Public Bodies Bill [Lords]

James Paice Excerpts

Tuesday 25th October 2011 Commons Chamber

[Mr Thomas]

My hon. Friend makes a good point, emphasising the one that I made about how it is surprising that so few Conservative Members are present.

Even Margaret Thatcher decided, in the end, that the AWB was too important to axe. Perhaps it would help the House if I gave two examples of the concerns about abolition that have been put to me. As my hon. Friend the Member for Hemsworth (Jon Trickett) said, had witnesses been invited to give their views on the Bill before the Committee stage, other Members might have had the opportunity to have direct conversations such as those I have had with the following two people. Richard Neville, from near Haywards Heath in Sussex, is on grade 4 of the AWB’s pay scale, reflecting his additional skills and experience—he has a craftsman certificate and a national certificate in agriculture. If the AWB were abolished, however, there would be no guaranteed protection of the extra wages reflecting his skills.

Richard Neville is particularly concerned about what would happen to overtime pay, which is currently paid at time and a half. He has to work one weekend in six and, obviously, considerably longer hours in summer over the harvest period. If he and those like him move jobs, what guarantee can the Minister offer that his new employer would offer him the same level of overtime pay? I would be happy to take an intervention from him, if he wants to get to his feet.

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

indicated dissent.

[Mr Thomas]

He does not—perhaps a glaring example of what the reality will look like.

My second example is Steve Leniec, from near Wantage in Oxfordshire, who is paid a craftsman’s rates and whose concerns are about the downward pressure on farm workers’ wages, which abolition of the AWB will drive. The House knows that unemployment is high at the moment, and his perfectly reasonable and understandable fear is that wages will slowly drop when the AWB is abolished.

--- Later in debate ---

[Mr Paice]

We have had a number of speeches on these new clauses and amendments which I shall try to address. I have to say that for the hon. Member for Harrow West (Mr Thomas) to say that the abolition of the Agricultural Wages Board is a major issue in the countryside demonstrates a serious lack of understanding about the issues that face the countryside. For the Opposition to talk about rural poverty after 13 years in office in which rural poverty got worse and worse year by year, with nearly everything they did being an attack on rural communities, smacks of hypocrisy.

I am one of those, and I suspect there are others in the House, who has at some stage had their wages set by the Agricultural Wages Board. I am not quite going back to 1948, but getting close to then. However, I recognise that the world has changed. Back in 1948, there were tens of thousands, if not hundreds of thousands, more farm workers. Most of them were horsemen, because horses were the main force of traction in those days. The world has moved on. Farm workers are not the forelock-tugging yokels that many Opposition Members seem to think.

[John Mann]

That is an insult.

[Mr Paice]

It is not an insult. If it is an insult, it is an insult to Opposition Members who have been using that sort of analogy to show the relationship between modern-day farmers and their work force.

[Mr Kevan Jones]

I do not think that I was doing that, but is the Minister really telling the House that, if the Agricultural Wages Board is abolished, farmers—I understand that he was a farmer before he was a Minister—will drive up wages, rather than driving them down?

[Mr Paice]

The market is what will affect wages. That is the reality of how wages are set in every other—[Interruption.] The hon. Member for Harrow West and the hon. Gentleman told us everything that happened after the abolition of the other wages councils and boards. I would take much more seriously all the remarks that we have heard from Opposition Members if they had recreated a single wages council or board in their 13 years in office. They did not do that, and that is why—[Interruption.] The hon. Gentleman says, “The minimum wage.” Yes, we support the minimum wage, and we have got it now.

[Mr Jones]

The Minister argues that wages should be left to the market. Is he therefore suggesting that there is no need for the Low Pay Commission and the minimum wage? That is the ultimate conclusion of his logic.

[Mr Paice]

The hon. Gentleman knows full well that that is not what I said. This group of amendments deals with not only the Agricultural Wages Board, but the Commission for Rural Communities.

[Huw Irranca-Davies]

Will the Minister give way?

[Mr Paice]

I will give way to the hon. Gentleman because I respect his integrity and his contribution on these issues in the past, although I did not agree with everything that he said.

As the hon. Members for St Ives (Andrew George) and for North Durham (Mr Jones) said, new clause 7 would transfer the Agricultural Wages Board’s powers to the Low Pay Commission and establish an advisory board of employees and employers to advise the commission. Clearly, amendment 32 would strike the whole issue from the Bill. Both provisions would continue the separate minimum wage regime for agricultural workers, although the mechanism would be different.

