Enterprise and Regulatory Reform Bill

Lord Whitty Excerpts

Wednesday 16th January 2013 Grand Committee

[Viscount Younger of Leckie]

The Agricultural Wages Board and Agricultural Wages Committees were set up in their current form nearly 65 years ago. The board was established at a time when there was little statutory employment protection for workers. Today the situation is very different and all workers are protected by the National Minimum Wage Act and working time regulations. Before I proceed any further, I want to reassure noble Lords that this Government firmly support the national minimum wage.

The Agricultural Wages Board is the only remaining sector wage council—all others have now been abolished. There is now no compelling reason why the agriculture sector alone should continue to be subject to a separate statutory employment regime. Let me explain why.

The agriculture industry today is very different. First, such businesses are often not just dependent on agriculture. Technological developments and increased mechanisation mean that there is no longer such dependency on manual labour in order to carry out agricultural functions. This has enabled businesses to expand and take on other, complementary work. The sectors within agriculture are therefore becoming increasingly diverse and many farm businesses now carry out non-agricultural activities alongside more traditional farming enterprises—for example bed and breakfast, and farm shops, where workers would not necessarily be covered by the agricultural wages order.

The agricultural wages order, which is made each year by the Agricultural Wages Board, takes no account of these changes within the agriculture industry. The process is one of “one size fits all” and this imposes a rigid and no longer appropriate structure on what are in reality nowadays myriad businesses that come under the umbrella term of “the agriculture sector”. The order is overly complicated and its provisions are wide-ranging and restrictive, hampering the ability of the industry to offer more flexible, modern employment packages. These amendments will end the separate statutory employment regime for agricultural workers in England and Wales and make amendments to the National Minimum Wage Act to bring the agricultural industry within the scope of the national minimum wage. The Government will also make amendments to secondary legislation to ensure that agricultural workers are adequately protected by the working time regulations.

The abolition of the Agricultural Wages Board and the associated agricultural minimum wage regime will enable farmers to offer terms and conditions for new workers that suit their particular circumstances and take account of the requirements of the specific farming sector. They will also be able to agree more flexible terms with existing workers by mutual consent. It will make it easier for farm businesses to employ workers, including taking on new workers, and encourage longer-term employment, thereby boosting growth and creating job opportunities.

The abolition of the Agricultural Wages Board will also mean that a single employment regime applies to all types of activities. This will bring transparency for both employers and workers, which is increasingly important given the diversity of farm businesses, not least in the interests of fairness and as the distinction between agricultural and non-agricultural activities becomes blurred. Even within the agricultural sector there can be confusion as to whether activities are covered by the agricultural wages order. For example, where a business packs and trims salad produce that is both grown on the farm and bought in, the packing of the home-grown produce is covered by the agricultural wages order, whereas the packing of the bought-in produce may not necessarily be. There are similar examples of confusion in the dairy and livestock sectors. Abolition will lift administrative and regulatory burdens from farm businesses and enable them to focus on their core business activity. It should encourage farmers to offer more in the way of longer-term employment, including the payment of annual salaries. All of this will encourage the development of a sustainable and prosperous industry for the future.

For the avoidance of any doubt, let me offer some further reassurance. Agricultural workers who have contractual rights reflecting the terms of the agricultural wages order at the time of the abolition of the board will continue to have those rights until such time as the contract might be varied by agreement between the employer and the worker or until the contract comes to an end. Moving forward, it is important to bear in mind that if agriculture-based businesses want to retain and attract able and well qualified people, they need to offer remuneration packages that are competitive. We know that the majority of workers in the agriculture sector already benefit from terms and conditions that are above the agricultural minimum wage rates. Currently, about 60% of permanent agricultural workers over the age of 22 are paid above the agriculture wages order minima. There is no reason why they should find themselves in a worse position in the absence of the board. The Government have asked the Low Pay Commission to include agricultural workers in its considerations when providing recommendations for all of the elements of the national minimum wage in order to achieve the smooth integration of agricultural workers in England and Wales.

