§ Order for Second Reading read.9.33 am
§ Jim Sheridan (West Renfrewshire) (Lab)
I beg to move, That the Bill be now read a Second time.
I am proud and honoured to present my Bill to the House. At the outset, I put on the record my appreciation of the great cross-party support that I have received for the Bill, which has been backed by MPs from every party and, indeed, every nation. In the past two months, I have also benefited from discussions with Ministers and officials from Government Departments with a particular interest in the Bi11: the Department of Trade and Industry, the Department for Work and Pensions, the Department for Environment, Food and Rural Affairs and the Treasury.
I also express my sincere thanks for the fantastic support that I have received from outside the House, particularly from the Transport and General Workers Union but also from a broad and growing coalition that includes the National Farmers Union, the TUC, the Ethical Trading Initiative, the Fresh Produce Consortium, major retailers —including Tesco, Sainsbury's, Safeway, the Co-op, Marks and Spencer and Asda —Unison, the Recruitment and Employment Confederation, which represents employment agencies, the Joint Council for the Welfare of Immigrants, the Dover 58 group, the National Association of Citizens Advice Bureaux, the Family Welfare Association, the Catholic Bishops Conference, and last, but certainly not least, the legitimate gangmasters themselves. That coalition for progress spans workers, employers, industry, unions and communities. Its breadth and depth are a powerful reflection of the seriousness of the issue and of the Bill's merits.
I should also like to place on record my appreciation for the help and advice that I have received from Ministers in various Government Departments, including DEFRA, the DTI, the DWP and the Home Office. In particular, I thank the Home Secretary for his continuing support, along with my right hon. Friend the Minister for Rural Affairs and Local Environmental Quality, who has also been very constructive and helpful in introducing this legislation.
516 I should perhaps explain the Bill's context. The recent tragic deaths of 20 cockle pickers in Morecambe bay have brought gangmasters into the headlines. It is the duty of us all to ensure that those who lost their lives have a fitting memorial, and first and foremost, that must mean legislation to tackle the worst excesses of illegal gangmasters. It is time for such legislation to stop the exploitation.
As the House knows, gangmasters are basically labour providers who operate throughout the whole UK economy. The Bill is not intended to introduce regulations in each and every industry; instead, it seeks to regulate gangmasters in the sectors in which they are most common, and where the abuses are the most extreme: agriculture, the shellfish industry, and food processing and packaging. Gangmasters have been supplying and supervising workers in those sectors for decades. It is estimated that at least 3,000 gangmasters operate in them, employing at least 60,000 workers. However, the absence of accurate data could mean that the real figure is as many as 100,000. It is also estimated that the gang labour work force comprises approximately 70 per cent. indigenous workers and 30 per cent. migrant workers.
Many gangmasters operate within the law and are extremely reputable, but far too many are rogue employers. In 1997, an interdepartmental working party estimated that some 20 per cent. of gangmasters were committing a wide range of offences. That is a minimum of 600 gangmasters. The harrowing events in Morecambe bay have shown the human cost of gangmaster abuses: Chinese cockle pickers paid 11p an hour and left to die. We now know that 20 people drowned in what was the worst workplace disaster in this country since Piper Alpha in 1988.
There have been other tragic incidents involving workers who were organised by illegal gangmasters. Three workers were killed in July 2003 when the minibus in which they were travelling to work was hit by a train on a level crossing. Two workers died on a fruit farm, also in July 2003, after being caught in a rope-reeling machine. The rogue gangmasters undercut legitimate gangmasters and exploit workers, both migrant and indigenous.
Evidence to the Environment, Food and Rural Affairs Committee in September 2003 showed that exploitation is commonplace, and I shall give the House some examples. They include the failure to supply workers with written statements of employment practices; infringements of Agricultural Wages Board agreements and the national minimum wage; and denying workers rights to paid holidays and statutory sick pay. Notice rights, rights to salaries slips and protections from illegal deductions from wages are also denied. There are also the failure to abide by termination of employment obligations, breaches of working time regulations and poor quality housing and accommodation, often in houses in multiple occupation, portakabins or caravans. There is overcharging for housing and accommodation, failure to provide tenancy agreements or rent books, use of under-age workers and abuse of tenancy rights with immediate eviction of workers on termination of their employment. There is withholding of workers' personal 517 documents and, perhaps worst of all, telling legal migrant workers that they are really working illegally to deter them from complaining or seeking advice.
§ Andrew George (St. Ives) (LD)
I congratulate the hon. Gentleman on making such a strong case, which I fully support. He referred to the report of the Environment, Food and Rural Affairs Committee and pointed out that many supermarkets, among others, strongly supported his proposed Bill. However, does he accept that the Committee pointed out in its conclusions and recommendations that supermarkets could not wash their hands of this matter? Many farmers complain that farm-gate prices are being squeezed by the monopolistic activities of supermarkets to such an extent that farmers and growers are seeking other sources of—
§ Jim Sheridan
The hon. Gentleman makes the valid point that some major retailers have been squeezing farmers, but I have to say that, during the consultation on my Bill, the major retailers have been first class in offering help and assistance to me and to others in the coalition parties. They have played a fundamental role in the coalition. Although there have been cases of some retailers going for the lowest common denominator in prices, that is certainly not the case among the major retailers today. I repeat that they have helped me enormously in bringing forward this legislation.
I should like to mention some relevant case studies. In the midlands, a gang worker was charged £600 by a gangmaster for documentation that was never produced. In Norfolk, gang workers have reported receiving no statutory sick pay during periods of ill health, while in Kent, gang workers have complained about being denied holiday pay. In Norfolk, gang workers were paid just £3 to cut 1,000 daffodils. In Bristol, accommodation arranged by a gangmaster involved 27 people living in one house, while in Suffolk, gang workers were housed in a holiday camp that charged the gangmaster £70 per week for each unit of accommodation, but he placed five workers in each unit, charging each employee £35 per week. In Cambridgeshire, gang workers were forced to live in partitioned containers that had no water supply. Rent and transport were deducted from the workers' wages before they were paid. One worker was paid £83 and the rent deducted was £80.
There is plenty of anecdotal evidence of what is going on, and there is similar evidence in Scotland of people being totally exploited. Unfortunately, many of the people who tell us what is going on are terrified to come forward, and we have to respect their anonymity.
I have also received correspondence from the Labour group leader at Arun district council, which has a substantial number of gangmaster-supplied migrant workers engaged mainly in horticultural work. There are persistent reports of appalling wages. We have heard of Portuguese workers being paid just £2 a day, exploitative and unsanitary accommodation and the possible involvement of Russian mafia-style operators.
518 There is also a major problem with tax evasion. Between 1989 and 1994—the last years for which accurate national figures are available—the agricultural compliance unit recovered £537 million in unpaid taxes from gangmasters. In June 2002, a gangmaster in Boston, Lincolnshire was jailed for three years for a £300,000 VAT fraud. A customs spokesman said:VAT fraud in the business sector of supplying agricultural labour is widespread.During 200–3, 46 Inland Revenue investigations in the Thames valley area alone resulted in the recovery from gangmasters of £4.3 million in unpaid tax and national insurance contributions.
Other serious criminal activities are associated with these gangmasters. According to the National Criminal Intelligence Service, the worst gangmasters are known to be involved in both human trafficking and drug smuggling. In its 2003 United Kingdom threat assessment, NCIS said:Some gangmasters knowingly supply illegal workers and, in addition, exploit the workers by colluding with other gangmasters to form cartels. In some cases the gangmasters are not only complicit in arranging illegal work and supporting documentation, but are involved in other areas of criminality such as tobacco smuggling. Class A drug supply, and theft of vehicles and plant".
§ Mrs. Irene Adams (Paisley, North) (Lab)
I congratulate my hon. Friend on bringing this matter to the House's attention before the rest of us realised just how bad the situation was. Will he comment on the fact that the security industry was in a similar position before legislation was introduced? Security companies were up to the same sort of thing—employing illegal workers and exploiting the most vulnerable people in society, who were often too terrified to report what was happening.
§ Jim Sheridan
My hon. Friend makes a valid point. She is right about the practices going on in the security industry before legislation was introduced. I congratulate her on her sterling and widely recognised work in dealing with some of the most unscrupulous drug dealers in her constituency, which neighbours my own.
Rogue gangmasters are exploiting workers, undercutting legitimate labour providers, defrauding the taxpayer and engaging in a range of criminal activities. They are bad for workers, bad for business, bad for taxpayers and, more importantly, bad for our society, yet there is no law to regulate them. Instead, we have depended on voluntary codes to curb their excesses. I should like to explain why I believe the voluntary approach has failed.
Two voluntary codes affecting the National Farmers Union and the Fresh Produce Consortium, though well meaning, have failed to tackle the problems associated with rogue gangmasters. They have not reduced exploitation of workers, nor have they made illegal operators operate within the law. Now the Government are putting their faith in a third voluntary code—a voluntary code of practice for gangmasters. Again, it is well intentioned, but it will not deal with the problem.
§ Anne Picking (East Lothian) (Lab)
I, too, congratulate my hon. Friend on introducing this 519 important Bill. The point that he was just making reaches the nub of the matter: the Bill needs teeth. It is not about regulation for regulation's sake—it is serious stuff. We must really mean what we say about protecting those extremely vulnerable people. We must license and regulate gangmasters.
§ Jim Sheridan
My hon. Friend makes a valid point. The legislation must be robust. Legislation for legislation's sake is worthless.I congratulate her, as she has a proud history of working against some of the unscrupulous gangmaster employers, who are reported to be moving into the health service.
The voluntary code was well intentioned but it will not deal with the problem. It is not underpinned by credible enforcement or sanctions. Furthermore, voluntary codes do not allow reputable labour users to check whether labour providers are legitimate. As the EFRA Committee said,it is unrealistic to expect the voluntary codes to prevent widespread illegal activity by gangmasters".In their response to the report, the Government agreed. I welcome the Government's acknowledgment that voluntarism has failed. I share that view, as does the entire industry. That is why it supports my Bill, which would set up a statutory licence and register. Weak voluntary codes and inadequate enforcement will mean only more tragedies like Morecambe bay; it is time to legislate and to regulate.
The Bill is a simple one, presented by a simple person. As I have already said, it targets gangmasters in the economic sectors where they and their abuses are most prevalent.
§ Mr. lain Luke (Dundee, East) (Lab)
My hon. Friend's description of himself is too severe. He is to be congratulated by all Members on, introducing his Bill. He is following an honourable tradition. In the last session, a private Member's Bill brought in legislation to regulate fireworks and he is promoting an important measure that will regulate a large sector of the black economy that has exploited foreign and British workers. I hope that, in conjunction with the Government, the Bill will be successful to ensure that those practices do not continue.
§ Jim Sheridan
I thank my hon. Friend for those kind words. He mentioned the Fireworks Act 2003. When the House supports and passes such legislation, it shows, to any who have doubts about us that there are good politicians and good politics.
The abuses are at their worst and most widespread in agriculture, horticulture, shell fishing and food processing and packaging. In essence, the Bill would establish an effective system for registering and licensing gangmasters, specifically those who carry out work for and supply labour to those industries in the UK. We want to make it illegal for gangmasters to operate without a licence and for people to use the services of an unlicensed gangmaster.
Under the conditions of the licence, all gangmasters will have to carry, and produce for users of their services, photo identification containing their name, company details and licence number. They will be required to keep proper records—who they employ, 520 who they supply to, who they work for, what they pay and what they deduct from wages. They would also be required to return all personal documents to gang workers, to co-operate with the proper enforcement agencies and to abide by the minimum standards that operate throughout the rest of the country.
At present, the Government have no accurate data to tell them how many gangmasters exist, where they operate, who they employ or how they treat their workers. That is confirmed by the EFRA Committee whose recent report stated:The Government could not tell us how many gangmasters are operating, what work they are engaged in and what is the scale of their operations.Without a licence or a register, gangmasters are free to operate beyond the reach of the law, but with a licence and a register, the Government can trace them, track them and make sure that they are abiding by their employment law obligations and fulfilling their health and safety duties.
The taxpayer is also protected through that same paper trail. At present, the Inland Revenue is largely reliant upon whistleblowing and the occasional targeted raid through Operation Gangmaster to uncover tax abuse. It is possible that up to £100 million a year of unpaid tax from rogue operators is being lost to the Treasury; a licence and a register would be the trail that led to the recovery of such money.
A licence and a register would protect those who rely on the services of gangmasters. The measure would require all gangmasters to show proof that they are licensed and legitimate; furthermore, all legitimate gangmasters will have their names placed on a register that is open to public inspection. That is why the Bill has the support of the NFU, which I greatly appreciate, the Fresh Produce Consortium and the major supermarkets.
No one is claiming that a licence and a register will be a panacea for the ills of rogue gangmasters. The requirement to have driving licences does not stop some people speeding, but it certainly concentrates their minds to know that, if they are caught, they will face the full force of the law. The Bill may not be the last word, but it is an important first step.
Currently, no laws mean no chance: no chance to protect vulnerable workers, and no chance to track down the rogue operators, bring them to justice and drive them out of business. Without a licence and a register, I fear that Ministers will, all too regularly, have to stand here sending messages of condolence to the families of workers like those who perished on the sands of Morecambe bay—the victims of exploitation and of voluntarism.
The Government already support licensing and registration in other sectors, both in principle and in practice. When the Labour Government found similar levels of criminal activity in the private security industry, to which my hon. Friend the Member for Paisley, North (Mrs. Adams) referred, they did something about it: they introduced licensing and registration through the Private Security Industry Act 2001 and they made sure that the system was backed up by effective sanctions and enforcement.
When the Government were concerned about protecting the rights of workers and ensuring the safety of the public from the actions of rogue employment 521 agencies in nursing. they introduced licensing and registration through the nurses agency regulations. That system, too, was backed by effective sanctions and enforcement.
Following the 1999 White Paper, the Government introduced licensing in the UK's private security industry in 2001, arguing that a licensing scheme would help to raise standards for employees and reduce offending. The absence of licensing meant thatit is likely to be those that are most vulnerable who will be at risk from unscrupulous operators".The voluntary approach to regulation failed because reputable companiesenforce effective standards and self-regulation but less scrupulous companies are able to undermine their best efforts. Voluntary regulation cannot touch this situation".In 2001, the Government produced a consultation document on the licensing and registration of the employment agencies supplying nurses and workers to care homes. Following the consultation exercise, licensing, registration and regulation were introduced by including those agencies in the provisions of the Care Standards Act 2000 and the Employment Agencies Act 1973. The Government argued that licensing and regulation protect vulnerable nurses and secure the proper conduct of nursing agencies. The absence of licensing and registration for agencies had engendered inconsistency, unfairness and many loopholes, with few deterrents for unscrupulous operators. When illegality and exploitation are uncovered, this Labour Government have recognised the benefits of licensing and registration. They have even introduced a licensing system, the horse passport scheme, to identify and track horses in the UK as a betting man, I think that some of the horses are still carrying their luggage. If it is good enough for horses, it must be good enough for gangmasters.
§ The Minister for Rural Affairs and Local Environmental Quality (Alun Michael)
My hon. Friend is making interesting points on a variety of issues on which licensing has been part of the solution. Does he agree that licensing is not a panacea—indeed, he said that the Bill is not a panacea—but a necessary part of an effective system? Given that our enforcement target is a group of serious law breakers, the key is making sure that the system of licensing is effective and cost-effective. Indeed, our discussions about the Bill have concerned making it simple and effective. I hope to welcome and support the Bill at a later stage. Does he agree that that is the basis on which we are seeking to obtain effective legislation?
§ Jim Sheridan
I thank my right hon. Friend for the help, support and advice that he has given me during these discussions. He is right that licensing is not a panacea. No matter what legislation we introduce, unscrupulous operators will always seek to circumvent and undermine it.
§ Ian Stewart (Eccles) (Lab)
The Minister's statement and the Bill both recognise that licensing and registration will not solve the problem in themselves. We must recognise that registration and licensing can be 522 effective only if there is informal policing, which means unions such as the Transport and General Workers Union playing full and active roles.
§ Jim Sheridan
My hon. Friend's point is valid. If the legislation is to be effective, those at the sharp end of the industry must be involved in the process to ensure that it works. Equally, we must make the proper resources available to allow them to do that.
§ Mr. Michael Connarty (Falkirk, East) (Lab)
My hon. Friend the Member for Eccles (Ian Stewart), who is a fellow TGWU member, recognises the problem that many areas are practically no-go zones for trade unions, which do not get the effective support of either the civil authorities or others in contacting people who are not in a trade union and do not know their rights. In beginning the licensing process, the Government must examine how trade unions can be given legitimate access to provide people with the information that they require to learn their rights.
§ Jim Sheridan
My hon. Friend has a proud history of working alongside the trade unions. The Government have introduced employment legislation that allows people to join a trade union, if they so wish. I hope that those engaged in the twilight world of the gangmasters will see fit to join a proper, independent trade union, obtain its advice and allow it to act on their behalf—sadly, that is missing in the industry at the moment. In principle and in practice, the Labour Government champion licensing and registration, and I call on them to do so once again by supporting this Bill.
If licensing and registration are to work, they must be backed by effective enforcement. Currently, when it comes to gangmasters, enforcement is non-existent at best and ineffective at worst. It relies on whistleblowing by workers who are terrified that they might lose their jobs and homes if their gangmaster finds out. It falls on—or to be more accurate between—the desks of a long list of Departments and agencies such as the Department for Work and Pensions, the Department for Environment, Food and Rural Affairs, the Home Office, the Department of Trade and Industry, the Treasury, the Inland Revenue, the Agricultural Wages Board and Customs and Excise.
Enforcement suffers from a lack of joined-up thinking and proper co-ordination; it is ad hoc and lacks proper targeting. The EFRA Committee did not mince its words when it considered the impact of the Government's flagship enforcement mechanism for gangmasters, the so-called Operation Gangmaster, which it considered a failure. It said that it wasappalled by the lack of priority to, and political accountability for, what is supposed to be the government's co-ordinated response to illegal activity by gangmasters".If the Government are serious about tackling rogue gangmasters, ensuring compliance with minimum standards, protecting workers and safeguarding the taxpayer, they must get serious about enforcement.
The Government must also consider the costs of a lack of effective enforcement: what will be the financial cost, in addition to the human cost that is paramount to all of us, of the current police and Health and Safety Executive investigation into events in Morecambe bay? 523 Judging by other inquiries, it could run into the millions. The Ladbroke Grove rail inquiry cost £7 million, the Marchioness inquiry cost £5.1 million and the Southall rail inquiry cost £2.25 million.