[Huw Irranca-Davies]

I want to shed some light, rather than heat. Of course, one of the Agricultural Wages Board’s functions relates to sick pay. How much is the statutory sick pay for grade 1 and grade 2 workers? How much would it be if the board were not there?

[Mr Paice]

All workers will have exactly the same entitlements as they currently have. Other hon. Members have made the point—I was going to make it later, but I emphasise it now, because there are a lot of myths about—that the Bill will not affect anyone in their current employment. They will be protected by their current terms and contract of employment, whether in relation to rates or conditions of pay.

[Mr Thomas]

Will the Minister clarify something that he said? If an existing worker moves to a different job after the Agricultural Wages Board has been disestablished, what protection will there be for his overtime rates of pay?

[Mr Paice]

Clearly, the worker will negotiate with his putative new employer. [Interruption.] I will be more objective: the real world says that that worker is unlikely to move to someone who will pay him less than the job that he is leaving. That is the reality.

[Gavin Shuker]

rose—

[Huw Irranca-Davies]

Will the Minister give way?

[Mr Paice]

I will give way, but I will make a little progress first.

I need to emphasise that this is not some secretive plot, as some people would suggest—[Interruption]—or even an open one. Let us not be pedantic. It is not some plot to drive down wages or conditions for agricultural workers; quite the reverse. For many years, there has been widespread employment protection for workers in other sectors of the economy through the national minimum wage regime and working time regulations. Agriculture remains the only sector with a separate employment regime. The terms and conditions and the way that it operates are outdated and gold-plate the provisions of the national minimum wage legislation and working time regulations. There is, therefore, a heavy regulatory burden on employers, and we believe that it is hampering the industry from creating jobs and damaging long-term prosperity and sustainability.

The regime that we seek to abolish dates back to the bygone era that I referred to. It does not relate to today’s widespread legal protections. It no longer reflects modern employment practices. As has been mentioned, it discourages the payment of annual salaries, which is difficult for workers because they have no control over their own financial planning. By contrast, the national minimum wage legislation provides for the payment of annual salaries. I emphasise that all our evidence shows that the vast majority of agricultural workers are paid above the level dictated by their Agricultural Wages Board grades.

[Mr Thomas]

The Minister says that there is a whole series of new, modern employment protections. I ask him again to draw the House’s attention to which one of them will protect workers’ overtime pay in the situation that I described in my previous intervention.

[Mr Paice]

Anyone in a post at the moment is protected by their contract of employment. Anyone who changes jobs—and whose contract therefore is no longer valid—will have to negotiate, just like in any other sector of the economy, and the hon. Gentleman was part of the Government who did not change that system.

[Mr Thomas]

Pay will go down.

[Mr Paice]

It will not necessarily go down; it will react to the state of affairs.

[Huw Irranca-Davies]

The Minister is being generous in giving way, but may I probe him again on my previous question, because he did not address those who change contracts? Can he confirm that most people are entitled to statutory sick pay of £81.60? Under AWB grade 1, the figure is £153.30. Under grade 2, it is £274.86. If we abolish the AWB and people go on to new contracts on those terms—I can pull out other examples—they will have substantially diminished terms and conditions. That is the reality that the Minister is painting for us.

[Mr Paice]

The hon. Gentleman does not seem to grasp that, if someone decides to change their job in the future, they will obviously want to take into account what terms and conditions the alternative is offering them. I will not dispute his figures, because they are the ones laid down at the moment, but anyone changing jobs will want to consider the options available to them.

[Mr Kevan Jones]

The Minister has just referred to agricultural wages being gold-plated. What does he consider to be gold-plated about the wages paid to agricultural workers?

[Mr Paice]

I was referring to the wages order, not the wages themselves. The Agricultural Wages Board structure is gold-plated. As other hon. Members have mentioned, the reality is that a lot of agricultural wages order measures go way beyond what is laid down in statute for any other walk of life or sector of employment.

[Mr Anderson]

rose—

[Gavin Shuker]

Will the Minister give way?

[Mr Paice]

No; I will make some progress. I, too, heard the right hon. Member for Cardiff South and Penarth (Alun Michael).

[Andrew George]

I very much respect the Minister’s judgment. He argues that the Agricultural Wages Board represents a bygone age, but does he accept that the Conservatives supported the establishment of the Gangmasters Licensing Authority, which provides necessary additional regulation to protect agricultural workers. If he is predicting, as a result of the abolition of the Agricultural Wages Board, that wages and terms and conditions will not go down, can he tell the House this evening that he will confidently predict that they will either at least remain the same or, indeed, be more enhanced than they might otherwise be? [Interruption.]

