Grand Committee
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Enterprise and Regulatory Reform Bill
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“Letting agents etc.
(1) In section 1 of the Estate Agents Act 1979 (estate agency work), for “to which this Act applies” substitute “and in subsection (1A) below to which this Act applies.
(1A) This Act also applies, subject to subsections (2) to (4) below, to—
(a) things done by any person in the course of a business (including a business in which he is employed) pursuant to instructions received from another person (in this section referred to as “the client”) who wishes to let or have the letting of an interest in land managed (for example, the collection of rents on his behalf)—(i) for the purpose of, or with a view to, effecting the introduction to the client of a third person who wishes to let an interest in land; or(ii) after such introduction has been effected in the course of that business, for the purpose of securing the letting of the interest in land; or(iii) for the purpose of, or with a view to, managing the letting of the interest in land on behalf of the client; or(iv) for the purpose of, or with a view to, block management of interests in land; and(b) management activities undertaken by any person in the course of a business (including a business in which he is employed) in connection with land or interests in land.””
Baroness Hayter of Kentish Town
My Lords, this is unfinished business for me. As the then chair of the Property Standards Board, I failed miserably to persuade the previous Government to do what I am now asking, but I feel I might have more success with this one.
The purpose of these amendments is, first, to bring letting agents into the Estate Agents Act, thus enabling the OFT to ban agents who act improperly; and, secondly, to require all letting and block management agencies to join an ombudsman’s scheme, which would give tenants and landlords the possibility of redress. This is already the case for estate agents under the Consumers, Estate Agents and Redress Act 2007 and we simply want to extend this to letting agents, as was demanded by Mark Prisk in 2007. I will make the case in three ways: first, the evidence of need due to the size of this sector; secondly, the number of complaints; and thirdly, the industry’s support for this move.
First, the numbers: about 3.5 million people rent privately, two-thirds of whom go through letting agents. Over 1 million landlords use letting agents to manage their properties. The private rented sector accounts for about 17% of all stock at the moment; this is forecast to rise to 20% by the time of the next general election. Which? estimates that tenants pay £175 million a year in agency fees. So it is a big industry, affecting the most basic of consumer goods—that is, homes—but it is not well run or well regulated.
Indeed, the industry is actually completely unregulated. There is ample evidence of rogue agents in this field. Luckily, there is also lots of evidence of good agents. In fact, just as estate agents have to sign up to a redress scheme, so 60% of letting agents—those who are members of the professional association ARLA: the Association of Residential Letting Agents—choose to belong to a redress scheme. However, 40% of letting agents are not members of a redress scheme because membership is voluntary.
We want all letting and managing agents to be members of a scheme and thus covered by a code of conduct or by the RICS “Blue Book” of standards. The amendment is supported by the two residential property ombudsmen: Ombudsman Services and the Property Ombudsman. The latter, Chris Hamer, has noted that with 40% of agents outside a redress scheme, there is a,
“significant risk for consumers who use such … firms. That risk arises from a failure of the firm to follow accepted standards of operation and customer service as laid down in … [the] code; and … exposes the landlord or tenant to … financial loss either through there being no protection of client money if the firm fails, or because … funds have been misappropriated”.
The Property Ombudsman’s workload with letting agencies has increased 200% in the past five years—up 25% last year alone. Some of that represents the increase in agents who are joining voluntarily, but it is the economic situation forcing more people into the private rented sector that is leading to more complaints. However, a quarter of the complaints referred to the Property Ombudsman could not be handled because the letting agent was not a member of the redress scheme.
The other ombudsman, Lewis Shand Smith, who is chief ombudsman at Ombudsman Services, has stated:
“Protection for the consumer in the lettings market is patchy which in turn leads to confusion. There is also an inequality in that those buying and selling residential properties are protected and have access to redress, while those renting in the private sector do not. A more robust and comprehensive regulatory framework and comprehensive access to independent redress will both protect and empower those in the PRS [private rented sector] market”.
These ombudsmen are seeing the problem grow day by day. Research undertaken by Which? and by RICS bears this out. One in five tenants and 17% of landlords said they were dissatisfied with their letting agents. Indeed, landlords’ customer satisfaction score for letting agents was sixth from the bottom across 50 markets and tenants’ satisfaction was second from the bottom. Half of consumers were unaware of or could not remember if their agent was a member of a professional body and the vast majority of them believed that letting agents are required to abide by a code of practice, despite that not being the case. However, nine out of 10 believe it should be compulsory for agents to register with a regulatory body and meet a code of conduct.
It is not just tenants. Landlords are hardly more sophisticated consumers than tenants. In fact, only one-third checked whether their letting agent was a member of a professional body. So tenants are not in a position to choose the agent and landlords often make bad choices. It is not simply that tenants and landlords have nowhere to go with complaints if there is not a redress scheme. It is also that, because letting agents do not have to be a member of a redress scheme, they cannot be banned for bad practice, they do not have to provide indemnity insurance, they do not need a published complaints procedure, there are no client protection rules and there are no entry requirements or qualifications. It will come as no surprise to the Committee that Shelter, Crisis and Which? support these amendments, as does Boris Johnson, mayor in this city, and Sir Robin Wales, Mayor of Newham, whose borough has driven the debate on regulation of the private rented sector. The noble Lord, Lord Borrie, who is, unfortunately, unwell today and unable to be with us, is also very supportive of these amendments. He was the first director of the OFT, which would gain some powers under one of these amendments. The noble Baroness, Lady Greengross, who sat through our last session when we did not reach these amendments would also like her name associated with them.
We know that those who represent tenants and landlords want this change, but what of the industry? The industry is absolutely behind this amendment. Lucy Morton, who has been described by the Telegraph as,
“the queen of London’s rental market for 30 years”,
told that paper:
“It is shocking that so many letting agents remain unregulated”.
The Chartered Institute of Housing wrote to me that it,
“believes that the private rented sector deserves adequate … regulation … to protect the increasing numbers of people … in the sector ... Currently, the regulatory arrangements … fall short of customer expectations with … nearly 40% of … agents not part of … [the] regime. CIH supports these amendments … [which] would … offer a redress scheme and extend the Estate Agents Act … to include … letting and managing”,
agencies.
They are not alone: the Residential Landlords Association, the British Property Federation, the Royal Institution of Chartered Surveyors, the Federation of Private Residents’ Associations, the National Federation of Property Professionals, the Association of Residential Letting Agents, the National Association of Estate Agents, Southern Landlords Association, the Institute of Residential Property Management and the Association of Residential Managing Agents have all asked me to let the Committee know that they support these amendments and that they support mandatory membership of a redress scheme in line with estate agents. They have written that they,
“believe that the regulatory framework in the lettings market … offers limited protection for the consumer with approximately 40% of lettings agents outside of regulation … The current … framework … costs business money, hitting many micro-businesses and sole practitioners … particularly hard. This amendment will provide consumers with clarity and … protection … raising standards across the rental sector, without adding unnecessarily to business costs”.
One of the UK’s largest estate agents, Knight Frank, has also written to endorse this statement.
This is a king-sized roll call. The industry is completely signed up to the initiative. Indeed, it is one that it has long wanted, as have others such as the Resolution Foundation, which wants all letting agents to be members of an ombudsman scheme and brought under the Estate Agents Act 1979 so that the OFT can ban those that act improperly. There is a major mischief at the moment as an estate agent banned by the OFT can open up the very next day as a letting agent. Charities, campaigners and the industry support my amendments.
I turn now to the governing parties. In their policy document, Decent Homes for All, the Liberal Democrats, noting that the numbers in the private rented sector now equal those in social housing and are set to overtake the public sector by 2020, describe how,
“a minority of bad … letting agents are a blight on the [private rented] sector … bringing PRS into disrepute”.
The Liberal Democrats therefore support,
“regulation … to ensure that … people are protected from unscrupulous or incompetent landlords and managing agents”,
by promising to,
“require all letting/managing agents to be on a national register and … to set up a mechanism whereby bad agents may be removed and therefore prevented from practising”.
These amendments provide that mechanism.
I turn to the other part of the coalition. The then opposition MP and now Housing Minister, Mark Prisk, tabled amendments to the 2007 Consumers, Estate Agents and Redress Bill when it was going through the House. His amendments, as I am sure the Minister has recognised, were virtually identical to my Amendment 28ZH. That is because he said that that amendment would amend the Estate Agents Act 1979 to extend the definition of estate agency work to include residential lettings and management. Some of the scandals in this market include charging both the landlord and the tenant for the same service, charging for simple procedures already covered by a landlord’s management fee, and charging exorbitant fees for basic functions. He went on to say:
“As a Conservative, I am instinctively cautious about arguing for more regulation. However, as a chartered surveyor and a constituency Member of Parliament, I know that we need to put lettings on the same regulatory footing as sales. The fact that the National Association of Estate Agents, the Royal Institution of Chartered Surveyors and the rest of the industry agree shows that the measure is long overdue”.—[Official Report, Commons, Consumers, Estate Agents and Redress Bill Committee, 24/4/07; col. 192.]
I have to confess that my party then proceeded to defeat his amendment. However, with this amendment, we have a chance to implement the amendment tabled by Mr Prisk in the other place. I beg to move.
Baroness Gardner of Parkes
My Lords, I support the amendment, but I do not think it goes far enough. I shall go on to talk about that in a minute. The noble Baroness has raised some interesting points and I was rather cheered to hear about her lack of success with the Labour Government because I am finding the same at the moment with the Conservative Government as regards the regulation of managing agents. I should say at the outset that that is what I think is missing here, and I hope to bring forward an amendment on Report to cover the regulation of managing agents of leasehold properties.
The noble Baroness mentioned the private rented sector. I am aware of what that is, but unfortunately we still seem to be unable to deal with the invisible private sector, which is quite worrying. I meet people all the time who are being forced out of a bedsit or something because the rent is being put up. The landlord does not even declare that he has any tenants—much less use any letting agents—and when the tenants try to find another place to go to, just a simple room, they are joining a huge queue of people. The rent is increasing even as they wait for their opportunity to get a room.
Baroness Howe of Idlicote
My Lords, I wish to focus my remarks on the R-word—redress—rather more than on the regulation side. Here before us, in the excellent amendment of the noble Baroness, Lady Hayter, is an opportunity to do something simple but clearly important which should have been done years ago—that is, to close the redress loophole in property lettings and management. The more one reads and learns about this issue, the more surprised one is about how we got into this muddled position that we are in today, with one department—BIS—taking a different view from another—Communities and Local Government.
As we have heard, change will be achieved by bringing letting agents and those who manage leasehold property within the redress net of the Consumers, Estate Agents and Redress Act 2007 and the main provisions of the Estate Agents Act 1979. Those Acts are both BIS Acts but, of course, housing is a CLG responsibility. The key thing that they do is, first, require all sales agents to be a member of an approved redress scheme and, secondly, give the OFT negative licensing powers to ban or reprimand sales agents for any misdeeds. However, neither Act has any sway over letting or managing agents, despite them interacting with consumers to an even greater extent.
I do not think that we should see access to redress as regulation. It is a consumer right and one of the eight consumer principles. It is true that consumers who are unhappy with their lettings or managing agent could go to court to get access to redress. However, as we know, very few do. These amendments are about mandating an alternative to court—alternative dispute resolution—which means that letting and managing agents must offer independent ADR to tenants, landlords and leaseholders. Therefore, I strongly support the intent behind these proposed new clauses. From the consumer perspective, they would mean that consumers with a complaint, after exhausting any in-house complaints procedure, if there is one, can take that complaint to an independent body approved by the OFT or its successor. This ADR will most likely be an existing body such as the Property Ombudsman, which already covers most sales agents, although I believe that there are other schemes as well.
What is the impact of this loophole? Surely it does not make any sense that a consumer who has a problem with a sales agent when selling, or even buying, a house has access to an independent complaints body, but if that same consumer—landlord or tenant—has a complaint about a lettings agent over a rental property or a problem with a managing agent who looks after their block of flats, they may not have access to independent ADR. While it is true that many, possibly a majority, of lettings managing agents are voluntary members of the Property Ombudsman—we have heard that already from the noble Baroness, Lady Hayter—there are around 6,000 firms of lettings agents that are not subject to it.
Why does it matter that we target them? One only has to read the briefing from Which?, along with that from many other organisations which have already been mentioned, to find the answer. The sector’s problems as outlined by the noble Baroness, Lady Hayter, and other speakers—and I am sure many others will continue in this vein—speak volumes. I shall not extend my time by reading out the Which? report giving various examples of landlords and tenants who have suffered in this way. Noble Lords will no doubt have a copy and can see for themselves.
I very much hope the Minister and the coalition Government will be able to accept the very reasonable and carefully defined amendment moved by the noble Baroness, Lady Hayter, not least in view of what a Minister in his role—Mark Prisk, now the Housing Minister—tried to do on a previous occasion.
Lord Deben
My Lords, the longer one has been in this House—or, indeed, in the House of Commons—the more one believes that certain statements are made irrespective of the Government. Somehow or other Governments take on a particular view about certain things, and regulation is one of those things. It seems to me that Governments often take a very narrow view about regulation and seem to think that if they regulate at all, they will be accused of red tape, of stopping businesses and of every heinous offence. That is the reason why the previous Labour Government refused to do this and why the present Government have introduced this Bill without this clause.
I hope the Minister will take it from somebody who has been in elected and now non-elected public life for nearly 40 years that it is the duty of Ministers to stand up against that attitude, because here is an issue where everybody recognises that there is only one sensible answer. It is not sensible to have a situation in which those who sell houses have a code that is different from the code for those who rent houses, because those who buy or rent houses think that they are working in the same context. Indeed, as it becomes more natural to buy and to rent in equal terms—I do not mean in numbers, but that people make those decisions—we must help the consumer in a sensible way. The only sensible way is the way so eloquently put forward by the noble Baroness when she pointed out that this is not regulation but consumer rights. It is the possibility of a consumer having a perfectly reasonable way of ensuring that they get fair do’s when they go to court.
It is very important for us to press this. I am speaking because I am a strong deregulator. I do not believe in the degrees of bureaucracy that we have managed to land on business. In my own business, I am conscious that there is a whole series of rules and regulations that restrict the number of people you take on and certainly stop the expansion of British industry and a lot of things that can be done. This has nothing to do with that. The only people who can dislike this light regulation are those who have every intention of misbehaving. When one reads that list of people who are supporting this, it is very hard to think of any responsible, respectable body, apart from the Caged Birds Society, that is opposed to this proposal.
I say this to my noble friend. Whatever is in his speaking notes—and I have a horrible feeling that I could write those notes, because there is a kind of parallelism with what I myself was given in the past, and was often willing to ignore—I hope that he will say to himself, “Least said soonest mended if I can’t give way”. If he cannot give way, some anodyne references would enable him to go back and say to the powers that be, “This won’t go. This isn’t acceptable”.
We must find a way to ensure that rogue letting agents do not get away with it any more. There is no argument that can be put up by BIS that can overcome the simple matter of the rights of the consumer. That is probably the elegant way through and I hope that he will be able to take it.
Lord Sharkey
I speak briefly and enthusiastically in support of Amendments 28ZH and 28ZJ. Other noble Lords have spoken eloquently and powerfully in favour of these amendments already and I do not want to repeat all their arguments, but I stress the real importance of this proposed measure to people’s lives. The absence of any kind of ombudsman scheme for letting agents is in itself an odd situation. It is tempting to say simply that if we can have an ombudsman scheme for estate agents surely it is obvious that we should have one for letting agents.
The absence of any such scheme for the private rented sector is not just an unfortunate gap in the regulatory or perhaps the redress landscape; it is an admission that can be the cause of real and prolonged distress. I have some personal experience of this. Two of my children lived in private rented accommodation until recently and for prolonged periods of time. The experience has been on the whole often unsatisfactory and occasionally downright distressing. On frequent occasions the dissatisfactions and distress were caused directly by the incompetence, inattention, procrastination and venality of the letting agent, and these were not always trivial occurrences. That is not surprising because we are discussing people’s homes.
