Agricultural Wages Board

Tom Blenkinsop Excerpts

Wednesday 24th April 2013 Commons Chamber

[Mary Creagh]

I will look at that in detail later, but we do not want either a race to the bottom on wages or a great increase in the amount that employers charge workers for their tied accommodation—their hot bed in a caravan—which will mean that they end up effectively working for below national minimum wage and undercut British workers out of the market.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

My hon. Friend is making an excellent case. One point covered by the AWB that scares me is workers’ sick pay and terms and conditions. At the moment, sick pay ranges from £150 to £250. Once the AWB has gone, employers will have to pay sick pay at only statutory minimum terms of just more than £85. That is a direct hit on workers, a quarter of whom are over 55 years old.

[Mary Creagh]

That is right, and we all know that as we get older we are more prone to illness. A further reason why farming is different is that people are expected to work antisocial hours and long hours out in what can be very difficult conditions. We saw that with the flooding last year and when farmers and their employees had to dig lambs out of the snow in the very cold winter we have just had.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

The backdrop to this terrible and petty Government measure is the fact that real wages have fallen by £1,700 since this Government were elected. This is a Government who preach about making work pay, yet raise the national minimum wage by only 1.9% while consumer prices index inflation is at 2.8%. This is a living standards debate. Instead of raising standards for farm workers, the Government are engaging in a race to the bottom on pay and fair treatment.

The first early-day motion I ever tabled in this House —early-day motion 754, on 6 September 2010—was a motion opposing the Government’s then proposals to eradicate the AWB. I did it with the full support of the Labour party, because we on the Opposition Benches know that the AWB protects pay and conditions for 152,000 farm workers in England and Wales and is used as a benchmark for others employed in food manufacturing. Some 3,360 of those workers live in the north-east of England and 170 of them are in my constituency. Once the AWB is gone, 42,000 casual workers could see a drop in wages as soon as they finish their next job. The remaining 110,000 could see their wages eroded over time.

Let me ask the Minister straight out: why are the Government taking £260 million out of the rural economy in disposable income? That is how much will be lost in sick pay and holiday entitlement over a 10-year period. How do we know that? We know because the Department’s impact assessment tells us so. The loss to local businesses is not the only part of that cost, which also includes estimates for new HR costs and litigation for farming businesses that will no longer have the collective negotiating umbrella under which the whole labour market is regulated. Indeed, the last time an attempt was made to get rid of the AWB, even Baroness Thatcher had to U-turn. Not only did she U-turn, but the gravity of the deprivation that could have hurt hard-working people did not make economic or moral sense then, and it does not make economic or moral sense now. We believe that those people—often they do not own even 1 square foot of soil on the land—should at the very least be able to afford the food they grow on that land. The Government should be helping families across this nation to deal with rising living costs, not actively participating in driving down hard-working people’s pay—and all this from a Government who are doubling the nation’s debt in a five-year period, with accrual of debt outstripping any allegations of debt accrual against us over the 13 years of Labour governance.

That is the perverse backdrop against which the demolition of the AWB is juxtaposed—a demolition that saves virtually nothing in Treasury terms, but which will ultimately bestow a huge tragedy upon rural communities. I repeat: it is a policy that saves virtually nothing, while the Government are also, as we know, cavalierly forgoing more than £1 billion in revenue that could be used for investment or to pay off the debt they are accruing. Instead, that money is being sacrificed to give millionaires a cut in the top rate of tax. Those millionaires could use that tax rebate, stick it with the Government’s spare home subsidy and buy up the surplus housing stock in some rural communities. The Government have just shafted people on AWB pay and terms and conditions.

Farm workers work in all elements. They do tough, hard-working jobs, much like those in the steel industry that I know—hard labour, shifts and working outdoors. Those jobs lead to a far greater incidence of ill health. Farm workers on the lowest grade will lose between £150 and £264 in sick pay once the AWB is abolished. The Secretary of State disagreed and said it would continue, but that is as long as TUPE regulations exist, and that is worth about 90 days in the current currency. A new employee in that sector will not be grandfathered like previous workers but put on statutory minimums, and the Secretary of State knows that.

A quarter of the current work force covered by the AWB are over 55, and the change to sick pay damns those workers to the self-fulfilling perpetuation of grinding poverty that those on the Government Benches simply choose to ignore. Another point is just how exposed an individual is under the new terms. They will be negotiating their pay, terms and conditions while the AWB is being abolished. For example, if an individual is tied into accommodation, how will they be able or confident enough to raise the issue of sick pay or holidays without collective bargaining when their home is at stake? We are talking about real living standards. This is not some sort of arithmetical debate; these are real people who are going to suffer.

[Neil Carmichael (Stroud) (Con)]

I have been listening carefully to the hon. Gentleman, but does he recognise that 41% of farm workers currently earn considerably more than the national minimum wage, as prescribed by the Agricultural Wages Board? That is a substantial difference. [Interruption.]

[Tom Blenkinsop]

As my hon. Friend the Member for Llanelli (Nia Griffith) said from a sedentary position, that means that 59% of workers do not earn that. Therefore, 41% have enhanced terms because a statutory minimum is in place—the same principle as for the national minimum wage. It is a different sector, but 59% of people do not earn that and there is no guarantee about what direction their pay, terms and conditions will go in. In economic terms, for the agricultural sector, that is mad.

It is totally and utterly crazy to say that by undermining a statutory minimum at the bottom, pay will go up. That is just not the case, as the past 13 years of the Labour Government proved. The national minimum wage was put in place, but collective bargaining allowed enhancements to be brought in. If the floor is taken away, the floor goes through the floor—it goes lower and lower.

[Neil Carmichael]

If the hon. Gentleman is so determined on the matter of the Agricultural Wages Board, why did the previous Labour Government not renew all other wages boards that were abolished under the Major Government?

[Tom Blenkinsop]

I would take those on the Government Benches more seriously if—pardon my slight diversion, Madam Deputy Speaker—the Government were not giving the full pay reward to the Army. Armed forces were awarded a 1.5% pay increase. The Chancellor announced the increase in the Budget at the Dispatch Box, yet delayed the start of those payments until 1 May. That is unique in the private or public sector. I have never heard of that in the steel industry, or any other manufacturing industry in the private sector, yet the Government are doing that to the armed forces—I apologise, Madam Deputy Speaker.

Tied accommodation affects 30,300 farm workers and their families. Will Ministers at least guarantee that those properties will not be taken from under the noses of those workers, and potentially opened up to the new spare homes subsidy market so that millionaires can increase their property portfolios? This is a piece of despicable legislation, outdone only by the sheer cowardice of a Government who wish to pass this measure without attempting to justify one scintilla of it to the House in open debate.