OPERATION OF AGRICULTURAL WAGES ORDERS

HC Deb 09 March 1998 vol 308 cc149-69

'. Within twelve months of the laying of the first regulations under section 1 or 2 of this Act, the Low Pay Commission and the Agricultural Wages Boards acting jointly shall make a report to the Secretary of State and to the Minister for Agriculture, Fisheries and Food on the operation of section 44 of this Act and the enactments mentioned in section 45(1) and (2) of this Act, and may make recommendations for such amendment of that section and those enactments as, in the opinion of the Commission, may ensure the more effective application of this Act to agricultural workers.'.—[Mr. Boswell.]

Brought up, and read the First time.

Mr. Boswell

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker

With this, it will be convenient to discuss Government amendments Nos. 29, 31, 36, 37, 30, 32 and 38.

Mr. Boswell

The strongest single case for the new clause is the list that you, Mr. Deputy Speaker, read out of no fewer than seven Government amendments that have attached themselves to the new clause. They form part of no fewer than 11 Government amendments to schedule 2, the agricultural wages schedule, not to mention the many Government amendments that were tabled in Committee. If those provisions are meant to achieve a blending of the conceptual streams of the National Minimum Wage Bill and the agricultural wages legislation, it is an untidy blending indeed.

When I was in Germany in the autumn, I visited Koblenz—the name stems from the Latin word confluencia—where the Rhine and the Moselle join. There is a visible difference in the colour of the water, one being greener and the other blacker. Despite the Government's best efforts, they have not achieved an imperceptible blending of the agricultural wages legislation and the Bill. That is not surprising; they are different concepts and they were written in different generations.

I was the tender age of five and a half, and just about to start primary school, when the Agricultural Wages Act 1948 was introduced. Some 50 years later, we are introducing national minimum wage legislation. I do not scoff at the Government for doing so, because it is a difficult task. They have decided to have a national minimum wage, and they want it to fit with the agricultural wages legislation.

As Ministers will know, we have already had a debate about the permit system under the agricultural wages legislation. I regret its passing—at least up to the level of the national minimum wage—and wish that it could have been extended to make wider provision for those who are so disabled as to be unable to earn the national minimum wage. The Government will come to regret that that has not been done. More immediately, the 102 persons who currently avail themselves of a permit under the Agricultural Wages Act 1948—which I remind the House was introduced by a Labour Government—will regret the consequences of the imposition of the national minimum wage.

The need for harmonisation—the Bill provides powers to make further changes to the agricultural wages legislation so that it fits better with the national minimum wage—argues strongly for a joint approach by the Low Pay Commission and the Agricultural Wages Board to report to Ministers before any changes are made. The Minister will recall that, when we discussed the issue in Committee, she explained that this year's review by the Agricultural Wages Board would be deferred for some 12 months so that those involved could see how the legislation fitted together. New clause 12 is a logical extension of the Minister's proposals.

The raft of Government amendments that have been tagged on to new clause 12 need a more precise explanation from the Minister than we have had so far. We need to see the colour of her money. The concepts in the Government amendments do not leap easily off the page, the hour is already late and I find it difficult to disentangle what is going on. The broad concepts behind the amendments are intelligible. Government amendments Nos. 31 and 37 are intended to prevent overlapping powers, or double jeopardy. That may be sensible.

Government amendments Nos. 36 and 30 deal with the dog rate. The Minister may remember that, in Committee, I referred to the intriguing concept of the dogs' national minimum wage. Under the agricultural wages legislation, agricultural workers may obtain an allowance for keeping a dog. For example, a shepherd might be required to keep a dog by his employer. Such arrangements are set out in the legislation, although I suspect that not many people make use of it. It is an interesting relic that some people may still find useful. I understand why that should be excluded from the national minimum wage because we are not extending the payment to dogs, even if we like dogs as a class of animal.

I am more concerned about Government amendment No. 29 and, in particular, about the component rate. It seems that the Government are playing both ends against the middle because they seek to exclude the top component, the night work rate. As it is now 12.14 am, it is appropriate to discuss night work rates because they apply at night after the first two hours and are a modest but appreciated supplement to the agricultural wages basic rate. If that is the normal pattern in which someone works, it is not self-evident a priori why they should be excluded, certainly not without a recommendation from the Low Pay Commission to explain it. After all, such rates are paid by employers and may reflect a regular pattern of payment. It is for the Minister to make her case on that.

12.15 am

I am conscious of the time, but I want to say a word or two about the overall implications of the agricultural wages orders, which I should have thought a joint study by the Low Pay Commission and the wages boards should cover, as proposed by new clause 12. Agriculture is an interesting industry.

Mr. John Home Robertson (East Lothian)

Hear, hear.

Mr. Boswell

It is nice to have the support of the hon. Member for East Lothian (Mr. Home Robertson), who has a considerable knowledge of the industry and is influential in high places. As a bigger, and perhaps even better, farmer than me he knows that the industry is not doing too well. There was a decline in farm incomes of 45 per cent. last year. No commodity or group of commodities is flourishing. That is putting severe pressure, both economic and psychological, on farmers and their employees. The number of employees has been diminishing for years. Only about 170,000 farm workers are now covered by the agricultural wages orders, but within that are several interesting and different cases.

I said in Committee, so I shall not dilate on it tonight, that in the arable sector and stock keeping there is a significant number of highly skilled craftspeople who are paid substantial rates. The Agricultural Wages Board by no means any longer, whatever it may have done initially in 1948, prescribes only for those at the bottom of the pile. It provides a ladder related to craft, permanence of employment and the attaining of certain responsibilities and qualifications. It is possible to find from that an average or standard rate, as it were, of about £4.17, which is substantially above what we now hear from the Government about the likely rate of the national minimum wage. The figure goes up to about £8 an hour for some of the appointment grades. Those people are in no sense unskilled or particularly underpaid. Some have salary arrangements, and are valued employees.

