Agricultural Wages Board

Owen Paterson Excerpts

Wednesday 24th April 2013 Commons Chamber

[The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson)]

I am grateful to the hon. Member for Wakefield (Mary Creagh) for securing a debate on this issue. I acknowledge the strong feelings that she has expressed, but I am firmly convinced that the abolition of the Agricultural Wages Board is in the best interests of all those working in the industry. It will provide simplification and greater flexibility, thereby encouraging investment, growth and job opportunities in the sector.

[Nia Griffith (Llanelli) (Lab)]

Will the Secretary of State explain exactly how the board’s abolition will create job opportunities? Will it happen by driving down wages?

[Mr Paterson]

I am grateful to the hon. Lady for that early intervention. If she gives me a chance, I will explain my case. I take a completely contrasting view to hers. I have a positive view of agriculture and I see an expanding demand for labour in the countryside. I believe that the current minimum wage arrangements will give protection to those at the lower end of the scale, but I am absolutely convinced—because it is happening already—that the overwhelming number of employees in the sector will be paid well above the minimum wage. Let me make my case; I might be able to convince her.

A successful agricultural industry will contribute to the growth of the wider rural economy, which is one of the four key objectives of my Department. Agriculture is vital for the UK. It produces much of the food that we eat and supports other industries that add nearly £90 billion to our economy. The food supply chain employs nearly 4 million people and includes the largest manufacturing sector in the UK. Exports of agricultural food and drink have seen seven years of continuous export growth and were worth £18 billion in 2011.

There are huge opportunities for further growth within agriculture to meet the demands of feeding the world’s population as it grows from 6 billion to 9 billion. We want to ensure that the UK industry is in the forefront of meeting those demands, and we are already doing a great deal to help to ensure the success of the industry. An example is the joint Department for Business, Innovation and Skills-Department for Environment, Food and Rural Affairs agri-tech strategy, which will provide a framework for research and the development of technologies. It will support growth through encouraging the global uptake of world-class UK-based agri-science and associated technologies, stimulating their translation into high-tech agricultural systems in the UK. We are working on the design of the new rural development programme, which we will use to develop professional skills, including business management and risk awareness, across the agriculture and forestry sectors.

[Tom Blenkinsop]

I am sure that the Secretary of State will be telling all this to the workers on his estate, but will he tell the House how many of the people on his estate will be affected by the termination of the AWB?

[Mr Paterson]

I have to disappoint the hon. Gentleman by telling him that I do not have an estate, and that I do not have any direct employees who take the agricultural wage.

I shall take up my case again. In addition, I want to give businesses the tools they need to have the confidence to invest, adopt and benefit from innovative technologies and farming practices.

[Andrew George]

Those tools will be extremely helpful, especially for research and development, but in relation to today’s debate, will my right hon. Friend tell me whether he thinks that agricultural wages and conditions will go up or down as a result of the abolition of the AWB?

[Mr Paterson]

As I said earlier, I am absolutely confident that there is a great future for the industry, and that there will be an increase in demand for labour, which will create pressure to drive wages up. Already, under the AWB, the vast majority of people in the industry are paid well above the minimum wage and well above the AWB minimums.

Another key area in growing the economy is the roll-out of superfast broadband to rural areas, and increasingly wider access to 3G and 4G networks will also make it easier for farm and rural businesses to operate.

[Jim Sheridan]

I listened carefully to the Secretary of State’s response to the hon. Member for St Ives (Andrew George). If wages and conditions were to go down, if that were to encourage migrant workers to come to this country to work for the lower wages, and if that were to result in problems in the community, whose fault would that be?