We have heard a careful, well-argued and rational case for requiring letting agents to belong to an ombudsman scheme, but we should not let the rational and logical force of the argument blind us to the fact that the current situation can be and frequently is the cause of real emotional and financial distress. We know that the problem is widespread, with 40% of letting agents not signed up either to a professional body or a redress scheme. We know that it is the less well-off who experience the most dissatisfaction. We can see by looking at the amendments that the problem is easy enough to fix.
The amendment is not simply a tidying-up measure. It addresses a real, widespread, distressing and, above all, completely unnecessary problem. It is very encouraging to see that there is widespread support for the proposal of the noble Baroness, Lady Hayter, both current and historic. The noble Baroness has listed the current supporters and I would like to add my colleagues in the Commons to that list. Annette Brooke put down an Early Day Motion in the middle of last month calling essentially for the measures that are now before us. As for historic support, the noble Baroness has noted that as long ago as 2007 my honourable friend Mark Prisk argued forcefully in favour in the Commons.
I very much hope that the Minister will see the force in the noble Baroness’s arguments and in those of the other noble Lords who have spoken and of his colleague Mark Prisk. I very much hope that the Minister will be able to revenge Mark Prisk’s defeat at the hands of the previous Administration and accept this important amendment.
Baroness Brinton
My Lords, I certainly will not rehearse the arguments—in fact I have torn up half of what I was going to say after the excellent opening speech of the noble Baroness, Lady Hayter, on this particular amendment. But I want to report particularly that when the Liberal Democrats debated our policy paper, Decent Homes for All, we heard of some very personal examples from members that I found profoundly shocking. They included one letting agent who had taken on a policy of no single parents at all, even if they were offering a three-month deposit as a guarantee and even if they were happy to provide—which I would not have been—a separate guarantor. This particular letting agent had just decided that single parents, mainly mothers, were no good. This parent, in particular, had no form of redress at all to that.
What is in front of us today is an utterly reasonable way of getting that redress. I am grateful to the noble Baroness, Lady Howe, and the noble Lord, Lord Deben, for making the point that this is actually much more about redress and consumer rights. It is rare to see an amendment that is so widely supported not only from within the House of Lords but also in another place by various people, including Mark Prisk, Annette Brooke and others from the government side. I hope that even if the Minister cannot give us an instant answer today he will be able to engage in discussion with those who have spoken in the debate on this amendment prior to getting to Report stage.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)
My Lords, it may not surprise my noble friend Lord Deben that I do indeed have some speaking notes, but I also hope that I can attempt at least to answer the questions that have been raised this afternoon by noble Lords. I know that these issues have been raised before, and I have considered carefully the amendments, arguments and indeed endorsements of the noble Baroness, Lady Hayter, for regulating the letting sector, particularly the ones that were mentioned this afternoon. She raises a very important issue.
I fully recognise the noble Baroness’s commitment in championing the interests of consumers in this area and take her concerns very seriously. It is helpful that she has brought it up in the context of this Bill. I note and respect the intervention of my noble friend Lord Deben in this respect as well. I know that the Housing Minister is aware of these concerns but I will raise them with him for further consideration. It is clear from the speech from the noble Baroness, Lady Hayter, that he—Mark Prisk, my honourable friend in another place—is aware of the issues that she has mentioned.
The noble Baroness, Lady Hayter, raised the issue in terms of a need for a mandatory redress to protect consumers, particularly those who are the most vulnerable. The Government are indeed keen to promote a greater use of redress but, understandably, want to avoid increased costs which might fall on landlords and tenants which a new mandatory regime would bring. While the Government acknowledge that poor practice exists in some parts of the letting sector, Ministers believe that new regulation would be disproportionate and would drive some businesses from the market. This would increase costs for consumers and reduce the choice and availability of accommodation on offer to tenants.
I can reassure noble Lords that letting and management agents are already subject to consumer protection legislation. For example, the Consumer Protection from Unfair Trading Regulations 2008 protect against giving false or misleading information, not acting with the standard of care and skill that is in accordance with honest market practice or claiming falsely to be a member of a professional body or approved redress scheme. The Unfair Terms in Consumer Contracts Regulations 1999 provide protection against unfair contract clauses, particularly where they are hidden in the small print.
Consumers who are treated unfairly or are charged unreasonable fees by an agent can seek help from their local trading standards officers, who have civil and criminal enforcement powers. The Office of Fair Trading has been investigating practices in the lettings sector and will be producing a report shortly including recommendations on how enforcement bodies can work to raise standards. We look forward to considering its report and recommendations. I hope that this particular point will go some way to reassuring the noble Baroness on the points that she has raised.
In addition to the protection offered by the consumer protection legislation, it is estimated that around half of all agents belong to voluntary schemes which set standards and offer redress if things go wrong. We invited industry bodies to work with us to improve the quality and coverage of self-regulation and in 2010 we endorsed the industry-led SAFEagent scheme. SAFEagent is designed to help consumers understand the benefits of using agents with Client Money Protection, by developing an easy to recognise logo. We are aware of the need for consumer awareness and also the importance of ensuring that vulnerable people are well informed, and indeed are advised as to what to do and where to go for help.
We have also published top tips for both landlords and tenants setting out the benefits of using an agent that belongs to SAFE agent or one of the professional bodies offering the right protections. We will continue to work with Citizens Advice and other bodies to ensure appropriate information is available. Citizens Advice provides help and advice on lettings over the telephone, online and face to face. In the light of these existing schemes and the consumer protection legislation in place, we have no current plans to introduce further statutory regulation. We are, however, keen to do everything possible to ensure that consumers are well informed and empowered to exercise their rights.
I was grateful for the intervention from my noble friend Lady Gardner who spoke most eloquently on the issue of the regulation of managing agents. I am aware that several issues have been brought to the Housing Minister’s attention in relation to letting agencies and residential leasehold and I am certain that managing agents are part of this. I am sure he is aware of your ongoing interest in this matter, but I will also inform him of the comments you made today. These are important issues to raise—as has been pointed out by the noble Baroness, Lady Gardner, there is a shortage of 300,000 houses in the UK. The letting of some of these properties must be effected fairly and consistently.
I hope that the noble Baroness, Lady Hayter, is reassured and will therefore be prepared to withdraw these amendments.
Lord Lucas
My Lords, I recognise a Treasury reply when I see it. I should be most grateful if the noble Lord would justify the first sentence of his reply by writing to me with the evidence on which that statement was based—that having this amendment passed would result in higher costs for consumers and a diminution in respectable firms in the market. That is just Treasury boilerplate. I very much doubt that they have done the work to justify that but I eagerly await the Minister’s letter to show me that I am wrong. In the absence of that, I very much hope that on Report we will deliver to my noble friend his first defeat as a Minister in the House of Lords. As he knows, this will not be a defeat for his department but merely for the Treasury and therefore one in which we shall all rejoice.
Baroness Gardner of Parkes
My Lords, we would all like to see that reply and I hope that it will be made readily available to everyone.
Viscount Younger of Leckie
Not only will I be very pleased indeed to reply to a letter that I might receive but I would be delighted to meet to discuss these matters fairly and fully.
Baroness Hayter of Kentish Town
The Minister will not be surprised to know that the lady is not reassured. I thank the noble Lords who have spoken for their support, not only the noble Lord, Lord Lucas, but also the noble Lord, Lord Sharkey, the noble Baroness, Lady Brinton and the noble Lord, Lord Deben, whose ministerial experience I am very grateful for, as well as the noble Baronesses, Lady Gardner and Lady Howe.
The problem with the voluntary scheme is that only the good agents belong. They are the members of the Association of Residential Letting Agents, which does not just get you in there—it educates you, awards certificates and does training. Very interestingly, ARLA also gets feedback from the ombudsman scheme to know what is going wrong and help them maintain their standards. The problem with the idea of using unfair contract terms is first that the consumer—whether it is a landlord or a tenant—simply does not know to go to them. Secondly, if an individual trading officer deals with something they will probably just deal with that one letting agent and there will be no feedback or ongoing case. I do not agree that this cost is disproportionate. The noble Baroness, Lady Gardner of Parkes, gave the figure of £150 to belong to a scheme: this is not going to put any letting agents out of business. The Minister also seemed to suggest that if any letting agents did go out of business—and they will only go out if they are bad and run off with clients’ money—this would somehow lead to less property. It will not: they will just go to a decent agency. It does not affect the number of properties on offer to tenants.
“Abolition of Agricultural Wages Board and related English bodies
(1) The Agricultural Wages Board for England and Wales is abolished.
(2) Every agricultural wages committee for an area in England is abolished.
(3) Every agricultural dwelling-house advisory committee for an area in England is abolished.
(4) Schedule (Abolition of Agricultural Wages Board and related English bodies: consequential provision) (abolition of Agricultural Wages Board and related English bodies: consequential provision) has effect.”
Viscount Younger of Leckie
The Agricultural Wages Board and Agricultural Wages Committees were set up in their current form nearly 65 years ago. The board was established at a time when there was little statutory employment protection for workers. Today the situation is very different and all workers are protected by the National Minimum Wage Act and working time regulations. Before I proceed any further, I want to reassure noble Lords that this Government firmly support the national minimum wage.
The Agricultural Wages Board is the only remaining sector wage council—all others have now been abolished. There is now no compelling reason why the agriculture sector alone should continue to be subject to a separate statutory employment regime. Let me explain why.
The agriculture industry today is very different. First, such businesses are often not just dependent on agriculture. Technological developments and increased mechanisation mean that there is no longer such dependency on manual labour in order to carry out agricultural functions. This has enabled businesses to expand and take on other, complementary work. The sectors within agriculture are therefore becoming increasingly diverse and many farm businesses now carry out non-agricultural activities alongside more traditional farming enterprises—for example bed and breakfast, and farm shops, where workers would not necessarily be covered by the agricultural wages order.
The agricultural wages order, which is made each year by the Agricultural Wages Board, takes no account of these changes within the agriculture industry. The process is one of “one size fits all” and this imposes a rigid and no longer appropriate structure on what are in reality nowadays myriad businesses that come under the umbrella term of “the agriculture sector”. The order is overly complicated and its provisions are wide-ranging and restrictive, hampering the ability of the industry to offer more flexible, modern employment packages. These amendments will end the separate statutory employment regime for agricultural workers in England and Wales and make amendments to the National Minimum Wage Act to bring the agricultural industry within the scope of the national minimum wage. The Government will also make amendments to secondary legislation to ensure that agricultural workers are adequately protected by the working time regulations.
The abolition of the Agricultural Wages Board and the associated agricultural minimum wage regime will enable farmers to offer terms and conditions for new workers that suit their particular circumstances and take account of the requirements of the specific farming sector. They will also be able to agree more flexible terms with existing workers by mutual consent. It will make it easier for farm businesses to employ workers, including taking on new workers, and encourage longer-term employment, thereby boosting growth and creating job opportunities.
The abolition of the Agricultural Wages Board will also mean that a single employment regime applies to all types of activities. This will bring transparency for both employers and workers, which is increasingly important given the diversity of farm businesses, not least in the interests of fairness and as the distinction between agricultural and non-agricultural activities becomes blurred. Even within the agricultural sector there can be confusion as to whether activities are covered by the agricultural wages order. For example, where a business packs and trims salad produce that is both grown on the farm and bought in, the packing of the home-grown produce is covered by the agricultural wages order, whereas the packing of the bought-in produce may not necessarily be. There are similar examples of confusion in the dairy and livestock sectors. Abolition will lift administrative and regulatory burdens from farm businesses and enable them to focus on their core business activity. It should encourage farmers to offer more in the way of longer-term employment, including the payment of annual salaries. All of this will encourage the development of a sustainable and prosperous industry for the future.
For the avoidance of any doubt, let me offer some further reassurance. Agricultural workers who have contractual rights reflecting the terms of the agricultural wages order at the time of the abolition of the board will continue to have those rights until such time as the contract might be varied by agreement between the employer and the worker or until the contract comes to an end. Moving forward, it is important to bear in mind that if agriculture-based businesses want to retain and attract able and well qualified people, they need to offer remuneration packages that are competitive. We know that the majority of workers in the agriculture sector already benefit from terms and conditions that are above the agricultural minimum wage rates. Currently, about 60% of permanent agricultural workers over the age of 22 are paid above the agriculture wages order minima. There is no reason why they should find themselves in a worse position in the absence of the board. The Government have asked the Low Pay Commission to include agricultural workers in its considerations when providing recommendations for all of the elements of the national minimum wage in order to achieve the smooth integration of agricultural workers in England and Wales.
Most of the functions of the 15 Agricultural Wages Committees in England have now lapsed in practice or been replaced by wider legislation. Their only remaining active function is to appoint members of the 16 Agricultural Dwelling House Advisory Committees in England, which are sometimes known as the ADHACs. The committees were established under the Rent (Agriculture) Act 1976 and their function is to give advice to local authorities on rehousing agricultural workers. As a result of changes in housing legislation, the number of requests for advice from ADHACs has declined significantly, to fewer than 10 in each of the last two years. There is no statutory requirement to consult an ADHAC and many local authorities happily take decisions on rehousing without such advice. I hope the Committee agrees that these 31 regional committees in England are now effectively defunct bodies and their continued existence at public expense cannot be justified. With regard to the abolition of the ADHACs in England, I want to assure noble Lords that there are no plans to change the provisions in the Rent (Agriculture) Act 1976 which give security of tenure to protected tenants, and therefore the amendments will not in any way jeopardise the position of tenants with protected tenancies under the 1976 legislation.
In summary, these amendments will bring employment practices in the agricultural industry into the 21st century, enabling sustainable growth for the future. They will also remove a number of obsolete public bodies and contribute to the Government’s wider programme of public body reform. I hope that, in the light of my remarks, noble Lords will accept them. I beg to move Amendment 28ZK.
Lord Whitty
My Lords, the Minister must realise that this is a bit of a controversial item. That is not surprising because in their latest impact assessment of the outcome of this measure the Government’s own best estimate is a cut in the living standards of rural workers in England by £236 million over the next decade.
Before I get on to the substantive points, of which I have many, I need to make a procedural point. I am not clear why we are debating the abolition of the Agricultural Wages Board in this Bill on this occasion. The amendments were put down two days before Christmas, without any prior warning. The Bill has been through the House of Commons. There was no indication in the House of Commons that the Government were going to come forward with this amendment in the House of Lords, which is very unusual, and, of course, everybody in the industry—on both sides of the industry and in Parliament—thought that the wages board was dealt with at primary-legislation level under the Public Bodies Act well over a year ago.
To implement that, the Government have to follow Section 11 of the Public Bodies Act, which lays down certain stipulations for bringing forward secondary legislation. It requires a full explanation to both Houses, a proper consultation period, the consideration of alternatives and a special memorandum to be laid before the House before it considers it. Why is this before us today when a procedure is already laid out and it appeared that the Government were prepared to go along that road until very recently? There was no explanation in the letter we got from the noble Viscount’s predecessor nor has there been any explanation from the Minister today. I can think of a couple of procedural reasons why the Government are in a bit of bother on this one. One of them is the Delegated Legislation Committee and the other one can be summarised by saying “Wales”.
Under the Public Bodies Act, the Government are already in serious trouble on a range of ways in which they have tried to bring forward the secondary legislation. The report of the Secondary Legislation Scrutiny Committee indicates that the Act requires a proper 12-week consultation, not the four-week consultation that Defra has sprung on us, and a full impact assessment followed by a government response to that consultation and a memorandum to Parliament. The Government seemed to start down that track, but the Secondary Legislation Scrutiny Committee criticises their behaviour in relation to other public bodies on a number of grounds: the lack of robustness of the government case; inadequate evidence; an inadequate approach to consultation with stakeholders; a failure to consider alternatives; and a lack of arrangements for future monitoring of the outcome. On pretty well all those counts, Defra and the Government are failing in the implementation of the Public Bodies Act in relation to the Agricultural Wages Board, so it must have occurred to the Government that it might be a bit easier to slip it into another piece of legislation, almost when nobody was looking over Christmas.
However, probably the biggest reason relates to Wales. This is, of course, an England and Wales body. As I understand it, the Welsh Government object to its abolition. The Welsh Government would like to see a continuation of statutory provision in agriculture which the Scottish and Northern Irish Governments have decided to have in relation to their own agricultural sector. Of course there is confusion here. If this was dealt with under agricultural legislation, and as agricultural policy is devolved, the Welsh Government would have equal rights to the Westminster Government and we would have to reach agreement with them on this.