That part of the agricultural economy exists alongside other people, often in casual employments, who are paid at lower rates, which can drop as low as £3.06 an hour but still comply with the order. That is particularly true of horticulture, which employs a significant proportion of the total labour force—some 50,000 out of the 170,000. Not all those people are paid for; some are partners in the business. Horticulture is a significant component.

Then there is seasonal work; for example, fruit picking or planting, which are jobs that do not necessarily involve a high level of skill, although they may involve an increasing level of skill—I hope they do. Some such workers will be paid at a relatively low rate, but if labour is not supplied at that rate, or if the rate rises, it is uneconomic to pick. I find that rather sad, because it could lead to the demise of the British apple. If my hon. Friend the Member for Faversham and Mid-Kent (Mr. Rowe) were still here, I am sure that he would talk on that subject. In the evidence of the National Farmers Union, horticulture is singled out as an area of particular stress.

We do not know what will happen in the next 12 months. We know now that agriculture across the piece—from arable farming, which is often highly capitalised, through livestock farming, which is organised extensively throughout the United Kingdom, to horticulture, some of which is intensive and highly capitalised and some of which is reliant on seasonal or casual labour—currently faces difficulties.

It would be sensible to look at the technical aspects of agriculture and its interaction with the national minimum wage in, say, 12 months' time and to consider some of the wider economic implications, because no one can look at the industry at the moment and feel happy with how things stand. Nor can anyone regard with complete confidence the introduction to the industry of a national minimum wage—albeit not all workers in the industry will be affected because the statutory rates may exceed the minimum wage rate.

Mr. Ian Bruce

I wonder, because I did not serve on the Standing Committee, whether the Government gave any indication that they were considering extending wages boards back into other industries once they got the minimum wage set. They have been keen on wages councils and boards in the past, but have they given any indication of their plans for the future? It is important to our consideration of this group of amendments to consider what report we may get on how the Agricultural Wages Board works alongside a national minimum wage.

Mr. Boswell

My immediate reaction to my hon. Friend's perceptive intervention is to say, perish the thought. In fairness to the Government, I do not think that they have it in mind to impose, on top of the national minimum wage structure, a superstructure of wages boards. Indeed, if we are to have one or the other, generally speaking it may be worth considering a national minimum wage because of the anomalies in the various wages councils.

However, I should say quickly that the Agricultural Wages Board provides a not individually, but nationally, negotiated framework for minimum remuneration which goes far beyond the lowest possible rates and extends up to quite significant levels of remuneration. That is not the same as a national minimum wage and, in considering the long-term future of the Agricultural Wages Board, I am sure Ministers ought to want to look at that on its merits in due course. The purpose of the new clause is largely to steer them toward doing so.

There is no doubt that agriculture is currently experiencing difficulties. There is little doubt that the national minimum wage would add to those difficulties. We do not necessarily ask for special treatment—exempting agriculture just like that—but we do ask the Government to be sensitive to the sector's difficulties. We invite them to explain their amendments in greater detail and to consider the suggestion in new clause 12, which would provide for a review in 12 months' time to see whether the situation is capable of improvement—as I suspect it will be—after that time.

Mr. Ian Bruce

I am somewhat perplexed by the Bill. I came to it late, because I thought that the Labour party had made a clear commitment in its manifesto, and that the legislation would sail through, given the Government's majority. I thought that it would be a simple Bill that everyone would understand, and that we would know what hazards were involved. I did not pay a great deal of attention to the Bill until recently. [Interruption.] If hon. Members want to intervene, I am happy to take interventions at any time. I have tried to get a grip of what is happening. Perhaps I am wrong to assume that a wages council that currently has a basic rate of £1.84 for a 16-year-old would have difficulty with the Government's proposals.

The Government have gone down a complex and foolish route by trying to combine a minimum wage scheme with the Agricultural Wages Board. They should be given the opportunity in 12 months' time to review what has happened. The Bill and the amendments that the Government have been forced to table leave me perplexed.

I heard an apocryphal story about an inspector sent by the Agricultural Wages Board to see a small farmer. He questioned the farmer about the rates of pay on the farm. The farmer said, "My stockman has been with me a long time and does all the milking. He is paid £5.50 an hour. The woman who deals with the chickens is on £4.80." The inspector said, "That's fine, but I've heard rumours that you are underpaying your workers. Is there no one else?" The farmer said. "Well there's the halfwit who works 80 hours a week and gets £1.20 an hour." The inspector said, "That's ridiculous. I must meet him." The farmer said, "You're talking to him. I earn £1.20 an hour and I work 80 hours a week." That is one of the problems we shall face. The farmer is not currently covered by a minimum wage because he is probably a director or a limited company, whereas he will be covered by the Bill.

I tried to help the Government earlier by pointing out that they would have problems if they did not exclude directors, who are, in effect, self-employed. A director is different from a limited company: hon. Members often do not understand the difference. Running an Agricultural Wages Board and a minimum wage scheme will cause complications. If a report were produced, we would know what was happening and directors could be excluded.

I asked my hon. Friend the Member for Daventry (Mr. Boswell) whether the Government intended to introduce wages boards to decide the differentials for people on the minimum wage upwards. When in opposition, the Labour party fought tooth and nail to maintain wages boards. That was foolish, because wages boards did not uplift but institutionalised the pay of low-paid workers. The record that shows what happened from the time wages councils were set up until they were abolished, and even afterwards, provides no evidence of the councils helping people to get out of low pay. In many cases, they had the opposite effect, and groups of workers were kept down.

12.30 am

I repeat the minimum wage rates that were set by the Agricultural Wages Board. They are: £1.84 for a 16-year-old; £2.14 for a 17-year-old; £2.60 for an 18-year-old; and £3.06 for those aged 19 to 65. The briefing supplied to Labour Members states that people who are employed full time all year in agriculture get £4.12 and not £3.06, but that does not apply to low-paid agricultural workers. They have to get work where they can find it, and the wages board does nothing to protect them. Anyone who suggests that the rates that I have described protect people is talking nonsense.