The Bill is not prescriptive on enforcement, which it leaves to the discretion of the Secretary of State. That could mean setting up a new agency as the Government did with the Private Security Industry Act 2001, which set up the Security Industry Authority, and the nurses agency regulations in the Care standards Act 2000, which set up the National Care Standards Commission. Alternatively, it could mean using and co-ordinating existing agencies. Whichever route the Government choose, enforcement must be underpinned by certain principles. It must have a proactive element and cannot simply rely on whistleblowing, especially in an area in which workers are too scared to blow the whistle. Any enforcement scheme must be transparent, accountable and proportionate. The regulator and the regulated must have no conflict of interest, and the Government must properly resource enforcement.
I shall summarise the key points in the debate. Rogue gangmasters in the agricultural, shellfish, food processing and packaging industries are exploiting workers, undercutting good labour providers and engaging in serious criminal activity. The voluntary system has not worked, is not working and will not work— the EFRA Committee has said as much, and hon. Members and the entire industry also recognise that fact. The proof can be seen in the faces of the families and loved ones of the 20 people who lost their lives in Morecambe bay. It is time to introduce a statutory licence and register for all gangmasters. It is time to enforce the law proactively. It is time to track down gangmasters and hold them to account. And it is time for legislation, not exploitation.
§ 10.9 am
§ Mr. Mark Simmonds (Boston arid Skegness) (Con)
I am delighted to participate in this debate and congratulate the hon. Member for West Renfrewshire (Jim Sheridan) on being selected in the private Member's Bill ballot and on choosing this important Bill that must be debated in great detail. I also congratulate him on holding together a disparate coalition of hon. Members of all parties, and the TGWU, the Fresh Produce Consortium and the NFU, which is an achievement in itself. I am especially delighted that the hon. Gentleman chose this subject because, as some hon. Members will know, I tabled a ten-minute Bill last September on the same issue. Had I been fortunate in the ballot, I would have chosen to bring in a Bill of exactly the same nature as the one before us.
The Bill poses something of a philosophical paradox for me. I certainly believe that we should not over-regulate, over-burden or impose red tape where it is not necessary. However, the Bill is not about regulation, burdening business unnecessarily or bureaucracy. It is about creating fair competition, removing exploitation and providing a fundamental building block to limit criminal activity, including extensive tax and VAT fraud.
This is an important piece of legislation that appears to be supported by everyone except—until very recently—the Government. I hope that when the 524 Minister winds up he will say that he supports not only the objectives of the Bill—which were the carefully chosen words of the Minister today and the Prime Minister before—but also the specifics and getting it through Parliament, to the extent that if a Member decides at some future stage to talk out the Bill, the Government will find room for it in their legislative programme, to ensure that it becomes law.
§ Alun Michael
I am happy to respond to the hon. Gentleman's comments, as I did to my hon. Friend the Member for West Renfrewshire (Jim Sheridan) during his introductory remarks. There are issues to be addressed in terms of the specific content of the Bill to ensure that it does what the hon. Gentleman said— keeps bureaucracy to a minimum, operates with maximum effectiveness and creates fair competition, as well as addresses illegal activities. It is in that context that my hon. Friend and I have had discussions in the past few days and I hope later to indicate my support, and the grounds for that support, along the lines of our discussions.
§ Mr. Simmonds
I am grateful for that intervention, which is constructive. I hope that we will be able to consider certain issues in greater detail in Committee, and I hope that the Minister and his advisers will also give them further consideration.
I wish to add some comments on my personal experiences of, and information I have gained on, this subject in the past few years since I have been an MP. It is important that the House understands that being a gangmaster or labour provider is a legitimate and necessary business that provides the work force for the agricultural and horticultural sectors. Most gangmasters, in my constituency and across the UK, operate inside the law, but a vast number do not.
I shall give a specific Lincolnshire perspective on the issue. The Lincolnshire economy, historically and to this day, is driven by the agricultural and horticultural sectors. Some of the issues that were raised by the hon. Member for West Renfrewshire are exacerbated and exaggerated in Lincolnshire. In the 16-mile stretch between Spalding and Boston, it is estimated that 20,000 workers a year are employed by gangmasters. An additional, and different, 20,000 workers are employed between Spalding and Ely. Boston has a population of between 25,000 and 30,000, and it is estimated that it has an additional 3,500 Portuguese workers, solely employed in the agricultural sector. Including the Portuguese workers, it is estimated that a total of 8,000 foreign nationals live in Boston. That causes tremendous social cohesion problems, but that is not the issue that I wish to address today.
Gangmasters have provided casual labour in Lincolnshire for hundreds of years. Traditionally, they did so to use the local work force to bring in the harvest. That has now changed, as supermarkets demand fresh produce from farms and packhouses in Lincolnshire 24 hours a day and 364 days of the year. It is no longer seasonal, casual labour, but a permanent fixture on the employment calendar. The pressure from the supermarkets is intense. Many of the businesses involved have open-book accounting so that the supermarkets can see the margins that they are charging, which allows the supermarkets to reduce 525 prices. There is continual pressure on the packhouse owners, the producers and the farmers to reduce their cost base. However, all the producers and farmers to whom I have spoken want to legitimise the work force, because they believe that damage is being done to the totality of the food chain. We should applaud that aim.
The situation has deteriorated dramatically in Lincolnshire in the past three years. I have received some confidential statistics that show that three years ago the percentage of foreign nationals working on farms and in packhouses in Lincolnshire was 3 per cent. Today, that figure is 97 per cent.
§ Mr. Mark Hendrick (Preston) (Lab/Co-op)
The hon. Gentleman mentioned 3,000 Portuguese workers. Portugal is in the European Union and many of those workers may well be legitimate employees.
§ Mr. Simmonds
I agree with the hon. Gentleman and he makes a fair point. I have no issue with people coming to the UK to work, if they help our economy legitimately. That especially applies to the Portuguese workers, although another issue is involved which I shall address later in my speech. However, many workers in my constituency and the rest of Lincolnshire are not here legally and, because they have no recourse to law, they are exploited more than others. They have tax taken off their wages, as well as enormous sums for food, housing and transport. They have no comeback against that through the trade union movement or the law courts, and they would benefit significantly if the Bill were to reach the statute book.
§ Mr. Hendrick
I thank the hon. Gentleman for the helpful response, but does he include the 3,000 Portuguese workers in the 97 per cent. that he mentioned? He gave the impression that those workers were not here legitimately.
§ Mr. Simmonds
The hon. Gentleman misinterprets me. The 97 per cent. figure includes the Portuguese workers and he is right to say that they are here legitimately. I have no issue with that.
The Government have been dilatory as regards doing anything about the problem. It is not a new issue, but it has worsened in the past four or five years. In Lincolnshire, it has been exacerbated in the past three years by the problems with immigration. Had the appalling tragedy in Morecambe bay not happened, I suspect that the hon. Member for West Renfrewshire would not be getting the support for his Bill that I have been delighted to see today.
The hon. Member for Morecambe and Lunesdale (Geraldine Smith) comes out of the episode very well. She did everything that a Member of Parliament could have done to try to warn the Government of what was happening, as I have done with similar sproblems in my constituency that—thankfully—have not led to the terrible tragedy that occurred in her constituency. Why did the Minister involved not tell the Health and Safety Executive what was happening in Morecambe bay? If the HSE was told, why was nothing done about it? It is extraordinary for a Labour Minister to put in writing 526 the fact that there are insufficient resources available to prevent vulnerable workers being exploited, but that is what happened in the response to the hon. Lady.
With my ten-minute Bill, I also warned the Government that such a problem could arise, although I never envisioned such a terrible tragedy. The Government were also warned by the National Farmers Union, the trade union movement and many other organisations, which now all strongly support the Bill. Moreover, the Environment, Food and Rural Affairs Committee, in its consideration of the issue at the end of last year, specifically criticised the total lack of co-ordination between Departments. Lord Whitty's evidence to the Committee was complacent, and I am delighted that the Committee will follow up its report with further evidence taking to ensure that the Government have introduced greater co-ordination to improve the situation.
The Environment, Food and Rural Affairs Committee highlighted the fact that no Minister was responsible and Operation Gangmaster had no aims and objectives. There were no overall goals, no budget and no time frame by which anything should be achieved. Those involved in Operation Gangmaster, which was supposed encompass three or four Departments, had not even met once in the previous year. I hope that the Minister—sadly, he is not in the Chamber at the moment—will confirm that Operation Gangmaster is now in full swing and working extremely hard to co-ordinate the Government's approach to support the Bill. Then approach to such matters before the terrible tragedy in Morecambe bay was dislocated and slothful, and I very much hope that that will change.
As the hon. Member for West Renfrewshire stated, the last reliable evidence on the issue comes from the 1995 agricultural compliance unit report, which identified 5,500 gangmasters and, by investigating them, recovered £537 million in unpaid tax and VAT at the time, nine years ago. I have no doubt—probably all hon. Members who have looked into the issue will agree that the problem has exploded since 1995, so the sums that people are evading or avoiding paying to the Customs and Excise and Inland Revenue are enormous. The problem is far bigger nine years on.
I should like to highlight some of the specific problems that relate to gangmasters—they occur not just in Lincolnshire, but across the United Kingdom—while bearing in mind the fact that many gangmasters are legitimate and operate within the law and that they are a necessary part of the agricultural and horticultural food chain. First, there is the exploitation of vulnerable workers. As the hon. Member for Preston (Mr. Hendrick) rightly said in his intervention, many of them are legal, welcome here and an important part of our economy, but many are illegal, and it is those illegal workers who are being exploited.
The worst example given to me was that of an eastern European lady who was employed by a gangmaster and paid £149. After deductions, she was left with £19. I understand that the citizens advice bureau in Boston has an example of someone who is left, after deductions, with £6 a week. How can it be right that, in a modern, democratic, civilised society, we are allowing that to take place in our country?
527 There are enormous health and safety issues. That is part of the tragedy in Morecambe bay, but not just cockle pickers are affected. There are health and safety issues in packhouses and on farms because there is no legislative framework to ensure that gangmasters and their subcontractors comply with existing legislation— never mind putting in place new legislative structures.
Enormous benefit fraud is going on, with people working— sometimes for legitimate gangmasters, sometimes for rogue gangmasters—while claiming benefit. Interestingly, a Government operation—Operation Shark, which took place in 2003— involved a swoop on the Scottish fish processing factories. More than half the people working in those factories were doing so illegally. Some 50 per cent. of the work force were foreign, more than a third of them were in the UK illegally, and 10 per cent. of the local work force were claiming benefits that they were not entitled to; and I suggest that that is prevalent across most of the casual labour market.
There is enormous tax and VAT fraud. VAT is charged to employers, but not passed on to Customs and Excise. National insurance contributions and income tax are deducted from workers, but, again, not passed to the Inland Revenue.
There are enormous social issues, such as terrible overcrowding in housing and inadequate access to health care. I have an example from my constituency where up to 30 workers sleep in a three-bedroomed house at the same time, and then another shift comes in as they go out to work. In effect, there are up to 60 people in a three-bedroomed house. That is exploitation to the most unpleasant and unacceptable degree.
Transportation is dangerous Untaxed and un-MOT'd vehicles are used to transport people to and from work, 24 hours a day, six or seven days a week.
There is intimidation. Large professional criminal organisations— from the Chinese triads to the Russian mafia—are now involved in the exploitation of labour, as was mentioned earlier. Millions of pounds are being siphoned off into organised crime, because there are so many legislative loopholes.
The worst offence of all—if that list is not terrible in itself— is the extensive people trafficking that is taking place, as we heard in relation to Morecambe bay. Gangmasters are now making arrangements to bring in workers in lorries or to fly them in, often leaving the workers in great debt. They may owe the gangmaster £20,000 for transporting them to the UK, which they have to pay off before they are released. If the workers cause a fuss and do not like what they are charged, their passports are confiscated and they are often thrown out on the streets. They have no passport, no home, no income and no transport to work. Again, to my mind that is a completely unacceptable part of the UK economy.
I wish to draw attention to some of the Bill's specifics that need very careful consideration, I hope, when the Bill is debated in Committee. The criteria for licensing should be included in the Bill, not left to subsequent regulations, because we need to strike a balance that ensures that we catch the maximum number of people who want to operate as gangmasters. I am very nervous about the suggested figure—£3,000—that a gangmaster would have to pay to get on to the register. Some 528 legitimate gangmasters who run small operations would find that sum exorbitant, and they would therefore not register, thus rendering their operations illegitimate. The process needs to be simple, non-bureaucratic and not have a deterrent effect on those who should register.
One of the issues that I have with the Bill, although I understand the logic, is that it applies only to certain agricultural and horticultural sectors. It does not apply to the construction, retail or cleaning sectors. Will legitimate gangmasters who provide labour for the agricultural, horticultural, cleaning and construction sectors in my constituency and throughout the UK need to have different business structures—one that needs to be licensed and the other that does not? We need to consider that very carefully, because that could provide a route around such legislation, as gangmasters and labour providers facilitate themselves by pretending that they provide labour for a sector that is not covered by the Bill.
§ Mr. Henry Bellingham (North-West Norfolk) (Con)
My hon. Friend is absolutely right. A number of labour operations in our part of the world provide labour seasonally. Obviously, when they are not providing labour for the agricultural sector, they often seek other work, such as cleaning or construction.
§ Mr. Simmonds
I am grateful to my hon. Friend for that intervention, and he makes a good point, which the Minister and his advisers need to consider very carefully.
§ Alun Michael
The hon. Gentleman is absolutely right to suggest that we need to clear up such issues, as I have indicated, and they can be dealt with in Committee. I have discussed that issue with my hon. Friend the Member for West Renfrewshire (Jim Sheridan) and our lawyers are looking at it with care. I am confident that we can find a way to ensure not only that there is no duplication—with more than one piece of legislation bearing down, thus creating the bureaucracy that the hon. Gentleman fears—but that there are no loopholes that would allow gangmasters to evade the Bill. That is a detailed matter, but he is right to raise it, as it is important in ensuring that the Bill is effective.
§ Mr. Simmonds
Again, I am grateful to the Minister for that helpful intervention. One of the issues that need to be considered is whether the Bill will capture employment agencies. When gangmasters operate inside the existing legislative structure, paying their tax and paying their workers properly, they tend to try to legitimise their businesses by turning them into employment agencies, rather than carrying on as what we would all understand as traditional gangmasters. We need to look at how to capture all that activity.
We also need to be alive to ongoing scams. For example, many packhouse owners and farmers insist that gangmasters who are providing labour have proof of indemnity insurance. However, a gangmaster often receives the indemnity insurance, which he agrees to pay through 12 monthly direct debits, he pays the first month's instalment and receives a certificate that he can show to his employers, and then cancels the direct debit. That is just one of many scams. There are many VAT scams that do not simply involve taking the VAT from 529 the employer and not passing it on. I shall not explain that in detail because such scams are extremely complex and I do not want to give hon. Members or people outside the House ideas.
Another key issue in my constituency— which is also a problem in Norfolk—is that large numbers of legitimate foreign workers, and foreign workers who are not supposed to be here, are controlled by gangmasters outside the United Kingdom. How do we control those gangmasters? We do not want simply to move the whole business offshore. Could the Minister have words with his counterparts in Europe to ensure that the system encapsulates everyone? I am deeply concerned about some eastern Europeans in my constituency who, although they will be welcome when they join us as part of the European Union, are not playing by the rules at the moment or following current regulations and legislative structures.
§ Rob Marris (Wolverhampton, South-West) (Lab)
On the hon. Gentleman's point about foreign gangmasters, does he agree that given that almost all the principals will be in the United Kingdom, those operations will be caught by clause 4(1), which makes it an offence for a principal to engage the services of a gangmaster who is not licensed? By bearing down on the domestic principals in that way, we will therefore bear down even on the foreign gangmasters.
§ Mr. Simmonds
I understand the hon. Gentleman's point, which is fair. However, let me give him a particular example. A farmer may decide that he wants to employ Portuguese workers directly from Portugal, so he flies over to Portugal and meets a Portuguese gangmaster in Lisbon, who then agrees to bring over 20 workers to work on his farm. How would that be caught under the Bill? My understanding is it would not be, because such workers are quite legitimately allowed here, since their country is in the European Union. That is the sort of detail that needs to be looked into. It might not be possible to legislate to stop that happening, but I would be interested to go into that in Committee.
I have several other concerns. I understand the logic of including in the Bill the provision that the ultimate employer— the farmer, the producer, the packhouse owner— could also be fined and imprisoned if they were employing non-licensed gang labour. However, I can clearly envisage circumstances in which an ultimate employer could inadvertently employ a rogue or licensed gangmaster who was subcontracting illegitimate labour down the chain using fraudulent documents. That happens at the moment. It cannot be right to make the farmer or packhouse owner liable for that fraudulent activity when he has not been involved in it. It is when it can be proved that an ultimate employer deliberately employs rogue and unlicensed gangmasters that he should be penalised.
§ Mr. Bellingham
During the summer, I visited various agriculture operations in my constituency, and saw one where an end user was employing labourers from one gang who had been subcontracted from another. A third subcontracting operation was also involved. At frenetic times of year, when it is desperately important to get the 530 harvest in quickly or for example, to pick strawberries before they deteriorate, what my hon. Friend describes could well happen.
§ Mr. Simmonds
My hon. Friend makes a good point. We need carefully to consider in Committee how subcontractors are caught by the provisions. Not only the ultimate gangmastster but all subsequent labour providers down the chain must have a licence and be on the register; otherwise the Bill will not work.
One of the critical elements of the legislation is enforcement, which must be properly considered and thought through. Whatever body is in place— whether or not it is appropriate to create a new statutory authority— must be effective and cost-effective, as the Minister rightly said. It is essential that the relationship between the various Departments and the enforcement body be co-ordinated and proper. The major onus of the legislation must be on the gangmasters. All legitimate gangmasters desire to clean up the current situation.
I know that others want to speak, so in conclusion I shall quote from a letter in this week's Boston Standard which sums up the problem very clearly. The person who wrote it works in a factory,shoulder to shoulder with workers from Ukraine, Romania, Portugal, Iraq, Kurdistan Russia etc. They can hardly speak English, often not at all Last week I counted nine different languages … Some of them receive less than £50 per week after the gangmaster has deducted lodge and travel money and they are transported from one factory or farm to another, sometimes doing double shifts for less than the minimum wage. They are little more than slaves.To my mind, that is unacceptable in the fourth largest economy in the world. We need to stop this exploitation, intimidation and massive fraud, and promote the legitimate supply of labour. I hope that we will be able to work together, across the parties, to ensure that the Bill is expeditiously enacted.