Most of the functions of the 15 Agricultural Wages Committees in England have now lapsed in practice or been replaced by wider legislation. Their only remaining active function is to appoint members of the 16 Agricultural Dwelling House Advisory Committees in England, which are sometimes known as the ADHACs. The committees were established under the Rent (Agriculture) Act 1976 and their function is to give advice to local authorities on rehousing agricultural workers. As a result of changes in housing legislation, the number of requests for advice from ADHACs has declined significantly, to fewer than 10 in each of the last two years. There is no statutory requirement to consult an ADHAC and many local authorities happily take decisions on rehousing without such advice. I hope the Committee agrees that these 31 regional committees in England are now effectively defunct bodies and their continued existence at public expense cannot be justified. With regard to the abolition of the ADHACs in England, I want to assure noble Lords that there are no plans to change the provisions in the Rent (Agriculture) Act 1976 which give security of tenure to protected tenants, and therefore the amendments will not in any way jeopardise the position of tenants with protected tenancies under the 1976 legislation.

In summary, these amendments will bring employment practices in the agricultural industry into the 21st century, enabling sustainable growth for the future. They will also remove a number of obsolete public bodies and contribute to the Government’s wider programme of public body reform. I hope that, in the light of my remarks, noble Lords will accept them. I beg to move Amendment 28ZK.

[Lord Whitty]

My Lords, the Minister must realise that this is a bit of a controversial item. That is not surprising because in their latest impact assessment of the outcome of this measure the Government’s own best estimate is a cut in the living standards of rural workers in England by £236 million over the next decade.

Before I get on to the substantive points, of which I have many, I need to make a procedural point. I am not clear why we are debating the abolition of the Agricultural Wages Board in this Bill on this occasion. The amendments were put down two days before Christmas, without any prior warning. The Bill has been through the House of Commons. There was no indication in the House of Commons that the Government were going to come forward with this amendment in the House of Lords, which is very unusual, and, of course, everybody in the industry—on both sides of the industry and in Parliament—thought that the wages board was dealt with at primary-legislation level under the Public Bodies Act well over a year ago.

To implement that, the Government have to follow Section 11 of the Public Bodies Act, which lays down certain stipulations for bringing forward secondary legislation. It requires a full explanation to both Houses, a proper consultation period, the consideration of alternatives and a special memorandum to be laid before the House before it considers it. Why is this before us today when a procedure is already laid out and it appeared that the Government were prepared to go along that road until very recently? There was no explanation in the letter we got from the noble Viscount’s predecessor nor has there been any explanation from the Minister today. I can think of a couple of procedural reasons why the Government are in a bit of bother on this one. One of them is the Delegated Legislation Committee and the other one can be summarised by saying “Wales”.

Under the Public Bodies Act, the Government are already in serious trouble on a range of ways in which they have tried to bring forward the secondary legislation. The report of the Secondary Legislation Scrutiny Committee indicates that the Act requires a proper 12-week consultation, not the four-week consultation that Defra has sprung on us, and a full impact assessment followed by a government response to that consultation and a memorandum to Parliament. The Government seemed to start down that track, but the Secondary Legislation Scrutiny Committee criticises their behaviour in relation to other public bodies on a number of grounds: the lack of robustness of the government case; inadequate evidence; an inadequate approach to consultation with stakeholders; a failure to consider alternatives; and a lack of arrangements for future monitoring of the outcome. On pretty well all those counts, Defra and the Government are failing in the implementation of the Public Bodies Act in relation to the Agricultural Wages Board, so it must have occurred to the Government that it might be a bit easier to slip it into another piece of legislation, almost when nobody was looking over Christmas.

However, probably the biggest reason relates to Wales. This is, of course, an England and Wales body. As I understand it, the Welsh Government object to its abolition. The Welsh Government would like to see a continuation of statutory provision in agriculture which the Scottish and Northern Irish Governments have decided to have in relation to their own agricultural sector. Of course there is confusion here. If this was dealt with under agricultural legislation, and as agricultural policy is devolved, the Welsh Government would have equal rights to the Westminster Government and we would have to reach agreement with them on this.