Lord Plumb
My Lords, I declare an interest as a farmer and someone who has employed farm workers over a considerable number of years. It is for that reason that I am more interested in the substantive points made by the noble Lord, Lord Whitty, than in the procedural points. The procedural points he raised are worthy of some examination and I am sure that the Minister takes all that on board. The substantive points are what really matter—how people react to whatever decision is taken in the proposed removal of the Agricultural Wages Board.
I also declare an interest as, many years ago, a member of that board. I served on it for a while so I have some recognition of what it does and the importance of the workers, farmers and independents who served on the board—as they do now—who had the responsibility of trying to reach a fair conclusion in the interests of both parties.
I particularly remember when we had the threat of a farm workers’ strike, which had never been heard of in history. It became quite serious because the noises were coming from East Anglia when we were about to start sugar beet harvesting and potato picking and so on, and it was spreading across the country. I always encouraged my workers to become members of their own union; I was a member of a union and the leader of a union and told them that they had the same responsibility.
I remember saying to my herdsman, who had a pretty substantial responsibility looking after a lot of animals, “You are a very keen member of the NFU. Have you heard about this strike?”. He said, “Of course we have heard of this strike. We had a meeting last Wednesday night. Of course we have to join them—solidarity and all that”. I said, “What are we going to do? If you are going to join this strike, have I got to come home and do the milking?”. He said, “No, we will manage”. I said, “How can we manage if you are on strike?”. He said, “I will get up a bit early and do the milking, then I will have a bit of a strike and then I will do the milking in the afternoon”.
That story sums up very fairly the relationship between the farmer and the worker. They live and work shoulder to shoulder. They can discuss things that are not normally discussed between industrialists and their workers, because of the numbers and relationships and so forth, which are very different.
I assure the noble Lord, Lord Whitty, that I am a bit nearer to farmers than he is. I have talked to the workers and to the farmers. When they see that the difference between the national minimum wage and the agricultural minimum wage is 2p an hour, they say, “What are we keeping it for? It is plain daft to try to keep something going just for the sake of keeping it going”. What is the cost of keeping it? Is it £50,000? The figures will come forward, I think, but we know that a considerable amount is spent every year on running the various meetings, let alone the buildings, the staff and the offices.
Lord Knight of Weymouth
I hesitate to interrupt the noble Lord, who is such an authority on agriculture in this House, but the figure of £500,000 is not accurate. As a point of information, I think it is about £50,000.
Lord Plumb
I am inclined to agree that the figure is not accurate. I was quoting from the NFU. I am not the NFU. I was, but I am not now. I think the figure is considerably higher than that. If the noble Lord wants to quote that figure, I am very happy for him to quote it. I was merely quoting the cost of running the outfit, not the whole cost of the operation, including the buildings and everything else. If he wants to do that, I ask him please to produce that figure. I shall be delighted to receive it.
One notes that Unite, which represents farm workers on the board, is today campaigning against its abolition, which one understands, and argues that the plans will put thousands of rural and agriculture workers’ pay and conditions in jeopardy. I do not accept that. I know from experience what is being paid at the moment. You can forget your wages board and your minimum wage. If you are going to employ on your farm today someone who is going to sit on a machine that has probably cost £250,000, you are not going to pay them peanuts to try to get them into employment; you are going to pay them a good living wage. I am a great believer in giving these young people an opportunity to get into a share-farming operation. More and more people are inclined to that sort of determination as we look towards the future.
Rather than foster good labour relations, I believe that the present system is a source of friction and could certainly be done away with. The normal pattern is for the employers and the employees to take turns each year in being disgruntled. The board and the councils were established each year, and we had the Wages Council Act 1947. At their height, there were 100 throughout the country. They were progressively abolished, as we well know and have already heard, particularly between 1979 and 1997, leaving the Agricultural Wages Board as the only remaining example. If they were so vital, why did the previous Labour Government not restore them? Why did they not bring them back saying, “Other workers are going to be damaged”, as they propose farm workers are going to be damaged? They have not been, and we have not got wages boards there. We got rid of them, so why not do the same with agriculture?
Lord Howarth of Newport
My Lords, I always listen to the noble Lord, Lord Plumb, on matters of agriculture and, indeed, on other matters with the greatest respect, as do all noble Lords, but the fact is that my noble friend Lord Whitty has made some very powerful points indeed about what the impact of this policy is all too likely to be on agricultural workers.
I want to make only two brief points; they are both about process. The Government have tabled this amendment in order to remove a provision from the Public Bodies Act. The effect of tabling this amendment to the Enterprise and Regulatory Reform Bill is to undo what Parliament quite recently legislated in the Public Bodies Act. Only two days ago, the Opposition tabled an amendment to the Electoral Registration and Administration Bill and the House approved it. It had the effect of altering a provision in the Parliamentary Voting System and Constituencies Act, and there was the most almighty hullaballoo and complaint from the Government—the Conservative Party, certainly—in the House. The noble Lord, Lord Taylor of Holbeach, waxed eloquent in saying:
“Where does it put this House in the eyes of the people should the Committee choose to pass the amendment? We will not be seen, as we would choose to be seen, as the guardians of constitutional propriety”.—[Official Report, 14/1/13; col. 520.]
He said that the amendment would damage, “the delicate constitutional underpinning” of the relationship between the two Houses. He also said that,
“there are great dangers in that”.—[Official Report, 14/1/13; col. 522.]
I can only conclude that all that complaint about the constitutional impropriety of what the Opposition were doing was humbug.
I make no further comment on that, but I want to make a comment on the process that the Government have adopted in introducing the measure as they are now doing. I am told that they allowed only one week for consultation in Wales. I had the privilege of representing a Welsh constituency in the House of Commons and among my constituents were a number of agricultural workers. Any Member of Parliament representing a Welsh constituency is very well aware of the fragility and vulnerability of employment in the agricultural sector in Wales, which deals with very difficult conditions of all kinds. What is at stake in the policy represented in the amendment which the Government tabled is the incomes of agricultural workers. As my noble friend Lord Whitty said, they are poorly paid and in fragile employment. It is simply wrong to consult for no more than a week on a matter of such grave importance to those who would be affected by it. It is wrong and inhumane, and the Committee must deprecate in the strongest possible terms the way in which the Government have proceeded on this.
Baroness Byford
I would like to take the noble Lord, Lord Whitty, back to 2000 when we had a long debate on the CROW Act. Why do I refer to that? I do so because he has suggested that this bit has been slipped into another Bill. The CROW Act was four different Acts in one Act. The last bit dealt with areas of outstanding natural beauty. It went through the whole of the Commons before that bit was printed up at all. It then came to this House, and I was sitting opposite the noble Lord, Lord Whitty, when he introduced it formally at Second Reading. I said to him clearly at the time that I was not prepared to go into the Committee stage before we had that legislation before us to consider it as a whole Bill. So I think that his protesting too much about how this part of the Bill is being introduced is a little rich.
Lord Whitty
Since we are going down this historic road with the noble Baroness, which I am delighted at, the difference is that by then my right honourable friend Alun Michael had already signalled in the Commons that we would be coming forward with substantive provisions. Nothing was done in the same way on the same amendment.
Baroness Byford
I perhaps would not agree with him because, if I can take him further along down memory lane, the Bill was debated in this House, amendments were made and it returned to the Commons. Several Members who were in the Commons at that time will well remember that at that stage not one word of the amendments in the areas of outstanding natural beauty were debated in the Commons because it was guillotined. That is what happens. Therefore, the noble Lord is being slightly mischievous this afternoon in perhaps protesting too much.
However, I return to the substance. I should again declare that we are family farmers. We used to employ people but are now part of an arrangement with a neighbouring farmer who does the work for us. I also declare the fact that, like the noble Lord, Lord Plumb, we have always had a good working relationship with our employees. Many of them were housed on the farm and some still live in housing on the farm, many years after they retired. I would hate to think that other Members of the Committee, perhaps responding to the contribution from the noble Lord, Lord Whitty, believe that all is bad out there, because clearly it is not—and it should go on the record that it is not.
The noble Lord, Lord Plumb, referred to the hugely expensive machinery that we have these days. Obviously, you pay your workforce according to the work that they do. Personally, I am very happy to support the proposals that the Government are making, in that we should look again at what job these boards still do, and whether it is necessary. The introduction of the minimum wage in 1999 made a huge difference—two pence is what we are talking about, and most farmers pay more than that to a lot of their workers. The noble Lord also mentioned the fact that some employers have not practised well, if I can use that expression. I shall think of better words. I remind the noble Lord that in response to that his Government rightly brought in the gangmasters Act. There was a case recently in the paper where it was declared that two family members were employing people in dreadful conditions, underpaying them and keeping them virtually confined. That is an absolute disgrace and any practice like that should be hit on the head. It should not be allowed—and I use this opportunity to reinforce that point, because it is hugely important. Where there is bad practice, it should not be allowed. The gangmasters Act, which the noble Lord and I took through the House, has teeth and it should happen. I am therefore more resolved in supporting the Government in their proposals than I might have been had we not had the gangmasters Act behind us.
Today we live in a very different era from when we first introduced the Agricultural Wages Board. The workforce is smaller in many ways, and its members multitask in many ways—they are not just labourers. I know that reference has been made to horticultural workers. To a certain extent, that is much more mundane work because of the nature of what they are doing. However, for anyone who wants to get on in life and run a good business, the one thing you should always remember is that your business is successful only if your workers are well looked after and encouraged to work well.
I hope that Committee Members will support this move, which will allow the agricultural industry slightly greater flexibility. It may be that wages are slightly better in one particular area than another but in normal business, people working down here in London get paid more than they do up north. Nobody goes to town about that saying that it is outrageous. The responsibility is on the farmers to make sure that they employ fairly and pay fairly. In this day and age we do not still need the wages board. I support the government amendment.
Lord Hunt of Kings Heath
My Lords, that was an interesting contribution from the noble Baroness, who speaks from experience, but there is no guarantee that farmers will do the right thing. My concern, apart from the procedure, is that by removing the Agricultural Wages Board you are removing an essential safeguard. The noble Lord, Lord Plumb, also spoke with great experience. Both noble Lords gave us a rather warm-hearted view of how farmers will respond. Apparently, we can rely on them to do the right thing and pay much higher wages than are paid under either the minimum wage or the rates contained in the order issued by the Agricultural Wages Board—but I wonder.
If one looks at the evidence given during the very truncated consultation period, the fact is that the supermarkets will undoubtedly be looking to drive down those wages in order to ensure that they keep the profits themselves. That is the story in history of how the supermarkets have behaved time and again.
My principal reason for coming into this debate is that I, alongside my noble friend Lady Royall, led for the Opposition on the Public Bodies Bill. I find it extraordinary that we are debating the abolition of the Agricultural Wages Board in this Bill. We spent hours debating the Public Bodies Bill. We had two very good debates on the Agricultural Wages Board in Committee and on Report during passage of the Bill, and in no way was there any suggestion by the Government that they would not be using the process laid out in what is now the Public Bodies Act to deal with the Agricultural Wages Board.
We have lost the super-affirmative procedure, which would have allowed for extensive engagement and consultation with stakeholders. It would have allowed noble Lords who had an interest to have taken part in extensive debate. Instead, we have had this remarkably truncated consultation—four weeks for England and one week for Wales—when many people are engaged in other activities during the winter period. We all welcome the Minister to his place but it is remarkable that in his introductory remarks he gave no explanation whatever about why this amendment was being introduced at this late stage, why the Public Bodies Bill procedure agreed by your Lordships' House is not being used and why such a short consultation period was agreed.
The consultation has been discussed very recently by the Secondary Legislation Scrutiny Committee. It very helpfully undertook a review of the new approach to consultation by the Government. We have to go back only to November of last year when the Prime Minister made a speech to the CBI conference and said:
“When we came to power there had to be a three month consultation on everything and I mean everything”.
He continued:
“So we are saying to Ministers: here’s a revolutionary idea—you decide how long a consultation period this actually needs. If you can get it done properly in a fortnight, great, indeed the Department for Education has already had a consultation done and dusted in two weeks”.
We know where that has landed the Department for Education. The Prime Minister added:
“And we are going further, saying, if there is no need for a consultation, then don’t have one”,
at all.
We now have a remarkable situation where, instead of having a well ordered process to consultation, it is entirely up to Ministers to decide how long it should be. I should have thought that there would be the inverse rule of ministerial law, which says that the more contentious the issue the shorter the consultation will be. Here we sit: one week in Wales on the abolition of the Agricultural Wages Board when we know there is absolutely no support whatever for its abolition in Wales. No wonder it is a week. People should be grateful, should they not? Why not a day? Christmas Eve would no doubt have produced the result the Government wanted. The way the Minister’s department has acted is, frankly, a disgrace.
I refer the noble Lord to the evidence given to the Secondary Legislation Scrutiny Committee. It received a lot of evidence and, unlike the summation of the evidence that Defra made of the consultation receipts, which I regard as wholly inadequate, this is a very well ordered summation. The committee report refers to a quote from the Academy of Medical Sciences, which said:
“‘We are concerned that if adopting a consultation response time of less than 12 weeks becomes the default, this may prevent expert membership organisations from being able to provide considered responses to support evidence-based decision-making in policy … as so many legislative proposals impose additional costs on business, calculating their actual cost impact can often take time and resources’”.
The committee concluded that there was a,
“widely expressed preference for a 12-week standard duration”.
We can see from what has happened in relation to the Agricultural Wages Board why that should be the case.
The Fresh Produce Association, as my noble friend says, is a convenient front for the supermarkets; no wonder it is in favour. On the issue of what landowners’ companies will do, I noticed the Duchy of Cornwall Nursery response in the consultation. The manager there says: “Overtime rates are ridiculous”. We know what will happen to the overtime rates of Duchy of Cornwall employees when we abolish the Agricultural Wages Board. I doubt there will be any overtime rate at all. That is what will happen in practice when this wretched amendment is passed, if it is passed, by your Lordships’ House.
The Minister then talked about this being a “deregulatory” action. I was a Minister at Defra for a little while and I am reminding myself of the Agricultural Wages (England and Wales) Order. It is not a very long document and absolutely clear. It is one of the most readable documents that I have come across. Here is a very clear way for employers and employees to understand what the rates are and how to put them into practice. That is admitted by Defra, whose regulatory impact assessment, in talking about the impact on the affected groups, states:
“Employers will need to familiarise themselves with relevant legislation instead of”,
having to look at the agricultural wages order. I refer noble Lords opposite to their continued and frequent complaints about the complexity of employment legislation. I fail to see how getting rid of this very slim, readable document and replacing it with the need for hard-pressed farmers to go through and read Act after Act is, frankly, a nonsense.
The impact assessment goes on to say:
“Workers and employers will need to spend time on negotiations to agree pay levels & other terms & conditions individually”.
How on earth is that reducing the time and effort of both farmers and farm workers?
The Government are replacing a well ordered system, easily understood by everyone, with bargaining that will have to take place from farm to farm, involving both farmer and farm worker in the complexity of negotiations. Is there any group of workers who work harder than farm workers? I doubt it. Surely they are the “strivers” that this Government were so pleased to cite when Mr Osborne started to try to divide this nation up in a very disturbing and discomfiting way. We know that the real impact of this will be to drive down the wages of some very good and vulnerable people, and we ought to have nothing to do with it.
Earl Cathcart
My Lords, when these amendments came to my attention, my first rather tongue-in-cheek reaction was, “Blimey, does the Agricultural Wages Board still exist? I thought it went out with the ark”. I say that as a farm employer. When setting a farm worker’s salary, I have to pitch it to reflect the salaries in the wider market outside of farming; that is, the competition.
