Clause 2 - Requirement to hold a licence

Gangmasters (Licensing) Bill – in a Public Bill Committee at 3:30 pm on 28th April 2004.

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Question proposed, That the clause stand part of the Bill.

The Chairman: With this it will be convenient to discuss the following: new clause 4—Acting as a gangmaster.

New clause 6—Prohibition of unlicensed activities.

New clause 12—Offences: acting as a gangmaster, being in possession of false documents etc.

Mr. Simmonds: I strongly support new clause 4(3). It is vital that we prevent gangmasters getting round the Bill and subcontracting to illegitimate gangmasters. That raises many issues, some of which will be discussed in relation to other new clauses.

It is important that the register is not available only at a particular office in the locality. It has to be accessible 24 hours a day—probably on the internet in this day and age—because of the, admittedly infrequent, necessity of getting labour in the middle of the night. Sometimes, the gangmaster on the first rung fulfils his initial obligations but cannot provide more labour, so he has to go to a subcontractor at very short notice. It is not always possible to wait until the morning, because crops may have to be taken out of the ground, or the supermarket might demand the produce, at very short notice.

Alun Michael: The hon. Gentleman raises important issues that will need to be covered in two ways: first, through regulations that will to be made and, secondly, through the establishment of the agency. We intend to engage people who are involved with the industry on the board, and use the liaison arrangements recommended in the Bill. This is an issue that everyone has raised. I am happy to assure the hon. Gentleman that, although some of the issues that he raises are not mentioned in the Bill, we regard them as important. Not standing in the way of the effective provision of labour by legitimate gangmasters is at the core of our implementation of the legislation.

Mr. Simmonds: I am grateful to the Minister for that extremely constructive intervention. I look forward to seeing the details in regulations.

Moving swiftly on, it is important that gangmasters and farmers be unable to circumvent the Bill through leaseback arrangements, whereby gangmasters pretend that they are operating as farmers but are not farmers in practice.

My concern about new clause 4 centres on subsection (5)(b), which mentions the use of workers to gather shellfish. Of course, I understand the sensitivity of that addition to the Bill, bearing in mind the terrible, tragic events of Morecambe bay. My problem is not with the nature of the provision, but with the fact that, as I understand it, the measure would catch small family businesses, such as one that consists of a father and mother employing their two sons. That, obviously, is not the operation of a gangmaster.

Alun Michael: I am happy to intervene to give the hon. Gentleman reassurance. First, he referred to leaseback. I believe that he is thinking of cases in which the gangmaster pretends to have become a farmer and to own the produce. That has been taken into consideration in the drafting of the Bill, and we are satisfied that such cases will not avoid its purposes and can be prevented.

The hon. Gentleman's second example involving a family has been raised by a number of people. It is exactly the sort of case that I mentioned earlier, where our intention would be to deal with it by exclusion. We need to discuss with the industry precisely how to do that, to make sure that we do not accidentally create a mechanism that encourages evasion. I am absolutely clear that the provisions as drafted will allow us to create exceptions or exemptions that deal with such anomalies. The drafting is designed to include such things because it is easier to draw a line around a subject through exemptions in the regulations than it is to have an over-complex Bill or over-complex definitions on its face.

Mr. Simmonds: I am grateful to the Minister for another constructive intervention. Judging by the way in which he is behaving, I hope that we will rattle through the Bill quickly, which is excellent. I have no desire to hold it up, but we must make sure that it is right and that it does not have negative, unnecessary or undesirable side effects.

New clause 12 is about offences. The first part of subsection (1) is clear enough: a gangmaster operating without a licence is committing an offence. However, the second part of the subsection states that a licence holder who breached the conditions of his licence would be committing an offence, which suggests that licence breaches are not in themselves an offence. I would be grateful for some clarification. Are there grounds—perhaps in other legislation—for revocation of the licence, as provided under new clause 9? Will the Minister outline all legal requirements that a gangmaster would have to meet to comply with the conditions of a licence? Will those conditions be on the face of the Bill, or set out in regulations?

Although a minor licence breach might not be worthy of classification as a criminal offence, surely major breaches should be. Will the Minister clarify how the choice will be made between prosecuting for offences under new clause 12 and revoking a licence detailed under new clause 9? Can both courses of action be taken? If one is taken as a priority, which will it be?