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[Baroness Byford]

I would like to take the noble Lord, Lord Whitty, back to 2000 when we had a long debate on the CROW Act. Why do I refer to that? I do so because he has suggested that this bit has been slipped into another Bill. The CROW Act was four different Acts in one Act. The last bit dealt with areas of outstanding natural beauty. It went through the whole of the Commons before that bit was printed up at all. It then came to this House, and I was sitting opposite the noble Lord, Lord Whitty, when he introduced it formally at Second Reading. I said to him clearly at the time that I was not prepared to go into the Committee stage before we had that legislation before us to consider it as a whole Bill. So I think that his protesting too much about how this part of the Bill is being introduced is a little rich.

[Lord Whitty]

Since we are going down this historic road with the noble Baroness, which I am delighted at, the difference is that by then my right honourable friend Alun Michael had already signalled in the Commons that we would be coming forward with substantive provisions. Nothing was done in the same way on the same amendment.

[Baroness Byford]

I perhaps would not agree with him because, if I can take him further along down memory lane, the Bill was debated in this House, amendments were made and it returned to the Commons. Several Members who were in the Commons at that time will well remember that at that stage not one word of the amendments in the areas of outstanding natural beauty were debated in the Commons because it was guillotined. That is what happens. Therefore, the noble Lord is being slightly mischievous this afternoon in perhaps protesting too much.

However, I return to the substance. I should again declare that we are family farmers. We used to employ people but are now part of an arrangement with a neighbouring farmer who does the work for us. I also declare the fact that, like the noble Lord, Lord Plumb, we have always had a good working relationship with our employees. Many of them were housed on the farm and some still live in housing on the farm, many years after they retired. I would hate to think that other Members of the Committee, perhaps responding to the contribution from the noble Lord, Lord Whitty, believe that all is bad out there, because clearly it is not—and it should go on the record that it is not.

The noble Lord, Lord Plumb, referred to the hugely expensive machinery that we have these days. Obviously, you pay your workforce according to the work that they do. Personally, I am very happy to support the proposals that the Government are making, in that we should look again at what job these boards still do, and whether it is necessary. The introduction of the minimum wage in 1999 made a huge difference—two pence is what we are talking about, and most farmers pay more than that to a lot of their workers. The noble Lord also mentioned the fact that some employers have not practised well, if I can use that expression. I shall think of better words. I remind the noble Lord that in response to that his Government rightly brought in the gangmasters Act. There was a case recently in the paper where it was declared that two family members were employing people in dreadful conditions, underpaying them and keeping them virtually confined. That is an absolute disgrace and any practice like that should be hit on the head. It should not be allowed—and I use this opportunity to reinforce that point, because it is hugely important. Where there is bad practice, it should not be allowed. The gangmasters Act, which the noble Lord and I took through the House, has teeth and it should happen. I am therefore more resolved in supporting the Government in their proposals than I might have been had we not had the gangmasters Act behind us.

Today we live in a very different era from when we first introduced the Agricultural Wages Board. The workforce is smaller in many ways, and its members multitask in many ways—they are not just labourers. I know that reference has been made to horticultural workers. To a certain extent, that is much more mundane work because of the nature of what they are doing. However, for anyone who wants to get on in life and run a good business, the one thing you should always remember is that your business is successful only if your workers are well looked after and encouraged to work well.

I hope that Committee Members will support this move, which will allow the agricultural industry slightly greater flexibility. It may be that wages are slightly better in one particular area than another but in normal business, people working down here in London get paid more than they do up north. Nobody goes to town about that saying that it is outrageous. The responsibility is on the farmers to make sure that they employ fairly and pay fairly. In this day and age we do not still need the wages board. I support the government amendment.

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[Earl Cathcart]

I am not absolutely sure why—I can only give you my case—I would want to reduce their pay at all. As far as I am concerned, the system is working perfectly well. I am happy with their pay, and so are they. I do not know where those figures come from. My view is that it is highly likely that all existing employment terms and conditions will remain exactly the same, as the Minister has just confirmed.