Within the past year, we have employed two new farm workers and I will use one of them as an example. Previously, he had been working for a road haulage firm, on a salary of £16,000. It became clear in the interview that he was keen to take our job and he seemed exactly the right man for it from my point of view. Getting him to switch jobs all rested on his salary package. I was advised that the job equated to about £7 an hour, which is just above grade 2 on the latest agricultural wages order scale. Let us look at the practicalities of using the agricultural wages order scale in negotiations. The prospective employee said, “What is my salary going to be?”. I replied, “£7 an hour”, because the Agricultural Wages Board only works in pounds an hour. He said, “What does that mean in gross per annum?”, because he wanted to compare my offer to the £16,000 from his existing job. I said, “That is £7 an hour grossed up for the year”. So we got out the calculator: £7 an hour times seven hours a day, five days a week, 52 weeks a year is £12,740. That is what the Agricultural Wages Board is saying I should pay him. He wanted the job and I wanted to employ him but the Agricultural Wages Board pay scale does not cut the mustard because he would not move jobs for a £3,260 cut in pay. I offered, and he accepted, £16,000—the same as he was getting from the job outside farming. The important point here is that it was the competitive wider employment market that determined his salary, not the agricultural wages order pay scales, which we ignored as not being helpful.
I asked my firm of accountants in Norfolk whether other farmers ignored the Agricultural Wages Board rates when setting salaries. Was I alone, and was I breaking the law? I now know that it is not strictly legal to pay a salary to a farm employee under the agricultural wages order. Happily, the accountants’ answer to both questions was no—I was not alone and it was not illegal. They said that few, if any, use the agricultural wages order rates nowadays because one has to pay over the odds to attract people into farming, especially if skills are involved, given, as my noble friend Lord Plumb said, the combine harvester worth £250,000—that is a big skill. I also asked my neighbouring farmers, who employ workers on their farms, and got the same answer.
Another point is that the way the Agricultural Wages Board works is archaic in that it sets pay rates per hour, rather assuming that we still hand out weekly wage packets. That is clearly impractical in today’s world. The preferred option for both parties is for a monthly standing order. If employers and their advisers are not using the rates set by the Agricultural Wages Board, what is the point of the board? Here is the rub because the practicality of today’s employment market has made the board obsolete. Also, the raft of modern employment law referred to just now has made the board irrelevant, not least by the national minimum wage that was just referred to, which currently stands at £6.19 an hour. The current minimum rate under the agricultural wages order is £6.21 an hour, a difference of a mere 2p, as has already been said. That 2p difference is not surprising because the board cannot set its minimum below the national minimum wage and it would look too simplistic to set it at the same rate—
Lord Hunt of Kings Heath
I am most grateful to the noble Earl for giving way. He has referred to the grade 1 rates, but he might have referred to the other grades listed in the Agricultural Wages Board order, particularly those around overtime. Where are the guarantees on those?
Earl Cathcart
If I may, I shall come on to that point later. As I was saying, the board cannot set the same rate as the national minimum wage because that would look too simplistic, so the rate is set at 2p more. Last year—surprise, surprise—it was also set at 2p above the national minimum wage. Next year, if the board still exists, I would hazard a guess that the rate will be set at 2p more. This is hardly rocket science.
Recent research shows that the average earnings of full-time farm workers are 40% higher than the rate set by the board and that in 2010 some 90% of farm workers received more than the grade 2 minimum. The conclusion must be that farm workers are paid well over the minimum set by the board. I have talked largely about full-time employees, but what about temporary workers? I would argue that they are and will be protected by the national minimum wage.
Apart from some noble Lords opposite, who does not want to see the abolition of the Agricultural Wages Board? It is the union, Unite, which is deploying scare tactics by saying that without the board farm workers will see reductions in their pay with only the national minimum wage to protect them. That is quite clearly rubbish. Going back to my employee on £16,000 a year, if the board goes, am I really going to reduce his pay to the level of the national minimum wage; that is, £11,300? I am not going to do so because he would not accept a drop in salary of some £4,700 and he would leave. That action would disrupt my business because I would have to interview new applicants, train the new person, and probably have to pay the new worker £16,000 to entice him to move from his existing job. It is highly likely that all existing employment terms and conditions will remain exactly the same as my noble friend the Minister has said, in spite of—
Lord Knight of Weymouth
Can the noble Earl square his estimation that no agricultural worker will lose any pay with the Government’s own economic impact assessment which states:
“Research suggests that workers’ wages may fall by £0-34.5m”,
A year, and that its best estimate is £32.5 million? Where is that £32.5 million going to come from if it is not from agricultural workers?
Earl Cathcart
I am not absolutely sure why—I can only give you my case—I would want to reduce their pay at all. As far as I am concerned, the system is working perfectly well. I am happy with their pay, and so are they. I do not know where those figures come from. My view is that it is highly likely that all existing employment terms and conditions will remain exactly the same, as the Minister has just confirmed.
Lord Whitty
I am sorry to pursue this point. The noble Earl may well be right in relation to his estate, but the department, which is supposed to know about the totality of the industry, estimates that there will be a significant cut in wages. Indeed, it is the major effect of this amendment in terms of the impact assessment. If the noble Earl is describing that argument as rubbish, it is not we on this side or United who made the argument, but the department, which got it seriously wrong. If that is what he is saying, it is another argument for the Government to look at what their information is based on.
Earl Cathcart
I am sure that the noble Lord will be interested to hear what the Minister says when he winds up.
I am happy to say that since employing new workers, my business has prospered. It may not be the norm, but the decision I have to make is not by how much I should reduce my employees’ salaries, but rather whether I should give them a bonus, a pay rise or a combination of both. It is a decision I shall make in spite of, not because of, the Agricultural Wages Board and contrary to the scare tactics that I suggest are being used by Unite.
If I wanted to expand my business beyond packing and selling my own farm produce by taking in produce from other farmers for packing and resale, any new workers for that expansion would not be classed as farm workers and would not come under the Agricultural Wages Board’s umbrella, so we would have the absurd situation of two people who are doing exactly the same job being paid at different rates—and all for 2 pence, which is a ridiculous complication. It is further complicated because I am told that if my expanded business had a busy period, say, before Christmas, under the Agricultural Wages Board’s rules I would have to pay time and a half to the agricultural workers packing my farm produce if they work more than eight hours a day or 39 hours a week. The workers packing my neighbouring farmers’ produce would be subject to the national minimum wage and paid the minimum rate regardless of the number of hours they work. What a dog’s dinner. I believe that the board is irrelevant in today’s employment market and an unnecessary cost to the taxpayer. It is outdated because it works on hourly wage rates, not salaries. Those who need an hourly rate are protected by the national minimum wage, and if the Agricultural Wages Board—
Lord Myners
I sense that the noble Earl is coming to the close of his comments. I want to remind him that he said he would answer the point raised by my noble friend Lord Hunt of Kings Heath; namely, that the higher grades are not protected by the national minimum wage. The noble Earl said he had an answer, and I think that the Committee is looking forward to hearing it.
Lord Hunt of Kings Heath
Perhaps I can help my noble friend. I am referring to grades 1 to 6: grade 6 is the farm management grade and the rate is £14.10 an hour; grade 5, which is the supervisory grade, is £13.05 an hour; and grade 4, the craft grade, which I suspect is the grade that the noble Lord has in mind, is £12.32 an hour, which on a 37-hour week comes to £22,000 a year. I really do not understand what he is saying.
Earl Cathcart
The noble Lord did raise a question and I did say that I would come back to it. This is all about the competitive market. I said before that one has to attract people with skills into farming and to pay a higher rate according to those skills, and that is exactly where I am; you have to pay a higher rate of salary—not a higher rate per hour—to the person with the greatest skills, and it is the competitive market that determines that price, which is normally higher than the Agricultural Wages Board rates.
I said that the board is irrelevant to today’s employment markets. It is outdated, working in hourly wage rates not salaries. Those who need an hourly rate are protected by the national minimum wage, and if the Agricultural Wages Board disappeared tomorrow I do not believe that most employers and employees would notice. Those who did would, I believe, breathe a sigh of relief as it would reduce the administrative burden on farmers and their advisers.
The noble Lords opposite have all argued strongly for the board’s retention, but they had 13 years in office to change, modernise and bring the Agricultural Wages Board into the 21st century. They chose to do nothing.
Lord Myners
My Lords, I welcome the Minister to his new role, although I feel rather sad for him that his debut is in promoting a Bill that most Members of the Committee will now recognise is a misrepresentation in its reference to the promotion of enterprise. I can say without any doubt after a career in business, including chairing a number of major public companies, that almost nothing in this Bill will have any beneficial impact on economic activity or on the growth of the economy.
This is a rather tawdry Bill, and we are now being asked to look at rather a shabby amendment. It must have been very clear to Members of the Committee that the Minister’s predecessor, the noble Lord, Lord Marland, did not really have his heart in the Bill at all. It was quite clear that he would much rather keep up his suntan overseas than put through legislation that will have such little economic impact.
The amendment has come about as the result of wholly inadequate consultation that is supported by evidence which is thin in the extreme, and the Minister will need to explain to the Committee why it is being proposed now. Why was it not incorporated into the original Bill? Why was it not mentioned, debated or discussed in the other place? Is it an afterthought? Was it overlooked when the Government were drafting not only the Public Bodies Bill but this Bill? If that is the case, those who work in the rural economy will have grounds for extreme grievance at the behaviour of a Government who can approach this issue, which is of great importance to them, in such a superficial and callous manner. My noble friend Lord Hunt of Kings Heath has already pointed out that by putting this amendment into this Bill, a number of procedures and processes that Parliament approved in the Public Bodies Bill will be avoided.
I noted the Minister’s strong endorsement of the national minimum wage and I declare my past role as chairman of the Low Pay Commission. However, as I listened to him I felt, as he advanced his arguments for the abolition of the Agricultural Wages Board, that one could have made the same speech and inserted the words “Low Pay Commission”. What is it about the Agricultural Wages Board that is different from the Low Pay Commission? His arguments about freeing up the economy, allowing the market to operate and establishing a market clearing rate apply to the whole economy. I ask myself whether we are seeing this shabby amendment incorporated into this Bill at such a late hour as a precursor for a deeper and more fundamental attack on the concept of the national minimum wage.
Lord Deben
My Lords, I declare an interest as the owner of a very small amount of agricultural land. I am also a former Minister of State for Agriculture. My only surprise is that it has taken so long to get to this point. It is unacceptable to say that the only people in the entire country who have to have a wages council after all the others have been abolished are we rural people. Actually, the insult is to us. The suggestion that there is only one group of people in the entire nation who need a wages board—because otherwise they will behave in a way that is wholly unacceptable—is offensive. It is offensive to my neighbours, it is offensive to rural people and it is not acceptable. That is the first thing.
Secondly, earlier I was rather tough with the Minister about what he may have written down. I could have written all the speeches on the other side quite simply because they have been said for the past 50 years. It is always the same thing—this argument that somehow or other people are out to do people down in an industry that is the most co-operative industry we have. You cannot run a farming enterprise—I do not run one but I see them all around me, and I was Minister for Agriculture and deputy Minister for the longest period of anybody—unless farmer and farm worker work together.
Thirdly, it is incredible to see the ignorance of what is happening in the industry, to hear speeches that assume that the industry today is like it was 50 years ago. Most people involved in the industry, by any proper measure, do not find themselves subject to the Agricultural Wages Board because the way farming is now organised and run is wholly different. Have we had a great campaign from Unite to say that the board has to be extended? Have we had trade unionists stamping in the street? Of course not, because they know perfectly well that this is an out-of-date mechanism which they do not want to bring back in any of the areas where it has been abolished. The previous Government had 13 years to do something, but they did not.
Lord Knight of Weymouth
I would like to revisit history very briefly. As I understand it, the wages councils for every other sector were abolished in 1993, the same year that the noble Lord finished being Minister of State for Agriculture. He must have been part of the discussions held then as to whether or not the Agricultural Wages Board should be abolished along with the others. Can he explain why he chose not to abolish it then?
Lord Deben
First, I do not remember whether I was still there or not because it was the year in which I moved. Secondly, I have always been opposed to the Agricultural Wages Board and have always said so because it has never seemed to apply to the industry that I know. It may have applied in 1930. It may have applied in the long-distant past in 1830, although we did not have the board in those days. This is what worries me about the speeches from the other side. I do not feel that they understand how agriculture works.
The former Member for Newport talks about agricultural workers in Newport. I must say that my mother was brought up there and there must be a pretty exiguous collection of people in Newport. However I say this: those of us who live in agricultural areas, care about agriculture and have spent a lifetime dealing with it have to say that the speeches from the other side have no connection with reality at all.
Baroness Turner of Camden
Is the noble Lord not aware that other employers in the industry feel very differently and find the Agricultural Wages Board useful and helpful? I was speaking to one such, a noble Lord, on precisely that point today. I do not know very much about agriculture, but I know quite a bit about employment rights, and I happened to mention this matter to a friend—not a noble friend but a friend—who is involved in agriculture in a large way. He told me that he respected the Agricultural Wages Board. He had always found it useful and was surprised that the Government were moving in the direction of abolition. It was clear that there had not been overall consultation. This is apparent from a number of the contributions today; there has been no real, deep consultation on the amendment.
Lord Deben
I am sure that the noble Baroness would agree from her long history of trade union negotiations that you can always find someone who takes a differing view. However, I have to tell her that if one talks to farmers throughout the country and to large numbers of farm workers their view is simple: this board has been an irrelevance for a very long time. Many of them feel it to be an insult to suggest that this portion of humanity, this group of people, should be singled out and defended on the basis that they cannot be trusted to run their businesses or to negotiate in the way that everyone else in Britain does.
I particularly objected, if I may say so, to the comments of the noble Lord who suggested that it would be much easier to keep the wages board because it is too complicated for farmers and farm workers to negotiate. My goodness, what a miserable society it is in which we have to have things done on a collective basis because individuals who work with, talk to and care about each other are unable, too stupid or do not have the time to work out the relationships between them, both financial and in terms of employment. It is a harking-back occasion. This Committee often reminds me of discussions—
Lord Hunt of Kings Heath
My Lords, the noble Lord has mentioned me, and it would only be courtesy to let me—
Lord Deben
I have made it quite clear that I will give way, but I should have a chance to finish my sentence before I do. I am very happy to give way to the noble Lord, who I much respect.
I was saying merely that before we indulge in historical references, we ought to remember that we are talking about people working today, who are employing today, who are alive today, who listen to these comments and who recognise in them a kind of attitude of superiority to rural people that many townspeople appear to have by believing that they are not fit to run their own lives like townspeople can.
Lord Hunt of Kings Heath
My Lords, I am grateful to the noble Lord for giving way because he mentioned me as the noble Lord who had referred to problems in reading legislation. The Bill is called the Enterprise and Regulatory Reform Bill. The Minister told us that it would be great to get rid of the Agricultural Wages Board because it will remove a whole raft of regulations from the industry. The point I am making is that the regulatory impact assessment produced by the Minister’s own department has a wonderful phrase that,
“employers will need to familiarise themselves with relevant legislation instead of the Agricultural Wages Board Order. Workers and employers will need to spend time on negotiations to agree pay levels and other terms and conditions individually”.
My point is that far from easing regulatory burdens, this will increase the burdens in an area of industry that is characterised by many small employers with a limited number of employees. I would argue in favour of the simplicity and straightforwardness of the order, which is incredibly easy to understand and well written. I know that if I was a small employer, I would welcome it. The current arrangements are much less of a burden than having to refer to dozens of Acts of Parliament, which the noble Lord’s department seems to think will have to be done in the future.
Lord Deben
I have listened carefully to the noble Lord, as I have on other occasions, and I think that he is missing the point. Indeed, he has revealed exactly the kind of concern that I have. Most of the employers of agricultural workers are larger employers because most of the smaller concerns do not employ any longer. That is one of the issues. To talk about the agricultural industry from that point of view is to talk about an industry which has passed. Ever since the passing of the Hunting Act we have gone through periods of listening to townspeople who do not know about the countryside talking about it in a way that they would find insulting if we who live in the country talked in the same way about the towns.
I say this to noble Lords opposite. It is impossible to defend an argument which says that uniquely among all jobs and professions, uniquely among all employers and uniquely among all employees, the small part of the agriculture and food industry to which this wages board applies has to be protected because it cannot otherwise stand up for itself. That is manifestly untrue, and it is insulting to a large section of the population. It also means that those of us who live in the countryside must again remember that people in this House and in the other place often debate our future with exiguous knowledge of what actually goes on Britain’s rural areas. I shall give way to the former Member for Newport.