[Mr Paice]

For once, I agree with whoever is shouting from a sedentary position. Of course no Minister can guarantee such things and it would be crazy for anybody to do that, but it is our firm belief that the overall employment situation in agriculture and in the fresh food sector will be enhanced by the abolition of the wages board.

The amendment proposed by my hon. Friend the Member for St Ives to transfer the powers and duties of the Agricultural Wages Board to the Low Pay Commission would mean the continuation of a dual regime, with consequent duplication of effort for employers. A transfer of the wages board functions to the Low Pay Commission would mean that there was still a separate employment regime for agricultural workers. There would be no removal of the regulatory burden on businesses and we would not achieve the simplification of legislation that we believe is necessary.

Moreover, if the Low Pay Commission were to be given powers to set an agricultural minimum wage rate, it would be difficult to argue why the commission should not extend those powers to set rates in other sectors—in other words, to return to the position before 1993. As it is, the Low Pay Commission does not have any statutory powers to set a minimum wage in any sector. It is an advisory body which makes recommendations to Government. The establishment of another advisory body to advise the Low Pay Commission, which the new clause would create, would introduce more bureaucracy, which is exactly what we are trying to avoid.

If the Agricultural Wages Board and agricultural minimum wage regime were abolished, the Low Pay Commission would be asked to consider evidence in the agricultural sector, as it does in other sectors. That evidence would be taken into account when the commission made its recommendations to Government on the rates for the national minimum wage. The national minimum wage rate would thus reflect the situation for agricultural workers. I have emphasised the point about retention of existing contractual rights.

The current evidence shows that for permanent workers aged over 21, well over half were paid well above the hourly minimum wage for the relevant grades in both 2009 and 2010. As in all other industries, agricultural workers with the right qualifications and aptitudes would continue to be able to command a premium. Lower skilled workers who were paid at or around the grade 1 agricultural minimum wage rate would be protected by the national minimum wage requirements. As has been mentioned, the lowest agricultural wage rate is just 2p per hour above the national minimum wage.

The Government would encourage industry representatives to work together to provide benchmarks for agricultural wage rates. As Members know, a non-statutory approach to wage setting works in many other industries, such as the construction sector, and although there are differences between the sectors, there is no reason why a similar approach should not work in agriculture.

I have discussed the matter with the National Farmers Union and urged it to introduce advisory levels of pay annually, in conjunction with the revisions to the minimum wage and annual levels of premium. The current premiums paid for grades above grade 1 are certain percentages above the basic grade. There is no reason why any employer who wants to employ somebody who they classify as a craftsman, a foreman or whatever grade they wish, cannot continue to use the minimum wage as the base for adding whatever premium they consider appropriate. The annual uprating of the minimum wage would be the opportunity for annual changes to agricultural wages.

In Committee and again tonight, there was considerable debate about the position of the Agricultural Wages Board in Wales. I accept that the Welsh Government take a different view. We are continuing to engage with them on the arrangements that should apply to agricultural workers in Wales.

Finally, the future of the board will be subject to public consultation, as required by the provisions of the Bill. We hope to consult before the end of the year. That will ensure that the consultation is widely advertised to meet the requirements of the Bill. Equally important and relevant to points that have been made tonight, an impact assessment and equality impact assessment will be published as part of the consultation.

That brings me to the issue of £9 million being taken out of the economy, which the hon. Member for Wakefield (Mary Creagh) said—well, it was broadcast this morning, but I suspect that, like me, she did not actually say it this morning—was per year. The figure of £9 million was one of a number of possible scenarios, but I will not take it back. It did originate from DEFRA, but it was not an official impact assessment. I do not dispute its origin, but the figure was £9 million over 10 years—less than £1 million a year.

[Mr Anderson]

Is the Minister telling the House that the measure will cost workers £9 million, when the AWB cost only £270,000, to quote the figures read out at the other end of the Chamber?

[Mr Paice]

The hon. Gentleman is mixing his figures. Nobody is disputing £270,000-odd as the annual cost of running the board. That is not the reason for abolishing it. The purpose of abolition, as we have tried to say, is to release the industry and free it up to increase employment opportunities.

[Mary Creagh (Wakefield) (Lab)]

I have seen a DEFRA impact assessment, which says that the cumulative impact of holiday pay and reductions in sick pay is £90 million over 10 years, which is where the £9 million a year net present value comes from. I am happy to send the Minister that document if he has not seen it yet.

