Enterprise and Regulatory Reform Bill

Debate between Baroness Donaghy and Lord Knight of Weymouth

Wednesday 16th January 2013 Grand Committee

[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—