Lord Howarth of Newport
I am grateful to the noble Lord who knows my former constituency so much better than I and who insists that although I represented a rural constituency for 15 years, I know nothing about agriculture. I represented farmers and farm workers for many years.
The noble Lord has still not answered the question put to him by my noble friend. Why, when he was the Secretary of State for Agriculture, did he omit to abolish the Agricultural Wages Board?
Lord Deben
First, I think I did say that I could not remember whether the decision to do the wages board came before or after I ceased to be the Agriculture Minister. I am being absolutely truthful about that. Secondly, I was never in favour of the Agricultural Wages Board, but I also remind the noble Lord that the decision to abolish these boards was taken as a whole. In those circumstances, I would have played a part, but, as a matter of fact, I do not think I did because the timing was rather different. I would just say to him that if I had had the opportunity, I would have done so. He might remember that I had a number of other things to deal with at the time, but we do not wish to go into that otherwise people will recall the photograph which was so widely used.
The issue I want to return to is this. I am not insulting the noble Lord. Of course he knows about agriculture because in a different guise he represented an agricultural constituency. I am merely saying that the language we have heard from the noble Lord, Lord Whitty, and those who spoke later, including even the upright defender of Cornwall, does not go down well with those in agricultural areas who want to be treated like everyone else: grown up and able to look after themselves. Their employment practices are decent and the relationships between employers and employees are particularly tight. The gangmaster regulations removed the only part of this which might have been argued, even though the agricultural workers regulations did not always cover the very people we wanted to help. I commend the previous Government for bringing that forward, and I am only sad to see that there is an innate conservatism in the trade union movement which makes it impossible for it to understand that the world has changed and with it we have to change our practices.
Lord Monks
My Lords, I respond, as a former general secretary of the TUC, to that last remark about the trade union movement. I cannot claim any rustic origins—I do not come from that part of the world—but I do claim some experience of rural life gleaned, at great expense, in various village pubs over the years, listening to what people say. While I accept that the degree of paternalism that often exists from the farmers’ and landowners’ side is often genuine and sincere, and we have heard some of that today, it is not the full story of rural life. It is not an idyll for everybody, some place where Beethoven’s Symphony No. 6 wafts gently in the background and people are all very nice to each other. That is not the case. There are some dark sides and some problems which are not being faced up to on that side.
Over the years, I have not been a great fan of wages councils or the Agricultural Wages Board. I say to the noble Lord, Lord Plumb, that the National Farmers’ Union has plenty to do with the fact that it is very difficult to be proud of the Agricultural Wages Board because it is a very tough negotiator. It can always answer for itself. It is good at it. If anything is irrelevant, as the noble Earl, Lord Cathcart, suggested, it is often because the employers have not wanted the board to address some of the problems that were brought to their attention. I take a rounded view which is certainly not old-fashioned. Some of the rates of pay that have been contracted for people driving a machine worth £250,000 or whatever do not seem excessive. When I look at the figures for farm incomes, I accept that there are good years and bad years, but they went up by 25% in 2011. I did not see a trickledown effect in the Agricultural Wages Board or any of the other agreements which were around. Farmers were, no doubt, thankful for a good year after some bad ones, but they were not exactly shelling out the money generously to their staff.
I ask the NFU and others, and I look forward to what the noble Lord says on these things, whether where there are shortages in the industry and a reliance on migrant workers it could be because the wages and conditions are still too low? Could it be because it is not an attractive place for young people to go to work and the prospects for replacing the ageing workforce are not fantastically good? I look forward to what the Minister will say on these things. This debate is about pay and conditions in agriculture as well as about the wages board. The wages board, like the wages councils, was in the words of Winston Churchill, a floor beneath wages. They are not a restriction which stops you from paying more. They are simply a floor, and if you do not go below it, you are clean. However, there are plenty of people who do go below it. I could quote examples, particularly from the horticultural industry, where some quite substantial employers went below the wages council order and were in difficulty when they were caught.
I ask the Government to follow the wise advice that has been given by my noble friend Lord Whitty and take a longer, deeper look at this. I am not against change, reforming, making the thing more relevant and all the rest of it, but this industry has different features. There may be some other industries around that you can compare it with, but they are not on our agenda today. Rural life, close relationships, living cheek-by-jowl—not always, but often—make this a rather special place, and that justifies the continuation of the Agricultural Wages Board.
Lord Cameron of Dillington
My Lords, first, I apologise for missing the first part of this debate. I am afraid that I was unaware that this debate was taking place until very recently.
I thought that we had put this whole issue to bed with the Public Bodies Bill. We went through all the arguments, we discussed it, we voted on it, and I thought that the Agricultural Wages Board had been abolished. Anyway, let us go through the arguments again.
There is no doubt, as many noble Lords have said, that the Agricultural Wages Board is and has been a very useful guide to farmers. I totally accept that. In some ways it is a bit of a cop-out for farmers because they can look it up on a piece of paper and know what they are going to pay their workers. It has been a useful guide not because of the actual rate set—because in fact the majority of farm workers are paid above the Agricultural Wages Board rate—but because of the percentage increases that have been given. This function can be easily replaced by other means, and the NFU has already committed to replace it.
It is no surprise to me that the majority of farm workers are paid above the Agricultural Wages Board rate. As the noble Lord, Lord Plumb, said, with machinery costs—actually his figures are slightly out of date because you can get tractors nowadays that cost £400,000 to £500,000 and combines that cost nearly £750,000—would you seriously pay someone the minimum wage to drive such equipment? I very much doubt it.
As the noble Earl, Lord Cathcart, said, rural competition is huge. Agricultural employment represents around 4% of the rural employment statistics. The competition from other industries is big, and you will not get people to come to work as farm workers. As the noble Lord, Lord Monks, said, the prospects for replacing the current workforce are not particularly good. They will not be particularly good if farmers do not pay proper wages, which I personally believe most farmers do, certainly on my farm and my neighbours’ farms.
The noble Lord, Lord Deben, said that farming is a very co-operative industry, and I absolutely agree. You live and work—and even play—as a team on a farm. Quite often, you are in a remote area. You cannot treat them as a distant workforce. You have to live next door to these people, meet them in the pub and so on, and it is a very co-operative industry. Frankly, I do not believe that farmers will immediately make use of the absence of the Agricultural Wages Board to behave completely differently towards their teams from how they do at the moment.
The noble Lord, Lord Hunt, said that the supermarket interests will get the better of us and we will have to put wages down. If you sell commodities to the supermarkets, they put you through a whole series of tests, such as Nature’s Choice for Tesco, and one of the main chapters is how you treat your workforce. I do not agree that the supermarkets will impose such tight margins that agricultural wages will naturally have to come down. I cannot see that as the logical conclusion to the abolition of the Agricultural Wages Board.
The board has been a useful guide, but the NFU has committed to produce comparative indicators to help us, such as the cost of living changes, the labour market, comparative industries, farm business conditions and so on.
On farm business conditions, it is not as tough a life as it used to be. Tractors have heating, stereophonic sound and CD players, and you have to produce all these things to attract your farm workers nowadays. It is a completely different life from the image that I seem to be getting from certain noble Lords.
All the agricultural bodies—the CLA, the NFU and the TFA—have been consulted and agree that, frankly, a statutory board for a single remaining industry is completely unnecessary in today’s world, and I very much agree with that opinion.
Baroness Donaghy
My Lords, I was a member of the Low Pay Commission when it was first established, although I did not have the pleasure of serving under my noble friend Lord Myners. We set the first statutory national minimum wage, which was applied to thousands of farm workers who were not covered by the Agricultural Wages Board. It did not render the AWB irrelevant, because the AWB dealt, and deals, with a wide range of other issues relating to the grading structure, pay above the grade 1 level, training, and other important terms and conditions.
Although I am aware that abolition has the support of the supermarkets, the horticultural industry and, regrettably, the NFU, I believe that the country will suffer and that we will come to regret this move if it is carried out. We know about the sorry process, so I will not repeat it. May I ask whether the proposal has the support of the Welsh Assembly Government? Will similar measures follow in Northern Ireland and in Scotland? In other words, have they been asked for their view in Northern Ireland and in Scotland?
The proposal will have a detrimental effect on most agricultural workers. Recruitment is already difficult, and the Agricultural Wages Board has been particularly strong on building a career structure for farm workers, strongly supported by the NFU, I should say. Farms with between one and four employees will find it impossible to resist the relentless pressure on pricing, and I have to disagree with my noble friend who has just spoken; the pricing issue will bring enormous pressures to bear on bringing down the cost in many farms. Their standard of living is already comparatively low, and the wages board was to an extent protection against that downward pressure. Small farms will also have to carry out their own negotiations on pay. That might be perfectly possible—of course, they are not stupid; I would not dream of saying that they are— but it is an extra bit of work on top of a heavy workload.
The most recent impact assessment has revealed a much greater detrimental impact than the first one, and I ask the Minister why there is that difference between the two impact statements. Does he have any assessment of how many small farms will go to the wall as a result of abolition? We know what will happen in horticulture; the staff will all be temporary, all immigrants, and all on grade 1, which is the equivalent of the statutory national minimum wage. To rely just on the minimum wage and the working time directive is to throw out the baby with the bath water. That is not to say that the board itself does not recognise the need for change and the need to give its constitution more flexibility. It has said so itself.
If I were still chair of ACAS and were asked what I would do to replace it, I would have supported the idea of a joint industry council with an independent chair and a conciliation and arbitration mechanism where there is a failure to agree. The parties involved in the AWB have already called for this. The Minister in the other place has called for salaries and not just wages to be paid, something to which the noble Earl, Lord Cathcart, referred. Again, this could be done without abolishing the board. It seems to me that the Government are hell-bent on abolition. Presumably if they do not get their way in this Bill, they will begin again in another Bill whose subject matter overlaps with half a dozen other Bills, which seems to be the coalition Government’s theme.
As the Minister knows, a lot of overtime is worked in the industry. At present, that is paid at the rate of time and a half. I thought it was 39.5 hours, but somebody said 39 hours, and I stand to be corrected. This will be in jeopardy, and workers may face an 80- to 90-hour week in an industry which is the second most dangerous after the construction industry. The workers might put themselves at risk simply to make up for lost income in order to feed their families. Have the Government assessed the impact on health and safety if pay levels fall and excessive overtime is worked?
The Minister in the other place, David Heath, has recognised the skills shortages and the importance of “rewarding well paid careers”. Amen to that, but the future of farming must take account of the needs of small farmers, not just agribusiness, if we are to protect our food supply for our country. Have the Government given up on small farmers? The industry is a special case because it enjoys a £3.4 billion taxpayer subsidy. In 2011, these payments accounted for around 60% of total farm incomes, so they are practically in the public sector. Farmers and farm workers are special because they help to feed the nation. I ask the Minister: if he succeeds in abolishing the Agricultural Wages Board, which will be a sad day for this country, what will he put in its place?
Lord Knight of Weymouth
My Lords, we have had an excellent debate and heard the arguments very well put on both sides. I shall start my comments with reading to your Lordships some of an Early Day Motion that was put down in the other place in June 2000. It said,
“this House notes that … the Agricultural Wages Board also sets a series of rates of pay to reflect the varying qualifications and experience of farm workers, thus providing a visible career structure for recruits going into agricultural work and is used as a benchmark for other rural employment; is nonetheless concerned that average earnings in rural areas are considerably lower than in urban areas; believes that any weakening of the Agricultural Wages Board or its abolition would further impoverish the rural working class, exacerbating social deprivation and the undesirable indicators associated with social exclusion; and therefore calls on the Government at the conclusion of the current review, to retain the Agricultural Wages Board as it is currently constituted”.
I read that out partly because it summarises the argument that I want to make but also because among the names of those who signed the Motion are some who are now Members of your Lordships’ House; for example, the noble Lords, Lord Clark of Windermere, Lord Campbell-Savours, Lord Taylor of Goss Moor, Lord Tyler and Lord Jones of Cheltenham. The name David Heath stands out. He is the Liberal Democrat Minister responsible for abolishing the Agricultural Wages Board now, so I wonder what has changed in the intervening 12 and a half years for Mr Heath. I think there are very important principles at stake here.
I pause at this moment to correct something in the intervention I made on the authoritative noble Lord, Lord Plumb, about getting the facts right. I checked the Government’s impact assessment, which has been very helpful to us during this debate. It says that the cost of running the board over 10 years is £800,000— £0.8 million—which equates to about £80,000 a year, so I was wrong and the NFU was wrong. I apologise to your Lordships if I corrected the noble Lord incorrectly.
The principle of a rural living wage is important. If you are poor in rural areas, it is a particular struggle. The quality of life in rural areas attracts asset-rich retirees and second-home owners, pushing up house prices, and local shops are a long way from distribution centres and competition is limited because of the geography, meaning that prices are higher than average. In its 2010 report, the Joseph Rowntree Foundation said that it costs 10% to 20% more to live in rural areas.
Average wages are relatively low for the working population, with the predominant sectors being cleaning, care, hospitality and working in micro-businesses. If you are lucky, you will get a job in the public sector. Where I live in Dorset the largest employer is the local council, where you will have decent job security and a reasonable wage—if you can get a job there. But of course rural councils are in turn underfunded, and I am happy to be part of a group being led by Graham Stuart in the other place that is campaigning to get better funding out of this Government for councils in rural areas. Of course, the best way out of poverty is work, but only if work pays. Topping up low pay through the tax system by means of tax credits is one good way of achieving that, but better still is for employers to pay decent wages. That is why we should be campaigning for a rural living wage and why we should be retaining the Agricultural Wages Board.
My noble friend Lord Whitty talked about the position of Wales in his excellent opening speech. We have heard from some speakers who support this abolition that farmers are united in their agreement that the Agricultural Wages Board is irrelevant and does not serve any purpose. However, the Farmers’ Union of Wales cites three good reasons for retaining it, saying that it reflects the unique labour requirements of the agricultural industry and that to abolish it would be a retrograde step for an industry which in recent years has been struggling to attract new skills and expertise. The three reasons are, first, that the economic climate in the agricultural industry has made it a less attractive option for young people. In the union’s view,
“rewarding skills, qualifications and level of responsibility is a vital means of persuading high calibre people to remain in or enter the industry”.
Here I pay tribute to the noble Lord, Lord Plumb, for the foundation that he has set up and I was pleased to be able to attend its launch. The union goes on to say that,
“reliance on a single national minimum wage will inevitably result in an erosion of talent and skills from farming as more lucrative and less physically challenging professions are taken up”.
The second reason given is that:
“Agricultural workers are required to be flexible in their working arrangements to cover busy periods, fine weather and unsocial hours which are not covered by general employment law provision”.
The union believes that there is a still a vital role for additional minimum rates of pay across the six grades for agricultural workers. The final reason given is that it is an,
“important means of avoiding potential conflict and lengthy negotiations with individual staff”.
People do not want the burden of negotiation that abolition would bring. That is the view of the Farmers’ Union of Wales. It tells noble Lords that not all farmers are by any means agreed that abolition is a good thing.
We have been privileged to hear from the noble Lord, Lord Plumb, who is a former member of the Agricultural Wages Board for England and Wales, but I want to repeat a short passage from a letter written by a gentleman called Barry Salmon, a member of the board who is just about to retire. He is particularly concerned about training and attracting young people—a common theme when I researched this issue. He states in his letter to the right honourable Owen Patterson, the Secretary of State, that if he proposes that the board must go, things like training and a proper wage structure will be lost:
“Come and work in the farming industry, a rewarding industry to work in, one that requires skilled employees, high skill levels will be required and training can be given, a willingness to continue to train to meet new demands is essential, workers must be able to work on their own initiatives and take day to day responsibility for what they do. At busy and demanding times long hours are worked for which overtime rates are paid”,
which, incidentally, is not guaranteed in the minimum wage structure but is guaranteed, whatever you are paid, in the Agricultural Wages Board structure.
“All of which is true but the rewards don’t look likely to encourage new trainees into farming, no pensions, no sick pay, no entitlement to time off for such things as bereavements and worst of all the National Minimum pay scale applies with no formal structure above that to reward training. I cannot believe schools are going to encourage pupils with the good practical skills needed to take up a career in farming”.
