Gangmasters Licensing Authority

David Hamilton Excerpts

Tuesday 21st February 2012 Westminster Hall

[Mr David Hamilton (Midlothian) (Lab)]

I congratulate my hon. Friend on securing the debate. Does not the GLA’s success mean that the problem is being moved across to the construction industry? A major problem is that there is no regulation in the construction industry to match the regulation that the GLA provides for other industries. Therefore, there is a good argument to say that the GLA should be expanded to cover the construction industry. That would help to deal with the industry that has the highest rate of accidents in the UK.

[Ian Murray]

I am grateful to my hon. Friend for raising that point. He has a private Member’s Bill on extending the GLA’s remit to construction workers, but because it is low down on the Order Paper, it will never be passed. I hope that the Minister will say in his response whether the Department for Environment, Food and Rural Affairs will examine the possibility of extending the GLA to cover other areas. The forestry and agricultural industries are becoming more regulated, gangmasters are becoming licensed, and the GLA has been successful, but there has been a migration of exploited labour into other parts of industry. I may mention that later.

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[Ian Murray]

I was about to come to that. I agree that that seems inherently contradictory, but the key fact about the Gangmasters Licensing Authority sitting in DEFRA is that it is there to do a particular job, which it is doing rather well. Moving the GLA from DEFRA to BIS would be putting it into a Department that is looking at deregulation and is running the red tape challenge. A previous Under-Secretary at BIS—now the Secretary of State for Energy and Climate Change—has made clear remarks about where the GLA should sit and what its function should be. Indeed, he initiated the Macdonald report, which recommended a light-touch regulatory approach. If the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Newbury (Richard Benyon) commits the Department at least to examining the extension of the powers of the GLA, there might be an argument about which Department it would sit in, but my point is that in this particular confusion, DEFRA is the best place for the GLA to sit. Moving it to BIS would merely be an act of deregulation, rather than showing support for an organisation that is prone to be hugely successful.

Will the Minister at least examine the possibility of not diluting the GLA, but extending it to other areas? We have heard about similar problems of exploitation and unlawful practices in construction, the social care sector and hospitality. There is evidence that the limited GLA remit has led to the displacement of rogue operators from GLA sectors into other parts of the labour market—the point made by my hon. Friend the Member for Midlothian. The Trades Union Congress has identified a strong case for extending the GLA licensing scheme, a view shared by the Select Committee on Home Affairs in its report on “The Trade in Human Beings” back in 2009.

There is also support for an extension to the GLA’s remit in the business community; that is critical to where the GLA currently sits in the Government’s thinking. Nearly three quarters of the gangmasters who responded to the 2008 survey by Liverpool and Sheffield universities, which I mentioned, said that the GLA scheme should be extended to other sectors—either to all sectors, or especially to the construction and hospitality sectors. That is significant, because many gangmasters operate in other sectors that are not subject to GLA regulation, most notably non-food manufacturing, distribution, cleaning and construction. Good business wants a level playing field, which can be delivered only by dealing with this contemporary slavery.

Recently, controversy has surrounded areas that the GLA has looked at, such as dairy farming, but the courts have recognised that, again, it is clearing up the supply chains. There is also a strong view that forestry should be removed from the GLA remit, but does that not provide a reason to allow the GLA to follow the evidence of gangmasters into any industry? I pose that question to the Minister. That way, gangmasters, rather than the industry, become the issue. Let the evidence follow the crime, if the evidence is there to investigate.

[Mr David Hamilton]

May I draw attention to my hon. Friend’s point about the support of the Scottish Trades Union Congress and the TUC? There is other support, too; the Select Committee on Work and Pensions took evidence in Midlothian many years ago, and the construction industry was represented there. It felt aggrieved about what was happening. Good, honest employers are having to compete against some unruly organisations, and they feel that they are in a deficit position as a result. It is important that we recognise that good employers also want regulation.