The rates allow low-paying employers to offer £3.30 an hour, and the response to the complaint, "That is a terrible rate," is, "It is 24p an hour more than the minimum. I am a generous employer." That was my experience when I worked in an employment agency for industrial workers. The first time I came across one of the terrible wages councils was when I encountered the Aerated Waters Wages Council. Hansard did not believe that there was such a body. It set the wages for those who put the fizz into pop. I suspect that my right hon. Friend the Leader of the Opposition could probably give us a more complete treatise on the fizzy pop industry than I could, although I was working in Yorkshire at the time. I cannot give a treatise because you, Mr. Deputy Speaker, would rule me out of order. You are my hon. Friend, but you are keen to keep us on the right route.

The Minister is one of my favourite Minister and I hope that she will explain how she intends to escape from the complications that she has got into as a result of trying to get the Agricultural Wages Board working with the national minimum wage. She is weaving a complex web, and I suspect that it will get the Government into even more difficulties.

We must examine the dilemma of a worker saying to himself, "Under human rights regulations and so on, am I getting the same deal as everybody else?" Everybody may be eligible for the minimum wage, but a small specialist group of workers may be given additional rights. I hope that the Minister will explain how the rates will operate. If the minimum wage is set at £4 an hour, will the time-and-a-half rate be calculated on that amount? What about the additions? Would we return to the agricultural rates to calculate the overtime rate and be satisfied with that as long as it was over the minimum wage rate? That is an important issue.

Agricultural wages orders not only deal with the rate for the job at a specific age, but state what the overtime rate shall be and the percentage of pay that may be taken for a cottage. They may state the allowances for a dog and for the provision of food, lodgings and so on. It is a complex web. Do we assume that the basic rate will be used in the calculations and that amounts thereafter will be based on that?

Are we saying that we trusted the Agricultural Wages Board? The Conservative Government said that they would continue to have the Agricultural Wages Board, but the Labour party never did. The Conservative Government never proposed to do away with the board, although I did not agree with that. Will all the grades just be amalgamated? Will the board be told to say that the minimum rate is now £3.50 or £4 an hour, that that has to apply to the 16-year-old and that everything from there will be ratcheted up?

One of Conservative Members' fears is that people who know that they are more skilled, more experienced—they may have worked on the farm for 10 years—and better workers than someone below them who receives the same minimum rate will ask, "What about my differentials?", even if the minimum wage is more than they currently earn. If they consider what has happened with the Agricultural Wages Board, which is affected by the national minimum wage legislation, they are entitled to ask what the situation is and how the system will operate.

We do not deal with these issues in isolation, but in terms of the real experience of the agricultural sector. Most of the farmers in my constituency tell me that they are not fearful of a minimum wage because most of them already pay all their workers above the minimum rates that were set by the Agricultural Wages Board. They assume, perhaps incorrectly, that any minimum wage will be below those.

I think that those farmers are making a mistake, but what is important is that, as we all know, a small—perhaps a 10 per cent.—difference in the value of the pound can have a dramatic effect on farmers' earnings. In the first year of this Labour Government, farm incomes have gone down by 40 per cent. The Minister of Agriculture, Fisheries and Food has said that they will go down further. He cannot promise that they will improve, and I think that he is right.

We do not know how far incomes will go down and we all know the situation for the farmer. He is all right as long as the banks are with him and he still has some cattle to sell off to keep the farm going. Farmers are fantastic at keeping going. The last people whose wages they will try to cut are their agricultural workers.

Farms are small businesses. Farmers live cheek by jowl with their work force, not hundreds of miles away. They do not, at the stroke of an accountant's pen, cut everyone's wages. They work closely with their work force. The work force continue to be paid, even when farm incomes are low, but we shall be in the strange position whereby many farmers—and most of them are in limited companies and earn wages—will have to say to their workers, "We are all going to have to work for a minimum wage. I am going to have to put my wages up because I was willing to work for nothing. I shall have to use my savings and to send the wife out to work."

Many farmers' wives work to support their husband and to keep income coming in. Farmers will have to negotiate with people who earn considerably more than any minimum wage that might be introduced and who will have to take a pay cut, perhaps down to the minimum wage—not up to it, as Labour Members believe will happen. The farmer will put his income up, not because he wants to or thinks it fair, but basically because the new Labour Government, the new people's Government, are telling him to do so.

I am extremely upset and concerned—[Horn. MEMBERS: "Ah."] I am grateful for that fellow feeling; we in Dorset need that. I wish that I had seen the many smiling faces here tonight on the countryside march the other Sunday. They would have been welcomed with open arms and would have come to understand the issues that we are talking about.

I am concerned and I think that my hon. Friends are concerned. I see avid looks on all their faces as they keenly wait to find out what the Minister is going to say. I am sure that many of them will want to comment on the Government amendments, and I will not detain the House further at this time.

Mr. Hammond

I am not a farmer, like my hon. Friend the Member for Daventry (Mr. Boswell); nor do I represent a rural constituency, like my hon. Friend the Member for South Dorset (Mr. Bruce). However, in my constituency there are a number of horticultural enterprises, and over the months, I have become aware of some of the problems facing the agricultural sector in general and the horticultural sub-sector in particular. It is common ground that in so far as the minimum wage will have an impact on the agricultural sector, it is the labour-intensive part that will be most seriously affected, and horticulture represents a significant part of that labour-intensive sub-sector.

In a sense, it is special pleading to propose a new clause that makes provision for a report on the impact of the Bill on one particular sector—in this case, agriculture. However, a certain amount of special pleading is justified, not merely because of the extreme pressure that the sector is under—an issue frequently discussed in the House, and of which all hon. Members are aware—but because, in the legislation governing wages, agriculture has a unique position compared with other sectors of industry.