[Mr Paterson]

The hon. Gentleman and I have debated these issues over many years, and we simply do not agree. Would he like to go back to the arrangements under some of the earlier councils? Why did not the Labour Government re-establish the Linen and Cotton Handkerchief and Household Goods and Linen Piece Goods Wages Council (Great Britain), for example? Why did they not re-establish the Ostrich and Fancy Feather and Artificial Flower Wages Council, or the Pin, Hook and Eye and Snap Fastener Wages Council? Why did they not re-establish the rubber-proof garment-making industry wages council? This is the last throwback to an era during which these sort of councils did, I am sure, a worthy job, but we now have a free and expanding market and demand for labour in the countryside. To answer his question directly, I am absolutely confident that wages will be well above those currently set by the AWB. [Interruption.] The hon. Gentleman says “If”, but it is not a question of “if”: wages are currently well above those levels.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

I absolutely share my right hon. Friend’s confidence in the future of agriculture. As he will know, in Herefordshire we have a thriving agricultural sector, and it will be all the more enhanced by broadband. Does he share my surprise that despite its denunciation of the measure, the Labour party is unwilling to state whether it would restore the Agricultural Wages Board?

[Mr Paterson]

I am grateful to my hon. Friend, who picks up on the earlier question that the shadow Secretary of State singularly failed to answer. On my hon. Friend’s behalf, I pose this question to her: if a Labour Government were to be elected after the next election, would the AWB exist? Will they bring in legislation to re-establish an agricultural wages board?

[Mary Creagh]

The right hon. Gentleman asks me a direct question. We are two years away from the next election, and I am sure he will be looking forward with great eagerness to our manifesto. We will look at all measures that stop the public sector, the taxpayer, subsidising poverty wages, wherever they occur in our economy.

[Mr Paterson]

I think my hon. Friend will take that as a no.

[Margaret Beckett (Derby South) (Lab)]

rose—

[Mr Paterson]

I give way to my esteemed predecessor.

[Margaret Beckett]

I am grateful to the right hon. Gentleman, who has now asserted more than once, as has his predecessor, that the outcome will be to improve the wages and conditions of agricultural workers. In that case, will he tell us where the savings his Department identifies will come from?

[Mr Paterson]

I am grateful to the right hon. Lady for that question. There are modest administrative savings from the running of this organisation. Labour Members concentrate on the impact assessment, which makes it clear that we have a dynamic market, stating:

“Current wage levels are generally above the AWO minima & are underpinned by the National Minimum Wage.”

On page 3, it says:

“Government intervention is no longer necessary because…it is considered that there is no market failure in the agricultural labour market such that workers require protection which is over and above other statutory terms and conditions and wider employment legislation applying to all workers.”

Let me pick up my thread again. I am confident that we have a thriving sector with demand for labour, which will push wages up, not down. I have touched on the farming regulation task force, which will remove a whole range of regulatory burdens from farm businesses. In fact, since 2011, we have removed £13 of compliance costs for every pound added. There will be 12,000 fewer dairy inspections a year.

The abolition of the Agricultural Wages Board will complement and supplement this work. That is why I find the position of the Opposition Front-Bench team so disappointing. Agriculture is now the only sector of the economy to retain a separate statutory wages regime. There is no rationale for treating agriculture any differently from other sectors. More than 900,000 businesses in England and Wales are micro-businesses that employ between one and nine people. The vast majority of those cover sectors other than farming and do not require an independent body to set employment terms and conditions, so there is no reason why it is still necessary for farm businesses.

It was in fact the last Labour Government who set up a single national minimum wage, and whose Minister, the noble Lord Falconer argued that

“the Government”—

namely the Labour Government—

“do not believe that a multitude of regional, sectoral or other minimum wages is the right approach. It is neither sensible nor justifiable intellectually.”—(Official Report, House of Lords, 11 June 1998; Vol. 590, c. 1240.)

Agriculture has moved on significantly from when the current wages board was established 65 years ago under the Attlee Government. It is now a global business and the price of agricultural commodities is determined by international supply and demand. British farmers have to compete not only with each other, but with farmers overseas in order to sell both here and in international markets.

The industry has become highly scientific and mechanised, with developments in plant and animal breeding, improved fertilizers and pesticides, and other scientific and technological advances. Workers in the industry need to be highly skilled and specialised. Modern farm businesses are no longer confined just to agriculture. Around a quarter of farms have now diversified into non-agricultural activities, such as rural tourism, retail and sporting activities. Rural tourism alone is worth £33 billion to the economy.

The agricultural wages order takes no account of the changes within agriculture, but imposes an inflexible structure, which is no longer appropriate for the varied and diverse businesses within the industry. This is an industry whose processes, structures and products would be barely recognisable to those drafting or debating the Agricultural Wages Act 1948.