He starts to point out some of the other benefits—
Lord Deben
First, I hope that the noble Lord will explain to the Committee that there is a distinction between the Farmers’ Union of Wales and the National Farmers Union of Wales, which of course voted in the opposite direction. There is a disagreement.
On the point that the noble Lord just raised, all those elements are in every other industry to which teachers might encourage people to move. Why would they not ask them to go into farming if there were no Agricultural Wages Board but would ask them to go into all these other industries that do not have a wages board? That does not stand up.
Lord Knight of Weymouth
I am afraid that I disagree with the noble Lord about the unique nature of agriculture. It is right that we have agricultural colleges giving specific training, specifically feeding an industry with the skills that are needed. People need to have that training and understanding of the unique way of life, in terms of working very anti-social hours at times and having to be highly flexible in the way that they work. Some 30% of farm workers have a boss who is also their landlord. There are a number of unique things about agriculture—he disagrees and I respect his disagreement—that I do not know of in other sectors.
Baroness Byford
I apologise—too many years in opposition. I take the noble Lord up on the agricultural colleges and universities—because two of them have become universities recently. I do not think that that has anything to do with what my noble friend was saying. The agricultural colleges are hugely important. They have an important role in encouraging young people to come into the farming industry. But it is a very different industry from what has been described by several colleagues on the other side.
Lord Knight of Weymouth
I mentioned agricultural colleges because I am not aware of another sector that has a specific network of colleges for its training. There is something different and unique about agriculture, which is very important. There may be others that other noble Lords want to mention. Maybe if I racked my brains I could come up with them, but I think there is something unique about agriculture.
Other benefits are attached to the Agricultural Wages Board. For example, there is the entitlement to rest breaks, overtime, paid holidays and even the allowance of £7.63 per week for working dogs. There is an on-call and night allowance. All these things are negotiated. They are all part of the reason why agriculture can be regarded as a special case.
Earl Cathcart
I am not very good at employment law; I have to be frank about that. Are you saying that my man to whom I am paying £16,000, which is nothing to do with the wages board or that side of it, does not have holidays, sick pay or all the other entitlements that any other employee in every other walk of life has? Of course he does. In my view it is not the wages board that is protecting him. He has normal employment rules and regulations, enjoyments and privileges.
Lord Knight of Weymouth
I am most grateful to the noble Earl and his helpful intervention.
Under the national minimum wage legislation, there is no minimum statutory level of overtime. Under that legislation, you have an entitlement to 28 days’ paid holiday as opposed to 31 days under the Agricultural Wages Board. There is also a maximum of 38 days for workers working more than six days a week under the Agricultural Wages Board, with no additional entitlement under minimum wage legislation. In terms of rest breaks, under the Agricultural Wages Board you are entitled to not less than 30 minutes where the daily working time is more than five and a half hours, whereas under the minimum wage legislation—
Lord Hunt of Kings Heath
Will my noble friend give way? I remind him of some of the evidence that came from the Duchy of Cornwall Nursery. The manager wrote in to say that he supports the abolition of the AWB and that “overtime rates are ridiculous”. Does that not give a clue to how some people in the industry will act if the AWB protections are abolished?
Lord Knight of Weymouth
The noble Lord makes a good point. He quotes evidence and I do not need to add to it.
I could go on to help the noble Earl. The final point, which I think is most striking, is the entitlement to paid sick leave and the level of sick pay received. Under the Agricultural Wages Board, all workers, whether or not they are paid the minimum, are entitled to 13 to 26 weeks on full pay after one year’s continuous employment, after which statutory sick pay applies. Under minimum wage legislation, statutory sick pay—currently £85.85 a week—applies where a worker has been sick for at least four days or more and has average earnings of more than the lower earnings limit, which is now £107 a week.
Earl Cathcart
I thought that it had been established that 90% of farm workers are paid above grade 2 in the scales—£6.50 rather than whatever the level is under the AWB. They are not being paid as minimum wage earners. They are getting a proper wage like anybody else who might be employed is getting a wage. I concede that temporary workers are paid the minimum wage, but normal salaried farm workers are paid well above that.
Lord Knight of Weymouth
The important thing to remember is that these legal entitlements for the agricultural sector apply regardless of whether your wages are at or above the minimum level set by the Agricultural Wages Board. These entitlements—for one and a half the usual rate for overtime, for example—are there regardless of what you are paid. That is an entitlement in law and we should protect it. I think that it is a good thing for us as parliamentarians to protect these minimum standards for workers, which would go if the Government were successful with their amendment to abolish the Agricultural Wages Board.
Unfortunately, some people do not act as responsibly as the noble Lords who have spoken and declared their interests as farmers. I point to the case of Chris Blakeney of Marden Management Ltd, who has just recently been in court in Swindon, where he changed his plea to guilty in respect of his activities as a gangmaster supplying 500 workers to farms across the country from his base in Calne. There are bad people around exploiting workers. When this protection goes, that exploitation is likely to grow.
A good argument has been made on this side of the Committee for the retention of the Agricultural Wages Board. What about the arguments against? I looked at the letter from the noble Lord, Lord Marland, the noble Viscount’s predecessor, to my noble friend Lord Stevenson on 19 December, when this amendment was announced. I note the manuscript amendment to the letter written by the noble Lord, Lord Marland, in which he said, “I reluctantly agreed to this—decision above my unpaid grade!”. That clearly suggests that the noble Viscount’s predecessor thought that this was all a bit dodgy. I would be interested to know whether the noble Viscount agrees with his predecessor about the dodginess of this amendment.
I then looked at the letter from the noble Lord, Lord De Mauley, whom I am pleased to see in his place. I think that we have answered most of the questions. The noble Viscount repeated the notion that this will improve employment but, as we have said, the impact assessment—on page 19, in paragraph ii, headed “Employment”—says:
“This effect is highly uncertain, and may therefore not be significantly different from zero”.
The Government anticipate no employment effect at all.
We have heard the arguments around whether agriculture is unique—people take different views on that. We have also heard the concerns about consultation. The lack of consultation on the amendment is truly shocking, given that 154,000 workers are directly covered by it. Four weeks’ consultation is completely inadequate for such a measure. There is then the problem of the number of people who were not included in the list of consultees. Action with Communities in Rural England was excluded. The various training organisations, such as Lantra, were not included. Housing bodies, such as the National Housing Federation and Shelter, were not included, even though the housing committees are being abolished. Even the Arthur Rank Centre was not included, despite the important role that we know the church plays in rural communities.
The consultation has been shocking. The procedure has been ignored. I would have welcomed a four-week consultation if it had been for the ash trees, for which we had an eight-week consultation; that matter was urgent. There was a really good reason for a short consultation on ash tree disease and four weeks would have been great; but we chose to go for eight weeks where there is an urgent need but four weeks to get rid of something that has been in existence since 1917. That makes no sense to me. The proposal is then brought here to Grand Committee where issues debated are supposed to be non-controversial, and we have a big row about whether the board should be abolished.
There is principled opposition and the noble Viscount should now tell us that he will withdraw his amendment and go away and reflect on it. He can then choose to bring it back on Report but it is not appropriate for the Grand Committee.
Viscount Younger of Leckie
My Lords, this has been a helpful and somewhat lengthy debate, which has included some passionate speeches from all sides of the Committee. I thank all noble Lords for their contributions.
I will clarify a couple of points. First, in relation to a point that was made by my noble friend Lord Plumb and led to a mini-debate concerning the figures in relation to retaining the Agricultural Wages Board, my noble friend is right to highlight the cost of the board. I have been advised that over recent years, the annual cost of running it has been around £180,000 and, for the ADHACs and the AWCs, the cost is around £20,000. That is just for the record. Secondly, the noble Lord, Lord Hunt, brought up the issue of rates of pay for farm managers. He quoted a rate of £14.10 per hour. I should like to clarify, and I hope he will agree, that he quoted the overtime rates, not the basic rates. The minimum hourly wage rate is £9.40 and the overtime rate is £14.10.
I will address directly some of the procedural issues that have been raised by noble Lords. The first issue was the question of whether the Agricultural Wages Board met the requirements of the Public Bodies Act procedures. This was raised by the noble Lord, Lord Whitty, my noble friend Lord Plumb, and the noble Lord, Lord Hunt of Kings Health. The Public Bodies Act is only one legislative route open to the Government to abolish the board. It is not the only route and it is perfectly open to the Government to decide upon another legislative option.
It would be politic to explain a little more about this. The Public Bodies Act created a specific set of arrangements for the reform of a wide range of public bodies by means of secondary legislation, which included the consent of Welsh Ministers, even where they exercised only minor functions. Welsh Ministers have specific, minor functions under agricultural wages legislation, for example in relation to the appointment of members of the Agricultural Wages Board, and ministerial consent was therefore needed to the proposal to abolish the board under the Public Bodies Act. The Welsh Government refused to give consent without powers to set agricultural wages and other terms and conditions being transferred to the Welsh Ministers. The Government could not agree to this for two main reasons. First, we regard this as a non-devolved matter relating to employment and, secondly, this would involve using the Public Bodies Act to extend devolution in a way that was never intended. I hope that that goes some way to explain why the Agricultural Wages Board stood out on its own.
Lord Howarth of Newport
Will the Minister also be good enough to explain to the Committee why it is acceptable for the Government to use the Bill to alter the effect of the Public Bodies Act, whereas it is not acceptable for the Opposition to use the Electoral Registration and Administration Bill to alter the effect of the Parliamentary Voting System and Constituencies Act?
Viscount Younger of Leckie
I note the point that the noble Lord is making but I was addressing purely the issues relating to the Agricultural Wages Board. I do not want to address or make a comparison with any other issue.
Lord Whitty
I am grateful to the Minister for confirming that one of the reasons for the change of tack by the Government is the Welsh situation but he is surely wrong in his remarks on devolution.
The Agricultural Wages Board has always been dealt with by the agriculture department. Well before political devolution, there was a separate devolution to the Scottish agriculture department. There is a separate arrangement in Northern Ireland. The employment issue falls to the United Kingdom. There is no difference in agriculture between Wales, Scotland and Northern Ireland, so why is the Minister prepared to accept that there should be devolution to Scotland and Northern Ireland, quite rightly, but to deny Welsh Ministers’ request, in the light of the decision in relation to England, to have a devolved body in Wales?
Viscount Younger of Leckie
My Lords, it is not for me to say it is only that. This is an historical fact, and I was just setting out the background to this. This is why the Agricultural Wages Board has remained separate. Now, in this Bill, we are looking to sort this out.
Lord Elis-Thomas
I apologise; I have been unable to follow the whole debate, as I have been sitting in the National Assembly in Cardiff.
Is the Minister aware of the statement issued yesterday by the Counsel General for Wales in which he proposes to refer the whole matter to the Supreme Court if the Minister persists with the current policy?
Viscount Younger of Leckie
I note the noble Lord’s comment. I was not aware of that.
The Deputy Chairman of Committees (Lord Faulkner of Worcester)
It might be for the convenience of the Committee if I remind the Committee that the Companion says:
“Members of the House who are taking part in a debate are expected to attend the greater part of the debate. It is considered discourteous for Members not to be present for the opening speeches, or at least the speech before and that following their own, and for the winding-up speeches”.
Viscount Younger of Leckie
I will move on to the issues that have been raised about the consultation period. Several noble Lords raised this issue, including the noble Lords, Lord Whitty, Lord Howarth of Newport and, indeed, Lord Knight of Weymouth.
The policy on the abolition of the AWB and related committees was first announced in July 2010, so there has been plenty of time for stakeholders and interested parties to make their views known. In particular, key stakeholders had the opportunity to do so during meetings of the Agricultural Wages Board and the Agricultural Wages Committees. The department felt that a four-week consultation period was proportionate and realistic, given the length of time that the policy had already been in the public domain. This is also in line with the Government’s new consultation principles.
In this respect I will address a point raised by the noble Lord, Lord Hunt, when he expressed concerns about those principles. The new principles allow for a tailored approach to the circumstances and needs of a particular case. Twelve weeks is not necessary in every case. The principles say that the timeframes for consultation should be “proportionate and realistic”. The department considers that the timeframe for this consultation was appropriate, given that the policy had been known for some time, as I explained a little earlier.
As mentioned, we also sent the consultation document to 13,000 bodies and held six meetings throughout the country to enable views to be heard. This very much involved Defra, which was also very much involved in disseminating information to those bodies and to many businesses to make them aware of the launch of the consultation.
Lord Howarth of Newport
I apologise for troubling the Minister again, but would he also explain, because I think people in Wales would be very interested to know his account of this, why one week’s consultation was good enough for Wales when four weeks was allowed for England?
Viscount Younger of Leckie
I have to say that it was news to me—I have heard it today for the first time—that there was one week’s consultation. It is my clear indication that it was not one week. It was a lot longer than that. I do hope that it was at least four weeks, but I will certainly get back to the noble Lord to clarify this, as it is important.
The noble Lord, Lord Whitty, in expressing concerns about the consultation responses, also stated that he wanted clarification. On the question of where the consultation responses are, all the responses are publicly available in the Defra library. Moreover, Defra officials specifically alerted the former Unite leader to the availability of the responses.
On the content of the responses, it is worth pointing out to noble Lords that there were 939 respondees, of which 345—37%—agreed with the proposal to abolish the Agricultural Wages Board; some 575—61%—were against, and 2% were “don’t knows”. The main point I want to make is that of the 575 against, 242 came from the same website.
Lord Hunt of Kings Heath
With the greatest respect, I imagine that some of those people represented about 157,000 workers, so it seems to me that that is not at all unreasonable.
Viscount Younger of Leckie
If the noble Lord prefers, I can get back to him—I will, indeed, get back to him—with more details concerning this response. I was purely expressing some facts concerning the response.
Lord Hunt of Kings Heath
With respect, it is not unusual for organisations to send notes to their members detailing changes that are going to be made and their implications. The noble Viscount seems to be saying that because these figures came through websites—I think he mentioned five websites—somehow they should be discounted. Surely that cannot be right. Is the Government’s new approach to consultation to make judgments about who they are going to listen to and to discount those responses that they do not like?
Viscount Younger of Leckie
With respect to the noble Lord, I did not say that I was discounting them. I was just producing some facts. However, it is strange that such a high number of responses came from the same website. I hope that that is a reasonable view to express. As I say, I shall be delighted to get back to the noble Lord with some clear figures and a response to that.
The noble Baroness, Lady Donaghy, raised the question of whether Northern Ireland or Scotland had been asked for a view on the abolition of the Agricultural Wages Board. I should clarify that the Agricultural Wages Board in Northern Ireland and the Agricultural Wages Board in Scotland constitute separate bodies and it is for their respective devolved Governments to take a view on their future.
The noble Lord, Lord Whitty, asked about the terms and conditions of farmers and their pay and sick pay under the current regime. Having two systems which may apply on the same site for the same organisation is not ideal. This measure obviously covers agricultural workers and will cover others who fall into the non-agricultural sector. Surely it is more confusing and difficult to operate such a system. As I said in my opening speech, farm businesses are increasingly diverse and carry out non-agricultural activities.
The noble Baroness, Lady Donaghy, asked why there was a difference between the first and second impact assessments. The first impact assessment was informed by independent research which compared the agricultural sector with the forestry and fisheries sector in order to assess the effect of the Agricultural Wages Board minimum wages. However, this did not allow for the fact that forestry is covered by an agricultural wages order. Since the consultation, the contractors have revised the analysis to correct this.
Lord Whitty
My Lords, does that mean that the Government stand by the second impact assessment? If it does, it undermines everything that has been said in favour of abolition of the wages board and the argument that that will make no difference, given that the second impact assessment says very clearly that over the next 10 years agricultural workers will lose £250 million worth of employment income. Let us be absolutely clear: if the Government, the noble Viscount’s department and Defra—the noble Lord, Lord De Mauley, is present—stand by the assessment, the removal of the Agricultural Wages Board will clearly lead to a serious reduction in wages in the agricultural sector.
Viscount Younger of Leckie
The intervention of the noble Lord allows me to move on to focus on the impact assessment. I do not recognise the figure that he has brought up. The impact will be between nought and £150 million.
Lord Whitty
To clarify, there is a range, but I am using a figure close to the best estimate which amounts to about £250 million.