The pressure that agriculture is under is well rehearsed and I do not need to recite the litany of problems that it faces, which we hear about regularly during Question Time and in debates. Suffice it to say that the National Farmers Union has calculated that a minimum wage introduced at the level of £4.61—or half male median earnings, which is the level sought by the trades unions—would cost the agricultural sector some £250 million per annum. Even if the rate were introduced at a rather more modest £3.50—a level that would disappoint many of the Minister's hon. Friends—according to NFU estimates, it would still cost the agricultural sector £43 million per annum. That is without any account being taken of the cost of restoration of differentials. I will discuss differentials later in my speech, as it is an important issue in agriculture.

Mr. Ian Bruce

Does my hon. Friend remember that literature from the old Labour party said that half male median earnings was not the end point, but the start? The Labour party made a commitment that it would start with that and then move to two thirds of male median earnings as a medium-term strategy. Has my hon. Friend, knowing that the Government are a little chary about coming in too high, made any assessment of what figure they are likely to move to and how many jobs it will affect?

Mr. Hammond

It is curious that we have not heard much about two thirds of male median earnings for a long time. In Committee, it became apparent that the Minister was not keen to talk about even half male median earnings. On my hon. Friend's question about whether I have made any assessment of where the minimum wage level might be set, I assure him that, throughout the Committee's deliberations, I and my hon. Friends did nothing but repeatedly inquire of Ministers about what level the minimum wage might be set at—but, alas, to no avail.

Mr. Boswell

Does my hon. Friend recall that the Minister expressed a certain enthusiasm for the beneficial consequences, as he saw them, of a minimum wage for jobs and growth? Was not the logic of his position the higher, the better? Is it not, therefore, strange that there seems to be a certain reticence among Ministers about introducing a high rate?

Mr. Hammond

My hon. Friend reminds me of the important contribution to economics made by the Minister in developing the upward-sloping demand curve for labour—the McCartney curve, as future generations of student will come to know it. That economic theory posits that, as the cost for labour rises, so will the demand for it. The logical conclusion of the theory is that a minimum wage set at an infinitely high level in the United Kingdom will ensure full employment for ever more.

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. I hope that the hon. Gentleman will be reminded also of the strict terms of the new clause that we are discussing.

12.45 am

Mr. Bercow

I am most grateful to my hon. Friend for giving way. I also note your strictures, Mr. Deputy Speaker, and shall ensure that my intervention is in conformity with them. Does my hon. Friend agree that, if the Minister has not abandoned the curve but simply hidden it, and if the Government intend, over time, to increase the national minimum wage for agricultural workers, that might well explain the Government's unwillingness to accede to new clause 12, which would require publication of a report commenting on the effect of the national minimum wage on the agricultural sector? If the Government were planning such an increase, that might well explain their reluctance—

Mr. Deputy Speaker

Order. The hon. Gentleman may have kept his remarks in order, but they were far too long.

Mr. Hammond

I thank my hon. Friend for his intervention. As he said, there may be various reasons why the Government are reluctant to have any formalised report on the agricultural sector. The direct impact of the minimum wage will be only one of those reasons.

I apologise, Mr. Deputy Speaker, for having strayed a little in my earlier remarks, having been tempted by my hon. Friend the Member for Daventry to recount to the House the economic theory proposed in Standing Committee by the Minister of State. I shall move on.

I have suggested that there is indeed a case for treating agriculture as a special case. The very existence of the Agricultural Wages Board underlines that case. Agriculture is now the only sector that has any form of statutory wage-setting arrangement. It is therefore relevant for us to examine the experience in that sector and how those arrangements have worked.

The most important factor in the wages council regime was that it was a sectoral approach, as it still is in the Agricultural Wages Board. The Government, in introducing their national minimum wage legislation, have set their face firmly against any type of sectoral approach—as they have against any regional approach or any other type of flexibility, which many people might think was necessary to ensure that a workable regime of statutory minimum wages was introduced.

The Bill's proposal to graft the national minimum wage on to current agricultural wages legislation, rather than completely to replace that legislation, is already a significant breach of the universality principle which so exercises Ministers. Alone among the sectors of the economy, agriculture will enjoy a different and distinctive regime of minimum wages—which will give rise to a problem that would be very difficult for any industry or sector to deal with, but which is particularly dangerous in a sector that is currently as fragile as the agricultural sector. I am referring to the differential restoration problem which will arise if the minimum wage introduced by the Bill is set at a level that falls between the casual rate currently payable under the Agricultural Wages Board legislation of £3.06 per hour and the permanent full-time rate currently set by that legislation, which is £4.12 per hour.

For a fairly long time, an established and well-understood system has defined the relationship between the pay of full-time, permanent workers and that of casual seasonal workers. That is particularly important in the horticultural sector, in which a large percentage of workers are seasonal. Once the minimum wage intervenes, the higher rate will remain unchanged, but the lower rate will be brought up to whatever level is set in the legislation. Surely it stretches credulity to suggest that permanent, full-time workers in an agricultural enterprise, who have been used to earning £1.06 per hour more than the casual workers whom they are frequently supervising and controlling, will not demand restoration of the differential that they have hitherto enjoyed.

Mr. Ian Bruce

I did not mention this in my brief contribution, but—having run an employment agency and provided temporary workers for about 12 years on a very intensive level—I recall that what upset trade unions most was the fact that temporary industrial workers, in particular, were sent in at a higher rate of pay than anyone on the shop floor. Indeed, we made sure that there was a big differential between temporary and permanent workers. My hon. Friend is making an extraordinarily important point.

Mr. Hammond

I thank my hon. Friend for his intervention. As I have said, differential restoration—as a result of the cutting in of the national minimum wage between two levels of pay that already exist within an enterprise—will be a problem across all sectors of industry, but there is no other sector in which there is currently a statutory arrangement for fixing wages, and I think that it will have a particularly important effect on agriculture.

As I said, I do not represent an agricultural constituency. I hope that Conservative Members who represent rural and agricultural constituencies will be able to speak more fully than I can from my limited perspective, but let me emphasise again the problems that exist in the horticultural sector—alas, the only agricultural sector of which I have any significant constituency experience. In that sector, the minimum wage will have a significant impact.