[Ian Murray]

Absolutely. I could not agree more with my hon. Friend. His private Member’s Bill, which I have already mentioned, looked at similar aspects of the construction industry. The critical point is that good businesses want good regulation—this is not about the amount of regulation—to clean up the sector, so that those good businesses benefit, as they deserve to benefit. As my hon. Friend said, “unruly organisations” and employers can then be rooted out, protecting not only workers but the industry. That is key, and it is why supermarkets have been so keen to work in partnership with the GLA, to bring that together.

May I summarise for the Minister some of the questions to which I would appreciate an answer? I am grateful for his presence—the Minister with responsibility for the GLA is otherwise engaged. Will he at least guarantee that there will be no watering down of the GLA regulation and enforcement powers? Will he keep resources in place, because the GLA is needed more now, in tough times, than in better times? Will the ministerial team at least examine the evidence for the GLA going into other sectors and, perhaps, following the evidence, rather than dealing only with particular sectors? Will the Minister look at the potential for more flexibility for the GLA, perhaps making it self-financing or providing it with the powers to examine other industries in less stringent terms, so that it looks not just at criminality? For example, I mentioned the dairy farmers: a slap on the wrist might have been more appropriate than a proper criminal process in that case.

There is widespread evidence that the GLA and the licensing system have been effective in raising standards in the fresh food processing sector, and other sectors covered, and in protecting some of the most vulnerable workers in the United Kingdom. The confusion and uncertainty on the part of the Government are not helpful, and the red tape challenge has proven that confusion can reign in such matters. Finally, let me return to where I started: the Gangmasters Licensing Authority was set up on the back of a horrendous tragedy. Any reduction in the remit of the GLA would put vulnerable workers at risk of exploitation, modern slavery and perhaps even death. Let us not scrap something that works.

[John Pugh (Southport) (LD)]

I congratulate the hon. Member for Edinburgh South (Ian Murray) on securing this important debate.

I also congratulate the hon. Member for Paisley and Renfrewshire North (Jim Sheridan), who is present and who was responsible for the original proposals, which went through the House of Commons and into legislation. I followed and supported his private Member’s Bill, turning up on a few Fridays to ensure that it ran the course. That might seem strange, because I represent a seaside constituency, but it is one that has a large agricultural hinterland. It was obvious to me, when he was promoting his Bill, that something needed to be done. I was acutely aware of a number of workers whom I saw around the town who were there illegally or were trafficked—they were certainly not treated at all well. In many cases, they were appallingly housed. In one celebrated case, a large number of Russians were found in a big house in Southport in conditions resembling the black hole of Calcutta. Those who were better housed might still be extraordinarily badly treated, with their rent often deducted from the pittance they were paid; every conceivable regulation for houses in multiple occupation was violated by gangmasters who often owned the property concerned.

It was also apparent to me at that time that there was some criminal involvement. Conversations that I had with the police and immigration authorities indicated that that was indeed the case. Clearly, from conversations that I had with valid employment agencies operating properly within the law, the situation was also a considerable restraint on their trade and was a problem in the labour market. As the hon. Member for Edinburgh South said, such people were breaching the law not only by using illegal labour but by not paying full taxation or proper national insurance. It was rather puzzling, when looking at the accounts of some large agricultural suppliers, as to how much they managed to get done with so few people seemingly employed on the books. That was before the Morecambe bay tragedy, which focused people’s minds on the seriousness of the issue and on how right the hon. Member for Paisley and Renfrewshire North was to bring it to our attention. Had people acted sooner, we certainly would not have had that tragedy.

I had a foretaste quite recently of what might still happen in the absence of a similar piece of legislation. Southport has a long history of shrimping, but we had a bonanza—almost a freak of nature—of cockles and other shellfish quite recently. It was a sudden surge, perhaps because of some tidal movement. However, it became well know that in the northern part of the constituency an awful lot of money was to be made from prestigious restaurants by going there quickly, taking appreciable risks and obtaining what was there. The local authority took the matter under control very effectively, but it was obvious in the circumstances that many strange people were suddenly showing up in town, and were prepared to take appreciable risks on behalf of themselves and those they employed in trying to obtain a quick financial return.