--- Later in debate ---

[Mr Paice]

I am happy to debate that matter with the hon. Lady outside. [Interruption.] I do not have the document to hand and I am not in a position to dispute the point. I certainly do not wish to be responsible for misleading the House.

On the second part of this group of amendments about the loss of an independent voice for rural communities, the Government have clearly stated that they are firmly of the view that democratically accountable Ministers should take responsibility for policy functions. A single centre of rural expertise, the rural communities policy unit operating within DEFRA, has already been able to engage more effectively since it was started earlier this year. It is already established.

In response to two points made by my hon. Friend the Member for St Ives, I should say that the commission has not been legally disbanded. That is part of the proposal in the Bill. The rural advocate’s post to which he referred is not a statutory post. It did not require any legislative change.

The work programme of the rural communities policy unit will shortly be published on the DEFRA website and the unit will be using a range of methods to provide public updates about progress and impact. I emphasise that we believe it is DEFRA Ministers who are primarily responsible for ensuring that rural issues are championed within the whole of Government. There are many rural commentators and independent organisations who already advocate strongly, work to us and see us regularly, and all of us are Ministers with strong rural backgrounds. It is our job to be accountable to Parliament for the way that we fulfil our role as rural champions. We will publish various documents and policy proposals over the coming weeks and months to demonstrate clearly that we understand the real needs of rural communities.

I am pleased to say that the Environment, Food and Rural Affairs Committee has indicated that it will wish to scrutinise the work of the rural communities policy unit. The Government welcome that as further evidence of the importance that many in this House and in the other place attach to the interests of rural communities.

[Mary Creagh]

I thank the right hon. Gentleman for giving way. I want to apologise for misleading the House earlier. The total loss to agricultural workers is in fact £93 million over 10 years.

[Mr Paice]

The House will have heard the hon. Lady’s apology.

If new clauses 8 and 9 were agreed to, we would create two new statutory bodies, an office of rural affairs and a rural advocate, both of which would be responsible for exercising the advocacy, advice and watchdog functions currently undertaken by the CRC. Instead of moving towards a single source of rural expertise, we would be funding two new organisations to gather evidence of rural impacts and to seek to bring about changes in policy, which would be a muddled arrangement, and, if anything, replicate and extend the duplication of functions that we seek to address.

We have had a long debate. I am conscious that other Members want to move on to other issues. There are other things that I could say about rural communities, but suffice it to say that we have a Government and a Department that passionately care about rural communities, and in that light I ask my hon. Friend the Member for St Ives to withdraw the new clause.

[Andrew George]

I am conscious that we have still to debate the Youth Justice Board and S4C, so I will not detain the House unnecessarily. However, I should like to respond to the Minister’s comments on the new clauses and his comments on the Commission for Rural Communities. New clauses 8 and 9 were mutually exclusive, so they would not both have to be agreed to. I appreciate that they may not be sufficiently technically adequate to achieve my objective, but the Minister must accept the need for some independent, out-of-Government advocate, and I hope that some overarching brief to maintain the rural perspective is a debate that we can still have, as the Minister acknowledges that the issue requires affirmative resolution following this enabling legislation.

I will not respond to all the Minister’s remarks on new clause 7, which dominated the debate, but he predicted that it would not drive down wages and conditions, and I respect his judgment. That is obviously a brave prediction, but when I asked whether he could predict that it would at least protect and result in the exceptional enhancement of agricultural workers’ wages and conditions, he could not provide that reassurance. I am pleased that in the past Conservatives supported the very necessary legislation to establish the Gangmasters Licensing Authority. The Minister said that this reflected a bygone age, but the bygone age is one before gangs and gangworkers were brought in and exploited in the manner in which they have been. That issue has been addressed, but agricultural workers are still very much present. After the abolition of the Agricultural Wages Board, should that proceed, it is predicted that we still need to attract another 60,000 agricultural workers over the next 10 years, which will be a challenge indeed.

I accept that new clause 7 is technically deficient, but I still believe that the Government should reflect on the proposal to bring responsibility for the enforcement of the regulations under another body such as the Low Pay Commission. Given that we are not making the decision today to abolish the Agricultural Wages Board, we have had a good debate and there are other matters for consideration, so I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.



New Clause 11

Youth Justice Board powers and responsibilities in relation to Wales

‘A joint committee shall be established to oversee the exercise of powers and responsibilities relating to youth justice jointly between the Youth Justice Board and Ministers of the National Assembly for Wales.’.—(Alun Michael.)

Brought up, and read the First time.