I understand that, in horticultural establishments in my constituency, wages set by the Agricultural Wages Board are almost always the wages actually paid, according to current practice. According to my observation, there appears to be no process by which those wage rates form a floor. They are the accepted going rate for the job and, when they are uprated annually, wages are uprated accordingly. This is not some theoretical construct according to which—as may obtain in many other sectors—wages are paid at higher levels. In the case of the horticultural sector and, I suspect, more widely in agriculture, the rates of pay laid down by the Agricultural Wages Board are the rates currently paid.

The arrival of the minimum wage will provide a dislocation and a shift in those arrangements. It will provoke not only a burst of differential restoration, but some industrial relations difficulties, as it will upset a very well-established and widely accepted regime of wage rates at a time when many producers, particularly in the horticultural sector, are suffering the effect of the strong pound sterling. Many of the products that are produced in my constituency for supermarkets in the United Kingdom are forced to compete with products grown abroad—particularly in the Netherlands, which has seen the value of its currency depreciate significantly against the pound in the past 18 months.

Producers of specialised horticultural products are price-takers, unable to affect the market price. Horticultural products are often grown to a specific picking date and have to be sold on that date. They are planted and harvested according to a strict rotation. On the date when they are delivered to market, the producer is, effectively, a price-taker and has to accept whatever price the market sets. Horticultural producers have seen prices in sterling decline by about 25 or 30 per cent. over the past 18 months.

Mr. Ian Bruce

My hon. Friend is modest in saying that he knows little about these issues as he clearly knows a great deal. Almost all hon. Members have a big interest in agriculture because their constituents are consumers. Does my hon. Friend recall the McCartney curve, whereby as people get more money, they can go out and buy more goods? Will not an increase in agricultural wages almost certainly put many people out of work? They will then have no money to put into the local economy, and everyone will suffer the effects.

Mr. Hammond

I thank my hon. Friend for that intervention. I shall not risk your wrath, Mr. Deputy Speaker, by being tempted into an analysis of the finer points of the theory of the McCartney curve. I agree, however, that people with no jobs are unlikely to be effective consumers.

The impact of the minimum wage legislation will be felt most seriously in sectors of industry and business where the United Kingdom is vulnerable to imported competition. We debated the matter extensively in Committee, and we all understand that in certain sectors where low wages are paid, such as the service industry, the economic impact of imposing a statutory minimum wage is not as serious as it might be in a sector that is vulnerable to imports for the simple reason that, in most cases, there can be no substitution by imported services. The agricultural sector, however, and the horticultural sector specifically, are significantly vulnerable to imports.

The fact that British agriculture is under extreme pressure—for a variety of reasons that we all know—coupled with the strength of the pound makes this absolutely the worst moment to impose a double-jeopardy burden on the industry. Unlike the rest of British business, people engaged in agriculture will be faced not merely with the national minimum wage as a statutory requirement, but with the national minimum wage plus the higher levels of Agricultural Wages Board rates that have been set and will continue. In addition to that panoply of regulation, they will have to deal with the upward pressure on those higher rates of wages caused by the inevitable clamour for differential restoration as the minimum wage rate cuts in and subsumes the lower parts of the structure within the existing Agricultural Wages Board system.

I support the new clause. By drawing attention to the specific concerns of agriculture and its special position, it does a great service, and would greatly enhance the Bill.

Mr. Letwin

I cannot match the sustained eloquence of my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) and the wide scope of his inquiries into the effects on agricultural wages. I should like to raise with the Minister a particular set of problems that arise in connection with the Agricultural Wages Order 1997. The new clause would permit the Government and the various agencies to investigate those circumstances 12 months ex post. Perhaps the Minister could explain in advance how the circumstances have been approached and thus remove at least one reason why the new clause is necessary.

1 am

I draw the Minister's attention to paragraph 6(9) of the Agricultural Wages Order 1997—with which she is no doubt familiar—which deals with standby duty rates, an important feature of agricultural wages in my constituency. The workers are not standing by in the sense in which dockers were paid to stand by when they watched ships being loaded under the dock labour scheme. That was a form of diseconomy institutionalised by the dock labour scheme and the Jones-Aldington arrangement.

Standby duty rates have a great economic significance in agriculture. The flexibility of farm labour depends in some circumstances on having individuals available for duty but not present on the farm and working at a given moment, as hon. Members on both sides of the House who are familiar with the issues know. The Agricultural Wages Board has taken that into account for many years and has established specific standby duty rates.

That makes the new clause necessary and provides an interesting test of the principle of minimum wage legislation. Paragraph 6(9) of the order gives the minimum standby duty rates. The rates increase for those between the ages of 15 and 18, with the top rate applying to those aged 19 and over. I shall not refer to the rates that cover those between the ages of 15 and 18. The Minister has no doubt considered the issue and would argue that the possible exemption of those under 26 could apply.

Mr. Hammond

Does my hon. Friend agree that it is not clear how the agricultural wages legislation will interact with the minimum wage legislation on that? It is not yet clear how waiting time and standby time will be treated in calculations of whether the minimum wage has been paid.

Mr. Letwin

I am grateful to my hon. Friend. That is my point.

The category of those who are 19 and over includes those between the age of 26 and retirement age. The standby duty rate per whole standby duty day is £16.50. The number of hours implied is in doubt. It would be reasonable to assume that we are talking about an eight-hour day. It does not take any elevated mathematics to divide eight into £16.50 and find that the implied hourly rate for standby duty is just above £2—presumably well below any minimum wage.

That is a vivid example—not unique, but nevertheless most striking—of the conflict between the minimum wage provision and the structure of the Agricultural Wages Order, which we must remember has been developed not by accident but in response to the very particular circumstances of agricultural labour.

Mr. Boswell

My hon. Friend is making a perceptive speech. Does he agree that, for the time being, the Agricultural Wages Order is the responsibility of a board which has a very high proportion of representatives from both sides of the industry, together with a significant number of independent members? They should know what they are talking about.