§ Geraldine Smith (Morecambe and Lunesdale) (Lab)
There is a whole host of reasons for supporting this Bill to license gangmasters, but I shall confine my remarks to one particular area of concern: the tragic drowning of 20 young people picking cockles in Morecambe bay on Thursday 5 February. I am aware that the incident is the subject of an ongoing police investigation and that it would be inappropriate for me to make any comment that would prejudice those inquiries or any legal proceedings flowing from them. I shall of course refrain from doing so, except to say that whenever I reflect on the terrible events of that day, I find it extremely difficult to free my mind from the sense of terror, helplessness and despair that those young men and women must have felt as they stumbled blindly, in the darkness, through the freezing waters of Morecambe bay, gripped by the growing realisation that they were about to die.
Nothing can alter what happened to those poor, unfortunate people. We cannot turn the clock back—it is too late. However, we can ensure that although their lives were lost, they were not wasted. We must take steps to prevent such a tragedy from occurring again. Whatever the outcome of the police investigation, wherever the finger of blame ultimately points, there can be no doubt that the laws, agencies and systems failed to protect those people from being exploited and placed in danger, and from suffering an horrific death.
531 Local people in my constituency, particularly those involved in inshore fisheries, insist that that Morecambe bay tragedy was an accident waiting to happen. I say that there is still an accident waiting to happen, because as yet nothing has changed to prevent the terrible events of 5 February from reoccurring. Many of my constituents were not surprised that an accident involving cockle pickers had occurred because it was common knowledge that many gangs with little or no knowledge of the treacherous tides and sinking sands were working in Morecambe bay. What my constituents did find surprising, however, was that so little had been done to prevent that accident.
It is a fact that the Government were aware of the situation. I first became involved after receiving a report from one of my constituents, who is a fisherwoman. She contacted me after being involved in a police raid on Pilling sands on 19 June 2003, instigated by the Department for Work and Pensions. She apprised me of her concerns about the exploitation and danger that a large number of people of Asian origin were subject to by a gangmaster. She also informed me that the police and the Department for Work and Pensions had been unable to interview any of the people because involved because they did not speak English and there was no interpreter present. She also said that she had been told that, despite people's efforts over a number of weeks, they had been unable to get the immigration service to participate in the raid.
Although the incident that my constituent referred to had taken place outside my constituency, owing to the serious nature of the matters that she had raised, I promptly wrote to the Minister for Citizenship and Immigration at the Home Office to apprise her of the situation. I subsequently received a reply on 8 August 2003 from an Under-Secretary of State, which basically informed me that health and safety issues have nothing to do with the immigration service— so much for joined-up government. The letter said that, although the immigration service was aware of the operation on Pilling sands and had assisted with similar operations in Morecambe bay and elsewhere—that Home Office information has subsequently proved to be flawed and will be the subject of my Adjournment debate on Thursday evening next week—its intelligence had indicated that any foreign nationals likely to be involved in cockling would in all probability be Chinese, so it could not do very much about the matter, and it would therefore not have been the best use of limited resources to have participated in the raid on Pilling sands.
I am sure that hon. Members will not be surprised to learn that that was not quite the response that either I or my constituents had been looking for. Nevertheless, the response contained one short paragraph that I believe is extremely important in the context of this debate. It reads as follows:Potentially there was the possibility of tackling the gangmasters employing the illegal immigrants for possible offences under the immigration acts. In order to do so it is normally necessary to obtain reliable evidence that can stand up in court. Our experience particularly with Chinese offenders is that there are no written statements or other supporting evidence to enable us to bring a prosecution.I find that frank admission that certain gangmasters and their gangs can operate outside the law to be breathtaking. It certainly adds great weight to the case for licensing gangmasters.
532 The Environment, Food and Rural Affairs Committee report on gangmasters states in paragraph 8 of its conclusions and recommendations:We are appalled by the lack of priority given to, and political accountability for, what is supposed to be the Government's co-ordinated response to illegal activity by gangmasters. Operation Gangmaster appears to be little more than an umbrella term for a few local enforcement operations in which the various agencies have exchanged information. Five years after it was established, Operation Gangmaster has had no significant resources allocated to it, has no targets and no Minister to take overall responsibility for its activities. Nobody could give us a comprehensive picture of what Operation Gangmaster does, how much it has spent and what it has achieved. Far from being a 'good example of joint action by several Government agencies' we conclude that Operation Gangmaster remains a woefully inadequate response to the complex enforcement issues arising from the illegal activities of gangmasters.I can only say in light of my experience that I find those comments remarkably generous towards the Government.
The tragedy in Morecambe bay and the slave labour practices of rogue gangmasters who operate with impunity in 21st century Britain has shamed the nation in the eyes of the world. I would at least hope that this terrible tragedy will shame the Government into taking long-overdue action against rogue gangmasters, and they make a very good start by supporting the Bill. We must ensure that the Bill is not watered down in Committee.
The Bill is simple and straightforward, and it will make it a criminal offence for gangmasters in agriculture and related industries to operate without a licence. Just as important, it will make it a criminal offence for anyone knowingly to use the services of an unlicensed gangmaster. It is at the intersection of the mainstream and shadow economies that the rogue gangmasters begin to ply their trade and build their evil empires. Offences committed under those provisions can be punished by fines or imprisonment, or by a combination of both, which should act as a strong deterrent. However, for the deterrent effect to be fully realised, it is essential that the measures in the Bill are rigorously enforced. The legislation must have teeth; there must be a mandatory licensing scheme with strong, proactive enforcement, and it must be properly resourced.
The Bill is about safeguarding the health and safety of workers and about protecting them from unscrupulous gangmasters. Those workers must be at the forefront of our deliberations. The slight inconvenience to some business and any cost associated with the introduction of such a licensing scheme to business or, indeed, the public purse, should be of secondary importance.
I pay tribute to my hon. Friend the Member for West Renfrewshire (Jim Sheridan) and congratulate him on bringing this extremely important Bill to the House. I certainly hope that it gains the support that it deserves from all parties. I thank hon. Members of all parties who have expressed their sincere sympathy to me and my constituents about the tragic events in Morecambe bay.
§ Mr. Henry Bellingham (North-West Norfolk) (Con)
I congratulate the hon. Member for West Renfrewshire (Jim Sheridan) on his excellent speech, on securing his place in the ballot and on using it to promote this Bill. I 533 congratulate him, too, on his work in preparing the ground for the Bill; he has spoken to a large number of people and organisations. As he pointed out, the Bill is different from other attempts to make progress on gangmasters because he has secured cross-party, multiple-agency support for it. That has taken a lot of work and I commend him for it.
There have been some excellent contributions to the debate so far. It is a pleasure to follow the hon. Member for Morecambe and Lunesdale (Geraldine Smith). All of us were deeply sympathetic to the position she found herself in after the appalling tragedy of the cocklers. It was a desperate human tragedy about which she had the courage to stand up and speak her mind. She said one or two things to Ministers that might have been unpalatable to them, but she did so because they were the right points to make, and we all admired her for that and for standing up for her constituents.
In my constituency, there is a very large arable, horticultural, food-packing and food-processing sector. My hon. Friend the Member for Boston and Skegness (Mr. Simmonds) gave some statistics. King's Lynn in my constituency is about the same size as Boston, and it has more light industry and manufacturing. However, I imagine that in the area between King's Lynn and Wisbech, and King's Lynn and Downham Market, roughly 60 per cent of people who work on farms and in packing plants and houses are overseas labourers. Some come from the European Union; in fact, there is a large number of Portuguese working in the constituency of my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard). There is also a number of Chinese and people from further afield still. and that number has risen sharply.
I should point out that many gangmastering labour-providing organisations are totally reputable. They are run by long-established families, they are long-established businesses, and they pay the minimum wage. They look after their employees and provide transport that is legal and in good working order. Many provide good accommodation. They meet the needs of the arable food-processing sector in a way that is beyond stricture and are a vital part of the local economy. The end users go back to the same gangmasters year in year out for workers to pick soft and hard fruit and to be involved in packing.
§ Mr. Simmonds
My hon. Friend makes an excellent start. Perhaps he has found in his constituency, as I have in mine, that those gangmasters and labour providers who operate within the legislative structures are keen for Parliament to legislate so that they are not undercut by those gangmasters who operate outside the law.
§ Mr. Bellingham
My hon. Friend makes a good point. It is fair to say that until recently the legitimate gangmasters were against such a Bill, but the mood has changed. The amount of illegal gangmastering operations in our constituencies has increased significantly. For a long time gangmastering and labour-providing operations in my constituency relied on students from throughout the United Kingdom to work as seasonal employees. They then started to rely 534 much more on eastern Europeans, many of whom came here to learn the language and to earn some money in the summer.
More recently, there has been a large influx of Chinese in west Norfolk, south Lincolnshire and north-east Cambridgeshire, many of whom came to East Anglia legally and legitimately. In the past couple of years, however, the snakehead and triad gangs have used that part of the country to offload many illegal immigrants who have been people-smuggled and transported into this country. I imagine that one reason why they come to Norfolk and south Lincolnshire is that the areas that they used to be sent to do not have the same availability of jobs and opportunities. The gangs obviously want to move them to a part of the country where jobs are available.
The problem was brought into sharp focus for me in the summer when a fire broke out in a two-bedroom flat in Fairstead, a ward in my constituency that is just outside King's Lynn Some 22 Chinese people were living in the flat. The fire was not caused by arson, but was the result of an accident caused by overcrowding. The occupants managed to get out of the flat and it was a mercy that no one was injured. The incident led to a great deal of local publicity and concern. The borough council, under the leader John Dobson, set up a working party to bring in the different agencies to find out what was going on and to get data and information to determine the seriousness of the problem. Its purpose was also to discover what the different agencies were doing and how they vi ere responding to the situation.
A number of illegal gang operations were being run by the triads and snakeheads Not only had they moved people into north-west Norfolk, south Lincolnshire and north-east Cambridgeshire, but they had established gangmastering operations to provide labour to many end users. It was the first time that many of the agencies—the immigration service, health and safety, fire, police and environmental health—had got together to discuss the problem.
My hon. Friend mentioned Operation Gangmaster. It was interesting that representatives from the Department for Work and Pensions said at the meeting that although the operation had more momentum now, it had been almost, a virtual operation, which was completely understaffed. There was not enough data and Ministers and officials in London had not provided sufficient leadership to get it moving.
Representatives of the immigration service explained that they did not have enough staff in Norfolk to begin to find out how serious the problem was and to take action. When I asked the local representative of the service how many staff he needed in Norfolk, Cambridgeshire and Lincolnshire, he said he wanted 150 or so if they were to carry out the necessary inquiries by visiting the gangmaster operations, some of the end users and some of the places where the supposed illegal immigrants were living. He told me that the service had five people available throughout the area to carry out that work, four of whom spent most of their time at Norwich airport. Admittedly, something is now being done; the immigration service is opening an office in Swaffham, in the constituency of my right hon. Friend the Member for South -West Norfolk, which will make a difference. I gather that it will employ 14 people.
535 The immigration officials made another pertinent point. I know that it does not come under the Minister's area of responsibility, but they said that they had stopped and interviewed a number of illegal Chinese immigrants. Few had legal or original documents. Many had forged documents and would not give their names. Those illegal immigrants knew that without legal documentation they could not be deported to the People's Republic of China because the Chinese Government have made it clear that they will not take back deportees who do not have legal documentation. One investigating officer made it clear to me that Chinese illegal immigrants often leave the People's Republic of China with identity cards and passports, but the snakehead and triad gangs advise them to destroy all documentation, which is replaced with false documents, including false names, when they arrive in this country. There is nothing the immigration service can do about that.
Those immigrants have my sympathy. They have paid king's ransoms to the people traffickers and triad gangs. Virtually all the money they earn goes back to their very poor families in China. I met some Chinese immigrants in the summer. I do not speak Chinese, but I had an interpreter. One has to admire them. They have travelled across the world to better themselves and to send money back to their home country. I understand from the local police that there may well be a connection between some of the Chinese in the part of the country that my hon. Friend the Member for Boston and Skegness and I represent and those who were so tragically killed at Morecambe.
I have always been tough on immigration, but what happened in Morecambe and the fire in my constituency, in which those Chinese people nearly died, make it clear that there is a human element to the issue. Those immigrants work hard. The ones who pick strawberries and other soft fruit and those who work in the food packing plants in my constituency work unbelievably hard. Some were working for well known, legitimate gangmastering operations that paid them the minimum wage and provided good accommodation and reliable transport. Others were undoubtedly working for illegal gangmastering operations. They were being paid a pittance, were exploited and lived in appalling accommodation. That situation in my constituency brought many things into focus for me.
My hon. Friend the Member for Boston and Skegness mentioned legitimate gangmastering operations. They realise that they are being underout and that our local economies rely on a large number of labour providers who do not pay tax properly and who participate in a variety of VAT and benefit frauds. Above all, they realise that people are being exploited. That is why the mood has changed markedly.
§ Alun Michael
The hon. Gentleman spells out the nature of the complexity in the interrelation of a variety of different activities and different ways in which illegal activity is taking place and, indeed, the difficulty of enforcement. Does he agree that that requires cooperation across a number of organisations, and he mentioned some of his local ones? Does he also agree that the strength of the coalition that my hon. Friend the Member for West Renfrewshire (Jim Sheridan) has brought together gives us the opportunity to get those 536 who are involved in commercial activities in the industry to work with the enforcement authorities, using the sort of proposals in the Bill, to create something that is effective, rather than imposing another piece of top-down bureaucracy?
§ Mr. Bellingham
I am grateful to the Minister for that intervention. He is absolutely right: we have to make sure that all the agencies are involved in solving the problem.
We have in this country a legal framework that is designed to prevent these abuses. We have quite tough immigration controls in some areas, and it is illegal to employ an illegal immigrant, although I understand that countrywide there have only been seven prosecutions in the past four years or so. Health and safety and environmental health authorities have some teeth, as do the fire service and the police. However, it became apparent during the King's Lynn meeting that many organisations and agencies did not know what the others were doing. That is one of the most important conclusions that I drew from the meeting.
§ Geraldine Smith
We held similar meetings in Morecambe. One of the problems of the multi-agency meetings was getting anyone to accept responsibility or assume leadership. The joined-up approach needs to operate at all levels of government, but it was missing in my locality.
§ Mr. Bellingham
That is true, and it also applies to enforcement of minimum wage legislation. In the agricultural sector, DEFRA has a lot of responsibility for that under the Agricultural Wages Act 1948, but in fruit-packing, potato-grading or carrot-topping plants, for example, the Inland Revenue is responsible. However, it is clear that there is overlap: when does agriculture become mainstream industry? That is a grey area.
I speak both as a Back Bencher and as shadow employment and small businesses Minister, although I speak from the Back Benches today. I am instinctively against new impositions of business regulation and red tape. The past few years have witnessed a plethora of additional red tape and regulation bearing down on businesses, and it is always small businesses that are bit the hardest. Most do not have human resources departments or the personnel needed to cope with extra legislation, and it is therefore small businesses that find it most difficult to adjust to new regulations and legislation.
One must ask whether, by regulating and introducing new laws, one is helping to create wealth, or to destroy it, or helping to create jobs and to increase the tax take. The first thing to do is to find out what industry and business want. In the present case, they want Government action. On the other hand, parts of the Bill cause me great concern, for example, the £3,000 fee that my hon. Friend the Member for Boston and Skegness mentioned. Many highly reputable organisations would find such a fee onerous-it is a large sum to small businesses. Farming is a precarious business at the moment. At times, certain crops and products fetch a good price, at other times, they fetch much less. We should not forget that many of the products that the gangs supply labour to harvest are not part of 537 common agricultural policy price support operations—they are in a free market—and the multiples have huge buying power. Margins are therefore very tight.
I also have reservations about the use of the criminal law against the end user. I have an open mind on whether we should use the criminal law at all in this respect. I accept the points made by the hon. Member for West Renfrewshire, who made a strong case for proper enforcement and sanctions and for using the criminal law. He does not want a toothless paper tiger; he wants a Bill that carries sanctions, and I accept the logic of his arguments. On the other hand, should the criminal law be applied to business, especially those that might have been acting in good faith?
This summer, I visited several operations in my constituency where gangmasters were providing labour. Harvest is an unbelievably busy, frenetic time. The end users are desperate to get crops such as strawberries and raspberries picked, because they have the multiples breathing down their neck, demanding the next delivery, saying that the fruit must be not quite ripe, but ready to ripen in the next 24 hours and with a shelf life of a week or so. The farmer or grower may have got up at 4 am, after working all night; he needs 40 or 50 people on the farm the next day, so he phones the gangmaster he normally uses, but he cannot send enough people, so that gangmaster phones another, who may phone a third or even a fourth to organise the necessary labour. In such circumstances, the farmer, who is desperate to get his crop picked, might end up with the full force of the criminal law bearing down on him, and that causes me concern.
Having said that I am by instinct, at every turn, anti-red tape and an anti-regulator who believes strongly that we should not regulate if at all possible, I acknowledge that the Bill has obvious merits. There is a feeling throughout the country, and in particular in East Anglia and south Lincolnshire, that people are being ruthlessly exploited by cynical, cruel and wicked people. As my hon. Friend the Member for Boston and Skegness said, that is wholly unacceptable in the world's fourth-largest economy. That is why it is important that the Bill is sent to Committee: it might not be perfect, but in Committee we can make it workable, so that it can be used to put things right.
§ 11.6 am
§ Mr. Nicholas Brown (Newcastle upon Tyne, East and Wallsend) (Lab)
I shall be brief, because it is of course possible for the Bill promoted by my hon. Friend the Member for West Renfrewshire (Jim Sheridan) to be talked out by its friends as well as by its opponents, and I would not want to be responsible for that happening. I congratulate my hon. Friend on introducing a Bill on this topic and on the enormous amount of work that has gone into preparing it and assembling the supporters who are lined up behind it. What is proposed is absolutely right and the Bill has my wholehearted support.
This is not the first time that Parliament has considered a licensing regime for gangmasters—there were licensing schemes in the 19th century. The most recent was introduced in 1973 and administered by the 538 then Department of Employment, but that scheme was abolished in 1994 because the Government of the day believed that it was a burden on business. I was therefore interested to hear the hon. Member for Boston and Skegness (Mr. Simmondds) date the explosion in the abuses that we are trying to deal with to 1995. I wonder whether there is a connection between that and the abolition of the licensing scheme the year before.
§ Mr. Simmonds
The right hon. Gentleman is putting words into my mouth. The last time that any Government did any serious research into the gangmaster problem was 1995, and they found that there were about 5,500 such operations. To my mind, the explosion has taken place in the past three years.
§ Mr. Brown
Nevertheless, I wonder whether the hon. Gentleman would care to reflect on the wisdom of abolishing the previous licensing scheme in 1994.