Many farm businesses are faced with the burden of having to administer both the agricultural minimum wage regime and the national minimum wage regime. Employers have to decide whether or not a worker’s activity is covered by the provisions of the agricultural wages order or by general employment legislation. In some cases, there are grey areas as to whether or not work is covered by the agricultural minimum wage or the national minimum wage. For example, packing of salad and vegetable produce grown on farm would normally be covered by the agricultural minimum wage, whereas packing of produce bought in from other farms is not.

Abolition of the Agricultural Wages Board will allow agriculture to compete on a level playing field with all other sectors of the economy, with all employees treated equally and all underpinned by the national minimum wage and other statutory provisions. Such an approach was championed by the last Government. Speaking in the Committee stage of the National Minimum Wage Bill, the noble Lord Falconer argued:

“a single national minimum wage is a fundamental principle of the Bill. A single rate is easier to understand and fairer and easier to enforce...I believe that there is a great virtue in simplicity. The simpler we can make the provision, the simpler and more effective the Bill will be. People will know what their rights are. There will be no difficulty in understanding their minimum wage entitlement; and there will be no over-complexity, which might lessen the effect of the Bill.”—(Official Report, House of Lords, 11 June 1998; Vol. 590, c. 1240.)

It is that over-complexity and bureaucracy, as represented by the Agricultural Wages Board, that we are seeking to remove. This will improve the industry’s competitiveness to produce for both domestic and export markets. About 40% of our fresh vegetables and 90% of our fresh fruit are imported, so there are plenty of opportunities for domestic growers to improve their share of the market. Abolition will remove outdated and prescriptive regulations that hamper the ability of industry to offer flexible modern employment packages, such as the payment of annual salaries.

[Tom Blenkinsop]

Is the Secretary of State saying that enhanced statutory sick pay is an outdated term and condition for farm workers, who have now had it removed due to the abolition of the AWB? Is he really saying that?

[Mr Paterson]

The hon. Gentleman has misunderstood. All the existing conditions continue.

As I say, abolition will remove outdated and prescriptive regulations that hamper the ability of industry to offer flexible modern employment packages, such as the payment of annual salaries. It will simplify employment legislation in the sector, provide transparency and make it easier to recruit workers. In the absence of the board, farmers and workers will be able to agree employment terms and conditions that suit the requirements of the farming sector and the particular circumstances of individuals.

[Roberta Blackman-Woods (City of Durham) (Lab)]

I wonder whether the Secretary of State will answer a question that was asked many times but never answered when the Public Bodies Act 2011 was in Committee. Did the Government consider modernising the board rather than abolishing it?

[Mr Paterson]

All sorts of options were considered, but we concluded that the answer was to abolish the board, thus bringing agriculture into line with every other employment sector in the country.

I fully understand the concern about the impact on workers’ wages and terms and conditions as they adjust to the level playing field and move from being set by a system of statutory wage fixing to being set by the market. However, the figures that the hon. Member for Wakefield and Unite have been using have been cherry-picked from the impact assessment and are based on the worst possible scenario, namely a reduction in the wages of every single worker in the agricultural sector. Anyone with any understanding of the farming industry, or the market, knows that that simply will not happen.

The abolition of the Agricultural Wages Board will not

“lead to a race to the bottom on wages in rural areas”

or “impoverish rural workers”, as the motion suggests. It will give farmers and workers the same flexibility to agree terms and conditions as is given to employers and workers in all other sectors of the economy, while also securing the same levels of protection. Most workers already have terms and conditions over and above those in the agricultural wages order, and as contracts are already in place, their wages should not be affected. In 2010, the basic pay of full-time permanent workers was 12% above the AWB minimum for their grade, and non-permanent grade 1 and 2 workers were paid 4% above the AWB minimum for their grade. More than two thirds of permanent employees aged over 21 earn above the agricultural wage minimum at grade 1, and more than half do so at grade 6.

The National Farmers Union has described the abolition of the AWB as “a progressive reform”, which is something in which the Labour party used to believe. The “bottom up” takeover of the party by the trade unions seems to be almost complete.