Mr. Letwin

I am grateful to my hon. Friend, who is absolutely right. I can go further. I have taken the trouble in the past few days to talk to a number of my constituents—[HoN. MEMBERS: "For a change."] I am grateful to hon. Members for their confidence in my constituency activities. I have talked to constituents who are on both sides of the fence: employers, who depend on the level of flexibility of standby duty, and those who benefit from the possibility. I asked them quite specifically how they would feel if the minimum wage legislation rendered it impossible to continue with standby duty at the rate specified by the Agricultural Wages Order. The response has not been favourable. I expect that it would not be favourable in many rural constituencies.

I hope that the Minister will be able to give the House a specific solution to this problem that shows that she and her officials have properly considered and have accommodated in the minimum wage legislation what is, after all, a major element of the Agricultural Wages Order, which has been much debated in the past. We could then rest easy: the Minister would have passed the test. I fear, however, that we shall not hear such an explanation.

I have to admit that, unfortunately, I was not a member of the Standing Committee. I have however read very carefully the entire lengthy debate in Committee on the relevant clauses—clauses 43 and 44 as they were; clauses 44 and 45 as they are—and found not the slightest reference to the issue to which I have referred. I find that surprising. I would have expected the Minister to vouchsafe such an explanation if it existed. That makes me think that this is a lurking problem that has not been properly explored.

I draw the House's attention to the fact that the new clause does not seek specifically to remedy the defects. That would be misguided because there are too many such possible defects in the Agricultural Wages Order from the point of view of its interaction with the minimum wage legislation. On the contrary, we are seeking, as we did in the previous debate, to protect the Government from themselves, and to protect the Bill from its latent defect.

Mr. Ian Bruce

I have had the honour and the privilege of listening to my hon. Friend talking to farmers in his constituency and I know how appreciative they are of his perception on the issue. [Interruption.] The Liberal Democrats are heckling, trying to—

Mr. Deputy Speaker

Order. May I remind the hon. Gentleman that he should be addressing the Chair, not simply turning to his hon. Friend?

Mr. Bruce

I was reluctant to say that the Liberal Democrats were heckling because I knew that you, Mr. Deputy Speaker, were being very attentive. Has my hon. Friend the Member for West Dorset (Mr. Letwin) ever—

Mr. Deputy Speaker

Order. I am trying to persuade the hon. Member that he should be addressing me.

Mr. Bruce

I thought that I was. Perhaps I was looking in the wrong direction at the same time. Perhaps, looking you directly in the eye, Mr. Deputy Speaker, I may ask my hon. Friend whether he has ever found a group of workers who were not overwhelmed and overjoyed to be given money in their hands to sit at home on standby, waiting to be called in to work. That happens not only in agriculture but in many industries, and we need to know what the Minister is doing about it.

Mr. Letwin

My hon. Friend makes a correct and helpful point. [Interruption.] It is helpful indeed, as hon. Members below the Gangway are helpfully adding, because it draws attention to the importance that individuals attach to that. However, I go further, because the important issue here, as in relation to many aspects of the Bill, is flexibility, which enables some of those workers in my constituency to be employed.

That is the point at which we cease to deal with a laughing matter and start to deal with something of the utmost seriousness. The need for flexibility is obvious in other parts of the Bill, but we are discussing new clause 12, which does not mandate a specific solution to the problem. It specifically makes it possible for the admitted experts, chosen by the Government, to review the situation at a decent interval, 12 months hence, and to ask themselves whether the interactions between the minimum wage legislation, the Agricultural Wages Board and the Agricultural Wages Order are such as to avoid any inconvenience.

I am sure that the omission in the Bill is an oversight on the Government's part. I am sure that the Government have no intention of throwing people on the dole heap because of a mistake in the implementation of the Bill in relation to the Agricultural Wages Order. I am sure that, if the Government carefully consider the matter—if they are unwilling to do so tonight, perhaps they will do so in another place—they will wish to reinstate something very similar to new clause 12, but slightly differently worded.

My hon. Friend the Member for Daventry (Mr. Boswell) tabled new clause 12 in all seriousness. I beg the Minister to take it in the spirit in which it is intended, and to look carefully at the Agricultural Wages Order, especially at paragraph 6(9), which has unfortunate consequences in the absence of a new clause along the lines of new clause 12.

Mrs. Roche

Once again, we have had a wide-ranging debate. That may be the kindest thing that I can say about the contributions. None the less, I shall do my best to keep in order, and to speak to new clause 12 and to the Government amendments in the group.

New clause 12 seems to bear a fair degree of similarity to a new clause that was proposed in Committee by Conservative Members. Once again, we are in the territory of the interface between the national minimum wage and the agricultural minimum rates; the relationship between the Low Pay Commission and the Agricultural Wages Board; and the forthcoming review of the Agricultural Wages Board.

In Committee, I explained in general terms the key principles that we are seeking to follow in applying the national minimum wage to the agricultural sector: first, that the minimum wage should apply in the agricultural sector as elsewhere; and, secondly, that we should not seek to make wholesale changes to the existing agricultural wages regimes in England and Wales, Scotland and Northern Ireland.

New clause 12 would require the Low Pay Commission and the Agricultural Wages Board to report to the Secretary of State and the Minister of Agriculture, Fisheries and Food within 12 months of the national minimum wage being set. The report would cover the operation of the clauses in the Bill that govern the interface between the national minimum wage regime and the agricultural wages regime.

In effect, the new clause would pre-empt the discretion of the Secretary of State to determine the timing and the nature of any future referral to the statutory Low Pay Commission. Of course, the Secretary of State might wish the Low Pay Commission to consider agricultural issues at some time. As the House knows, the Government's evidence to the commission includes a discussion of the agricultural sector. However, new clause 12 requires a joint report to be prepared within a year of the minimum wage being set. We feel that that is quite arbitrary.