I remind the House of the abuses with which we are trying to deal. Those who are taking advantage of the current position pay less than the national minimum wage and the agricultural wages boards minimum wage. They make people work longer than the 48-hour maximum and they do not observe statutory sick pay and holiday pay regulations, or rules on employment and termination notice. There is benefit fraud people work and claim benefits. Illegal workers who are not entitled to work in our country are employed and illegal deductions from pay are made for so-called services provided. Income tax and national insurance contributions are not paid, VAT is evaded and health and safety regulations are breached.
As my hon. Friend the Member for Morecambe and Lunesdale (Geraldine Smith) made so clear to the House in a moving speech, health and safety issues are not minor matters. The agricultural sector's record on health and safety matters is not good, and the victims range from owner-operators—people who operate their own farm businesses—to employees. We should take these matters seriously, and it is perhaps worth reminding ourselves who the victims are. They include legal workers in the industry who are being paid the rate for the job, and having to compete with others who are not being so treated. The victims are also honest employers. I am not surprised that the National Farmers Union supports the Bill. There is nothing more galling for an honest employer than finding that they are being undercut by others who are not obeying the law and, worse, finding that the law is not being enforced. In other words, the dishonest get away with it. I can think of nothing that is more likely to induce cynicism and disrespect for the law than the fact that it is being honoured in the breach.
If that is not bad enough, there are people illegally in this country who are being exploited for poor rates of pay. We as citizens are perhaps turning a blind eye to all this. At least that is the current state of affairs. We are turning a blind eye to the oppression of an underclass, the members of which are in our country and among us but are being treated extremely badly. What should we do about it? I think that the licensing proposal is the correct remedy, but it will not work on its own. Of course we want an effective licensing regime, and that means a system that is backed by powers that are in force. More than that, we need to know who is doing the 539 enforcing within the Government. We need to know also which Department is accepting lead responsibility and which Minister can make the necessary decisions and come to the House and reasonably be held accountable for the decisions.
We understand that responsibility for different aspects of the problem lies with different Departments—the Home Office, the Department of Trade and Industry, the Department for Work and Pensions and the Department for Environment, Food and Rural Affairs. It is vital that we draw the strands together and ensure that there is a main Minister responsible, and that that Minister is able to operate with authority and be accountable to us in this place. It is not an easy thing to do. I have had ministerial responsibility both in the old Department of Agriculture, Fisheries and Food and in the Department for Work and Pensions. I have tried to tackle these issues, and I know that other Ministers have tried to do so as well. The willingness is there. Public servants are willing to play their part. So far, however, effective co-ordination and the single-mindedness that is necessary to tackle the problem have eluded us.
It is not true to say that nothing has been done. There have been prosecutions. In 2002–03, there were 138 prosecutions of gangmasters for benefit fraud. That is the work of the Department for Work and Pensions. There were 14 prosecutions for tax and national insurance evasion. That would come under the Treasury. Since 1997, there have been 22 prosecutions and eight convictions for employing a person subject to immigration controls. It seems to me that those figures for prosecutions do not tell the full story about the offences that are being committed. As we consider the Bill and the abuses that we are trying to clamp down on, we need to consider two other big questions. Before dealing with those I shall gently make the point that responsibility for dealing with these issues in agriculture, shell fishing and packaging does not lie only with the primary producer. A powerful supply chain operates in the food sector, and I welcome the fact that some major household names further down the supply chain have said that they, too, support the Bill.
That support needs to be given practical effect. When considering enforcement issues—I know that the Minister is interested in them—that are part of the licensing proposal, it is right to ensure that enforcement works right the way down the supply chain. In other words, powerful people have to accept the responsibility that goes with having great power and being able to weald it further down the supply chain. I do not think that it is fair to put all the pressure on the primary producer. In the Select Committee report it is an extremely good report—the point is made that there are many people working in the primary sector who are trying to obey the law and trying to do their best, but they are up against illegal competition and also the pressures that the hon. Member for North-West Norfolk (Mr. Bellingham) properly referred to that are in the supply chain.
I take the view that the supply chain has a vested interest in the well-being of that chain and in taking responsibility for clamping down on practices that are not only illegal but considered to be completely unacceptable by Members on both sides of the House. 540 Everyone has to take responsibility, and that includes the big and the powerful as well as those who are in the front line as primary producers.
Although I think that the licensing proposal set out in the Bill is right—the supply chain sits alongside it—there are two bigger issues that it would be wrong for us not to consider. The first is illegal working. Of course it should be illegal to work and claim benefit—to do so is to defraud the benefit system, and that is not acceptable. Leaving aside that rather obvious point, why should it be illegal nowadays to work? Surely the Government's whole approach is to encourage people to work and to make a contribution. The thrust of the working families tax credit proposal is to get people into work and so advantage themselves. They will be earning money and earning a better income than even the most generous benefit system could ever provide for them.
My view is that work should not be illegal, at least from the point of view of the worker. However, it is right that there should be illegal employment practices for which the employer can be held accountable. As we make progress with the Bill, I hope that the Government will reflect on this pretty fundamental point about employment law. I suspect that we do not keep illegal working as part of our framework of law because the Government philosophically believe that it should be illegal to work—most Members, certainly on the Government Benches, do not believe that. There is a view that if we make this country an unattractive place to immigrants—for example, difficulties in claiming benefits, difficulties in accessing the health service and difficulties in getting a job and being able to keep themselves—they will not come here. All the current evidence is that that is a hopeless argument. I urge the Government to think again.
At the heart of the matter is the question of how far employment law and conditions, and perhaps housing law, benefit law and the right to have access to the health service, can be used as deterrents to illegal immigration. I would like to see the Government take on, as they reflect on the licensing scheme, the issue of whether we should just deal with illegal immigration bluntly and in its own terms, and not try to use the labour market as a weapon in what the Home Office seems to find an intractable problem. There is a blunt side to this as well as obvious advantages. The labour market would work better if there were no such thing, from a worker's point of view, as illegal employment. However, it would mean having to face the question of what to do with people who should not be in the country and have exhausted all the avenues regarding their right to stay, particularly if the country that they have come from will not take them back.
§ Andrew George
The right hon. Gentleman has raised the difficulty of relating benefit claims to employment opportunities. Does he agree that there are significant problems, particularly in areas like mine, where people who are claiming benefit find it extremely difficult to undertake short, intensive periods of work? It is a devil of a job to try to get back on to benefit, so they risk losing benefit and getting into debt. That is a great problem, simply because the system is not working to their advantage.
§ Mr. Brown
That is a good point, although it is separate from the main thrust of the argument that I am 541 trying to make. When I was a Minister in the Department for Work and Pensions, we tried to deal with the problem by introducing a rapid return procedure, so that people who had been on one of the Government's in-work programmes could make a rapid return to benefits. I do not know how well that is working in the hon. Gentleman's area, but he has made a perfectly good point. Entitlement to housing benefit is particularly affected, because people have to pay rent from their earnings rather than their state benefit. The safety net that they previously enjoyed will be removed, so they worry about how quickly it will be reinstated, especially if their employment is short-term. The hon. Gentleman made a good point—the Department is aware of the problem, and is trying to deal with it. There are programmes in place, but that is not to undermine the value of his argument.
I am trying to make a broader point. How far should other aspects of the way in which we manage our society, whether acknowledged or not, be shaped by the desire to deter illegal immigration to this country? I am coming round to the view that it may be better to face up to the difficult issue of illegal immigration on its own terms and have a clear-cut policy, instead of hoping that the housing market, the health service and, above all, the labour market will operate as a covert deterrent. That is happening at the moment in agriculture, horticulture and the shellfish industry, as we have seen with such tragic consequences. I wish the Bill well, and I urge the Government to consider those other questions as it makes progress.
§ Andrew George (St. Ives) (LD)
I congratulate the hon. Member for West Renfrewshire (Jim Sheridan) on introducing the Bill. As has been said, it clearly has all-party support. That support is both for its principle and the opportunity it provides to do something about the issue. There is not necessarily support for every aspect of the Bill, and much more debate is needed, especially in Committee, when I hope constructive proposals and amendments will be introduced to embellish and strengthen the enforceability of the measure.
A recurring theme in hon. Members' speeches was the fact that something needs to be done. The predecessor of the hon. Member for Boston and Skegness (Mr. Simmonds) raised the issue in years gone by, so it is not a new concern in his constituency. The hon. Member for Morecambe and Lunesdale (Geraldine Smith), who has a particular reason for raising the issue, has handled her response to the appalling tragedy in her constituency particularly well. The hon. Member for North-West Norfolk (Mr. Bellingham), like his son. Friend the Member for Boston and Skegness, said that none of us wants unnecessary red tape and regulation, which is a burden on employers and often employees. However, something clearly needs to be done, and we all want to take the issue forward.
On 13 February, there was a lurid headline on the front page of The Independent, preceding a report on the 54 Greek Romanies in my constituency who were rescued by the Greek embassy from a gangmaster who, according to the headline, was allegedly beating and starving them and denying them their wages. The Greek 542 embassy intervened and assisted those workers, helping them to return to northern Greece. I have spoken to the embassy and the gangmaster, who works for Boldline. I shall have further meetings with him, but he claims to be a legitimate operator and denies many of the press allegations.
I am concerned that workers are coming to this country on false pretences and with false expectations. The gangmaster claimed that the workers had no intention of working and made some uncomplimentary remarks about them. As an office holder in the all-party group on Roma affairs, when I hear about Romanies coming from northern Greece to my area, I am worried when I learn that they have been given rudimentary accommodation and allegedly been mistreated. I support an agenda of celebrating diversity in this country and more widely, so when I hear of Romanies living close to Hayle, the town where I live in Cornwall, I believe that we should welcome them and share in their culture. They should not live in rudimentary accommodation, suffer alleged mistreatment, and have to be rescued. We should hold civic receptions to meet them and hear more about them, instead of allowing them to be treated in that way, which is a matter of great concern.
In an intervention on the right hon. Member for Newcastle upon Tyne East and Wallsend (Mr. Brown), I spoke about the difficulty of claiming benefits. Ten years ago, during a period of high unemployment, daffodil, broccoli and bulb picking, as well as other agricultural work and, to a lesser extent, work in the fishing sector in my part of the world, was undertaken by local people. Although west Cornwall and the Isles of Scilly have much higher unemployment than the average for the rest of the country, our population is sparser, so the available work force among the unemployed and people on benefit is significantly smaller. Many growers and farmers in the area need other labour supplies to provide labour for short, intensive periods because they cannot get that labour from the local area.
Locally and nationally, people who claim unemployment benefit find it tremendously difficult to undertake such work. The right hon. Member for Newcastle upon Tyne, East and Wallsend was right that the housing benefit system is a particular problem. Areas with a tiny public rented sector and high house prices have extremely difficult housing problems. If someone loses housing benefit for a period and gets into debt they risk losing their home and a fundamental part of their life. People who undertake short, intensive periods of employment discover that it is simply not worth their while. We therefore need to address that problem when looking at the wider issue.
I agree with the right hon. Member for Newcastle upon Tyne, East and Wallsend and others that part of the background to the issue is the debate fuelled by some of the right-wing tabloid press in recent weeks about illegal immigrants and benefit tourists coming to this country. That is a red herring. As the right hon. Gentleman rightly points out and in my own assessment—perhaps we need further inquiry into this-certain parts of the country, possibly including the great city of London would collapse if not for the migrant workers who underpin the economy. The lurid headlines in some of the press do not provide a suitable environment in which to find a responsible way forward. 543 In an intervention on the hon. Member for West Renfrewshire, the Minister said that he wanted effective legislation. That is what we all want. As other hon. Members have said, it is not a question of licensing and regulation—that is the confetti in the background—what matters is enforcement. Within the Inland Revenue, an agricultural compliance unit is already operating. At the beginning of the year, growers in my area register all the gangmaster or labour supply companies that they intend to use during the year. They complete a form which they send to the agricultural compliance unit. If there is any amendment to that during the year, they must complete another form and send it to the Inland Revenue.
I do not know to what extent the Data Protection Act 1998 or other legislation is restricting the sharing of such information from farmers and growers between Government Departments with an interest in the operation of particular aspects of legislation. Those of us who do not want to create unnecessary additional regulation would not want farmers, to complete yet more forms, when the information already available could be shared.
§ Alun Michael
The hon. Gentleman raises an interesting point, with which I agree The duplication of information helps nobody. It has been demonstrated that some organisations believed that they could not exchange information, when in fact they could. When the Crime and Disorder Act 1998 was passing through the House, I recall inserting a clause to tell organisations explicitly that they could share information for the purpose of crime reduction. Although that was already believed to be the case, the purpose was to emphasise that information could be exchanged for virtuous purposes, provided that that was done properly and in accordance with the rules. The hon. Gentleman is right to point out that information is not shared when it should be. Perhaps we can consider the matter in detail in Committee.
§ Andrew George
I am grateful to the Minister for that intervention. I hope that in Committee we will be able to tease out such issues, rather than reinventing wheels that already exist. As other hon. Members have said, we need to see evidence of a joined-up Government who recognise that information can be shared. Instead of creating unnecessary brick walls, we need to facilitate a mechanism whereby information is shared by Government Departments. I hope that we can examine ways of doing that.
The Environment, Food and Rural Affairs Committee was critical of the Government, who clearly need to get a grip on the matter and adopt a more joined-up approach. As the right hon. Member for Newcastle upon Tyne, East and Wallsend said, there should be a Minister to give a clear lead and co-ordinate the approach among Departments.
I do not want to detain the House unnecessarily and I know that other hon. Members wish to speak. There are a few other points that I shall make as briefly as possible. The Home Office currently operates a scheme that causes concern to people in my area. Those who cannot get work permits are using, and allegedly abusing, a system operated by the Home Office called the training and work experience scheme, which allows 544 people from other countries to come to the UK for up to 12 months, allegedly on a work experience and training module, and to take back to their country of origin the qualification that they are intended to achieve at the end of that period. The allegation is that the scheme is simply used as a means by which gangmasters can bring labour into the country and that there is very little training and a great deal of repetitive work out in the fields. I hope the Bill will deal with the operation and supervision of such schemes.
Other speakers have mentioned fraud. Under Operation Gangmaster in 2002–03, the Government reclaimed £5.9 million in VAT, the Inland Revenue recovered tax and national insurance of £4.3 million during that year, and the Benefits Agency recovered £405,000. It is interesting that in this case—to use old Labour-speak, if I am allowed to do so in the present Chamber—the problem of fraud seems to involve the bosses, rather than the workers. That should be the main focus of action, enforcement and regulation.
My next point was made in an intervention, which, sadly, was deemed to be too long. We have heard reference to the Environment, Food and Rural Affairs Committee, and I want to emphasis the role of the supermarkets. It is good to have their support for the Bill. They are creating the market conditions in which pressure to cut producer costs through potentially unscrupulous practices has had such unfortunate consequences. People, especially those from urban constituencies, if I may say so, may not understand the pressure on small farmers and growers in rural areas. Their farm-gate prices and the conditions on the contract are being pushed to such an extent that they desperately seek lawful ways of cutting their production costs. That creates an environment in which unscrupulous gangmasters can thrive. We should not overlook that.
§ David Hamilton (Midlothian) (Lab)
In those circumstances, does the hon. Gentleman agree that it is good news that every major supermarket has signed up to the aims of the Bill? That sends a signal to all farmers that they want a level playing field, which should remove some of the pressure on farmers.
§ Andrew George
That will take some of the pressure off the farmers, in the sense that the supermarkets are saying that they want the matter sorted out. It does not remove the pressure of unsustainable farm-gate prices, or the incredible pressure to which farmers are subjected by the conditions in the contracts. The supermarkets are not relieving that pressure. They are, however, attempting to achieve good publicity for themselves by backing the Bill. They must follow that up by enforcing their voluntary code of practice, which is supposed to help to protect suppliers—farmers and growers from the unscrupulous misuse of supermarkets' monopolistic powers. Only last week, the Office of Fair Trading reported that farmers and growers are not using that code of practice because they fear the consequences. Of course the supermarkets will want to be seen to be supporting the Bill, because that is good publicity for them, but they must follow it through in the way they treat farmers and growers.
§ Alun Michael
The hon. Gentleman is raising some interesting issues, as he has throughout his speech. He is 545 ranging quite wide by discussing the way in which the market works and supermarkets operate. Perhaps we should be a little less ambitious and not seek to solve the problems of the universe in one private Member's Bill, ambitious as my hon. Friend the Member for West Renfrewshire (Jim Sheridan) has been in promoting it.
Does the hon. Gentleman agree that the aim must be to create a situation in which fair competition works and unfair competition is penalised? That is the constructive but limited objective that the Bill should have. Then—this is where the retail organisations come in—we have to try to ensure that it is not worth anybody's while to employ illegitimate gangmasters. That will lead to light regulation because the whole industry is supportive of fair competition, which undermines the opportunity for unfair competition.
§ Andrew George
I entirely agree with the right hon. Gentleman. That is the kind of world that we are pushing towards. We need to strike a balance between ensuring the success of voluntary agreements and creating an environment in which all consumers look for ethical trading products when they go to the supermarket shelves and want to be reassured that they are not buying something that is part of an unfair trading practice. If that does not happen through the market, sadly regulation is required to make the supermarkets enforce it.
I am well aware that other hon. Members wish to speak, so I simply say that the hon. Member for West Renfrewshire has my full support and that of my party. We agree that something must be done about the problem, and the Bill provides a good framework on which to hang further discussions. I hope that the hon. Gentleman is not too precious about particular clauses and that he will welcome sensible and constructive amendments that would strengthen the Bill.
§ Mr. Frank Dobson (Holborn and St. Pancras) (Lab)
I wholeheartedly welcome the Bill, which is intended to put right a long-standing wrong and to improve the lives of some of the most vulnerable people within these shores. I congratulate my hon. Friend the Member for West Renfrewshire (Jim Sheridan) on introducing the measure prior to the glare of publicity that followed the awful events in Morecambe bay, and on his exemplary, clear and, if I may say so, simple introduction of his Bill, which was a lesson to many.
I commend my hon. Friend the Member for Morecambe and Lunesdale (Geraldine Smith) for her long-standing efforts to try to prevent the awful occurrences in Morecambe bay before they happened, and for her most restrained and moving contribution to today's debate.
It is only fair to remind the House that two Members of Parliament who are no longer with us—the late Joan Maynard, a Labour MP, and Dick Body, a Tory MP—devoted a huge amount of time to trying to persuade the rest of us that we needed to do more to protect people from evil gangmasters. It is to the shame of us all that we did not take more notice of them.
546 For a long time, we have been urged to take action by the TUC and the Transport and General Workers Union, which incorporated the Agricultural Workers Union. Now, we are finally doing something. With a bit of luck, we will find that, following the contribution of my hon. Friend the Member for West Renfrewshire, Jim has actually fixed it. That would be good for everybody.