Alun Michael: The hon. Gentleman has raised some interesting points, which I am happy to say that we have considered in some depth. First, the whole point of having a licensing system that makes a difference is that as soon as the licence has been taken away, it is impossible for the individual to continue their activities. If a gangmaster whose licence has been revoked does anything, even if it would otherwise all be legitimate, he can be done for not having a licence. The system allows immediate disciplinary action to stop things happening.

I assure the hon. Gentleman that the revocation of a licence is potentially far more draconian a measure than it might first appear. In addition, there are heavier penalties for repeat offences. Those penalties mean that if, for instance, a gangmaster whose licence had been taken away went with another gang and was arrested and prosecuted, and he then did it again, the repetition of the offence would trigger the heavier penalties. In such a case, the Bill as we are now redrafting it will act as an antisocial behaviour order. That means that severe penalties will be available for the people that we really want to catch.

We do not want to create such a powerful disciplinary and legal mechanism for people who may have just slipped up and committed minor breaches. The requirements that will be placed in the licence need to be thought through during discussion with the industry and need to be agreed by the agency, but they will undoubtedly include some matters that we all would regard as a breach, simply as a means of saying, ''Look, you're not doing it properly. Do it this way in future.'' We need to make it clear our aim is to create a licensing system that keeps people who want to act within the law within the circle of the licence, which means that minor breaches will be neither here nor there. The distinction to be drawn is between those people and the villains. We want the villains to be outside the circle and we want to be able to act against them very quickly. I hope that that explains how the Bill will work.

There are other requirements in legislation. For instance, people have to fill in their tax returns and they have to pay tax. That is the way things operate—at least in general. If a company is in breach of the tax laws, it does not mean that it is closed down immediately. The Inland Revenue has its own ways of dealing with breaches and its own powers. If the issue is simply one of tax, it is dealt with in that way. If one of the villains is not only not paying tax, but employing illegal workers, or exploiting people by not paying them the minimum wage and so on, revoking the licence gives us a powerful opportunity to get a grip on the situation and close down their operation.

That is why the Bill will be a much more powerful instrument than is appreciated.

Andrew George: The Minister paints a black or white picture. People are either villains, or acting as legitimate gangmasters. I suspect that some of the large organisations that we are talking about will have a legitimate licence while sending out teams that are not operating within the spirit of the law. I would like the Minister to clarify whether he thinks the Bill will be able to deal with such gangmasters.

Alun Michael: The hon. Gentleman makes a good point. If the breach of a licence—or loss of it—does not mean anything, that sort of activity could take place. There may be some legitimate and some illegitimate activities going on, perhaps under the aegis of the same organisation. However, if one group were acting illegally and not observing the code necessary to retain a licence, that would put the whole of the business at risk, not just one gang. There is a genuine incentive for such businesses in showing them that it is not worth trying to bend the rules at the edges because that could destroy their whole business by resulting in its being closed down. We must ensure that people who utterly disregard the law are clearly outside the ambit of the licensing system while not coming down like a ton of bricks on people who are genuinely providing services but get things slightly wrong at the edges.

There are judgments to be made, which is why it is essential to have people with knowledge of each aspect of the industry—people from farming, legitimate gangmasters, representatives of the trade unions and the enforcement agencies—all involved in the design and operation of the licence. The practicalities need to be flexible enough to ensure that we catch the right people but do not create burdens for those who are not the targets of such activity.

Over the years, there has been a reluctance to make the activity licensed because people do not want a process that is bureaucratic and costs a lot of money. We are designing the legislation in such a way that a fairly slim-line licensing system, which keeps the burden of licensing to a minimum, can make it unprofitable and impractical for people to operate outside the ambit of the law. That means helping in other aspects of enforcement—the sort of work that Operation Gangmaster is already tackling with some success—rather than creating bureaucratic edifices.

Making legislation that has the flexibility to deliver in practice is part of process. I am happy to discuss that and share drafts of documents with Committee members, as well as with the participants in the industry consortium, so that we get it right. I suggest that we are talking the same language of practicalities across the Committee.

Question put and negatived.

Clause 2 disagreed to.