Mr. Boswell

I would not necessarily want the Minister to commit herself to having a joint report, but does she agree that it would at least be worth considering whether it might be to the benefit of both the Low Pay Commission and the Agricultural Wages Board if they considered the matter together rather than separately? They are more likely to get it right if they do.

Mrs. Roche

I understand the hon. Gentleman's point. He has made it before and I understand the way in which he puts it. However, at this stage I would not want in any way to pre-empt what the Secretary of State might want to do on some future occasion.

Mr. Hammond

rose—

1.15 am

Mrs. Roche

I will not give way as I want to make some progress, if I may. New clause 12 seems to suggest that the Low Pay Commission should inevitably be involved in the forthcoming review of the Agricultural Wages Board, which is planned by the end of 1999. Such a review was last carried out in 1993 under the previous Conservative Government. I cannot resist pointing out a fundamental inconsistency that the Opposition display time and again. The previous Government decided that they would retain a statutory minimum pay regime for agriculture alone. So, Conservative Members have already conceded the principle that there should be a minimum pay rate, although one would not know that from some of the contributions made this evening. For various reasons, which seem unclear, they want to confine it to one sector—agriculture—but low pay is low pay wherever it occurs. That is why the Bill will apply in every sector. The Opposition seem determined to let low pay continue and that is why they have consistently opposed the Bill.

For the 1999 review, there will be a full consultation and views will be requested on the way in which the two systems are operating together. Of course, the Low Pay Commission could be asked to contribute to the 1999 review, but we are not saying now that it must take part. The essential difference between the Government position and that outlined in new clause 12 concerns flexibility. The Secretary of State can refer any matters to a statutory commission, if such a commission is appointed. No doubt, we will consider that possibility nearer the time of the general review. Therefore, the new clause is unnecessary and, if Opposition Members persist with it, I must ask the House to reject it.

Mr. Hammond

I thank the Minister for giving way just before she concludes. Does she agree that one of the benefits of the new clause would be that it would send a clear signal to the agricultural community that there is a recognition of the special problems under which it is labouring and that the Government recognise that up front and are prepared to say that there will be a review at a fixed point in time?

Mrs. Roche

The Government are doing that already, as is shown by the amendments. We have argued that the two regimes should exist side by side, and there is to be that review in 1999. As I said, it will be a full consultation.

Mr. Ian Bruce

The hon. Lady is always most courteous. If the report is simply from the Agricultural Wages Board, the Government will know what is happening only as regards minimum wages within agriculture. The Low Pay Commission may well want to make recommendations. The old Labour party wanted all industries to have some form of wages board. With a majority of 77, I acknowledge that many of my constituents voted for a Labour party that was going to bring back wages councils, and we believe that new clause 12 would allow the Government to do that. Does the Minister intend to bring back wages boards throughout industry?

Mrs. Roche

The next review of the Agricultural Wages Board would have been this year, but the Government decided to postpone it until late 1999 to take account of the introduction of the national minimum wage. That is a clear, sensible and coherent way of moving the system forward.

The Government amendments make further changes to the Agricultural Wages Act 1948 and the equivalent legislation in Scotland and Northern Ireland. They are intended to clarify and remove possible ambiguities in the application of the Bill to the agricultural regime. They fall naturally into two subgroups: amendments Nos. 29, 36 and 30, which deal with supplemental agricultural minimum rates—such as the night-work premium, to which the hon. Member for Daventry (Mr. Boswell) referred—and amendments Nos. 31, 32, 37 and 38, which deal with the overlap between enforcement powers.

Amendments Nos. 29, 36 and 30 were designed to deal with a technical problem in the Bill's drafting, arising from the fact that where the Bill changes the agricultural wages legislation—for example, in schedule 2, paragraph 2(2), which incorporates a new subsection (2B) into the Agricultural Wages Act 1948—it sets out the requirement that No minimum rate…shall be less than the national minimum wage. That is fine for the basic agricultural minimum rate, as the intention has always been that agricultural workers should receive no less than the national minimum wage.

The drafting leaves a question mark over the various other agricultural rates and supplementary allowances, of which mention has been made. It could be read as meaning that the other supplementary rates should also be at least at the same level as the national minimum wage. Amendments Nos. 29, 36 and 30 make it absolutely clear that the requirement that an agricultural minimum rate must be no less than the national minimum wage applies only to standard time, or piece-work rates of pay. They explicitly disapply that requirement in respect of supplemental or additional agricultural minimum rates.

Mr. Letwin

Will the hon. Lady give way?

Mrs. Roche

No. I want to make some progress, if I may.

Holiday pay and sick pay are in a slightly different category, as they could be viewed as substitute pay rather than supplemental allowances. The amendments confirm that the requirement that an agricultural minimum rate must not be less than the national minimum wage will not automatically apply to holiday pay and sick pay for agricultural workers, unless the national minimum wage is determined, under regulations made under clause 2, as being payable generally in respect of time when a person is on holiday or sick.

Mr. Boswell

I am not sure that I have the matter clear, so I should be grateful for a further explanation. Bearing in mind the helpful comments of my hon. Friend the Member for West Dorset (Mr. Letwin) on standby rates, I think the hon. Lady is saying that the national minimum wage should apply to the basic rates. I have been critical of that, as I have objected to the exclusion of any additional component from the equation. Is she now saying that each of the additional components will not have to apply to the separate national minimum rates? If so, is that also the case for standby rates?

Mrs. Roche

The change is set out in the amendments. The national minimum wage will apply only to standard time or piece-work rates of pay. I give an example. The hon. Gentleman has already mentioned the "dog allowance", as it is sometimes known. No one is suggesting that the shepherd must be paid at least the rate of the national minimum wage for his dog over and above the standard rate of pay, which must be at least the level of the national minimum wage. We want to clarify some of the points that were discussed in Committee. Amendment No. 29 deals with the situation in England and Wales, and amendments Nos. 30 and 36 make parallel changes in Northern Ireland and Scotland.