Casual working, contracted labour and agency staff have been around since employment has been around, and those arrangements are unlikely to disappear. We are therefore obliged to try to ensure that people who do casual work, who are contracted labour or who are agency staff are offered proper and full protection—the sort of protection given to people in permanent long-term employment. Such people are especially in need of it, because many of them are ill informed, particularly vulnerable and difficult to organise. Consequently, it is difficult for trade unions to arrange the protection that membership can bring. I hope that the some of the extra funds that the Government are giving to the trade unions for training will be devoted to training people to make them more effective in recruiting and representing vulnerable people in the casual labour part of our economy.
Decent gangmasters have nothing to fear from my hon. Friend's Bill; indeed, they have everything to gain. Bad gangmasters are the robber barons of our society. I emphasise that they are robbing not only the people they employ, but everybody else. They are robbing the legal and illegal work forces with which they are involved—not only of money, but of their entitlement to the national minimum wage. By the form of their employment, they are robbing them of the tax credits that would go to other people in similar circumstances. They are robbing them of national insurance cover and contributions, pension entitlements, holiday pay and sick pay. They are robbing them of their health—in some cases, of their lives—and all have been robbed of the dignity that everyone should be able to get from work.
But it does not stop there. They are robbing us all, as taxpayers. Income tax, national insurance and VAT are not being paid in, and most of these firms—if one can call them that—pay no other contributions. It is very unlikely that they pay business rates anywhere. They are the villainous people living on the edge of society who make no contribution to it but take a lot out. They are robbing reputable employers by undercutting the rates that reputable employers are required to take from the people to whom they supply the work force because they comply with the law. As my hon. Friend the Member for Morecambe and Lunesdale said, they are robbing our country of its reputation as a decent society. All that robbery must stop.
There are lessons to be learned, one of which is, as a generality, to beware of the worshippers of deregulation. Gangmasters were regulated from 1973 to 1994, but that system was abolished because it was allegedly a manifestation of the nanny state that involved red tape and snooping. If the nanny state, red tape and snooping would have stopped what happened in Morecambe bay, I am a proud supporter of all those things.
We must not fear being accused of introducing the nanny state, red tape and snooping if they offer decent protection.
547 As my hon. Friend the Member for West Renfrewshire pointed out, we have recently legislated to register nursing agencies and to establish a registration system for the security industry. We rightly propose to register and license landlords to deal with bad ones and we intend legislating for a licensing system to get rid of loan sharks. All are good examples of what Parliament is about. Gunfighters in American B-movies say, "We deal in lead"; in this place, we deal in regulation. We should not be ashamed of that.
The next lesson to be learned is that when dealing with cruel and evil wrongdoers, voluntary codes do not work. The voluntary code in the sector that we are considering has helped the evildoers because it has increased their advantage over those who comply with the code. As the costs of complying have increased, the wrongdoers have been better able to undercut those who complied. We do not have voluntary codes against other thieving villains. We have laws against burglars and those who mug people in the street. We enforce those laws and punish the wrongdoers. No one would suggest that we could stop mugging on the street through a voluntary code. Yet, in the case we considering organised, wealthy villains are mugging some of the most vulnerable people in our society.
Let us consider enforcement. There is no point in me or any one else making a pious speech, passing a toothless law and patting ourselves on the back for it. We must have effective enforcement. The Bill provides for two-pronged effective enforcement. First, it places an obligation on those who are called principals—the people who use the gangmasters' labour. They will have an obligation to check on the gangmaster and all the way down the supply chain. If they want to retain their reputation as respectable people. they must do that. That is a singular requirement, with which most will want to comply.
§ Mr. Bellingham
The right hon. Gentleman presumably heard my few remarks, in which I mentioned the case of the farmer trying to get his strawberries picked at the crack of dawn. Many subcontracting gangmasters, and perhaps even a third or fourth subcontractor, are involved, so that in the early morning, the farmer has no idea where the labour has come from but is desperate to get his strawberries picked. Does not the right hon. Gentleman feel sympathy for the position of such a farmer or grower?
§ Mr. Dobson
Yes. I understand the hon. Gentleman's point, but if the Bill succeeds, matters will be much easier and the farmer will be more secure because there will be reputable suppliers of labour, on whom he has been able to depend in the past. If the suppliers need to subcontract people to help them, there will be other reputable people further down the supply chain. If we eliminate the disreputable, farmers, and suppliers should be okay. In any case, the Bill provides for some sort of defence of reasonableness.
Although I believe that we need a separate agency for the task of enforcement, I do not accept that it is terribly difficult to co-ordinate the activity of various agencies and Departments to deal with the problem. An impression of difficulty is created through the possible involvement of the Inland Revenue, the Department for Work and Pensions, the immigration service, the police, 548 the Agricultural Wages Board, the Health and Safety Executive and possibly the local environmental health department. However, they do not have to co-ordinate so that they all go on a raid together. All that they need to do is ensure that when one goes on a raid, the others are filled on in the details and that, if people are detained, the relevant parties can get there to quiz them on their aspect of the matter, whether national insurance, immigration or health and safety.
It is not impossible to conduct a raid involving, for example, two agencies, and subsequently ensuring that the other five, six, seven or eight do their job. My right hon. Friend the Minister and other Ministers should draw to the attention of those in the field that they have a job to do and that it is about time that they started doing it. If the debate gives Ministers an opportunity to say, "We want a bit better performance from you folks", that will be another merit of it.
I strongly support the Bill and stress the necessity for enforcement. A long time ago, when I did history 0-level, the history master said, "They passed a factories Act, which had no impact. Then they passed another factories Act that included a factories inspectorate and it started having an effect." Without enforcement provisions, we will not get the changes that we want. I hope that the measure is passed and receives the resources that it needs for enforcement.
I speak as a central London Member. Although I represent Elm Village and Chalk Farm, that does not qualify me to talk about agricultural work, despite growing up in the rural east riding of Yorkshire and therefore having some knowledge of the position. However, I am worried about the exploitation of other vulnerable workers because it is not confined to the agriculture and food industries. It is much more widespread. It occurs in the rag trade, the construction industry, catering and cleaning. I have to emphasise a shameful point—the exploitation does not affect only the private sector. Clear evidence shows that people who work down the supply chain for the national health service, local government and central Government Departments are affected by such vile exploitation. The council, hospital or Department may let a contract to a reputable agency, but many members of the work force are probably not directly employed by it. The agency may subcontract and the subcontractor may subcontract and so on, further and further down the line, until we end up with people who do not get a decent rate of pay, who do not pay tax or national insurance and who are charged for their transport, overalls or uniforms and food. They are vulnerable people, and the position is disgraceful.
Those vulnerable people include many people who are legally entitled to be here—British citizens, who are as British, or not, as me. However, people who are here illegally are exploited even more. They are often trying to pay back the people traffickers who brought them into the country and rip them off. They pay probably the same collection of evil villains for their accommodation. Ultimately, they are enslaved by debt and violence, and the threat of violence. We should not forget the violence that lies behind much evil enforcement.
There is also a peculiar sub-category, to which the hon. Member for Boston and Skegness (Mr. Simmonds) referred: ill-informed people from the European Union who have been convinced by their evil gangmaster that 549 they are not legally here. For example, many Portuguese people work in Britain without knowing that they are entitled to do that, and are thus exploited as if they were illegal immigrants and feel that they have no rights.
I have tried to give credit to everybody who has been involved in the Bill, and a great deal of emphasis and exploration of this exploitation has been done by Polly Toynbee of The Guardian. I do not agree with everything that she writes, but over a long period she has devoted a huge effort to identifying and drawing our attention to the problems faced by some of the most deprived people in our country. One measure of our success ultimately would be if she could start writing articles about something other than the impoverished work force in Britain, and I am sure that she would be delighted to be able to cease writing on the topic.
This excellent Bill brings protection to one group of exploited workers, but if we pass it roughly as it is, a large number will remain who are not protected in the way that we would wish. I reassure my hon. Friend the Member for West Renfrewshire that I do not seek to have his Bill amended and extended to cover everyone, because that is not his task, nor the task of a private Member's Bill. But we cannot sit back satisfied once the Bill becomes law. We need a much more comprehensive approach and a comprehensive measure to ensure that no one in Britain is employed in conditions that would be unacceptable to us, or our families. That must be the test. If the thought of us, our children or grandchildren being so employed is unacceptable, such employment is not fit for anyone else either.
One of the things that bothers me is that no one even knows how many people are not being paid the minimum wage. The TUC estimates that about 150,000 are in work not being paid the minimum wage, but there is no clear Government figure on those doing casual or agency work. Those figures seem to range from about 250,000 to 1 million, and I think that even 1 million is an understatement. God knows how many other people are employed in the so-called black economy.
The Government say that one of the attractions of Britain's economy is that we have a flexible labour market, but generally speaking it is the casual contract labour agency end of the market that provides the ultimate flexibility, and if it is that sphere that provides the flexibility that we say is helpful to our economy, we are under a special obligation to ensure that the people working in it are offered the protection that we would all like to see. It is imperative therefore that we strongly support and push for the implementation of the present directive that is held up in the European machinery to provide the proper protection for casual and agency workers Europe-wide, which would reduce some of our problems.
I warmly congratulate my hon. Friend the Member for West Renfrewshire. The Bill will do a good job as long as Ministers accept that it needs proper enforcement and the resources are provided. Not many people succeed in placing such a measure on the statute book and can look back and say, "I did that." My hon. Friend will be able to say, "I did that for some of the worst-off people in my country." Not many of us will ever be able to say that, and my hon. Friend should be really proud.
§ 12.4 pm
§ Mr. John MacDougall (Central Fife) (Lab)
I add my warmest congratulations to my hon. Friend the Member for West Renfrewshire (Jim Sheridan) on his timeous introduction of the Bill. When he first introduced it in January, no one could have imagined the horrific circumstances that were to unfold in Morecambe bay, which so shocked us.
The timing is right for such a Bill, which is welcome. We have a proud and rich inheritance of representing our work forces and trying to ensure that they are well looked after, and many have contributed to that over the years, including trade union representatives and others. Since I first aspired to enter the House, I have always believed that its task was to ensure that people were properly protected and that we could be proud of the working conditions that we offered to our workers.
Recent months have made clear how much we have failed in the past. There is no shame at all in saying that we can always do things better, and each and every one of us has had a good wake-up call. We can do something much better than exists at present, and the Bill offers that opportunity.
We have an increasing problem with the enlargement of the European Union. More and more people will move across Europe and Britain has a strong economy and is an attractive place in which to live and work. We should offer the best protection to anyone who seeks employment in this country, with the best conditions attached to that employment.
I am delighted that the supermarkets have spoken out so clearly in favour of adding their weight behind the Bill. It is important to have such commitment. It is a narrow-minded approach to believe that provision is adequate and to become complacent, so that we do not take the right steps at the right time. As I said, this Bill has been introduced at the right moment.
It is a very dark and intimidating world out there for people who are brought into this country. We can only begin to imagine what pressures the people in Morecambe bay were under. I add my congratulations to my hon. Friend the Member for Morecambe and Lunesdale (Geraldine Smith) on the excellent way in which she has represented her constituency during the horrific experience that it underwent. I am sure that the House has felt and will continue to feel much sympathy for that terrible set of tragic circumstances.
One can only begin to imagine what kind of pressures those people were under. What would make anyone go out in such conditions to carry out such work for the income that they were receiving? That is why, as has been said today, we should all feel some sense of shame for not addressing those problems.
It is time for the Government to act in this matter. The Select Committee report on gangmasters in 2003 concluded that the Government had not tackled the problem effectively. It is six years since the interdepartmental working party on the issue was set up, yet we still do not know how many gangmasters operate legally or illegally in this country, so we do not know how many people are legally or illegally employed. We should address that issue, and the Bill will give us the opportunity to do so when we consider it in Committee, as I hope that we will.
551 In discussing Operation Gangmaster, the report raised the question of whether there had been appropriate funding. Resourcing levels have been bad, and much more can be done in that regard. Mention has been made of enforcement, which is a very important issue that we must tackle. The Bill must have teeth and make a difference, and we should be able to measure the resulting difference clearly. I also welcome the work of the Ethical Trading Initiative. The code of practice is a good one, but we must ask ourselves whether it is sufficient in itself. I hope that we can look at that in Committee.
Casual workers are an important part of the economy. We must be careful not to be over-prescriptive with paperwork. We have heard about the burdens imposed by unnecessary legislation, but that does not apply in this case. There is clearly a weakness in the system, so in that regard the Bill is important; it is not legislation for legislation's sake. That is an important message. Reference has been made to a £3,000 charge, and such matters will doubtless be discussed in Committee. The legislation will bear much responsibility but whether it will stand the test of time will be determined by its effectiveness.
§ Jim Sheridan
On charging £3,000 for a licence, it is clear that the Secretary of State will determine any costs. Such payment will be graduated, so that smaller farmers can be accommodated and not disadvantaged in comparison with larger ones.
§ Mr. MacDougall
I thank my hon. Friend for that clarification.
We should also consider the rights of people in employment, and factors such as agricultural minimum rates of pay, the national minimum wage, written employment and pay details, working time, holidays and so on, which are important details. When people seek employment in these industries, they must be reassured that they will be properly represented in respect of their conditions.
Another factor is the temptation to use young children in such work. We must make sure that they do not fall into the grip of unscrupulous gangmasters. We must continually emphasise that we are talking not about those who operate properly, but about illegal activities and people who operate outside the law, not within it. That should be the central thrust of this legislation. Of course, such people do not only come from this country; as I have said, they also come from the enlarged European Union and even further afield.
This issue has been a difficult one for many years, which is why it has been discussed in the House on many previous occasions, and in different ways, by various Members in trying to increase awareness of the illegal activities of gangmasters. The Bill is a vital first step in legislating to deal with the current situation, and I welcome its simplicity. It does not get bogged down in the complex details; its purpose and intention are clear. I hope that the broad support that it has received in the House so far will continue, and that we all remain focused on the value of that simplicity. I hope, too, that the Government will make only minimal changes to that simple approach in taking account of their own concerns. That way, we can ensure clarity for everyone 552 who operates within the law, while making clear to those who seek to operate outside it the exact implications of their actions.
Hindsight is a wonderful thing, and we would all like to have the vision to make the right decisions at the right time. There is no doubt that, had legislation similar to the Bill been in place, the tragic circumstances in which the Chinese cockle pickers lost their lives would have been much less likely to occur. That is what should drive us forward. The legislation is very much needed and people will benefit from it. If it is passed we could all rest easier and feel that we had done our best to protect people who seek employment in our country, because we will have offered a leading example for the whole of Europe on how best to employ people. The legislation will support best practice.
I reaffirm that the Bill is opportune and that the case for the legislation could not have been made more clearly than by the tragic circumstances that have occurred. Sadly, we have read about other cases, even in the public services, of the temptation to go for cheap labour. Cheap labour is one thing, but credible labour is entirely different. I hope that the Bill will bring about a more credible system in this country for the employment of people who, through no fault of their own, have to work at the bottom end of the wage scale and desperately depend on their low incomes. In those circumstances, unscrupulous people can exploit them so much that we end up with more lives lost. More than 20 people have lost their lives and that is more than 20 too many. We must seize the opportunity that the Bill provides to provide a much more secure employment system that will apply to all people seeking employment here.
§ Mr. Owen Paterson (North Shropshire) (Con)
I heartily congratulate the hon. Member for West Renfrewshire (Jim Sheridan) on his luck in coming so high in the private Member's ballot and on introducing a Bill that attempts to deal with an important area of concern in our national life, which is reflected in the attendance of hon. Members this morning.
§ Mr. Eric Forth (Bromley and Chislehurst) (Con)
Before my hon. Friend gets carried away and to forestall any remote chance of the record being misleading, he will accept that, if I recall correctly, there are 659 Members of Parliament. Does he gauge the support for this or any other Bill by the number of MPs present in the House? On my count, to be generous, there were probably 30 Members in their places today, so I hope that my hon. Friend will accept that 30 out of 659 reflects the true measure of support for the Bill today.
§ Mr. Paterson
That is an interesting comment from one of the most assiduous attenders in the House. I congratulate my right hon. Friend, who turns up at every possible opportunity and uses every possible means in the parliamentary process to get his point of view across. I thought that there were about 30 Government Members in their places this morning, and it is rather surprising that more of them did not want to speak.
§ Alun Michael
Very often Members, including Ministers, are present in the House, but are engaged in 553 other duties. They fully intend to support a Bill, if necessary, which often applies in respect of private Members' Bills.
§ Mr. Paterson
I am sure that the right hon. Gentleman is right that many Members are in their offices, watching our proceedings on the television. Perhaps they will be tempted down to the Chamber later.
The hon. Members for West Renfrewshire and for Morecambe and Lunesdale (Geraldine Smith) movingly reminded the House of the horrific recent incident in Morecambe bay, which involved illegal Chinese immigrants. On behalf of Her Majesty's Opposition, I should like to offer my deepest sympathies to the relatives of those who died.
There is a terrible poignancy about the ability of our society to enable a man to telephone his family on the other side of the world as the icy waters close around him, and its inability to enforce existing laws, which could have saved his life. That provided a terrible and haunting example of the simple fact that passing laws in the House is futile unless they are enforced.
The Asylum and Immigration Act 1996 made provision to fine employers up to £5,000 for employing illegal immigrants, but that legislation has not been properly used. According to the latest statistics on the control of immigration, published by the Home Office in November 2003, 22 people have been proceeded against under section 8 of 1996 Act, and just eight have been found guilty. The failure to use the Act properly is even more tragic in the light of what the hon. Member for Morecambe and Lunesdale told us this morning. She was on the case immediately; she had a warning; she wrote to the Minister on 28 June. Six weeks later, she received a reply saying that it would not be appropriate to participate in the particular operation. Her comments this morning were trenchant and pertinent.
The Morecambe bay disaster reflected a further catastrophic failure of enforcement by the Health and Safety Executive. Last week, it said:We were aware of an alleged near-miss incident on the Cumbrian side of Morecambe bay just before Christmas 2003.It confirmed that the Health and Safety at Work, etc. Act 1974applies to all workers in Britain, including those who may be working illegally".So those workers came under the remit of the HSE, whose inspectors have powers to serve a prohibition notice, with immediate effect, stopping unsafe working practices. Last week, the HSE admitted thatour jurisdiction extends to the low water mark".It is thus clear that the HSE could have stopped those unsafe practices.