I can reassure the House that agricultural workers who have existing contracts at the time of abolition will continue to retain rights to pay at the appropriate grade level, along with the other terms and conditions in the current agricultural wages order. For the avoidance of any doubt, we intend to provide for that in legislation. Employers will not be able unilaterally to alter terms and conditions for an existing worker without legal consequences. New workers coming into the industry will be protected by the national minimum wage and by wider employment legislation.

The hon. Lady has described the national minimum wage as

“one of the Labour Government’s greatest achievements.”

Why should we not let agricultural workers benefit from that achievement? The national minimum wage provides sufficient protection for 99.5% cent of the work force, including those who operate factory machinery, those who drive heavy vehicles, and those who care for the sick, the elderly or children. There is no reason why it should not also provide sufficient protection for agricultural workers.

[Margaret Beckett]

The Secretary of State has repeatedly mentioned the national minimum wage and the fact that it was introduced by the last Labour Government. Let me say to him, as the former Secretary of State who introduced the national minimum wage legislation, that it was no accident that when we introduced that legislation—which was, of course, opposed by both the parties who are now in government—we did not abolish the Agricultural Wages Board, precisely because we recognised the particular vulnerabilities of agricultural workers.

[Mr Paterson]

In October this year, the Government will raise the national minimum wage by 12p an hour to £6.31. [Interruption.] Let me respond to the chunterings of the shadow Secretary of State by pointing out that that is 10p above the lowest band rate set by the Agricultural Wages Board. Agricultural workers supplied by a labour provider will continue to have the added protection of the Gangmasters Licensing Authority. We will also make changes to the working time regulations by means of secondary legislation in order fully to align the treatment of agricultural workers with those in other sectors.

[Yasmin Qureshi]

Will the Secretary of State promise that if the wages and terms and conditions of agricultural workers start to decline after the abolition of the Agricultural Wages Board, he will reinstate the board?

[Mr Paterson]

I cannot promise anything. It is up to individual employers. What I do know is that employers throughout the country are crying out for good staff. Finding a good cowman is like finding hens’ teeth, and a really skilled driver of a modern piece of equipment worth hundreds of thousands of pounds is someone an employer will really hang on to.

[Yasmin Qureshi]

rose—

[Mr Paterson]

I have already answered the hon. Lady’s question. She takes a completely black view of the economy, but this is an expanding sector that demands skilled people.

[Yasmin Qureshi]

rose—

[Mr Paterson]

I am going to press on. Other Members want to speak.

I believe that agriculture needs to encourage new and young workers to come into the industry. Evidence suggests that the skills shortage in agriculture will be greater in the years between now and 2020 than in other sectors of the economy. The agricultural work force is also ageing: 55% are over 45, which, again, is a higher figure than is found in other sectors of the economy. Under the new arrangements, market drivers will ensure that wages remain competitive. Farmers will need to offer competitive employment packages and career opportunities at all levels to recruit and retain workers to meet their business needs.

Of course, we recognise the need to ensure a smooth transition for agricultural workers and employers to the new arrangements. Subject to parliamentary approval for the Enterprise and Regulatory Reform Bill, we intend to invite industry representatives to a meeting to explore whether there is scope for future informal, voluntary industry engagement between employers and workers. DEFRA also supports a review of the agricultural skill levels used in the agricultural wages order, which will contribute to the broader work of the industry AgriSkills Forum. We will ensure that written guidance and information is available for workers and employers to help them understand the changes and what they mean for them.

The abolition of the Agricultural Wages Board will allow the industry to modernise while ensuring that agricultural workers have the same levels of protection as workers in all other sectors of the economy. It will ensure a vibrant and sustainable future for agriculture and will have benefits for those who work in the industry, as well as the wider rural economy.

The motion seems to look upon the UK agriculture industry as though it is still powered by beer, sandwiches and steam, when in fact it is reliant on cutting-edge technology, machinery and science. The Government wish to equip the agriculture sector for the challenges and opportunities of the 21st century. The Labour party and its union backers do not. We will vote against the motion.

[Several hon. Members]

rose—