By contrast, all agricultural pay rate entitlements will be enforceable under the national minimum wage enforcement provisions as applied to agriculture. The amendments make that clear. Amendment No. 31 deals with the situation in England and Wales, and amendment No. 32 is a consequential amendment to schedule 3. Amendments Nos. 37 and 38 make parallel changes in Scotland.

The amendments may appear complicated, but they all contain commonsense measures that will remove possible doubts as to the Bill's effects in agriculture. We have always been aware of the need to ensure that the interface works effectively and without difficulties, and that is what the amendments are designed to do. I commend them to the House.

If Opposition Members press the new clause to the vote, I urge the House to reject it.

Mr. Edward Leigh (Gainsborough)

It struck me that much of what the Minister said was irrelevant to the real problems of the countryside. I am acutely aware of those problems, as I represent a large arable constituency.

I made the effort to obtain the latest documents from the Agricultural Wages Board. To read them, one would think that, if the lot of the agricultural labourer was not exactly rosy, the board was at least maintaining his position in society. That is true at one level. For instance, we know that the average weekly earnings of whole-time hired men aged 20 and over increased by approximately 2.5 per cent. in 1996, from £237 to £243. That is hardly a king's ransom, but at least, as the report makes clear, it represents a maintaining of earnings in real terms, when deflated by the RPI. It is simply not the case that agricultural labourers are maintaining their position. That is why the new clause should be carefully considered. Agriculture in general is in crisis. On arable farms in my constituency the work force has been cut in recent years by a quarter.

Whole areas of our countryside are being depopulated of workers. That has nothing to do with wages and everything to do with the new forms of agricultural production. The city dweller—[HoN. MEMBERS: "What about the new clause?"] What I am saying has everything to do with the new clause, which is designed to bring to the Government's attention the problems of agriculture and the fact that there should be a proper review.

The Minister did not address the crisis facing agriculture. The Government need to take the crisis seriously and to understand that it goes wider than the question of wages. The city dweller has a rosy view of agriculture.

The agricultural labourer is effectively being deskilled. He used to be held in high regard because of his awareness of the local subtleties of the soil and so forth. Now so much of agriculture is related to agribusiness and the ethos of his life and his skills are held in far lower regard. The Government must take action. They cannot consider the crisis simply in terms of wages: they must consider the wider problem and try to bring back to the agricultural labourer real pride in his work.

Mr. Deputy Speaker

Order. I remind the hon. Gentleman that it is not sufficient to make occasional reference to the new clause. He must address his remarks directly to the new clause and not make a Second Reading speech.

Mr. Leigh

I am grateful to you for your guidance, Mr. Deputy Speaker. I have made my point and, although the hour is late, it is a point that will be made again and again by my hon. Friends and myself who hold the countryside in real regard and are deeply concerned about what this Government are doing to it.

1.30 am

Mr. Boswell

This has been an interesting debate, which has ranged from dogs and night rates—as opposed to nitrates—to the overall state of agriculture. My hon. Friend the Member for Gainsborough (Mr. Leigh), who has just made his first contribution to our deliberations, has performed a service by reminding us that man does not live by bread alone, and that the countryside has spiritual as well as economic problems. However, it may be difficult to solve them by the introduction of a new clause, even one as modest and as ingeniously drafted as new clause 12.

I thank the Minister for her explanation of the Government amendments. I find it a little difficult—not wholly because of the hour—to unpick the finer meaning of her speech, because the subject is so complex. Her clear explanation merely reinforces my support for new clause 12, because the impact of the interaction of main and additional rates should be considered alongside the issue, which we discussed in Committee, of the impact of pay reference periods—a doctrine from the National Minimum Wage Bill7—compared with the non-existence of such periods in the agricultural wages legislation. The issues are complicated, and that fact itself makes the case for a joint review some 12 months from now to examine the way in which the legislation is working.

I look the Minister straight in the eye and invite her to reflect on whether she can search her conscience and assure us that no further amendments will be introduced to make the two pieces of legislation work more closely together. We have already seen more than a dozen such amendments, and, if one is a buff of the agricultural wages legislation, one begins to doubt whether the cascading process of change has yet come to an end.

Mr. Ian Bruce

I listened carefully to the Minister, and I am concerned to hear my hon. Friend suggest that the Government should not reconsider their position. I did not hear the Minister say anything about the standby rates. The Bill is defective, so we want the Government to table additional amendments when it is considered in the House of Lords.

Mr. Boswell

I was, I hope, suggesting to the Minister that she might consider that point. If the choice is between leaving the Bill in an unsatisfactory or unclear condition or amending it to make it clearer, I would settle for one or two more amendments if they improved the Bill, despite the fact that I have castigated the Government on their cascade of new amendments.

The Government should reconsider the situation, and the Low Pay Commission and the Agricultural Wages Board should also be asked to examine the issues. We have all been studying the Agricultural Wages Order 1997—my hon. Friend the Member for West Dorset (Mr. Letwin) more assiduously than anyone—but we can all make mistakes on the details, and I wish to correct the record on a point that I made. I said that the standard rate for farm workers was £4.17 an hour when it is £4.12. That is one of those King Charles's heads that I have had throughout our proceedings. I think that I saw the figure mistyped in something such as my NFU Journal. It has stuck in my mind, and if one can consistently waver, I have done so between the two figures. It is £4.12; I checked the order.

It is a serious point: the orders are complex, and it is important that they work properly. To use a phrase that we have not used tonight but that the Minister of State used extensively in Committee, it is important that the Bill is not discredited. We urge the Under-Secretary to continue to reflect and analyse and to make any appropriate changes.

I would not like to close without passing reference to the concerns expressed by my hon. Friend the Member for Gainsborough and others about the state of agriculture. The Minister knows that this is a difficult time to introduce a national minimum wage. That reinforces the argument for a proper review in about 12 months. Opposition Members know that, every time the Government reach a difficulty, and sometimes when they have not reached one, they review the situation. They are doing so to the tune of more than 100 reviews. One more in a good cause would not be inappropriate.

Question put and negatived.