As politicians, we should ensure that a true memorial to those who died so unnecessarily will be real enforcement of existing legislation, to prevent further tragedies. I wholly endorse the comments of the hon. Member for Morecambe and Lunesdale, who pointed out that another accident is waiting to happen.
§ Mr. Forth
Has my hon. Friend reflected on the possible relationship between the new authority that will 554 be set up under the Bill and, for example, the HSE? I have some reservations about the fact that, as we set up more and more bodies and authorities with overlapping responsibilities, there is, at the least, a risk that the outcome will be less effective than it would be if—as my hon. Friend seems to be saying—the existing authorities did their job properly.
§ Mr. Paterson
That is indeed the drift of my remarks. I think that the Minister, too, believes there is no point in setting up extra bodies for the sake of it. As I hope to elaborate, there is a clear case for better co-ordination of the existing bodies.
Lessons can be drawn on the subject of gangmasters from the excellent report produced by the EFRA Committee. It noted that law-abiding gangmasters provide a vital service, supplying labour to a wide variety of industries, not just to agriculture. That is especially true at times of seasonal demand, as was eloquently made clear by my hon. Friends the Members for Boston and Skegness (Mr. Simmonds) and for North-West Norfolk (Mr. Bellingham).
Yesterday, I was talking to one of my constituents who runs a substantial agricultural operation. He depends heavily on what he prefers to call agency labour—he does not use the term gangmaster. He uses a wholly legitimate, responsible organisation and brings in workers at busy times. He told me that many of those staff are paid as much as £6 or £7 an hour and are in responsible jobs. As he says,We wouldn't use them if they weren't good at it.He supplies large supermarkets and told me:There is enough legislation in place already.In fact, while I was talking to him he was filling in a seven-page questionnaire, relating to his commitment to the ethical trading initiative. He confirmed that it is almost impossible to run a legitimate business while in breach of current legistation.
As the spokesman from the Transport and General Workers Union said at the briefing meeting organised by the hon. Member for West Renfrewshire in Committee Room 12 on Wednesday, there is a market need for legitimate, legal gangmasters; they provide a vital service. However, as the EFRA Committee showed, legitimate gangmasters are being undercut and damaged by unscrupulous operators whose activities are criminal. They are a disgrace and, as the report showed in some horrific examples, which were movingly repeated by the hon. Gentleman this morning, they present us with a problem that must be addressed.
The Opposition are wholly committed to ending the shameful activities of criminal gangmasters as soon as possible. Following the good work of his predecessor, who promoted a private Member's Bill on this subject, my hon. Friend the Member for Boston and Skegness described some of the appalling behaviour of gangmasters, but pointed out that nearly all those activities are already illegal.
In a particularly helpful contribution, my hon. Friend the Member for North-West Norfolk graphically showed the need for co-ordination between agencies. He showed that when they met, they did not know what they were doing or what remit the other agencies had. Dramatically, the immigration authorities say that to 555 enforce existing legislation they need 150 people to cover Lincolnshire and Norfolk, but they have only five, so it is not surprising that existing legislation is not enforced.
The central issue seems to be that many laws and enforcement agencies are associated with the matter. The basic legal framework for gangmasters is set out on page 14 of the Select Committee report, which lists the activity, the main legislation and the enforcement agency, and we should put it on the record. Illegal working is covered by the Asylum and Immigration Act 1996, which should be enforced by the immigration and nationality division of the Home Office. The national minimum wage was introduced by the National Minimum Wage Act 1998, which should be enforced by the Inland Revenue on behalf of the Department of Trade and Industry. The agricultural minimum wage was introduced by the Agricultural Wages Act 1948, which should be enforced by DEFRA.
Deductions from pay are covered by the Employment Rights Act 1996, and the enforcement agency is effectively an individual worker bringing a complaint to an employment tribunal—as my hon. Friend the Member for North-West Norfolk said, there is a problem with language there. Minimum standards for employment agencies are laid down by the Employment Agencies Act 1973, which should be enforced by the DTI's employment agency standards inspectorate. Requirements on notice of termination of employment are laid down in statute by the Employment Rights Act 1996, and an individual worker enforces it by bringing a complaint to an employment tribunal. The right to a written statement of employment particulars is also included in the Employment Rights Act 1996, and again the complaint mechanism is an individual worker bringing a complaint to an employment tribunal.
Working time and holidays have been mentioned several times this morning, and the working time regulations and agricultural wages order cover them. Again, complaints are made through an employment tribunal, which is already established in law.
§ Mr. Forth
I am loth to interrupt my hon. Friend in the middle of that interesting and relevant catalogue, but I represent a suburban constituency and wonder whether he can help me with this question: is it so difficult to identify people, either of ethnicity or not, working in open fields in the open country? Given the catalogue that he is reading out, it strikes me, as a city boy, that it would not be rocket science for an enforcement agency to go round fields in the picking season to feel a few collars, ask a few questions and find out which regulations are being breached. He has an intimate knowledge of the countryside; can he help me?
§ Mr. Paterson
In the case of people picking crops in the open countryside, my right hon. Friend is right. That activity happens in daylight only and the people are easily visible. However, many of the people who fall under the remit of the Bill will work indoors in packing houses and sheds.
There is still more legislation covering those employed by gangmasters. Income tax and national insurance requirements are laid down in a raft of tax legislation—there are far too many such Acts and, as we all know, taxes are far too high—which is enforced by 556 the Inland Revenue. On benefit fraud, clear guidelines are laid down in the Social Security and Administration Act 1992 and in the Theft Act 1968, which are enforced by various units working for the DWP. VAT requirements are laid down by the VAT Act 1994, which is enforced by Customs and Excise. Finally—we have already touched on this—health and safety is the most important issue, and the details are set out in the Health and Safety at Work etc. Act 1974, which is enforced by the inspectorate of the HSE. The inspectorate has the power to move in on all workers at all times, whether they are legal or illegal.
§ Geraldine Smith
One of the problems with the Health and Safety Executive is, obviously, the resources and the number of offices that it has. Would the hon. Gentleman support an increase in public spending to help with some of those enforcement problems?
§ Mr. Paterson
That is the most pertinent point, and the hon. Lady is absolutely right to suggest that we need to consider how that great raft of legislation should be enforced, because it is not enforced. The Government, whom she supports, spend £50 million of taxpayers' money every hour. It is up to them to sort out how they spend those resources, but I should have thought that there would be enough money to make some rearrangements, so that money is put into the enforcement of that raft of legislation.
§ Rob Marris
The hon. Gentleman is being generous in giving way. Some of the legislation to which he refersS—principally, the Employment Rights Act 1996—states that the remedy for the individual is to go to what is now called an employment tribunal. However, a case that involves an illegal employment contract—for example, where a tax dodge is going on will be thrown out by an employment tribunal and the individual worker will not have a remedy. That is one of the reasons why we need such a Bill.
§ Mr. Paterson
That point is pertinent because, obviously, those who work for illegal gangmasters are, in effect, criminals themselves, but they can be picked up under current legislation.
It is clear that there is a massive enforcement failure, and it is interesting to compare the rhetoric of Operation Gangmaster, which was introduced in 1998, with the Government's commitment to solving the problem. Lord Donoughue said:There are a significant minority of gangmasters in this country whose activities are simply unacceptable. I am very concerned about the intimidation and abuse of workers' rights, which some of those people are involved in. The Government is also determined to clamp down on gangmasters who abuse the taxation, national insurance, benefit and immigration systems.Paragraph 45 of the Select Committee report has been mentioned by several hon. Members today, but it provides such devastating criticism of the Government's initiative that it is worth reading out in its totality to get it on the record:We are appalled by the lack of priority given to, and political accountability for, what is supposed to be the Government's co-ordinated response to illegal activity by gangmasters. Operation Gangmaster has been little more than an umbrella term for a few local enforcement operations in which the various agencies have exchanged information. Five years after it was established 557 Operation Gangmaster has had no significant resources allocated to it, has no targets and no Minister to take overall responsibility for its actions. Nobody could give us a comprehensive picture of what Operation Gangmaster does, how much it has spent and what it has achieved. Far from being 'a good example of joint action by several Government agencies' we conclude that Operation Gangmaster remains a woefully inadequate response to the complex enforcement issues arising from the illegal activities of gangmasters.That comes from a Committee, with hon. Members of all parties, chaired by my very sober and reasonable right hon. Friend the Member for Skipton and Ripon (Mr. Curry).
The Government's response to the 14th report describes Operation Gangmaster in somewhat different terms. The Government say:Operation Gangmaster was originally intended to be a forum in which interested agencies could discuss areas of mutual concern and exchange information and intelligence—in other words an umbrella organisation.That umbrella organisation has no specific Minister in charge, no targets and none of the enforcement agencies involved allocated any staff or resources specifically to deal with gangmasters. The Government now say in their response to the Select Committee thatmany of the illegal activities of gangmasters fall within the wider, informal economy. The Government's approach to tackling the problems associated with the informal economy is driven by a report on the subject, by Lord Grabiner, which was published in March 2000. Operation Gangmaster needs to be viewed within this context and not in isolation.The Grabiner report is well worth reading—it contains some very interesting material—and he argues on page 29, paragraph 6.3:In many areas, the evidence suggests that Departments could achieve better results simply by investing more in their current investigations and through better co-ordination of their activities, rather than through any new approach".That was entirely endorsed by my hon. Friend the Member for North-West Norfolk and by the Minister's interventions. The report's central recommendation, on page ii, is thatthe best solution is to improve the rate of detection and the effectiveness of punishment. In order to detect people in the informal economy, Departments must co-ordinate and improve their investigations. They also need to be able to share the information they hold and use information from other sources to check for suspicious signs of fraud.In the body of his report, Lord Grabiner elaborates, in paragraph 6.9:One common finding is that, in certain classes of business, there is a culture of tax evasion that spans different tax regimes, and either collusion with benefit fraud by employees, or turning a blind eye. This leads to significant loss of revenue and is a major source of benefit fraud. It also gives the business an unfair advantage over honest competitors. As indicated in Chapter 2, it is especially common in labour-intensive sectors where the competitive pressures to hold down pay-roll costs are strongest.He continues, in paragraph 6.10:It seems to me that such a multi-faceted problem requires a more co-ordinated approach across the relevant Departments and Agencies.The right hon. Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) touched on that. The paragraph continues: 558As listed above, there are examples of joint working, but they are not the norm. And, as long as individual Departments pursue their investigations separately, there is a danger that they will only see the aspect that concerns them—and that it may not, on its own, be serious enough for them to take action against the business. Joint investigation would reveal the total cost to the taxpayer of combined tax and benefit fraud.That is exactly what the hon. Member for Morecambe and Lunesdale found. She discovered that the immigration authorities were not going to get involved in health and safety aspects, and what she said on that was most helpful, because it completely confirms what Lord Grabiner said.
Lord Grabiner concluded, on page 32:I recommend that the most realistic way to overcome this barrier is to set up a specific Government function or line of work, accountable for investigating businesses in the informal economy. This would be specifically funded for, and capable of, taking action against the range of tax and benefit offences associated with the informal economy. It would provide a mechanism for bringing greater coherence to work across Departments, building on the good practice which exists in several places. The key is accountability, and appropriate resourcing.That is exactly what the right hon. Member for Newcastle upon Tyne, East and Wallsend said, drawing on his interesting experience as a Minister.
We therefore come right back to the beginning: to enforcement and the need for the different agencies to work together to share information; to the need for adequate resourcing; and, so far as accountability is concerned, to the need for a single Minister to be in charge. That cannot happen unless there are the resources; the political will and clear political direction. Despite the good intentions behind it, the Bill as currently drafted does not help. The Select Committee report conveys the complexity of the gangmaster structure, in which one gangmaster, who might be legitimate, often subcontracts to another, who will use another, who will use another, and so on.
Under the Employment Agencies Act 1973, whose licensing and registration requirements were repealed under the Deregulation and Contracting Out Act 1994—a Conservative initiative—the legitimate agencies registered, but most complaints concerned unregistered agencies I draw the attention of the right hon. Member for Newcastle upon Tyne, East and Wallsend to the Department of Trade and Industry's submission on page 100 of the Select Committee report, which somewhat refutes his comments on the impact of that Tory reform. Even if we had licensing, there would be a major detection job in picking up the illegal operations that had not applied for a licence. Paragraph 5 of the DTI submission says:A proportion of persons acting as gangmasters have continued to be found to be in breach of a range of legislation that is enforced by the inspection bodies of a number of Government Departments. It is considered unlikely that a statutory registration scheme would prevent individuals, who currently operate illegally and in defiance of existing legislation, from continuing to work in that manner.Mark Boleat of the Association of Labour Providers—the ALP is the newly formed trade association for gangmaster—has offered powerful logic on that issue. He writes that if the Chinese cockle pickers, who so tragically died in Morecambe bay, had been working for a man who was selling the cockles on to a wholesaler—as appears to have been the case—then 559 technically he would not have been a gangmaster as defined by the Bill and such operations will not be covered by it. He adds that illegal gangmasters do not confine their activity to agricultural work; they are highly flexible and will fill any niche where there is a buck to be made. He also explains that his association supports the principles of the Bill, but believes that there are difficulties confining it to agriculture.
Lord Grabiner explains on page 16 of his report that the sectors whereillegal immigrants are usually found working are those where casual and cash-in-hand work is widespread".He cited catering, contract cleaning, farm working and the clothing industry. He could equally well have mentioned construction. I was interested to hear the hon. Member for West Renfrewshire say that possibly even health workers are getting involved in such activities.
My major criticism is that we are dealing with a symptom of the black economy, but the Bill focuses on only a narrow part of it—the agricultural sector. The problem is much wider than that, something on which the Grabiner report elaborates. If there is heavy enforcement in the agricultural sector without similar activity elsewhere, it is likely that the criminal gangmasters will move into other less well policed sectors. That will always happen if we target a sector rather than the criminal because we simply displace the problem without solving it. That is the essence of the Grabiner report and his call to see the problem in the wider context of the informal economy, a stratagem that the Government endorse. As drafted, the Bill does not address the wider issues.
The Grabiner report makes other good recommendations, addressing how to facilitate interdepartmental co-operation, which would help to track gangmasters. Again, the Bill does not deal with that. It would create a new offence of not registering and would apply statutory codes of practice, which create yet more offences, most of which are covered by existing legislation. The hon. Gentleman proposes a separate authority, which some might call a quango, to administer and police the licensing system. It appears from schedule 1(d)—the payment of a fee to accompany the application for the grant of a licence"—that the body would be self-financing, its costs covered by licence fees.
The figure of £3,000 has bandied around, and the hon. Gentleman says that there will be a fee scale. I am sceptical about whether that would work because the honest gangmasters would be hit by a double whammy of increased costs and increased regulation, which would make them even less competitive in comparison with illegal gangmasters. So the licensing system could make the problem worse by making the cut-rate gangs' labour and product more attractive.
§ Mr. Bellingham
Will my hon. Friend elaborate on the possible £3,000 registration fee? He knows that many gangmastering operations are small businesses. Some in my constituency have a full-time staff of perhaps two or 560 three people. In difficult times, £3,000 —or even £2,000 or £1,000 if there is a scale—would be hard for them to find given the small margins.
§ Mr. Paterson
That is a most helpful and legitimate point. The other danger is that the illegal criminals will carry on outside the system; they will not pay the fee, which will be a burden on respectable operators. Past experience of the operation of similar self-funding regulatory agencies should be used as a guide, and it is not encouraging. As a rule, they tend to expend most of their efforts on policing the legitimate players.
§ Jim Sheridan
It would help if the hon. Gentleman could explain where the figure of £—3,000 has come from.
§ Mr. Paterson
I heard it cited in the debate and it comes from a Transport and General Workers union briefing. If it is not right, that can be discussed at a later date.
§ Jim Sheridan
Some confusion might have arisen when we talked about 3,000 gangmasters—not £3,000. That is what the TGWU briefing said. The £3,000 figure has been mentioned only by Conservative Members.
§ Alun Michael
Far be it from me to help the hon. Gentleman, but he has pointed to a necessary element of working out the Bill's details. We must ensure that the arrangements we make keep the fees or charges for licensing or registration to the absolute minimum in order to create an effective system that can be well policed. That is one of the issues that I have discussed with my hon. Friend the Member for West Renfrewshire (Jim Sheridan). At this point, I would not give too much credence to a specific figure, wherever it comes from. It is something that everyone who wants the legislation to succeed will have to work out carefully.
§ Mr. Simmonds
I think it was I who mentioned the figure earlier today. It comes from an article in the Grower that quoted the Association of Labour Providers sayingThe TGWU's proposed licence fee of £3,000 is huge for small businesses".If that is not accurate, I shall be grateful if the hon. Member for West Renfrewshire intervenes again to say so, but the figure is here in black and white and it is too much for small-scale gangmasters to afford.
§ Mr. Paterson
That, too, was a helpful intervention, in that it clarified where the figure came from. I entirely endorse the Minister's comment that the fee is a detail that should be examined later, but we should bear in mind the warning given by my hon. Friend the Member for North-West Norfolk that the final figure should not be too onerous. The danger of a self-financing authority is that it will spend most of its time bearing down on the 561 legitimate players—the easy targets who produce its income—while the illegal gangmasters, who cost too much to police, will be left alone.
The National Farmers Union is in favour of the Bill, provided there is adequate enforcement. Its brief states:We agree with the EFRA Committee that licensing alone is not enough; it should be complementary to the key requirement for more effective enforcement of the law.Taking all those points into account, it seems most appropriate for the Government to implement the Grabiner report. A Minister should be put in charge of its implementation, as the right hon. Member for Newcastle upon Tyne, East and Wallsend said, because we are dealing with a vast number of agencies subject to many different Ministries.
§ Mr. Forth
It may be that my hon. Friend deals with this point later in his speech, and I hope that he does, but no one has yet mentioned in my hearing any regulatory impact assessment in respect of the Bill. He remarked, almost casually, that the NFU is in favour of it, but has the NFU provided any estimate of the likely increase in the cost of food resulting from the combination of the licences, the bureaucracy and the potential increase in basic labour costs?
§ Mr. Paterson
The briefing mentions no such figure.
Lord Grabiner strongly recommends having a Minister to deal with the whole informal economy, of which gangmasters form only a part—they are only a symptom of a much wider problem. Then, he says, the Government should determine priorities, targets and, as the hon. Member for Morecambe and Lunesdale said, resources—the scheme will cost money that has to be diverted from somewhere else.
§ Jim Sheridan
May I remind the hon. Gentleman that the scheme will be self-financing in the sense that it is estimated that £100 million a year is lost to tax evasion?
§ Mr. Paterson
The hon. Gentleman is right to say that fraud leads to a great loss of revenue, but he presumes that the system will work 100 per cent. I am sceptical about that, as I have just explained.