Baroness Buscombe
My Lords, I am grateful to the Minister. I have been sitting here and slowly thinking to myself that I cannot continue to listen to the noble Lord, Lord Whitty, making this incredible, disingenuous argument. I am going to go back down memory lane briefly. I remember when the noble Lord, Lord Whitty, was Minister for Agriculture and we had the Burns report.
Lord Myners
I am grateful to the noble Baroness for giving way. The Chairman has already read from the guidance on participation in debates. The noble Baroness was not here at the beginning of the debate and in that circumstance—
Baroness Buscombe
Good.
I remember so well that when the noble Lord, Lord Whitty, was in government, the Burns report looked into the future of hunting. The report came back saying that if we lost hunting, the lives of a huge number of people in rural areas would be affected. They would lose their jobs and that would have a massive impact on the rural economy. I remember the noble Lord standing at the Dispatch Box saying “I do not like hunting. I am not interested in what the Burns report says. We are going to get rid of it anyway”. Here is the noble Lord, Lord Whitty, talking so much about the need for consultation as if he really cares what the result might be. This is all about dogma. What has been going on this afternoon has been vacuous and disingenuous, and I hope that the Minister will feel strong in his argument and ignore these disingenuous requests to remove the amendment.
Lord Whitty
I am quite happy to have another debate about hunting. I understand, however, that the Prime Minister is not prepared to pursue it. I have not seen the devastation in jobs in hunting since the hunting Act was passed, but let us put that to one side. All I was asking the Minister was whether he stood by his own department’s calculations of the effect on wages in the agricultural sector of abolishing the board. It is a straightforward question on which I would like a clear answer: if he does still accept it then everything we have been saying on this side is correct and there will be a serious detrimental effect. If he wishes to change it, however, I suggest he produces a different impact assessment before we reach Report.
Viscount Younger of Leckie
I will do my best to answer the noble Lord’s question. Our figures tell us that the impact assessment for new workers will be from nought to a worst-case scenario of £150 million. However, as I mentioned in my opening speech, there is no reason to suppose that the 60% of workers who are currently on a contract will not remain on their existing contract. Noble Lords will know that, if you are an employer, you cannot suddenly change or reduce a contract between two people.
The reality will depend on how farmers use the increased flexibility that will result from the abolition of the Agricultural Wages Board. Many workers are already paid above the agricultural minimum wage, so there is no reason why there should be a change. Moreover, the underlying labour market conditions suggest that workers will be in demand and farmers will need to offer competitive packages to attract and retain skilled and qualified staff. I am afraid that the evidence is against the noble Baroness, Lady Donaghy, who was claiming that the jobs would not be available and farm workers would be leaving the sector. I do not believe at all that that will be the case.
I am also grateful for the intervention from my noble friend Lord Plumb. It is encouraging to note his comments and all the efforts that he has been making in encouraging new workers into farming. I am also grateful for the intervention from my noble friend Lady Byford who, quite rightly, pointed out the importance of ensuring that there were some good working practices that will be retained within the agricultural sector.
The noble Lord, Lord Myners—who is now back in his place—spoke about the difference between the Low Pay Commission and the Agricultural Wages Board. This is exactly the point: there is no need for two different bodies both assessing low pay issues. That plays into our hands as to why we believe that it is right to abolish the Agricultural Wages Board.
Lord Myners
My Lords, the Minister made what I thought was a rather unnecessary remark about the fact that I was absent from the Committee for not more than five minutes—in a debate that has run for two and a half hours, and I was here for about an hour before that. I will not explain to noble Lords why I chose to leave the Room for five minutes, but for the Minister to make a point on that shows how desperate he is to keep the faith of his supporters.
On the subject of people leaving the Committee, the noble Lord, Lord Cameron of Dillington, who is no longer in his place, asserted his view that he did not think that the benefits would be passed on to supermarkets. I question that given that in their evidence to the consultation the supermarkets have been hugely supportive. One wonders why they are supportive of this proposal if they do not expect to benefit. If that is also the view of the Government, can the noble Viscount explain to us in very simple terms that if you have a transferred benefit here—taking £250 million out of the rural economy—where is that £250 million going? There has to be an equal and off-setting amount. Where does the Government believe the benefit will accrue?
Viscount Younger of Leckie
First, I apologise to the noble Lord. There was absolutely no derogatory comment intended.
I do not believe that the money will be taken out of the agricultural economy. The whole point of making this change and abolishing the Agricultural Wages Board is to create a more flexible environment and to enable farmers to recruit new workers.
Lord Myners
There is nothing in the Agricultural Wages Board that in any way prevents a farmer from paying more, as indeed the noble Earl explained to us. This is “flexibility” used as a euphemism. It is a flexibility that only moves in one direction. The Minister’s argument simply does not withstand any close and critical examination.
Viscount Younger of Leckie
I think I should repeat to the noble Lord that the Agricultural Wages Board has been in existence for 65 years. I realise that that is not necessarily a reason for changing but there are still some great anachronisms within the system. Secondly, part of the point is to release farmers from the administrative burden of the two-tier, dual system. So I stick by my view that this is long overdue and it is right that we should take this step.
The key priority for this Government is to encourage economic growth. The Government firmly believe that the abolition of the Agricultural Wages Board and the agricultural minimum wage regime is in the long-term interests of all those within the industry. It will enable the sector to meet the challenges of increasing domestic food production and help secure its long-term prosperity. The abolition of the related Agricultural Wages Committees and Agriculture Dwelling House Advisory Committees in England will also contribute to the Government’s public body reform programme and will remove a number of redundant bodies, as mentioned earlier. I hope that the Committee will accept the amendment.
The Deputy Chairman of Committees
The Question is that Amendment 28ZK be agreed to. As many are of that opinion will say “Content”.
The Deputy Chairman of Committees
My Lords, paragraph 8.103 of the Companion states:
“As divisions are not permitted in Grand Committee, decisions to alter the bill may only be made by unanimity. Thus when the Question is put, a single voice against an amendment causes the amendment to be negatived”.
I therefore declare this amendment negatived.
Lord Stevenson of Balmacara
My Lords, I shall speak also to Amendments 28ZKB, 28ZKC, 28ZKD and 28ZKE which are in my name and that of my noble friend Lady Hayter. I should make it clear that we on this side support the new bankruptcy regime and welcome what is set out in the Bill to try to make progress in this important area, but we would like to suggest some improvements. In so doing, I declare an interest as chair of StepChange, the leading debt advice charity.
We are concerned that the proposed changes to the bankruptcy process, wherein a court-based process is being replaced with an adjudicator, may lead to individuals and sole traders being declared bankrupt when there is actually an alternative debt solution which would be more appropriate for their situation and would have less severe consequences for the debtor. Such miscarriages of justice could lead to the debtor unnecessarily losing assets, including their house, or unnecessarily closing their business, and prevent them getting bank finance for 12 months or longer.
Particularly at this time, we need to be very careful about how the debt relief processes work in practice. Under the new process, as I understand it, a debtor will make an application to an adjudicator. The adjudicator will then determine the application based on two criteria: the jurisdiction criteria based on the debtor’s centre of main interest and whether the debtor is unable to pay their debts. Establishing the centre of main interest is important due to the recent development of bankruptcy tourism, where individuals from states with more onerous bankruptcy regimes, such as Germany or the Republic of Ireland, petition for bankruptcy in the UK in order to be discharged from their debts after 12 months. If the adjudicator is satisfied as to both criteria the order will be made. If the adjudicator is not satisfied that the criteria have been met, they cannot make the order.
The adjudicator will be able to request further information from the debtor, and if they receive information from third parties—for example, a spouse writing to the adjudicator to claim that the debtor was seeking to go bankrupt in order to avoid matrimonial claims—they would be able to decide whether or not to take this information into account. If the adjudicator is satisfied that the criteria have been met after receiving further information, the order will then be made. If the adjudicator rejects the application, the debtor is able to request a review of their file. If, after review, the application is once again rejected, the debtor can appeal to the court.
We need to consider the scale of the problems being faced by people experiencing unmanageable debt. We believe that some 6.2 million households are either in, or are close to having, significant debt problems. Bankruptcy is only one of three formal debt solutions, each of which involves the court, a licensed insolvency practitioner or the Civil Service equivalent. These include debt relief orders, individual voluntary arrangements and county court proceedings. However, many of StepChange’s clients prefer to reach a voluntary arrangement which we broker with their creditors and enter into a debt management plan under which they pay off their debts through us over a number of years. Last year, we returned some £300 million to creditors, and we are on target to counsel some 500,000 individuals this year.
At present, when a bankruptcy application is made to the court, either staff at the filing stage or the district judges or registrars at the hearing have an opportunity to point the debtor towards proper debt advice, and many discover that an alternative debt remedy is more appropriate for them. This may not only prevent miscarriages of justice, as I have already mentioned, but may also save the court, and particularly the official receiver, considerable unnecessary work.
However, we understand that under the new proposals, an adjudicator will not have the discretion to refer a debtor to seek advice and will have no choice but to process all eligible bankruptcy applications without considering whether an individual may be better off using an alternative debt solution.
The Government propose to deal with this concern in the new adjudication process by assuming that debtors will take independent debt advice before making their bankruptcy applications. However, in practice we know that many of our clients can stall over doing something about their debts for up to a year, until something such as illness or reduced earnings tips them over the edge, so to speak. We are therefore very concerned that the procedures to be introduced do not place sufficient stress on the need for debtors to seek independent free advice, with the consequence that the new system will be much less effective at preventing inappropriate bankruptcy applications.
Encouraging debtors to take appropriate debt advice prior to submitting an application will not necessarily ensure that they have all the information that they need in order to make an informed decision on whether bankruptcy is the best solution. Debtors contemplating bankruptcy are understandably under enormous financial and emotional stress and may be unaware of the sources of potential advice: my charity is the leading purveyor of free independent advice, but there are others, including Citizens Advice, and there are also fee-charging operations including, of course, insolvency practitioners.
Furthermore, while debtors may be aware of the gravity of bankruptcy and its implications, they may be unaware that they may qualify for an alternative debt remedy that would cost less, or be free, ensure that they maintain their homes and possessions, and have far less grave implications for their future relationship to credit.
I understand that in Scotland, where we operate as a separate charity, consideration is currently being given to making debt advice mandatory within the insolvency processes there, and I applaud that. I urge the Government to consider whether this would be a sensible step here. It would be possible to legislate to require a debtor to confirm that they have received independent expert advice before making their application. If that is too radical a step at this stage—and I accept that it may be—I urge the Government to think about emulating the Scottish Government to the extent of at least reviewing the whole debt arrangements system before too long. We have a major problem looming, as too many people are bumping along while prices rise, and with the spectre of a return to “normal” interest rates possibly the trigger for a whole range of new problems.
Amendments 28KA and 28KD give the adjudicator the opportunity to stay proceedings and work with debtors while they seek independent debt advice and enable debtors to withdraw their application during the 10-working day postponement period, for example if they are advised during that period that bankruptcy is not the most appropriate debt solution.
When he responds, will the Minister clarify whether the Government will consider ensuring that the online forms to be used in this new system will require debtors to confirm that they have sought appropriate debt advice from the independent and free debt advice charities? Will he also confirm whether there will be an exhortation for the debtor to work with the debt advice organisations such as StepChange, Citizens Advice and IPs to ensure that the advice suggested or required on the online forms captures the best possible options and language for the debtor? Will the Minister also confirm whether discussions are being held with the Scottish Government, particularly the Accountant in Bankruptcy up there whose scheme is very similar to that proposed?
Amendment 28ZKE reflects our concern that discretion for the adjudicator to seek guidance from the court has not been included in the Bill. If the adjudicator were given the discretion to ask the court for directions if they are not satisfied as to whether the criteria for making an order have been fulfilled, this could avoid the review and appeal process, as the court could provide an answer or guidance on complex issues, including cases where a petition may have been presented for an ulterior motive, such as to avoid matrimonial claims.
At present it is up to the debtor to appeal to the court if, for example, the adjudicator rejects their application, and in these circumstances the debtor may face the prospect of two fees—not a palatable prospect if the debtor is out of funds. If the adjudicator had the ability to seek guidance from the courts, we think that many cases may be resolved without the need for the debtor to apply to the court directly and incur additional fees.
Without the ability to seek guidance from the court, the process will also be unnecessarily prolonged and may expose the debtor to additional perils. In the interim period between the initial application for the order and the last resort of an appeal to court, there will be no moratorium from creditor action and debtors could still be pursued by their creditors, with all of the associated stress and anxiety that this can cause. In our view, the drawn-out process could be avoided if the adjudicator could seek guidance from the court in the first instance.
We understand that the Government have discussed the issue with insolvency practitioners and they take the view that it is more important to have a simple system shorn of subjectivity and to a large extent kept out of the courts. Those are admirable aspirations, but when he comes to respond, will the Minister honestly defend a situation where simplicity seems to be trumping individual rights, where difficult judgment calls are eschewed in place of a box-ticking process and where people’s rights to be heard in court are being threatened? I would be willing to meet the Minister and his team if that would be helpful because I hope that we can find accommodation on these matters. I beg to move.
Viscount Younger of Leckie
My Lords, the amendments seek to extend the role of the adjudicator introduced by Clause 63 of the Bill. Noble Lords will be aware that the reforms to the debtor-initiated bankruptcy process remove the order-making function from the court, and replace it with a new administrative process. This provides an opportunity to introduce a modern, electronic and more efficient application process, and was indeed first consulted on by the previous Government. A similar process has been successfully operated in Scotland since 2008, as the noble Lord, Lord Stevenson, has already mentioned. The adjudicator will be required to consider each application and decide on an objective basis whether or not the criteria for making a bankruptcy order are met. If they are, the adjudicator must make a bankruptcy order.
The first four of these amendments seek to impose a requirement on the adjudicator to consider whether bankruptcy is the right option for the applicant, and whether an alternative debt solution may be more appropriate. The proposal is that the adjudicator should have a discretion to hold off making a bankruptcy order for a period if he or she feels the debtor may benefit from taking further advice.
The amendments may be motivated by a power that the court presently has to refer a debtor who has presented a bankruptcy petition to an insolvency practitioner in a case where an individual voluntary arrangement may be a viable alternative to bankruptcy. I understand, however, that the courts very rarely make use of this power.
I reassure noble Lords that before making their bankruptcy application, applicants will be strongly encouraged to take independent debt advice to ensure that bankruptcy is really the right option for them. My officials will work with the Money Advice Service and providers within the debt advice sector to ensure that applicants have the information they need to make an informed decision. Furthermore, within the electronic application process itself, we propose to include a series of warnings to ensure that applicants are made fully aware of the serious implications of bankruptcy before they make their application. We will also ensure that the process flags up any alternative debt remedies that may better suit their circumstances.
The Government consider that these safeguards are sufficient to ensure that debtors are empowered to make an informed decision as to whether or not bankruptcy is the right option for them before they take the serious step of making a bankruptcy application. The Government believe that these amendments would unnecessarily complicate the process by requiring the adjudicator to exercise discretion on a case-by-case basis. That would increase administration costs with an impact on the application fee. It would also delay access to debt relief for the debtor, who would have elected for bankruptcy in full knowledge of their other options.
Amendment 28ZKE seeks to give the adjudicator power to apply to the court for directions in relation to any matter arising in connection with the bankruptcy application. The policy intention is to ensure that the system delivers better outcomes by focusing the court’s role and resources on matters of dispute that rightly require judicial intervention and expertise. The onus will be on the debtor to show that he or she meets the relevant criteria. However, the application process will be designed to help the debtor and to ensure that the adjudicator has all the information needed to reach a decision. The adjudicator will also be able to request such additional information from the debtor as he or she considers necessary for determining whether a bankruptcy order should be made.
The Government recognise that complex issues may arise in a small minority of cases, especially around the jurisdictional criteria and where the debtor’s centre of main interests is located in England and Wales. However, persons appointed as adjudicators will have the skills they need to do the job without the need for recourse to the court. It is acknowledged that the court still has a role to play. Where the adjudicator refuses to make a bankruptcy order because the criteria are not met, the debtor will have the right to appeal to the court. That provides a route to court in those cases where it is needed. The court will also continue to determine creditor-initiated bankruptcy petitions, which are more likely to be complex and contentious.