I wholly support the thrust of the legislation. As the hon. Member for Edinburgh South said, it prevents a number of wholly undesirable activities. It prevents people from being treated badly, and prevents abuse of health and safety legislation. It even saves lives. It is not an underestimate to say that lives would be put at risk in the absence of proper supervision of the gangmaster business. It certainly ensures that more taxes are paid than would otherwise be the case, and it goes a long way towards cleaning up the supply chain, which has been fairly murky in the past. I have no real evidence for this, but I am fairly confident that supermarkets were receiving vegetables that had been provided through gangmaster chains that required some inspection, to say the least.

At the moment, the Government are against red tape, as we all are. No one makes a case for red tape. The issue is what is meant by red tape. There is no clear definition. I am told by people in the Department for Transport that they were asked to look at traffic regulation orders as a sample of red tape, which shows how vague and blurred the definition is. If it means over-regulation and unnecessary regulation, we are against it in principle, but what we are discussing is not an example of that. There is clear evidence that an authority such as the GLA is needed, and I would be sorry to see it abolished.

The hon. Member for Edinburgh South has made a case for an extension of the GLA’s remit, and I am slightly wary of that. He drew a valid distinction between dealing with gangmasters as an industry-specific issue, and dealing with them in terms of the business model involved. My instinctive preference is to look at the industry-specific aspect.

[Mr David Hamilton]

I draw the hon. Gentleman’s attention to the construction industry. Many foreign companies come to the UK and bring their employees with them. The very problem of employment and accommodation to which he referred exists here now. Such companies give with one hand, and take away with the other. They pay wages to their employees, but then increase the rent for their accommodation. That happens now in the construction industry, and it goes against local British firms that are trying to get into the market and do a fair job with people they care about: their employees. The regulations should apply to foreign employers, and ensure that exploitation does not happen.

[John Pugh]

The hon. Gentleman has slightly anticipated me. There is a prima facie case in the construction industry, and there has long been a history of gangmaster behaviour, which used to be called the lump. Building firms sometimes employ people as a gang instead of employing them individually to avoid some of the penalties that might be incurred because work on a building site is intrinsically risky. A construction firm might incur liabilities, but sometimes, by arrangement, they fall on the gangmasters, who accept no ultimate liability whatever.

There is a decent case for including the construction and agriculture industries, but it becomes more difficult in the catering industry, which the hon. Member for Edinburgh South mentioned. We seem to be moving into territory where we may be imposing on an industry regulation that, strictly speaking, is unnecessary.

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[Mr David Hamilton (Midlothian) (Lab)]

I will not take up much time, Mr Dobbin. I did not intend to speak, because the previous contributions were so good, but I would like to make one or two points. We all come to the House with our own experiences from the lives that we led before becoming Members of Parliament. That is one of the characteristics that is strong in Parliament. I came here with nearly 20 years’ experience as a coal miner. The comparisons between the mining industry and the construction industry are stark. They are very similar, in that the numbers of deaths and injuries in each are extremely high. Like my hon. Friends the Members for Birmingham, Erdington (Jack Dromey) and for Paisley and Renfrewshire North (Jim Sheridan), who spoke before me, I do not lean away from regulation. Regulation saves lives in many areas, and the construction industry is one of the areas that I believe is very important.

I take the point made by my hon. Friend the Member for Edinburgh South (Ian Murray), who initiated the debate, that the GLA should follow the evidence that comes forward. I will just make one or two observations. When I was unable to get my private Member’s Bill through—technically, it is still there, but I think that I am about 120th or so in the list—among the examples that I intended to raise was Pure Recruitment Solutions, based in Glasgow. Its licence was revoked in 2008. However, the company still operates and provides labour to a number of sectors, one of which is construction. The same is true of Prestige Recruitment Ltd. Its licence was revoked in 2007, but it still operates in a number of sectors, including construction. It is also true of Victor Wolf Ltd, which lost its licence in January of last year, and of ASAP Recruitment, which lost its licence the year before. It still works in various sectors, but not in agriculture.

