Enterprise and Regulatory Reform Bill
Debate between Viscount Younger of Leckie and Duke of Montrose
The Duke of Montrose
My Lords, I apologise for having missed the first few words spoken by the noble Lord, Lord Whitty, but I know where he was coming from. I cannot fully agree with my noble friend Lord Deben: I think it is actually the other way round. I employ a couple of agricultural workers and know the set-up as it now occurs up north. Of course, that is miles away from the historical situation that we used to have there, whereby agricultural workers had no security whatever. They had what the Scots termed a seeking-on day. If the farmer did not come and see you on your seeking-on day, you knew that you were leaving. That happened every six months.
The Agricultural Wages Board and other things came in and have satisfied that element. It has also covered a great many other things. The complaint on the other side should be that not enough agricultural workers have joined the union because the agricultural workers will be in a strong position when this is introduced. Admittedly, you get the awkward position, if there is a farmer who employs only one employee, that he could terminate his contract and immediately bring in something entirely new.
The Minister gave me a very good answer to my questions, which he was not able to provide in the debate, stating that there will be, on a new contract, no automatic right to special rates of pay, but if you sacked the only worker you had, you would immediately destroy any chance of an amicable way of working in future. Not only that, if you had to renegotiate the contract, the other side could say, “I’m going to get my union representative along, and he will make sure that you comply”. Presumably, the union will also produce its own rates of pay. Of course, we now have these various certificates that you can gain, and from that you can develop a hierarchy of pay. So I should have thought that the fear of loss, while looking obvious initially, will, as the noble Lord, Lord Curry, said, work out the other way round.
Viscount Younger of Leckie
My Lords, the amendment of the noble Lord, Lord Whitty, would require Ministers to publish and lay before both Houses of Parliament an updated impact assessment of the abolition of the Agricultural Wages Board prior to the commencement of the provision to abolish the board. The House has already debated the impact of the abolition of the Agricultural Wages Board at considerable length both in Grand Committee and at Report, and has voted in favour of abolition.
The best estimate of £250 million over 10 years, which includes the potential impact on wages, sick pay and annual leave, is based on empirical academic research, which looked at wage levels in the past.
As I have made clear previously, the impact on wages, which is the largest cost, would account for only 1% of the total agricultural wages bill over the 10-year period. However, the impact assessment makes clear that there is and will remain considerable uncertainty about the impact and that in fact there may be no reduction in workers’ wages or other benefits. That is because the reality of the impact will depend on the behaviour of employers of farm workers and a range of other factors, such as relative strength of supply and demand for agricultural workers and the need to be competitive with other employers in the same area—points made most eloquently by my noble friends Lord Deben and the Duke of Montrose.
Moreover, there are a number of reasons why the impact is likely to be smaller than that suggested by the external research. A majority of workers already receive terms and conditions above the agricultural minimum wage rates, so it is probable that their wages would not be affected if the board were abolished. The underlying market conditions suggest that there will be a sustained demand for agricultural workers. Research indicates that there is a shortage of workers with relevant skills in the agricultural sector, and that that shortage is higher than comparable shortages in other areas of the economy. The agricultural workforce is also ageing, with 55% of the sector workforce aged over 45, which, again, is higher than in other sectors of the economy.
Moreover, agriculture is a huge industry, with tremendous potential for growth to meet the challenges of feeding the world’s growing population. As I said in the debate on Report, £250 million over 10 years assumes that every agricultural worker would see a relative fall in their wages compared with what they would have been due. We think that that is a highly unlikely scenario given the evidence of the demand for workers—a point made most eloquently by the noble Lord, Lord Curry. However, we deliberately decided to adopt a cautious approach in the impact assessment, given that there is some uncertainty.
Enterprise and Regulatory Reform Bill
Debate between Viscount Younger of Leckie and Duke of Montrose
Viscount Younger of Leckie
If I may be allowed to finish, prices paid to producers are determined by international markets, not just supermarkets. Supermarkets now recognise that they have their reputations to protect. Since February 2010, all contracts between major food retailers and their direct grocery suppliers must comply with the groceries supply code of practice, the aim of which is to ensure that those who directly supply the large grocery retailers do not have unexpected costs or risks transferred on to them. I finish by saying that the horticultural sector similarly operates in international markets, with imports representing nearly 40% of fresh vegetables and over 90% of fresh fruit sold in the UK.
The right reverend Prelate the Bishop of Hereford also raised the issue of workers who worked in the farming sector who were below the school leaving age, if I understood him correctly. He argued that they would be disadvantaged by the abolition of the Agricultural Wages Board. I would like to reassure him that the National Minimum Wage Act 1998 does not apply to children below compulsory school leaving age. Therefore, following the abolition of the Agricultural Wages Board, no minimum rate would be set for young workers in agriculture in this age group. However, this would leave them in a similar position to children who work in other sectors such as shops, hotels and hairdressing salons. They will continue to be protected by general employment law and by health and safety legislation. Children of school age should be in full-time education and it is not the Government’s policy to encourage them to seek work.