My point is that to put a Minister in charge, backed up by a taskforce, could be done easily and quickly—it could be done this afternoon. To pick up the point made by the hon. Member for Morecambe and Lunesdale, there is another accident waiting to happen up in Morecambe if nothing is done. Action must be taken, but a new Act and yet another agency—the authority specified in the Bill—would simply slow matters down.
§ Rob Marris
The hon. Gentleman assumes that there will be a new agency. I draw his attention to clause 3(1), which states:The Secretary of State shall by regulations nominate or establish a body".562 Therefore, if she wished, the Secretary of State could nominate an existing body to administer the scheme. There will not necessarily be a new authority.
§ Mr. Paterson
The Bill talks about an authority. Perhaps the Bill's promoter, the hon. Member for West Renfrewshire, can confirm that. I understand that there will be a new authority that will act as an independent quango. It is a detail that may be elaborated on later; perhaps the Minister will do so.
§ Jim Sheridan
I am happy to be helpful to the hon. Gentleman. Perhaps he will deal with the factual elements of the Bill and not with hypotheses, or with what he might have heard in the Tea Room or anywhere else.
§ Mr. Paterson
That was a less helpful intervention.
I have taken an authority to be an authority. The Bill will take time to get through Parliament and it will take time to establish the new organisation, whatever it is and whether it is inside a Department or is not. I think that the creation of an authority will slow down matters because it will take a year or so to set it up, and it will have to recruit and organise. Only then will it start working. It could be two years or more before the authority is fully effective. It will then have to devise a co-operative plan with other agencies, whose functions would overlap, exacerbating rather than resolving the problem with the introduction of yet another agency.
§ Rob Marris
I will not repeat my quote from clause 3(1), instead I shall focus on its use of the word "nominate". I suspect that no one who has been present throughout the debate would wish for a two-year delay, or whatever. Would the hon. Gentleman care today to suggest or nominate art existing authority that he thinks could pull the issues together and deal with enforcement, which many of us, if not all of us, want to be applied?
§ Mr. Paterson
Perhaps I have not expressed myself clearly or perhaps the hon. Gentleman has not been listening carefully. My drift—the Grabiner report made this clear—is that there should be a Minister co-ordinating activities right across —[Interruption.] I am a shadow Minister. It is up to the Government to decide which of their Ministers should have such responsibility. The approach I have suggested is endorsed by senior Labour Back Benchers. There should be a Minister appointed in charge whose responsibility extends across all the activities of the black economy. We are talking about a narrow symptom, which is the failure of the black economy.
§ Mr. Andrew George
In view of the hon. Gentleman's answer to the last intervention, can I conclude from what he is saying that Conservatives believe that there is no need for any further legislation and that existing legislation should be implemented? Will the Opposition divide on this issue? Are they opposing the Bill?
§ Mr. Paterson
That is a rather niggling intervention.
Our attitude is that if there is a failure of existing legislation, we would agree that there is a role for a Bill to introduce measures to fill that legislative hole. I have been making the point at some length that a raft of legislation has not been properly enforced. We are as keen as anyone in the House to bear down and close on illegal gangmasters and the ghastly activities that they encourage, and we entirely endorse the objectives of the hon. Member for West Renfrewshire. As I have said, if there is a hole in existing legislation, we would endorse additional legislation to fill it, but at present I am not convinced that there is.
I am making the point—I have the agreement of the hon. Member for Morecambe and Lunesdale, who had such a terrible incident in her constituency—that there is a need for action now, and I think that action could be taken by appointing a Minister with a broad remit across Departments.
§ Mr. Forth
My point follows the intervention of the hon. Member for St. Ives (Andrew George). One could be driven in the direction of saying that before we rush to legislate it might be worth considering whether the course that my hon. Friend is suggesting might be more effective, certainly in the short term. If a Minister were to be nominated or to be given responsibility to range widely across all the existing different agencies to ensure that they enforce their responsibilities, that might be a much more effective way of dealing with the matter than legislating as suggested, which may take much longer to take effect. Surely. therefore, it is not a matter of either/or, as my hon. Friend's suggestion would, at the very least, have a much quicker effect than the Bill.
§ Mr. Paterson
I agree entirely. The events at Morecambe and other industrial accidents can be addressed immediately by ensuring that the Health and Safety Executive is properly resourced and focused. That could happen today if a Minister took action. I repeat yet again that what happened at Morecambe resulted from the Executive's failure to enforce existing legislation. Logic dictates that the Government should implement their own findings, get a multi-agency taskforce up and running immediately with a Minister in charge, announce a budget allocation from existing resources and set targets for enforcement action. Running through the discourse is the issue of adequate enforcement. The Association of Labour Providers makes the point eloquently:Arguably, if there was proper enforcement of the existing legislation there would be no need for a licensing regime.The activities of illegal gangmasters are shameful, and we will support measures to end them. If there are deficiencies in existing law, the Bill could be amended to remedy them, but deficiencies in enforcement and political will are more of a problem than legislative deficiencies. I completely endorse the admirable intentions of the hon. Member for West Renfrewshire to stop the activities of criminal gangmasters, and cannot stress enough our determination to help to solve the problem. I sincerely regret, however, that, as currently drafted, the Bill will not realise the high hopes that he and his supporters have for its efficacy.
§ The Minister for Rural Affairs and Local Environmental Quality (Alun Michael)
I welcome the Bill, and thank my hon. Friend the Member for West Renfrewshire (Jim Sheridan) for introducing it. Anybody who leads a coalition that includes the Transport and General Workers Union and the National Farmers Union is formidable. This week, I met Tim Bennett, the new president of the NFU, and Jack Dromey, deputy general secretary of the TGWU. The Department for Environment, Food and Rural Affairs has good relations with both organisations and regards them as friendly and co-operative, although not usually at the same time. My noble Friend Lord Whitty has had discussions with the British Retail Consortium as well.
We fully support the Bill's objectives and, by making the changes that my hon. Friend the Member for West Renfrewshire is willing to accept and which I shall spell out in more detail, I am confident that we can co-operate in getting it on to the statute book without delay. The hon. Member for North Shropshire (Mr. Paterson) expressed some genuine concerns, but they can be overcome. Everybody wants effective legislation. When one starts work on legislation one begins with something crude that can be refined by discussion over time. The Bill as drafted is a serious attempt to put legislation on to the statute book, but it can be improved. Today's debate has looked at a series of issues and demonstrated the wish of Members on both sides of the House to have effective legislation in place. That is often easier said than done, and legislation can be a substitute for action, as the right hon. Member for Bromley and Chislehurst (Mr. Forth) said a few moments ago. My favourite comment about legislation is telling. In "The Decline and Fall of the Roman Empire", Gibbon warned that laws often fail to prevent what they forbid. I am proud to have introduced in the House the antisocial behaviour order, a mechanism designed to prevent antisocial activity, rather than just say that it should not happen. I hope that together we can effectively create an antisocial behaviour order for gangmasters by fine-tuning the Bill.
I agree with the right hon. Member for Bromley and Chislehurst about the need to make enforcement by existing agencies more effective. There is a need for licensing to deal with the offences both of acting as a gangmaster while not licensed to do so and employing unlicensed gangmasters. That would help the work of existing agencies and assist the creation of a fair market by squeezing out illegal activity.
I pay tribute to my hon. Friend the Member for West Renfrewshire for his enthusiasm not just to get the Bill through, but in working with Government organisations and the wide group of organisations that have supported him in order to get it right. Even before the events in Morecambe bay, we were close to agreement, and I am pleased that he has extended his ambitions for the Bill following those tragic events.
All the contributions to the debate have demonstrated the value of debating such issues in the House. My hon. Friend the Member for West Renfrewshire gave a comprehensive introduction, virtually all of which I agreed with. The hon. Member for Boston and Skegness (Mr. Simmonds) said much that I agreed with, particularly his comment that the Bill 565 was not about bureaucracy, but about enforcement and effectiveness in order to create fair competition. I understand fully his concern about the possible level of fees, which was reflected in later contributions. We need to address the matter and engage the industry in that discussion.
Clearly, the important thing is to create mechanisms that will work and which build on the strength of organisations. Farmers know what their needs are and how the system works on a day-to-day basis, which many of us do not. They should be engaged in the decision-making process that defines the activities of the licensing body, which in my view should be kept as simple as possible. The hon. Gentleman also mentioned scams and the possible outcomes. That is why people engaged in the industry, who understand the fragility of some of the processes, are important. Leadership in the hands of the industry is an important element of the measures that we design.
My hon. Friend the Member for Morecambe and Lunesdale (Geraldine Smith), to whom I responded following a parliamentary question a couple of weeks ago, pointed out that problems still remain. That is why the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Exeter (Mr. Bradshaw), was with her in the area yesterday, listening to comments from local people. She is right to identify a number of ways in which enforcement and co-ordination could be improved and a better understanding developed between the various organisations, although a great deal is being done. I shall return to that point in a moment.
The hon. Member for North-West Norfolk (Mr. Bellingham) made a number of points about enforcement and the work of Operation Gangmaster. I agree with his concern to make sure that we do not increase the amount of red tape. My right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) rightly referred to the need for leadership. Indeed, the leadership in Operation Gangmaster is with the Department for Work and Pensions, in which he played such a distinguished part.
The hon. Member for St. Ives (Andrew George) mentioned changes in the nature of work and employment and in the terms on which labour is supplied. He is right to highlight that. We are responding to changes in a market, some of which have happened over a number of years and some quite rapidly in response to need. We should bear that in mind. My right hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) expressed vigorously the need to help stop robbery of various sorts. He went slightly further than I would in promoting red tape, but I agree on the need to squeeze out performance and to make sure that we do not underestimate what has been done to tackle the difficult problem of illegal activity. My hon. Friend the Member for Central Fife (Mr. MacDougall) emphasised the importance of the Bill.
The hon. Member for North Shropshire focused on the importance of legislation being effective. In many ways he reinforced my key points about the Bill. He rightly pointed out that the range of illegal activity involved is extensive. People are breaking the existing law in complex ways in order to undertake such activity. 566 We are talking about individuals at the hard end of the business, who will certainly not help the enforcement authorities or those operating in the legitimate market. They are among the nastiest people in our society and are some of the most difficult to deal with in a decent society.
The hon. Gentleman quoted from Lord Grabiner's report, which has played into the work of Operation Gangmaster and the thinking of Ministers. However, I agree that more needs to be done. The test of how we design and use the requirement for licensing will be its outcome, not whether we have managed to put another piece of legislation on to the statute book.
There are a variety of concerns about the Bill as drafted, including the level of charges that might emerge, the operation of the licensing body and the engagement of the industry. The latter is absolutely crucial. I hope that a simple licensing scheme, and a simple offence and penalty, can create a different environment in which fair competition is strengthened and rewarded, and in which enforcement of all the legislation that the hon. Member for North Shropshire mentioned becomes much simpler as a result of the additional provisions in the Bill.
We need to create a framework by which everyone in the industry—workers' representatives, especially the Transport and General Workers Union; those who use gang labour, particularly the National Farmers Union; consumers of the outcome, including the British Retail Consortium; and legitimate gangmaster—plays a part in creating the atmosphere of enforcement. Against that background, I have to say to the hon. Member for North Shropshire that I am not convinced of the need to set up a new agency, which, as he said, takes a long time. We should consider in Committee the option of nominating or establishing an agency if that proves necessary, but we should also consider the possibility of a co-operative approach within the industry. Giving the industry ownership underpinned by legislation might be the best way to carry forward effective licensing.
I want to stress that, as Members on both sides of the House have said, it is not illegal to operate as a gangmaster. The Government have no intention of making such activities illegal. As my hon. Friend the Member for West Renfrewshire made clear, those who run legitimate businesses provide a flexible labour resource that is vital to key parts of the agriculture and fresh produce industries, which would be crippled were they not to have access to the labour that they need.
§ Rob Marris
Will my right hon. Friend join me in paying tribute to Joseph Arch? I am sure that he will, because last June he and I stood in the rain in Warwickshire commemorating him. Joseph Arch set up the first agricultural workers' union, which became part of the Transport and Ceneral Workers Union—my own union. Later on, he became a Member of this place, but before that he was a gangmaster.
§ Alun Michael
He was also a lay preacher, which demonstrates just how virtuous such people can be. I thank my hon. Friend for reminding me of that day. I am tempted to reflect that I was greeted with a certain amount of wet weather as I made my historical remarks, 567 but when he stood up, thunder, lightning and sleet ensued. I am not sure whether that was because of his talent for expressing himself—
§ Alun Michael
That may indeed be the reason—I thank my right hon. Friend for another excellent line.
As my hon. Friend says, this issue has been around for a long time. We need to support and reinforce those who treat labour properly and help labour to meet the needs of those who want to employ it. A certain amount of courage has been shown by some of the people who have come forward to support co-operative activity across the industry and to support the Bill.
The problem is that flexibility is too often delivered at workers' expense. At the extreme, there are gangmasters who trade in human misery, disregard the law, and resort to intimidation and violence in pursuit of their personal power over people and their profits. The Government are committed to tackling the exploitative activities of gangmasters who have no respect for the law or for people. Efforts to end the human misery caused by certain labour providers have been going on for some time, and the Bill gives us an opportunity to strengthen the process.
As many hon. Members have said, there is also the matter of fair play. Legitimate gangmasters pay taxes, but the lawbreakers are responsible for considerable Exchequer fraud, health and safety offences, failure to pay the minimum wage and the use—rather, the abuse—of illegal labour. Other forms of non-compliance are often associated with the exploitation of gang workers.
We do not wish to reduce flexibility or create labour shortages, but we are committed, to tackling abuse and promoting the employment of legitimate workers. The only point of my hon. Friend the Member for West Renfrewshire with which I disagreed was his underestimate of the efforts to tackle the difficult issue and of recent progress.
As exploitation of gang workers is not a new problem, let me set out the context for the Bill and the efforts to tackle the problem. The National Farmers Union and the Fresh Produce Consortium have the tried to tackle the problem through codes of practice. Although such efforts are to be welcomed, and several hon. Members did so, such soft regulation is clearly not enough on its own. Gangmasters' abuse of workers has continued for far too long, but no one should delude themselves that resolving that will be easy. The worst culprits already break the law in many ways as the hon. Member for North Shropshire said. Some break a range of laws and large profits are being made illegally.
It is important to fit well with the work of Operation Gangmaster, through which the Government took action to deal with the issue soon after coming to office in 1997. I believe that the Bill does that. Operation Gangmaster has been piloted in Lincolnshire and East Anglia since 1998. However, it became a casualty of foot and mouth disease, which brought most enforcement operations to a halt in 2001. That fact appears to have escaped the notice of the hon. Member for North Shropshire. The operation was relaunched in 2002, with the Department for Work and Pensions co-ordinating 568 the activities. My noble Friend Lord Whitty has done a sterling job in representing DEFRA in the team of Ministers that drives the work forward.
Ten regional operations are active under the Operation Gangmaster umbrella—more than at any time in the past. The work supports and complements but does not replace the compliance activity that individual enforcement agencies undertake better. Positive outcomes have been achieved under Operation Gangmaster against gangmasters and their employers. In 2002–03, that included identification by the Department for Work and Pensions of 235 overpayments and 1,023 adjustments to benefit worth £405,000, and securing 138 sanctions and prosecutions. In the same period, the Inland Revenue specialist team settled 46 inquiries and reviews that identified unpaid tax and national insurance worth £4.3 million and led to criminal prosecutions of 14 gangmasters for VAT offences involving VAT of £5.9 million and resulting in prison sentences that totalled 31 years.
I do not claim that that is enough, but we should not discount the efforts that have been made and the lessons that are being learned as a result of the enforcement agencies' work to co-operate more effectively. I entirely accept the views of colleagues in all parties, but especially those on the Labour Benches, that we should be impatient about greater effectiveness. However, let us not pretend that nothing has been done because that would be untrue.
Each of the organisations to which I referred and others, including the police, will have their hand and their capacity for swift intervention greatly strengthened by the creation of a simple offence: operating as a gangmaster while not licensed to do so. If we keep administration to a minimum, we will achieve a simple offence that requires little evidence and therefore does not take up too much time of the courts or the enforcement agencies to secure a prosecution. That is simple in concept, and in terms of evidential requirements and court time.
A significant level of enforcement activity by individual agencies is already going on in parallel with Operation Gangmaster, which itself will continue for the foreseeable future. In the right form, the Bill will strengthen that activity and provide a simple framework to make a lot of hard, arduous and time-consuming work much simpler to pursue.
Events of recent weeks have shown that we cannot be complacent about illegal working. We have heard graphic accounts today of some of the abuses perpetrated by gangmasters in several parts of the country. Those abuses affect UK and foreign nationals alike. We also know about the involvement of criminal gangs in people trafficking. Those activities create the conditions that allow gangmasters to exploit vulnerable workers, preventing them from claiming their rights, and profiteer at their expense. That is why the immigration service increased the number of staff working in enforcement from 1,677 in April 2002 to 2,463 by November 2003.
There has been a £60 million investment over three years in the multi-agency anti-trafficking force, Reflex. The new serious organised crime agency will in time pull together police, immigration, Customs and other experts to tackle organised immigration crime. It has 569 been recognised that such action is necessary, but it is not the sort of action, nor the sort of organisation, that can be achieved overnight.
We cannot condone illegal working and will do all that we can to stamp it out, but we have a responsibility to those who fall into the hands of the unscrupulous gangmaster, and that again has been reflected in contributions today from both sides of the House.
§ Mr. Simmonds
Does the Minister have a view on the expansion of the Bill to include areas outside the agricultural and horticultural sectors? My hon. Friend the Member for North Shropshire (Mr. Paterson) and others have made the point that it excludes people in the construction and cleaning industries who operate with the gangmaster system.
§ Alun Michael
We need to focus on the specific activities covered by the Bill. There has been a particular history of gangmaster activities in agriculture and related areas, as defined in the Bill, and we should focus on that because that is where a simple and straightforward licensing system can be most effective. In many of the other areas of activity, legislation is in place. The hon. Gentleman referred to an overlap with the employment agencies legislation. We will be most productive if we focus on the specific activities in the Bill, including the fisheries issue as a result of the events of recent weeks. It would be wise not to over-extend the Bill's scope. I understand the relationships with other parts of the employment market, but if we create something that is over-complex, we might fall over our own feet and fail to achieve the clarity of outcome that hon. Members clearly want to see.
There has been clear support for statutory licensing from hon. Members on both sides of the House. I recognise that licensing in this sector also has the support of many organisations involved in the food supply chain, and that strengthens the case for it immeasurably, because to have that practical support, provided that the legislation is in place, will be enormously important.