[Lord Whitty]

I am sorry to pursue this point. The noble Earl may well be right in relation to his estate, but the department, which is supposed to know about the totality of the industry, estimates that there will be a significant cut in wages. Indeed, it is the major effect of this amendment in terms of the impact assessment. If the noble Earl is describing that argument as rubbish, it is not we on this side or United who made the argument, but the department, which got it seriously wrong. If that is what he is saying, it is another argument for the Government to look at what their information is based on.

[Earl Cathcart]

I am sure that the noble Lord will be interested to hear what the Minister says when he winds up.

I am happy to say that since employing new workers, my business has prospered. It may not be the norm, but the decision I have to make is not by how much I should reduce my employees’ salaries, but rather whether I should give them a bonus, a pay rise or a combination of both. It is a decision I shall make in spite of, not because of, the Agricultural Wages Board and contrary to the scare tactics that I suggest are being used by Unite.

If I wanted to expand my business beyond packing and selling my own farm produce by taking in produce from other farmers for packing and resale, any new workers for that expansion would not be classed as farm workers and would not come under the Agricultural Wages Board’s umbrella, so we would have the absurd situation of two people who are doing exactly the same job being paid at different rates—and all for 2 pence, which is a ridiculous complication. It is further complicated because I am told that if my expanded business had a busy period, say, before Christmas, under the Agricultural Wages Board’s rules I would have to pay time and a half to the agricultural workers packing my farm produce if they work more than eight hours a day or 39 hours a week. The workers packing my neighbouring farmers’ produce would be subject to the national minimum wage and paid the minimum rate regardless of the number of hours they work. What a dog’s dinner. I believe that the board is irrelevant in today’s employment market and an unnecessary cost to the taxpayer. It is outdated because it works on hourly wage rates, not salaries. Those who need an hourly rate are protected by the national minimum wage, and if the Agricultural Wages Board—

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[Lord Whitty]

I am grateful to the Minister for confirming that one of the reasons for the change of tack by the Government is the Welsh situation but he is surely wrong in his remarks on devolution.

The Agricultural Wages Board has always been dealt with by the agriculture department. Well before political devolution, there was a separate devolution to the Scottish agriculture department. There is a separate arrangement in Northern Ireland. The employment issue falls to the United Kingdom. There is no difference in agriculture between Wales, Scotland and Northern Ireland, so why is the Minister prepared to accept that there should be devolution to Scotland and Northern Ireland, quite rightly, but to deny Welsh Ministers’ request, in the light of the decision in relation to England, to have a devolved body in Wales?

[Viscount Younger of Leckie]

My Lords, it is not for me to say it is only that. This is an historical fact, and I was just setting out the background to this. This is why the Agricultural Wages Board has remained separate. Now, in this Bill, we are looking to sort this out.

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[Viscount Younger of Leckie]

With respect to the noble Lord, I did not say that I was discounting them. I was just producing some facts. However, it is strange that such a high number of responses came from the same website. I hope that that is a reasonable view to express. As I say, I shall be delighted to get back to the noble Lord with some clear figures and a response to that.

The noble Baroness, Lady Donaghy, raised the question of whether Northern Ireland or Scotland had been asked for a view on the abolition of the Agricultural Wages Board. I should clarify that the Agricultural Wages Board in Northern Ireland and the Agricultural Wages Board in Scotland constitute separate bodies and it is for their respective devolved Governments to take a view on their future.

The noble Lord, Lord Whitty, asked about the terms and conditions of farmers and their pay and sick pay under the current regime. Having two systems which may apply on the same site for the same organisation is not ideal. This measure obviously covers agricultural workers and will cover others who fall into the non-agricultural sector. Surely it is more confusing and difficult to operate such a system. As I said in my opening speech, farm businesses are increasingly diverse and carry out non-agricultural activities.

The noble Baroness, Lady Donaghy, asked why there was a difference between the first and second impact assessments. The first impact assessment was informed by independent research which compared the agricultural sector with the forestry and fisheries sector in order to assess the effect of the Agricultural Wages Board minimum wages. However, this did not allow for the fact that forestry is covered by an agricultural wages order. Since the consultation, the contractors have revised the analysis to correct this.

