Gangmasters Licensing (Extension to Construction Industry) Bill

Ed Davey Excerpts

Friday 3rd December 2010 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

I congratulate the hon. Member for Midlothian (Mr Hamilton) on securing parliamentary time for his Bill. I recognise the depth of his interest in health and safety matters and in securing decent working conditions. Obviously he had a track record in this area before he came to this House, and it was a pleasure to meet him to discuss his Bill prior to today. I hope that I have a few things to say to him in the time that is left to me—

[Mr David Hamilton]

Sit down.

[Mr Davey]

The hon. Gentleman tempts me to sit down, but I will not be doing so quite yet because it is important to put the Government’s position on the record. I wish to say a few things that I think will have made his efforts worth while.

This Government, too, are committed to improving health and safety, particularly in construction, to ensuring fairness in the workplace and to encouraging and raising levels of compliance with workplace rights, in the construction sector and elsewhere. Where we differ with the hon. Gentleman is on whether licensing would be an effective solution to problems in the construction sector. Of course, licensing has its place as a tool in the regulatory arsenal. It is used in relation to labour providers in agriculture and food processing, as he said, and there are other examples too. However, licensing is an expensive and untargeted system of regulation. It burdens all with fees and inspections—the good and the bad alike—and with the risk that the worst businesses evade licensing altogether. Licensing can be an appropriate response to particular problems in particular sectors, but that does not mean it is appropriate in all cases.

[Andrew Bridgen]

I declare an interest, as I am a major shareholder in a food processing business in my constituency. North West Leicestershire is a major provider of building materials and is the base for many large construction companies, as hon. Members are perhaps aware. There is a huge difference between the agricultural and food processing industry and the construction industry, and therefore in the regulatory burden that those industries can carry. The food and food processing industry is a non-cyclical business—parts of it can even be counter-cyclical—and has been almost unaffected by the economic downtown, whereas we know that we cannot say that of the construction industry. I am very worried that any further burdens on the construction industry at this particular time, when it is struggling to deal with the effects of the last recession, could be particularly burdensome. It is not fair to compare the construction industry now with the more resilient food processing industry.

[Mr Davey]

My hon. Friend is exactly right in his analysis of the construction industry and of how we use licensing as one of the tools to deal with everything from health and safety to fairness in the workplace. We need to consider the conditions that need to be met before something such as licensing is appropriate. We need to consider whether existing enforcement arrangements are inadequate; whether there is hard evidence of illegal activity; where a licensing system would be a proportionate and effective way of tackling the problems that are seen; and where licensing would be practicable, enforceable and, finally, affordable. The Government do not consider that those tests have been met for the construction sector.

There is a misapprehension in some quarters that employment agencies that supply labour to the construction sector are unregulated, and that workers are unprotected. In fact, regulatory safeguards are already in place for all agency workers, whichever sector they work in. For example, employment agencies operating outside the Gangmasters Licensing Authority’s sectors have to comply with health and safety and working time legislation enforced by the Health and Safety Executive. They must also comply with the national minimum wage regulations enforced by Her Majesty’s Revenue and Customs. In addition, they must adhere to special employment agency regulations enforced by my Department’s employment agency standards inspectorate—the EAS—which responds to complaints from agency workers, and carries out an additional programme of proactive, risk-assessed inspections each year.

On health and safety legislation and the work of the HSE in the construction sector, the hon. Member for Midlothian is rightly worried about health and safety, which is a big concern for the sector, but I am not convinced that a licensing system would improve the sector’s health and safety record. The GLA applies a range of licensing standards. The conditions for health and safety are intended to ensure agreement between the labour supplier and the hirer about who will have responsibility for managing day-to-day health and safety, including the preparation of risk assessments, but that is already clear in construction.

Under the Construction (Design and Management) Regulations 2007, the principal contractor has responsibilities for ensuring the health and safety of all individuals who work on a construction site regardless of their employment status. This includes directly employed workers, labour-only sub-contractors and the self-employed. In addition, each contractor working under the principal contractor has duties to every individual working under their control. Those duties are on top of the requirements that individual employers have to their employees. Duties of the principal contractor include the requirement to consult all workers involved in a project to ensure that the measures taken to protect their health and safety are effective.

[Gordon Banks (Ochil and South Perthshire) (Lab)]

I am listening to the Minister’s remarks with great interest. He has explained his position on why the GLA is not relevant to the construction industry, but will he expand on why he has changed his mind since signing early-day motion 1366 in 2009?

[Mr Davey]

I have considered all the issues that would have to be taken into account, such as whether it would be appropriate, proportionate and justifiable, and it is clear that the EAS does an extremely good job and that it deals with all the problems. Let me quote some of the statistics, which are worth bearing in mind. In 2009-10, there were 42 fatal injuries to workers in construction, with a fatal injury incidence rate of 2.2 per 100,000 workers per year. That compares with 105 deaths and a rate of 5.9 per 100,000 per year in 2000-01. Injury rates are also at an all-time low since the reporting regulations changed in 1995. That is done under the existing system. There has been some success and the previous Government should take credit for that.

It is clear that an extension of gangmaster licensing is not the way forward, but there is a case for taking a fresh look at our compliance and enforcement arrangements. As the hon. Member for Midlothian said, existing enforcement functions are undertaken by a number of bodies, including the EAS, HMRC, the GLA and the HSE. The Department for Environment, Food and Rural Affairs also has a role, in enforcing the agricultural minimum wage, but that will disappear with the proposed abolition of the Agricultural Wages Board as part of the public bodies review.

The single pay and work rights line has drawn those bodies closer together and has been a major step forward in creating a single port of call for workers who want advice or to report an abuse. It has also been a powerful spur to more joint working between the enforcement bodies, which are now carrying forward multi-issue cases together on a regular basis. However, the time is right to ask whether it is possible to build on the progress that has been made. I am therefore announcing today an intention to review the Government’s workplace rights compliance and enforcement arrangements to establish the scope for streamlining them and making them more effective. I hope that the hon. Gentleman will welcome that announcement. The review will be undertaken next year, when other priorities permit, and will be part of the wider rolling review of employment law being co-ordinated by my Department.

[Mr David Hamilton]

Who will undertake the review and who will be included in it?

[Mr Davey]

It will start in my Department and I envisage it looking at different ways of organising the Government’s compliance and enforcement work. It will consider whether incremental improvements can be made to encourage further co-ordination and joint working, such as better legal information sharing gateways and governance machinery, which would allow priorities to be discussed and set on a broader, cross-agency basis. I envisage it considering whether online and helpline employment law advice channels can be linked and streamlined. I also want it to look at the potential cost and operational benefits of enforcement models that would consolidate enforcement functions in a single body or fewer bodies.

The review will initially be carried out internally within the Government, as I said to the hon. Gentleman, but will involve meetings with key interested parties to solicit views and test thinking. My Department will publish a statement of initial findings and intended next steps next year in the context of progress reports on a wider employment law review—