Enterprise and Regulatory Reform Bill

Lord Bishop of Hereford Excerpts

Wednesday 6th March 2013 Lords Chamber

[Lord Whitty]

My Lords, what the Minister failed to mention is that the Government’s own best estimate, in the only document that they have produced on the effect of abolishing the Agricultural Wages Board, will be a direct cut of £240 million from the income of rural workers.

Our amendments would do some of the things that the Government are after: they would abolish the 31 bodies; they would allow for simplification and modernisation to the wages order; but, crucially, Amendment 83A keeps the legal underpinning of the terms and conditions of those who work in our agricultural sectors.

That figure of £240 million comes directly from Defra’s impact assessment, and it is its best estimate—there is a range, but that is its best estimate. The House is in some difficulty here because it should have more information. We are in a slightly bizarre procedural position because on the face of it the Government had the right to abolish the Agricultural Wages Board under the Public Bodies Bill. But, of course, under that Bill, after long and rather testy debate in this House, there are some very detailed procedures for implementing that abolition. They require much greater information, much clearer arguments, much better figures and much more effective consultation than the Government have coming forward. The Government are trying to cut corners by inserting their amendment into a piece of legislation that had already passed all stages in the House of Commons and which was not accepted in Committee in this House.

There may be good reasons why the Government are trying to change tack. One is that they have problems with the Welsh Government—this is England and Wales legislation. The Welsh Government, like their counterparts in Scotland and Northern Ireland, want to maintain statutory minimum standards in the agriculture sector. Of course, it is also convenient for the Government that they have not been required to come forward with that kind of information. They have not presented us with any alternatives; they have simply come forward with a proposition for abolition. The House would be entitled to say to the Government that we are not prepared to consider this government amendment until the equivalent of Section 11 of the Public Bodies Act is before the House. Clearly, the Government are not prepared to go down that road.

I will say a few words about the nature of the agricultural workforce. Of course, the Minister is right that it has changed since 1917 and 1948, but we are left with an agricultural work structure of a lot of relatively small businesses that employ one, two, three, perhaps six, permanent staff and parts of a sector that employ large numbers of casual workers on a seasonal basis. There is no other sector in the whole of the economy that is like that. There is no other sector, therefore, that requires the kind of legal protection that until very recently all parties in the industry and all parties in the House recognised was important.

Moreover, the Government’s analogy is quite wrong. The Agricultural Wages Board specifies a whole wages structure and a whole career structure for workers in the agricultural sector. It does not simply specify a minimum wage, like the national minimum wage; nor is it the same as most of the old wages councils, which simply specified a basic rate rather than the whole range of conditions required within the agricultural sector, which will be difficult to achieve without some legal underpinning by normal methods of collective bargaining either nationally or by agreements between individual farmers and their own workforce—something that would often be very difficult for both sides to accomplish.

The Minister claims that this is a great removal of burdens on small farm businesses, but the operation of the board has in many cases been of great benefit to small farmers. In the consultation—such as it was; it was only four weeks’ consultation, whereas most people are required to go through three months, and it was only one week in Wales—a significant number of small famers said they wished to retain the Agricultural Wages Board because that meant that once a year they knew what they were going to pay their staff and they did not have to go into embarrassing and lengthy detailed negotiations with their own two or three employees. Therefore, the burden of administration on the farmers is actually less under the Agricultural Wages Board than it will be if the Minister gets his way and it is abolished. In the evidence, there are a large number of small famers saying precisely that, ranging from the West Country to Yorkshire to Norfolk.

The impact assessment also says that the effect on farmers’ incomes will be a significant improvement. In fact, it has that down as the reciprocal of the cut in the agricultural workers’ wages. But the reality is that a lot of those famers will never see that money, or will only see it temporarily. The wage cut for workers will almost certainly end up being of benefit to the supermarkets. It is very interesting that in the consultation nearly 40% of the replies are from the horticultural sector, which employs the mass amount of casual, unskilled labour and which deals directly with the supermarkets. Even more tellingly, the strongest supporters in the rest of the food chain are the Fresh Produce Consortium, whose dominant members happen to be Tesco, Morrisons, Asda and Marks & Spencer.

The reality is that once the supermarket buyers hear that the Agricultural Wages Board and the minimum rates have been abolished, they will go back to their farmers and suppliers and say, “We want a cut in the prices that we are giving you”. The reality is that whatever burdens the Minister claims will be removed from small employers, many of whom do not accept that, the money will not come out of the pockets of farm workers and into the pockets of the farmers, it will go out of the rural community entirely and into the pockets of the supermarkets.

This is a very dangerous move and one that we certainly could not support. There is little in what the Minister said tonight with which I can agree. There is little in what his supporters in Committee, who were in the minority, brought to bear. They said, “In my area, on my own estate, on my own farm, people I know pay a lot more than the minimum wage”. Of course they do. It is a wages structure. A lot of employers pay more than the minimum. But once you abolish the floor, the whole wages structure starts coming down. The impact assessment which the advisers of the department of the noble Lord, Lord De Mauley, Defra, and BIS had before them makes it quite clear that the best estimate is that this will be nearly £250 million out of the pockets of relatively low-paid agricultural workers. It is a disgrace, frankly, that the Government are proposing this. It is a disgrace, in some ways, that the NFU has changed what has historically been its position in support of the board to pressing for its abolition and, in so doing, does not represent the views of many small farmers.

Our amendment would allow simplification and modernisation. It would allow the abolition of the 31 quangos to which the Minister has referred, which would give Defra a few brownie points on the Cabinet Office’s scorecard of the quango cull. The abolition of the wages board, however, is a different matter. It will bring distress to rural communities, a cut in income to rural workers and will do nothing for the farmers and the agricultural sector of this country. I beg to move our amendment to the Government’s amendment.

[The Lord Bishop of Hereford]

My Lords, I thank the noble Lord, Lord Whitty, for his clear and eloquent statement on why it is essential not to abolish the Agricultural Wages Board, and why it is therefore vital that as a House we support this amendment of the Government’s amendment.

It is noteworthy that the wages councils were established by Winston Churchill in 1909, and he spoke of the need for them in these words:

“It is a serious national evil that any class of His Majesty's subjects should receive less than a living wage in return for their utmost exertions … where you have what we call sweated trades, you have no organisation, no parity of bargaining, the good employer is undercut by the bad, and the bad employer is undercut by the worst; the worker, whose whole livelihood depends upon the industry, is undersold by the worker who only takes the trade up as a second string … where those conditions prevail you have not a condition of progress, but a condition of progressive degeneration”.—[Official Report, Commons, 28/4/1909; col. 388.]

That may not be quite the language that we would use today. It is language from 100 years ago, but they are still salient points. Indeed, these underlying principles and thinking have led to a minimum wage and then a living wage.

When other wages councils were abolished in the 1980s, the Government chose to keep the Agricultural Wages Board on the grounds that the industry required some central oversight to prevent wages being driven down unacceptably. In order to consolidate and build upon the progress achieved in terms and conditions during the past 30 years, we need to retain and further develop, and update, the Agricultural Wages Board, not abolish it.

The NFU has criticised the cost and provision of the AWB claiming that it is a,

“bureaucratic irrelevance since the advent of the Minimum Wage”,

and pointing out that the gap between the national minimum wage and the basic agricultural wages order minimum is only tuppence. However, the AWO also, of course, lists six different grades, to which we have heard reference made, with levels to be paid according to responsibilities, qualifications and the nature of the work in question: a salary structure.