[Lord Whitty]

My Lords, does that mean that the Government stand by the second impact assessment? If it does, it undermines everything that has been said in favour of abolition of the wages board and the argument that that will make no difference, given that the second impact assessment says very clearly that over the next 10 years agricultural workers will lose £250 million worth of employment income. Let us be absolutely clear: if the Government, the noble Viscount’s department and Defra—the noble Lord, Lord De Mauley, is present—stand by the assessment, the removal of the Agricultural Wages Board will clearly lead to a serious reduction in wages in the agricultural sector.

[Viscount Younger of Leckie]

The intervention of the noble Lord allows me to move on to focus on the impact assessment. I do not recognise the figure that he has brought up. The impact will be between nought and £150 million.

[Lord Whitty]

To clarify, there is a range, but I am using a figure close to the best estimate which amounts to about £250 million.

[Baroness Buscombe]

My Lords, I am grateful to the Minister. I have been sitting here and slowly thinking to myself that I cannot continue to listen to the noble Lord, Lord Whitty, making this incredible, disingenuous argument. I am going to go back down memory lane briefly. I remember when the noble Lord, Lord Whitty, was Minister for Agriculture and we had the Burns report.

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[Baroness Buscombe]

Good.

I remember so well that when the noble Lord, Lord Whitty, was in government, the Burns report looked into the future of hunting. The report came back saying that if we lost hunting, the lives of a huge number of people in rural areas would be affected. They would lose their jobs and that would have a massive impact on the rural economy. I remember the noble Lord standing at the Dispatch Box saying “I do not like hunting. I am not interested in what the Burns report says. We are going to get rid of it anyway”. Here is the noble Lord, Lord Whitty, talking so much about the need for consultation as if he really cares what the result might be. This is all about dogma. What has been going on this afternoon has been vacuous and disingenuous, and I hope that the Minister will feel strong in his argument and ignore these disingenuous requests to remove the amendment.

[Lord Whitty]

I am quite happy to have another debate about hunting. I understand, however, that the Prime Minister is not prepared to pursue it. I have not seen the devastation in jobs in hunting since the hunting Act was passed, but let us put that to one side. All I was asking the Minister was whether he stood by his own department’s calculations of the effect on wages in the agricultural sector of abolishing the board. It is a straightforward question on which I would like a clear answer: if he does still accept it then everything we have been saying on this side is correct and there will be a serious detrimental effect. If he wishes to change it, however, I suggest he produces a different impact assessment before we reach Report.

[Viscount Younger of Leckie]

I will do my best to answer the noble Lord’s question. Our figures tell us that the impact assessment for new workers will be from nought to a worst-case scenario of £150 million. However, as I mentioned in my opening speech, there is no reason to suppose that the 60% of workers who are currently on a contract will not remain on their existing contract. Noble Lords will know that, if you are an employer, you cannot suddenly change or reduce a contract between two people.

The reality will depend on how farmers use the increased flexibility that will result from the abolition of the Agricultural Wages Board. Many workers are already paid above the agricultural minimum wage, so there is no reason why there should be a change. Moreover, the underlying labour market conditions suggest that workers will be in demand and farmers will need to offer competitive packages to attract and retain skilled and qualified staff. I am afraid that the evidence is against the noble Baroness, Lady Donaghy, who was claiming that the jobs would not be available and farm workers would be leaving the sector. I do not believe at all that that will be the case.

I am also grateful for the intervention from my noble friend Lord Plumb. It is encouraging to note his comments and all the efforts that he has been making in encouraging new workers into farming. I am also grateful for the intervention from my noble friend Lady Byford who, quite rightly, pointed out the importance of ensuring that there were some good working practices that will be retained within the agricultural sector.

The noble Lord, Lord Myners—who is now back in his place—spoke about the difference between the Low Pay Commission and the Agricultural Wages Board. This is exactly the point: there is no need for two different bodies both assessing low pay issues. That plays into our hands as to why we believe that it is right to abolish the Agricultural Wages Board.