As I have said already, those organisations include the NFU, the Fresh Produce Consortium, the major supermarkets and local government representatives, as well as bodies such as the citizens advice bureaux, the Catholic Church and the Refugee Council, which has seen some of the elements of human misery that have been reflected in contributions today.
In particular, I pay tribute to the Transport and General Workers Union, which has been active in promoting the Bill to the Government and to the public, as well as to my hon. Friend the Member for West Renfrewshire and to Members of Parliament generally. The newly formed Association of Labour Providers, representing legitimate gangmasters, also backs action to curb the exploitative activities of some gangmasters.
We are approaching the measure in a way that will maximise effectiveness while keeping legitimate operators' costs and bureaucracy to a minimum. That is a small price to pay to ensure that all labour providers compete on a fair and equal footing. That is precisely the approach that I discussed with my hon. Friend, and which I believe he is prepared to support.
570 It would be wrong to let the occasion pass without recording my concern about the recent tragedy in Morecambe bay. The details of gangmaster involvement in that incident have yet to be established conclusively, but it is clear that the workers who lost their lives were being exploited. The Bill will help to protect some people from unscrupulous gangmasters.
The Morecambe bay tragedy also raises a number of issues that are beyond the Bill's scope. I agree with the hon. Member for North Shropshire that it is not a panacea or a magic wand that deals with everything; rather, it seeks to provide one tool that will be useful in combating illegal activity. However, I can assure Members that we are, actively considering what can be done to ensure that working conditions in the bay are made as safe as possible. There are complexities with regard to legislation, but they are being worked on.
The Department for Environment, Food and Rural Affairs has been working closely with the Ethical Trading Initiative in the past few months to develop a best practice guide for labour providers. Such work has brought together key organisations involved in food production, packaging, processing and retailing. The major supermarkets have been closely involved, and their support for this work has been invaluable. When the Bill leads to the establishment of a licensing scheme, this best practice work will be a valuable aid to the industry in determining the conditions to be applied to a licence. I accept that such work is not enough on its own, but it is invaluable in giving body and content to a simple licensing system. It will also be of help in determining how to audit compliance with licence conditions.
Historically, the problems caused by gangmasters have been particularly acute in agriculture and the related fresh produce trades. Much of the work undertaken by the Government and other stakeholders to tackle gangmasters' exploitative activities has therefore concentrated I on the agricultural industry. The work done in association with the Ethical Trading Initiative has also been undertaken in an agricultural context. The support for licensing that all the major food chain interests have shown—from producer to retailer—will help to ensure that it is successful in tackling the problem of exploitative gangmasters in this sector. We believe that licensing should target agricultural activities, because as I have said, it is the agricultural sector that has caused the greatest concern in recent years. That will capitalise on the support for action offered by all organisations, including the supermarkets operating in the food chain, and on our knowledge of gangmaster involvement in the agricultural sector.
We believe that the time is right to introduce statutory control of labour providers operating in agriculture and related areas, so we support the concept of a statutory licensing scheme. I am pleased that my hon. Friend the Member for West Renfrewshire has agreed to work with us to amend his Bill in Committee, in order to introduce a licensing scheme that the Government can support. Many of the contributions to today's debate have helped us to move in the direction that he and I have already discussed.
It is envisaged that the Bill in its amended form will be specifically limited to gang workers who are supplied or used to undertake work in agriculture, horticulture, 571 shellfish-gathering and related areas and activities; that it will apply to primary labour providers and to subcontractors; that it will define clearly the form of licensing to be used and its boundaries; that it will make provision for the Secretary of State to recognise or establish a licensing scheme and the associated register of licensed gangmasters through secondary legislation; that it will agree to, or make provision for, appeals in relation to a refusal to issue a licence, or a decision to revoke a licence; that it will provide for charges to be made for licences to cover full costs, with the level to be set through secondary legislation; and that it will establish the offences of operating as a gang labour provider while not being registered, and of engaging the services of an unlicensed gangmaster. I recognise the need for protection to ensure that that is not an overbearing penalty, but the provision is important to ensure that there is buy-in, and that there is no reward for those who are willing to ignore the legislation.
It is also envisaged that the amended Bill will give the Secretary of State the authority to designate officers from existing enforcement agencies to deal with the offences of operating while not being registered and of using unlicensed gangmasters, and that it will set out the powers of enforcement officers and ensure that officers from different departments are able to share information, work together and target those who are the main concern of all who have contributed to today's debate, without placing onerous burdens on others.
As has been said, we will need to avoid duplicating other legislation, such as the Employment Agencies Act 1973, which covers labour providers. However, we need to do so in a way that ensures that there is no loophole, and that gangmasters are not able to evade the intentions behind the Bill: that we can proceed against illegitimate gangmasters however they operate, and that they cannot evade the legislation.
In that form and with those changes, we believe that the Bill will significantly strengthen our attempts to curb the exploitative activities of gangmasters without introducing unnecessary new regulatory burdens. The sort of amendments that we are suggesting will enhance the Bill, and in no way divert from the direction and intentions that led my hon. Friend the Member for West Renfrewshire to bring the Bill in its present form before the House. We will use existing enforcement mechanisms, as it is not our intention to create an additional layer of inspection and bureaucracy.
The proposed provision to allow information about gangmasters to be shared among enforcement agencies will help to ensure much more effective co-ordination of enforcement activities. As I have said, in combating crime we have found that misunderstandings are sometimes made about the exchange of information, which is usually for quite legitimate purposes. We intend to deal with that matter so that there is no doubt about it in the Bill. The provision will greatly strengthen our ability to enforce existing legislation governing the conduct of gangmasters.
The primary offence that the Bill creates will be easy to prove and it will aid enforcement in respect of other offences. It will enable people to be put out of business if they are breaking the law. A successful prosecution will lead to the loss of a licence. That, combined with the commitments made by buying organisations in the food chain, will help to prevent such businesses from 572 continuing to act as labour providers. In other words, it will remove the incentive for people to break the law. Experience from Operation Gangmaster suggests that the benefits to the Exchequer could be substantial.
We acknowledge that the introduction of licensing could mean some small increases in labour costs and a marginal increase in prices. However, it will place a much bigger burden on the illegal competitors, so it will promote fair competition. We therefore believe that the balance will be favourable. In any event, keeping labour costs down at the expense of workers' rights. welfare and safety cannot be condoned. I hope that nothing said in the Chamber today was intended to suggest that that is not the case, and I am grateful to the hon. Member for North Shropshire for confirming that I am right in that interpretation. Neither can it be right to allow legitimate gangmasters to be squeezed out by the unscrupulous ones.
I am pleased that the supermarkets have given their backing to statutory licensing to underpin the introduction of ethical labour supply practices in the food chain. I noted the earlier remarks of the hon. Member for St. Ives, which were intended to encourage supermarkets to go further in their ethical policies. I am sure that that would win support on both sides of the House, but the supermarkets are supporting the propositions underlying the Bill, which is welcome. I hope that they will work with us to ensure that there is no place for unlicensed gangmasters in the future.
I commend the Bill as a positive response to the problems caused by gangmasters, and I look forward to working with my hon. Friend the Member for West Renfrewshire to develop and amend the Bill in Committee. I hope that, as the Bill moves forward from Second Reading, it will gain support from both sides of the House and that we will all seek to make it a non-bureaucratic but effective and cost-effective measure. I hope to hear that my hon. Friend supports the approach that I have spelled out in my response.
§ Mr. Eric Forth (Bromley and Chislehurst) (Con)
I very much welcome the tenor and content of the Minister's response. I would like to think that it is a sign of a shift in political thinking—and, indeed, in the political landscape—when a Minister places such welcome emphasis on minimising bureaucracy and cost and the focusing of legislation. Those are welcome sentiments, and I hope that he will share his new-found views with some of his ministerial colleagues. I hope to hear more of that sort of thinking from more Ministers in respect of future legislation, but let us be grateful for what we have had today. I certainly welcome the thrust of what he said.
I shall be uncharacteristically brief for me on a Friday, as I can see the hon. Member for Pendle (Mr. Prentice) on the other side of the Chamber and I am keen for his Bill to get a proper airing. Indeed I intend to ensure, as far as I am able, that it does, because I support it. However, I want to say a few words in this debate and to pick up on three points. The first is enforcement and the second is scope, on which the right hon. Member for Holborn and St. Pancras (Mr. Dobson), who, sadly, has just left the Chamber, made some telling points that I hope will not be forgotten. The 573 Minister, too, touched on the scope of the measure, as did my hon. Friend the Member for North Shropshire (Mr. Paterson). Finally, I want to say something about impact and cost—the gaping hole in the argument that we have heard today, especially in the context of the much-vaunted claims about support from retailers.
The voice that has not yet been heard is that of the hapless consumer, yet if the Bill, or some similar measure, is to have the impact that everyone wants, there is bound to be an on-cost effect, principally for food. but possibly for other things, too.
§ Anne Picking
The point about the consumer is important, but does my right hon. Friend— [Interruption.] Well, I quite like him. Does the right hon. Gentleman agree that no consumer would want to eat cockles at the expense of people who had lost their lives?
§ Mr. Forth
It is difficult to ask 60 million individual consumers what they want, but I know what the hon. Lady is saying. That is not the point at issue, however; I should prefer, in discussing such legislation, that we be aware of the likely cost impact so that consumers could make a judgment—for example, through studying our debate.
The risk is that we do things in this place that increase costs—
§ Mr. Forth
Of course, I will, when I have finished my point. I welcome all interventions on Fridays, Mr. Deputy Speaker, as you know—I encourage them.
In order for consumers to make the judgment to which the hon. Member for East Lothian (Anne Picking) has rightly referred, they should know more of the facts than have been put before us today, or are likely to be put before us.
§ Geraldine Smith
Is there not a cost to the Treasury if we do nothing? The cockles in the middle of Morecambe bay were worth £10 million, but I doubt that much income tax was paid on that.
§ Mr. Forth
That is a fair point which, with a bit of encouragement, I might want to develop—who knows?
There is always a trade-off between tax forgone and tax that is more collectable, were we more successful in enforcement; but there may also be a negative effect. If we shrink activities through excessive licensing, other losses may be incurred.
§ Alan Michael
The right hon. Gentleman is right to refer to excessive licensing. That is why it is so important to keep licensing activity and costs to the minimum. I was reluctant to comment on the possible figures, as my hon. Friend the Member for West Renfrewshire (Jim Sheridan) and I need to consider the issue; it is of course legitimate for other Members to look into it, too. At a later stage, a regulatory impact assessment for business will have to be carried out, but I hope that the right hon.
574 Gentleman will accept that, as I indicated earlier, our first task is to ensure that, by working with the industry, we keep the costs to the minimum that is necessary for effectiveness. We can then achieve outcomes such as an improved marketplace in legitimate activity.
§ Mr. Forth
I am most grateful to the Minister for those comments. We all look forward to those aims being carried forward.
There are subsidiary arguments, although I shall not be tempted into them. However, if by introducing such measures we force up the price of ethical or regulated produce, there is a danger that it could be displaced or replaced by products from elsewhere that are much less ethically gathered or manufactured. That balance must always be struck. We have to be aware of the global context in which these things operate—whether it be cockles or any other produce.
All of us who go to the supermarket, as I do every week—
§ Mr. Forth
If the hen. Lady doubts me, she should ask Mrs. Forth the next time she sees her. We do our shopping as a joint activity in Waitrose in Bromley, if the hon. Lady really wants to know. I shall be in the supermarket tomorrow, as I am every Saturday morning, and the hon. Lady is welcome to shop with me in Bromley. As well as monitoring prices closely—perhaps that belies my origins—I examine the origin of produce and am struck by the vast variety of sources. When we seek to regulate, control or tax activities in our country, we must consider the likely impact on imports.
§ Mr. Bellingham
My right hon. Friend has touched on an important point. I represent a number of chicken producers in Norfolk who implement high standards of animal welfare. However, we import millions of chickens from Thailand that have never seen the light of day and that have be m force fed chemicals and other ingredients, but the bottom line is that the consumer wants cheap chickens.
§ Rob Marris
The effect on the price for the consumer may not be as great as the right hon. Gentleman fears. We have heard today that the principal—the farmer—may not pay a cheap price for gang labour because the gangmaster rips off the workers by operating illegally by, for example, overcharging for accommodation, and the farmer ends up paying for the labour and charging supermarkets for it.
§ Mr. Forth
I accept that, but there may be another effect—the produce will not be gathered at all if we are not careful. If we eliminate problems such as multiple occupation of homes and hot bedding, the supply of labour may reduce to such an extent that farmers, the principal producers, will have difficulty obtaining labour to gather their produce. Again, that would have 575 a general effect on the domestic agricultural sector, and it could have a displacement effect on imports. We are not necessarily at odds here, but, as the Minister says, we must be mindful of the tensions inherent in the Bill.
I was going to discuss enforcement, but I shall leave that matter because I want to discuss the scope of the legislation. Almost as a throwaway line, the right hon. Member for Holborn and St. Pancras said that the Bill is focused on the agricultural sector, which is currently on people's minds. As he said, we should not forget that the phenomenon exists in catering, construction and other sectors of our economy. That raises the questions of whether we should legislate and how focused legislation should be. There is a tension between saying that the legislation should be focused and therefore more effective, and ignoring similar problems in other sectors, which does our voters and us a disservice. We should bear that point in mind as we examine the Bill.
Given the Bill's title, there is no possibility of extending its scope, but I hope that a marker has been put down that such matters will not be forgotten. That point relates to enforcement, because if Customs and Excise and the immigration authorities can enforce legislation on agriculture, which the Minister told us about a moment ago, presumably they can do it in other sectors. If they have demonstrated their capacity to enforce legislation in agriculture and other sectors, why can they not rapidly extend their effectiveness, which we all want?
§ Jeremy Corbyn (Islington, North) (Lab)
One important problem is that there are considerable numbers of asylum seekers, particularly in London and the south-east, who are not allowed to work and who want to work. They do not receive state aid or benefits and are therefore prey to the worst kinds of exploitation, which one can find in catering, hotels and building sites all over London and the south-east. I understand that that issue is outside the scope of the Bill, but it must be addressed at some point.
§ Mr. Forth
Without trying your patience too far, Mr. Deputy Speaker—I am a student of your body language—I would agree with the hon. Gentleman, except to say that again a balance has to be struck between over-protecting such people and denying them an opportunity to work. That is another issue that has to be borne in mind. I had some furniture delivered recently by two charming young Ukrainian gentlemen. Being the decent sort of chap I am, I did not ask to see their work permits. I could not decide whether I wanted to encourage them to bring my furniture or whether I felt that they were prevailing too much on our hospitality. I shall not dwell on that issue.
With my eye on the hon. Member for Pendle, I wish to make a final point.
§ Mr. Bellingham
At the peak of the growing and picking season, there are several gangmaster operations in East Anglia that supply gang labour to the farming industry. At quiet times, they may supply labour to the catering, construction and hospitality industries. Does my right hon. Friend agree that that issue must also be addressed?
§ Mr. Forth
I hope that that would be generally agreed, but as we are talking about this Bill today, we can only note my hon. Friend's remarks on this occasion.
576 Despite everybody's efforts to keep me on my feet, I wish to conclude by saying a few words about the lack of an impact assessment. I am nervous when we embark on such legislation without any attempt to measure the impact on the cost structures of the industry, on tax revenues—be it plus or minus—and, as importantly, on the consumer. The Bill is bound to have an effect in all those areas. Despite all the expert advice that the hon. Member for West Renfrewshire (Jim Sheridan) has had on the Bill from unions, retailers and others, no one appears to have made any attempt to estimate the impact on their costs, employment practices, ability to gather the produce or the cost to the final consumer. The hon. Member for East Lothian may be right that consumers would not care about the cost if such tragedies as we have seen recently are eliminated or it meant that people were treated decently. That may be the view that the consumer takes, but for them to be able to take that view they must know something about the additional bill.
§ Mr. Simmonds
Is my right hon. Friend aware that many legitimate gangmasters, especially those who have to provide labour 364 days a year to packhouses to enable them to supply supermarkets with an all-year round supply, operate inside the law under very slim margins of profitability? If the bureaucracy and additional cost is over and above what is necessary, many will not be able to operate profitably and will therefore not provide the much needed labour to send the food up the chain of supply.
§ Mr. Forth
My hon. Friend knows much more about this issue than I ever will and he may be right, but I suspect that a countervailing force would be at work. If the illegal operators are eliminated, the legal operators will have that much more opportunity to carry out their tasks effectively and more efficiently. I welcome the fact that the Minister said that he wants to minimise any cost burden involved.
I said to the hon. Member for Pendle that we would be able to move on at about 1.45 pm. I pride myself on having a good sense of the passage of time and I am aware that the Bill's promoter will wish to say a few words, so I will conclude my remarks. I can see that the Bill will receive a Second Reading, but it will also receive thorough scrutiny in Committee—and that I very much welcome.
§ Jim Sheridan
With the leave of the House, I thank all right hon. and hon. Members for their support today, especially those who made such powerful and eloquent contributions to this important debate. That applies regardless of how late they joined it or how early they left it. I also want to mention the fact that—this is not a measure of the support given by those hon. Members who are in the Chamber—a number of right hon. and hon. Members from across the spectrum have given their support to the Bill.
In particular, I thank my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown). I was humbled by his presence, given his experience of agriculture, and pleased that he joined us today. I am also impressed by the presence of my right 577 hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson), who is equally experienced in introducing legislation in the House.
I also welcome and appreciate the support given by my hon. Friend the Member for Morecambe and Lunesdale (Geraldine Smith), whose constituents had tangible experience of the consequences of unscrupulous gangmasters.
I thank all those people outside the House for sending their letters and e-mails of support during the past couple of weeks. Of course, once again, I thank all the coalition partners for all their support and help. Their backing has helped the Bill to make progress. In that vein, I also thank the right hon. Member for Bromley and Chislehurst (Mr. Forth) for his brief contribution, and I certainly hope that he continues in that way.
I have learned a great deal from the debate today, and I believe that gangmasters and gang workers may also learn something—that the days of exploitation must come to an end. Again, I thank my right hon. Friend the Minister for his response and for his words of support and encouragement. I hope that, as the Bill progresses and we debate the issues further, the result will be that he and the Government will be able to work with me and my colleagues during the next stages. However, the Bill is deliberately non-prescriptive. We have said that it is entirely up to the Secretary of State to decide which agency should take up the responsibility. I was encouraged when my right hon. Friend said that existing agencies could perhaps do so, but serious consideration should be given to resourcing those agencies.
I finish by saying that, for all those who are exploited and those who have lost their lives because of exploitation, the Bill could and should be the most fitting memorial that the House could give to them and their families.
§ Question put and agreed to.
§ Bill read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).