The right reverend Prelate the Bishop of Hereford, in quoting Winston Churchill's words “sweated workers”, raised the question of protection. There is now a raft of protections for all workers under general employment legislation including the national minimum wage, working time regulations, the Employment Rights Act, equal pay and equality legislation and legislation for fixed-term employees, part-time employees and agency workers. If the Agricultural Wages Board were abolished, agricultural workers would enjoy the same protection as workers in all other sectors of the economy. That emphasises how far we have come since 65 years ago. It is interesting that there is quite a long list there.
To conclude on the issues that the right reverend Prelate the Bishop of Hereford raised, he made the point that there should be a defined living wage. I support that and in fact the Government support the concept of a living wage and encourage employers to take it up where possible. But the decision on what wages to set is one for employers and workers.
My noble friend Lord Greaves raised the issue of the consultation and much discussion was had in Grand Committee on that. The noble Lord, Lord Whitty, also raised this matter concerning Wales. I believe that I wrote quite a long letter to the noble Lord, Lord Stevenson, and copied it to a number of other noble Lords to address this matter.
The policy of the abolition of the Agricultural Wages Board and related committees was first announced in July 2010 so stakeholder and interested parties have had plenty of time to consider the matter. During this time, key stakeholders also had the opportunity to make their views known to Defra during meetings of the Agricultural Wages Board and 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.
The noble Lord, Lord Whitty, raised the issue—which, again, I believe was raised in Grand Committee—over the lack of use of the Public Bodies Act. To address this directly, the Public Bodies Act was only one method by which the Agricultural Wages Board could have been abolished. The Government are perfectly free to bring forward primary legislation to abolish the board.
The removal of the board will provide simplification and greater flexibility and allow the agricultural sector to compete on a level playing field with all other sectors of the economy, encouraging employment and competitiveness which will benefit all those in the industry. The noble Lord’s amendments would retain the Agricultural Wages Board and the separate employment regime for agriculture. This would continue the dual regulatory burden for farm businesses. The proposal that the board should be able to fix minimum pay rates by reference to any periods of the employment is intended, we presume, to make it easier for the board to provide for annual salaries. We are not convinced that the amendment would serve its purpose.
The provisions on the enforcement of the agricultural minimum wage are derived from the National Minimum Wage Act, which dissuades farm businesses from offering annual salaries. Moreover, the introduction of salaries would not be enough in itself to bring employment in agriculture into the 21st century. If the amendment were accepted, the opportunity for the agricultural industry to move forward and modernise would be lost. Instead, agriculture would be stuck in the past with an antiquated system of statutory wage fixing and prescriptive regulation of employment practices.
The Duke of Montrose
My Lords, I wonder whether my noble friend could also answer the point that I raised earlier. Does he know of any form, format or regulation that will deal with the question of what payment rates should be for work over and above the minimum hourly rate?
Viscount Younger of Leckie
I thank my noble friend the Duke of Montrose for that question. It is best that I get back to him in writing after the debate.
While I welcome that the amendment acknowledges the need to abolish the 15 agricultural wages committees and 16 agricultural dwelling house advisory committees in England, we do not consider that there is a need to retain any of the functions. The amendment tabled by the noble Lord provides the Agricultural Wages Board itself to take over the functions of the ADHACs in England. The Government are committed to growing the rural economy. A key part of that would be to ensure a dynamic and prosperous future for the agriculture industry.
We are already taking forward the recommendations of the Farming Regulation Task Force which will remove a range of unnecessary regulatory burdens from farm businesses. We are improving access to superfast broadband and the mobile network coverage in rural areas, which will make it easier for farm and rural businesses to operate. We have provided almost £57 million to the Welsh Government to ensure that broadband access is available to homes and businesses including the hardest to reach areas in Wales.
Some £100 million is being invested from the Rural Development Programme for England, which will help small rural businesses to improve their skills, facilities and competitiveness. We have also introduced a pilot of rural growth networks to share lessons learnt to stimulate sustainable economic rural growth.
This whole package of measures, together with the ending of a separate agricultural minimum wage, will support the agriculture industry in having a successful and competitive future, which will benefit all those who work in agriculture and the rural economy.
The abolition of the Agricultural Wages Board is supported by industry bodies, including the National Farmers’ Union, the Country Land and Business Association, the Tenant Farmers Association and the Association of Labour Providers. It is supported by independent professional advisers, such as the Central Association of Agricultural Valuers and the Agricultural Law Association. In view of the above, I hope that the noble Lord will feel able to withdraw his amendment and I commend the government amendments to the House.