting industry was taking on board
something over 5,000 apprentices a year. Now, you have got just
over 2,000 being taken on and that is because, I believe, of its
development towards not employing people, but to resource labour
from agencies.
Mr Blackman: The other thing is
that there is a culture which has come about in the last few years
that you can buy skills off the peg and you do not have to train
people. You can actually get them by getting people from Eastern
Europe and indeed, if you look at the number of applications to
the industry this year, we have probably turned away, certainly
in the building and construction side of the industry, more than
40,000 applicants who have been through an entry test to the industry,
but those places, those skills are being filled by people from
Eastern Europe.
Chairman: Perhaps I can interrupt your
flow a second because it may help the questioning to flow logically
to have Mike Weir's question come in here.
Q192 Mr Weir: To follow that up,
you specifically say in your memorandum to the Committee that
the UK's dependence on migrant labour undermines the training
culture of the construction industry and is eroding its skills
base. Do you have any evidence you can give us on that point?
Mr Blackman: If you look at the
numbers of people employed in the industry and you look at the
numbers of people that are applying to the industry and being
turned away, those places are being filled and they are being
filled in the main by, I think, people from Eastern Europe, but
that is a temporary situation. All that does, the effect of using
migrant workers on the scale that exists in the industry at the
moment, is give you a window of opportunity to address the lack
of the training culture and it is temporary because the overwhelming
majority of those people will return. One of the reasons that
will accelerate that is that all we have done is transferred our
own skill shortages to Eastern Europe because in Poland they have
skill shortages in the building industry, so the rates of pay
will go up because, like here, you are dealing with a market and
that will make it more attractive for people who have come here
to return home perhaps quicker than they would have done if that
had not happened.
Q193 Mr Weir: ConstructionSkills,
our previous witnesses, told us about the scheme they were involved
in with getting young people on to sites and giving a card, and
I forget what it is called now, but are you involved in that?
Do you think that is a way that will help fill the gap in skills
once migrant labour starts to move off?
Mr Blackman: Sorry, I did not
hear that.
Q194 Mr Weir: The previous witnesses,
ConstructionSkills, were telling us about the scheme they have
to place more young people into apprenticeships on sites with
major employers and sub-contractors. I was asking if you were
involved in that and do you think it is a way of dealing with
the skill shortages when migrant labour starts to return home?
Mr Blackman: I think it will improve
the situation, but I think the biggest difficulty that certainly
CITB are going to have is to actually establish a situation in
the industry without a requirement that employers take on apprentices
and train people. Without a requirement for that and while it
is optional, that is always going to be an uphill struggle and
you can waste a lot of resources which should be given to training
in just trying to persuade people to give opportunities to people
that we need to come into the industry.
Chairman: I brought Mr Weir in then because
his question logically followed what you had just said, but I
interrupted Mr Bailey's flow.
Q195 Mr Bailey: I think you were
just about to touch on this issue. Given the problems with young
people in employment and migrant labour, what potential is there
for attracting older workers back into the construction sector?
What do you think could be done?
Mr Blackman: I think there is
considerable potential. I think there are a lot of older workers
that would like to train in the construction industry in all different
craft skills. I think the difficulty is, however, that there is
not funding for adult trainees and of course there are not grants
available that there would be to young people in most areas, so
I think it is a question of cost and funding and I think that,
in order to do that in sufficient numbers to be meaningful, there
would have to be a change in the funding that is available to
actually train those workers.
Q196 Mr Bailey: Do you think that
funding should come from the Government or within the industry?
Mr Blackman: I think it is probably
going to come from both directions really. I think it will come
from the Government and I think that the industry is going to
have to accept that it is going to have to train a lot of people
and that there is going to be a cost to that, and that is the
same in every industry.
Q197 Mr Bailey: So you are saying
that in effect there is a gap in training provision which, if
filled, would enable older workers to come back or to come into
the industry, they may be first-time construction workers, and
that this needs to be addressed by both the industry and the Government?
Mr Blackman: I think that is right.
You are giving people a second chance to learn a trade and, secondly,
you are giving people a chance who are in the industry perhaps
as a general operative or a labourer to upskill.
Mr Hardacre: In the M and E sector,
I have found anyway that a lot of workers now are continuing to
work beyond what is traditionally the retirement age of 65 and
I think that is primarily due to the fact that there is this genuine
shortage of skilled labour in the industry. I also think it is
a tragedy that a lot of mature workers, maybe older workers, in
the manufacturing industry may have been made redundant through
closures, and I will give the example of Rover some years ago,
where they had excellent skills which could have been transferred
into potentially the construction industry, but, for reasons that
I do not really know, those skills have been lost and I feel that
that was a tragedy.
Q198 Mr Weir: We have heard a lot
about exploitation perhaps of migrant workers in the industry.
What more, do you think, could be done to eradicate employer exploitation
of migrant workers?
Mr Blackman: I think it is very
difficult because when people come here from another country,
particularly if they do not have good language skills or even
basic language skills, they are easy to exploit. The reality is,
if we are honest, that there is not any employment protection
for people for the first year of service with any employer, so
you can be dismissed and you do not really have any recourse as
a UK worker to an unfair dismissal claim until you have got a
year's continuous service, so anybody that is coming into that
is going to find it difficult. The other thing is that very often
people do not know their rights. I was talking to some bricklayers
a couple of weeks ago and they were being paid £4.50 an hour
for working in Seaford, and they are now not working for £4.50
an hour, but the reality is that an awful lot of people like to
exploit people in construction, particularly in the informal and
the illegal end of the industry and that is the experience. There
is very little, in reality, protection for migrant workers, unless
they belong to a trade union and there is somebody there to look
after them. If they are working for certain employers and certain
agencies, as Tom said, within the industry, they are extremely
vulnerable. I think that, if you are going to bring people here
in the numbers we have seen, then you have to make provision to
look after them and that has not really happened. I looked at
some stuff in terms of homeless people in London and I think one
in six of the people sleeping rough in London in this survey were
from Poland and those are people who have come here, been dismissed,
lost their accommodation and are in real difficulty, so I think
it is extremely difficult. On a number of occasions, I have heard
people say, "We want to make sure that, when you come here,
you're not exploited. You're going to get your rights, you're
going to get everything that you're entitled to", but that
is not always the case actually. There are a number of areas in
the industry which operate an illegal economy and a lot of people
we see sort of sinking into that.
Q199 Mr Weir: But do you, as a union,
find it difficult to make contact with these workers on sites
to be able to advise them of their rights? Do you find that you
are prevented from doing so in any way or is it that they themselves
particularly are not seeking out help?
Mr Blackman: Some of them are
told not to talk to you if you get an officer go on to a site
and if there are groups of Eastern European workers. Normally,
if there is an agency providing people from Lithuania, they will
all be from Lithuania and, if they are from Poland, they will
all be from Poland, it is not a mixture, and usually there will
be somebody there who has told them not to talk to you when you
walk up to them and that is the culture of the industry. Usually,
if you look further, you will often find malpractice, people being
charged administration charges, and we have seen situations where
people have been charged employer costs and that is deducted from
their wages, all sorts of abuses. It is extremely difficult actually
and there is no policing and that is the problem.
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