The fact is that we close companies down in one sector and they re-establish themselves in another. I refer to construction unashamedly, because I strongly believe that the number of deaths and serious accidents in the construction industry can be reduced if regulation is applied. The regulation is supported by the representatives of the workers and by the honest employers in the construction industry. I meet them regularly, as other hon. Members must. People can go round the businesses in my area, where the building sites and so on are. Subcontractors are, by nature, local firms. However, in many cases, the subcontractors are being squeezed out of the market simply because labour is being brought in from other places. Bed and breakfast is included for those workers; their board and so on is included.

I remember my father telling me about the situation in the mining village of Newtongrange. Images of it can be seen in the Scottish mining museum. I am talking about a time just before the second world war. A person called Mungo Mackay owned all the houses in Newtongrange. He was also the coal owner. He gave the miners a rise and then put the price of bread up in the shops and put the rent up. It was a case of giving with one hand and taking away with the other.

The people who are being exploited today are the foreign workers who come in, but the situation is also completely unfair to local employers. It is about time that we recognised that if we want to make progress in this country and create an environment that is worth working in, we must ensure that the honest employers are protected and protect the workers at the same time.

I wanted to make one or two points, because the 2004 Act is under threat. We should be looking at extending the Act, not reducing it. We should be ensuring that we protect British workers. Disasters happen because of a sequence of events. I fear that one of these days there will be a disaster in the construction industry and then people will be concerned. I was part of the Bill that went through Parliament; my hon. Friend the Member for Paisley and Renfrewshire North allowed my name to go down. I question whether the Bill would have been able to go through if the disaster in Morecambe bay had not happened. The reason why it received support across the board was the disaster that happened at that time. If it had not happened, there might have been difficulties in getting the Bill through. I do not want the same to happen in the construction industry. There are deaths and serious accidents in the construction industry on a regular basis. The numbers will grow if employers are unregulated. They will exploit that avenue. We should not be allowing that to happen.

[John Pugh]

In the run-up to the Olympics in Athens, many lives were lost on the building sites. In the run-up to the Olympics in London, no such event or no event of such a size has taken place. Does that not help the argument that regulation on British building sites is at any rate better, if not good enough?

[Mr Hamilton]

There were a number of reasons for that. I can give the example of the headquarters of the Royal Bank of Scotland—admittedly, that is not the best subject in the world to be talking about at present. Only one accident happened there, and the reason why only one accident happened was that at the beginning the contractor who got the contract sat down with the work force and the trade union movement and agreed with all the subcontractors a strategy whereby accidents were unacceptable. The problem is that very few employers of that magnitude take that view. That employer did it, and better than that, it was able to prove that the contract came in under budget and under time.

Let me contrast that with the Scottish Parliament. The Bovis company was running things at the Scottish Parliament. If someone walked on to the Scottish Parliament building site, they would hardly find an English-speaking worker, yet the signs were all in English. They had to go to serious classes and there were a number of accidents at the Scottish Parliament.

There are good employers and there are bad employers. I do not criticise all employers. However, if we un-regulate or do not regulate and employers recognise that there is a gap, they will go to that gap.

[Jim Sheridan]

We have been exceptionally lucky not to have had a Morecambe bay disaster on the Olympic site, but we cannot forget the fact that the number of deaths in the construction industry is rising. We must keep that at the forefront of our minds.

[Jim Dobbin (in the Chair)]

Mr Hamilton has one minute left.

[Mr Hamilton]

I will just add this, Mr Dobbin. The other side of the coin is that every serious accident is one step away from a death. It should be recognised that the number of deaths could increase quite dramatically. I am an ex-miner. I recognise that disasters happen because of a sequence of events. I do not want such a sequence of events to happen in the construction industry, and one way of ensuring that it does not is by telling bad employers, “You’re not welcome.”