For these reasons, the Government consider that this amendment would confer an unnecessary discretionary power on the adjudicator. In the light of these reassurances about the application process and the recourse to court for debtors, I hope that the noble Lord will agree to withdraw the amendment.
Lord Stevenson of Balmacara
I thank the Minister for that response. I sense within what he has said that he shares some of my aims in tabling these amendments, and I welcome that. However, I am still a bit perplexed. If you are prepared to go down the route of ensuring that those responsible in these processes flag up the options that are available to people—as I tried to explain in my opening remarks, there are many people for whom bankruptcy is the wrong solution; in the rather overused phrase, it is the nuclear option—and you are going to ensure that appropriate warnings are put on to the application forms, we are very close indeed on this point. It therefore boils down to a question of whether there is a bit more discretion in the system than perhaps the Minister is prepared to admit. I find that puzzling.
I tried to explain in my opening remarks that there is an awful gap for a debtor who is attempting to resolve a crisis because the only two options are to trust an adjudicator, and if the decision goes against the debtor, to find, finance and pay fees for an appeal to the court. As the noble Viscount has said, there are areas where the court will be better placed to make these decisions. The other point he made was the need to make sure that, in the first instance, there is sufficient discretion in the appointment of adjudicators who have the sensibility to make sure that people are involved. The noble Viscount has hinted that further discussions may take place between his officials and the appropriate authorities. I would urge that they involve the main bodies that are actually involved in direct dealing with those who have debt problems and not with the Money Advice Service. Obviously it will have an interest in this, but I think we need to speak to the experts in this matter. Perhaps we could have a side exchange on how those discussions go and whether the right people are being consulted. I would then be less concerned about them.
We may have to come back to this issue because to me it feels too tight, but perhaps further experience will be sufficient. On that basis, I shall withdraw the amendment.
“ In section 293 (summoning of meeting to appoint first trustee), in subsections (2) and (3) for “court” substitute “prescribed person”.
In section 295 (failure of meeting to appoint trustee), in subsection (3) for “court” substitute “prescribed person”.”
Viscount Younger of Leckie
My Lords, these amendments make minor and technical changes to the Insolvency Act 1986 and relate to the reforms to the debtor bankruptcy petition process introduced by Clause 63. The reforms will remove the existing requirement for the indebted individual to present a bankruptcy petition to court and replace it with a new administrative process. Presently, certain statutory notices are required to be filed at court during the course of a bankruptcy. Most of these requirements are presently set out in the Insolvency Rules. However, a small number of requirements are contained in the Insolvency Act and are the subject of these amendments.
The proposed amendments would ensure that Ministers, in consultation with stakeholders, are able to modernise and make more efficient all of the filing and document inspection processes governing both debtor and creditor-initiated bankruptcies without the need to amend the Act in the foreseeable future. It is anticipated that, where the bankruptcy is commenced by way of the debtor making an application to the adjudicator, documents generated will not necessarily be routinely filed at court. While the Government have no intention at present to change the current policy of filing notices at court in relation to creditor-initiated bankruptcies, it is possible that in the future the Government may be minded to extend some or all of the filing efficiencies introduced in relation to debtor-initiated bankruptcies to creditor-initiated bankruptcies.
The strong policy preference is that such detailed procedural requirements, including those relating to filing, should be in the rules and not in the Act. This is in line with a wider government agenda to consider the overall structure of insolvency legislation with a view to ensuring consistency in what is contained within the primary and secondary legislation. One of our aims is to remove detailed prescriptive requirements from the primary legislation wherever possible. The amendments also make other minor and technical changes that are consequential to the reform of the debtor petition process. I beg to move.
Lord Stevenson of Balmacara
My Lords, I have listened carefully to the Minister. I find that these proposals are in keeping with the general approach that has been taken and I have no particular objection to them. I mentioned in my contribution on the earlier amendments that I was much taken by the experience in Scotland; I was trying to suggest that there are lessons to be learnt from there. I make this point, which I think would be worth reflecting on. The new bankruptcy Bill that is about to go through the Scottish Parliament, which I am sure officials are well briefed about, seems to take as its starting point a slightly different perspective to those with debt problems from the one that we are taking in England and Wales. I slightly regret that. I am not overstating it when I say that there is an ambition north of the border—is there not always an ambition north of the border?—to create what is called there, possibly in correspondence rather than in the main line, a financial health service. Perhaps the Minister could reflect on whether there is some element of that in what is being proposed in the totality of the amendments that we have been considering today.
The point that I am driving at is that, if we focus only on the processes when people are already facing imminent bankruptcy or worse, we are not picking up the sensibility that I think is infusing the thinking by the Accountant in Bankruptcy and in the Scottish Parliament on these matters, which is that far greater attention should be placed on the role for public involvement in the borrowing and lending processes that affect individuals. Too many people find it very easy to borrow and extremely hard to save. That balance is completely wrong. We should have a much more balanced approach to how these things operate and how we regulate in a space within which people extend credit in order to provide the sort of services that they wish to use during their lives but at the same time acquire debts that have to be serviced and eventually repaid.
There is a bigger and better conversation to be had around whether the 19th-century and 20th-century notions of debt are as appropriate as they should be in the 21st century to the way in which people operate. At one level—I do not want to extend this debate, but I think that this is an important point to put on the record—there are many instances where we see behaviour in the marketplace that is counterintuitive and absurd. I am thinking particularly of payday lenders. The problems relate to the flow of credit to those who need it and the pressures under which they operate. The fact that people are prepared to take out these ridiculous loans at absurd interest rates and on impossible repayment terms is not a reflection of iniquity on the part of the lenders; it is a reflection of something that is going on in society. We are not tapping into that in the proposals that we are hearing today. Yes, it is sensible to take away the courts’ role as a primary source for all these bankruptcy applications but only, I would argue, if we are also aware of and alert to the other ways in which people can be assessed for indebtedness and helped to find an appropriate way forward. On that basis, I find this general approach right but possibly lacking context. I wonder whether, in his closing remarks, the Minister could make a few comments on that area.
Viscount Younger of Leckie
I listened carefully to the noble Lord, Lord Stevenson, and I am very grateful to him for his full response. I very much take note of the issues that he raised concerning the need to provide better help to those who unfortunately get into debt. I think that the best thing to do is to follow up his suggestion to take this further in discussion outside this Committee.
“ In section 298 (removal of trustee and vacation of office), in subsections (7) and (8) for “court” substitute “prescribed person”.
(1) Section 299 (release of trustee) is amended as follows.
(2) In subsection (1)(a) for “to the court” substitute “under this paragraph to the prescribed person”.
(3) In subsection (3)(a) for “court” substitute “prescribed person”.”
“(1) Section 415 (fees orders) is amended as follows.
(2) In subsection (1)—
(a) after paragraph (a) omit “and”, and(b) at the end of paragraph (b) insert “and(c) the performance by an adjudicator of functions under Part 9 of this Act,”.(3) After”
““24ZA Provision requiring adjudicators—
(a) to keep files and other records relating to bankruptcy applications and bankruptcies resulting from bankruptcy applications,(b) to make files and records available for inspection by persons of a prescribed description, and(c) to provide files and records, or copies of them, to persons of a prescribed description.24ZB Provision requiring an adjudicator to make returns to the Secretary of State of the adjudicator’s business under Part 9 of this Act.”
“24B Provision requiring a person to whom notice is given under section 293(2), 295(3), 298(7) or (8) or section 299(1)(a) or (3)(a)—
(a) to keep files and other records of notices given under the section in question, and(b) to make files and records available for inspection by persons of a prescribed description.””
Lord Lucas
“Ownership of licences to copyright
(1) Any natural person who acquires, for value and for his personal use only, the right to use a copyright may, for value or otherwise, transfer that right to any other person.
(2) Any terms in any contract that purport to forbid, place restrictions on or require payment for a transfer under subsection (1) shall be null and void.
(3) Any person who in any way controls the use of a copyright must do all things necessary, without undue delay and without recompense, to effect a transfer under subsection (1) above.”
Lord Lucas
My Lords, in moving the amendment, I wish to speak also to Amendment 28B.
Since I tabled these amendments, we have had a Christmas present from the ministry. On 20 December, the Secretary of State was kind enough to announce a package of intentions to reform copyright which entirely supersedes my Amendment 28B. Therefore, I will not trouble the Committee by addressing that because clearly we will see this in a proper and thought through form when we come to the Bill that will follow the announcements made by the Secretary of State. However, we have a small cameo performance on copyright now before we go to bed. I would be grateful if the Minister could confirm that the 28th of this month will be the next day in Committee, since clearly this stage of the Bill is now going to go into 10 sittings. If there is any suggestion that there will be a day in between, will we all receive an e-mail notification rather than having to spot that something has changed on the Order Paper?
It seems to me that copyright is aptly described by Macaulay. A lot of people speak as if copyright is a god-given possession of creative people. It is not; it is a deal done between those who consume copyright material—I both produce and consume copyright material—and those who produce it. In order that it should be produced, those who consume are prepared to let the copyright owners have a limited monopoly on it, but that monopoly is not without terms. It is given in order that it should be available for consumption. The way in which people want to consume copyright material is therefore an important part of negotiating and renegotiating the bargain between users and producers of copyright material.
My firm view, which, to judge from his 20 December announcements, is shared by the Secretary of State, is that we should look at copyright as a means of increasing national wealth, not just of producing a nice little rose garden to enable creative people to live comfortably and have everything exactly the way that they want it. It is a bargain between two sides. It is an agreement to use something that is essentially an evil—a monopoly—in order to enable something good to happen. My view, like that of the Secretary of State, which is covered in Amendment 28B, is that we must from time to time look at the way in which copyright functions in this country and ask whether it is serving the interests of users as well as those of the people who create it. In the case of fair use, quite clearly the rules had begun to fall well short of the way in which people wanted to use copyright material. We all own a reasonable variety of devices. If we buy a copy of Beethoven’s ninth symphony by the London Symphony Orchestra, we ought to be able to listen to it on various devices; we do not want to have to buy separate copies for separate devices. Therefore, we must make it possible for users to do that because that is the way that users want to consume material and that is part of the modern bargain.
Amendment 28A covers something that the Secretary of State has not touched on but which others will be aware of. In the days of books—and long may they continue—when you bought a book, you owned it. You could pass it on to other people, you could sell it second-hand, you could leave it in your will—it was a possession. Now if you buy a book for use on your Kindle it remains the property of Amazon, which can remove it at any time—and does. Amazon strips people of their whole libraries or removes individual books if something has gone wrong with the licensing. You do not own a book; you just have the right to consume it for a while. That is a fundamentally undesirable position when it comes to the relationship between the creator and the user.
Something that is for personal consumption ought to be a personal possession; it ought to be something that we can pass on to other people. We should not allow the position to persist where the balance has been shifted. We have allowed the change in technology to change the balance between the old regime that existed in the case of books, of ownership as a result of payment to one of leasing as a result of payment. We should encourage people to have libraries and pass on intellectual works they have created to other people. That is the right balance between users and creatives. I want to restore the balance in the case of modern technology to where it was in the case of the old technology. Although I know I will not achieve anything this time with this amendment, I hope we will see something, if not from this Secretary of State then a future one. It is certainly a matter I will raise when we next debate this Bill. I beg to move.
Lord Clement-Jones
My Lords, it would be a shame not to savour the final quarter-hour of Committee today—although I have probably learnt more about agriculture than I ever wished to. I see that the noble Lord, Lord Whitty, is still here; he is clearly incredibly versatile in all these matters. Seeing him and the noble Lord, Lord Lucas, I am afraid that I am reminded of the passage of the Digital Economy Bill, which may or may not be a good thing. As we know from that, the noble Lord, Lord Lucas, is never knowingly underprovocative, particularly on the question of intellectual property rights, and I am not going to enter the lists with him on the issue of the format-shifting exception that was the subject of the Christmas present he mentioned.
Amendment 28A is an incredibly sweeping amendment that would have a massive impact on the cloud computing industry in the UK, which is forecast to grow from something like £2 billion to £6 billion. It would have an incredibly damaging effect, which makes it highly undesirable for various commercial reasons. Quite frankly, it also happens to be in contravention of the existing EU directive on computer software, which gives the exclusive rights to copyright owners in those circumstances. Of course, there are issues about the ownership of digital content, but this is not the way to deal with them. There are issues about who owns what you have on your iPad or tablet from other manufacturers, but this is an incredibly sweeping way to do it. In the way the amendment is phrased, I doubt whether it will cure the issue by itself.
Baroness Buscombe
My Lords, I rise to resist the amendment of my noble friend Lord Lucas and to support what my noble friend Lord Clement-Jones said. My noble friend Lord Lucas’s argument in relation to Amendment 28A; that if someone has a book they should be allowed to own it, enjoy it and pass it on to others sounds, emotionally, like a good thing. Indeed, I have done that on many occasions among my family and friends. But passing one book among one or two friends is a million miles from what is now possible because of the speed of technology. Because of the digital world we inhabit, the whole of the creative being of that book can be out in the ether and transmitted globally within moments. The creative right is all but destroyed rather than shared in a small and special way. While I entirely understand the emotion behind the idea that we should continue to feel that we can share something we really enjoy, it is neither wise nor sensible to do that in this world because it will deter creators from creating more wonderful books. That is the tragedy of this. It is a perverse consequence of technology.
Lord Stevenson of Balmacara
My Lords, I do not wish to detain the Committee, but I wish to thank the noble Lord for his introductory comments and reflect on two points. First, a number of the issues he raises will come up in other amendments and I hope that he will share his wisdom on those occasions as well. Secondly, I must disappoint him in one respect. He suggested that part of what he wanted to say was covered by the Christmas present provided by the additional copyright exceptions and other things that were coming forward and that there might be an opportunity to discuss those in a separate Bill. That will not happen because the Government are, at the moment, choosing to implement those proposals by secondary legislation, bundled in, as the note says, “as few SIs as possible”.
Unless we get a late Christmas present from the Minister, we will have to oppose that because there are very large issues within what has been proposed. Not all of them are unwelcome and we would probably want to get behind most of them. But the way in which it has been done leaves a gap in the expectation outside that there should be a lot of discussion about these things. As has just been said, they affect the very heart of what we are trying to say around our creative economy, how people create and how things are consumed. If we do not get that right, there will be a wave of concern outside. I therefore lay down a small elephant trap for the Minister to fall into then leap out of with one bound later on when we reach that point in the Bill.
Viscount Younger of Leckie
My Lords, it is fair to say that, as a Scotsman, I do not do Christmas presents after Christmas. Nevertheless, I am grateful to my noble friend Lord Lucas for initiating these amendments. Before I continue, I cannot yet confirm the dates for the extended Committee work, but we will make sure that noble Lords hear in good time.
The amendments aim to allow consumers to do more with copyright materials that they have already bought. Amendment 28A seeks to ensure that personal licenses to use copyright can be resold or passed on to another person. This would apply, for example, to those licences that accompany e-books or computer software. This is an important area and one of which the Government are keenly aware. However, the law in this area is still developing. The extent to which resale of licences is already allowed under European law is not yet clear. The cases that have been considered have dealt with specific limited circumstances. I note the comment from my noble friend Lord Clement-Jones who described the proposal as incredibly sweeping. Perhaps it is not surprising that I would say that there should be careful consideration before action is taken.
Lord Lucas
My Lords, I am grateful to my noble friend for his reply, and less grateful to my noble friends for their interventions.
To my noble friend Lord Clement-Jones, I will say—as I will likely say on future occasions in this Bill—phooey. One of the effects of cloud computing and the fact that something is not fundamentally located on an individual device makes the whole business of regaining ownership much easier. No longer does one have to deal with something that is passed from device to device and copied into a torrent stream that suddenly goes illegal and cannot be kept track of. In the case of iTunes, it is one enormous great cloud computing lump, and transferring ownership is an extremely easy thing to do if one bothers to write a few lines of code. Technology is moving on and is making the transfer of ownership much easier than it was under the old ways of doing things. I expect that, given proper consideration and thought, this will be quite easy to implement in a few years’ time. For now, I beg leave to withdraw the amendment.