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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Perhaps some bright spark in the department decided to deal with this matter under employment legislation. There is a certain logic to doing that as it relates to wages, but the fact of the matter is that it has been dealt with by agriculture departments ever since the Agricultural Wages Board was set up. Every Agriculture Minister, including myself and the noble Lord, Lord De Mauley, have dealt with the Agricultural Wages Board under their Defra or MAFF responsibilities. It is a departure to treat it under employment legislation, in which case it becomes a reserved matter for Westminster. Putting it in employment legislation may get round the Welsh issue. The Minister did not say so but the deletion of various pieces of secondary legislation in this Bill allows Wales to have a different solution because it crosses out England and Wales at various points. However, that is being done in Westminster legislation; it is not what the Welsh Government want and they were not actively consulted on it. Not surprisingly, the Welsh Minister is extremely angry about the way in which this matter has been dealt with. To get round potential criticism in terms of procedures under the Public Bodies Act and to get round the Welsh problem, if I can put it that way, the Government have tried to find another way to tackle this issue. That is why it is before us today.
I am afraid that the Government are on somewhat dodgy procedural and legal grounds. If the Government are intent on proceeding in this way then this Committee and, indeed, eventually the House are at a very minimum entitled to demand at least the same level of detailed information as would be required under the Public Bodies Act procedures. I remind the Government that those procedures were insisted on by the House, against the Government’s inclinations, during the passage of the then Public Bodies Bill. At that point, the noble Lord, Lord Taylor of Holbeach, rightly recognised that the House had strong feelings on this matter and that we would need to have special procedures in order to deal with the secondary legislation. That information is not before the Committee today and there is no indication that the Government will produce it. Indeed, their procedure so far has been out of kilter with what
is required under the Public Bodies Act. The best outcome would be for the Minister to withdraw this amendment. I see that he is not over-inclined to do so, in which case I will have to go on to my substantive points.
The Minister said that there have been massive changes in the agricultural sector, and he is right. However, it is still a sector and a workforce unlike any other. It is found mostly on smallish farms with one, two or three employees and comprises substantial seasonal and casual work, with some sectors heavily dependent on migrant and seasonal labour. This workforce is uniquely subject to low pay and, particularly in the seasonal sector, is subject to serious exploitation by gangmasters as well as by farmers and growers.
The abolition of the Agricultural Wages Board is a direct attack on the living standards of 150,000 rural workers and, indirectly, a lot more because, although they do not comprise a legal framework, the Agricultural Wages Board minimum level and structure are used as a benchmark for rural wages outside the strictly agricultural area; and, in a sense, the Minister acknowledged that.
I said that the original impact assessment provided for consultation—the very brief consultation was woefully thin—and that is true, both literally and content-wise. In one sense it was a paragon of clarity and honesty. Table 1 of that original impact assessment shows clearly that the sole intention of this measure is to remove over the next decade £136 million—in the subsequent impact assessment that is increased to £150 million—from the pockets of rural workers and transfer it ostensibly into the coffers of landowners and farmers, although I will argue later that that outcome may not be the case in practice. In total employment costs, it involves a total transfer of £236 million. The latest best estimate is £150 million in wages, £84 million in holiday pay and £4 million in sick pay, plus associated national insurance costs et cetera—a total of £250 million.
The only net benefit in that assessment—because that is a strict transfer—is a saving of approximately £67,000 to the Government in Defra’s administration costs for the AWB. Incidentally, there is no mention in the impact assessment of the potentially increased administrative costs on farmers because a number of individual farmers wrote in, both to the NFU and the Government, explaining that they actually relied on the wages order in order to implement simply their own wages and HR situation. Most farmers do not have HR departments, find it difficult to negotiate directly with a very small number of staff and find it difficult to check the legal requirements, level of pay, sick pay, holidays and so on. Some farmers made those points in their responses. I understand that in a survey conducted in, for example, Hampshire—my neighbouring county—about 80% of farmers did not know that the board was going to be abolished and/or were actually opposed to the abolition for this very reason.
The impact assessment is not full, but it is absolutely clear that this is money taken away from low-paid rural workers. There have been two main arguments in the Government’s first position as to why we should be
doing that. Those arguments are, frankly, contradictory. First, there is the argument that this is about minimum wages and we do not need this board now that we have a statutory minimum wage. However, unlike the other wages councils that were abolished in the 1980s, the Agricultural Wages Board order is not simply about minimum wages. It is about the whole structure of wages and other conditions, as the impact assessment recognises. If we remove that structure, there will be no wages structure in the agriculture sector. The effect will be to drag down wages. Before the noble Lord gives some assurances in relation to the immediate effect because existing contracts of employment clearly continue to apply, in order for the Government to get to their figure of so-called benefit—that is to say, wage cuts—the measure must affect a whole range of workers, whether they are on the minimum wage or not—and 40% are, even so.
The Government’s alternative argument is that most workers are actually paid more and that this will therefore have no effect whatever. At the time of the debate on the Public Bodies Bill, when this issue came up, various Members of your Lordships’ House—who, I may say, have fairly close associations with a landowning interest—pointed out that most of their workers and the workers in the industry were paid more. You cannot have it both ways. Either this measure will have no effect because employers will continue to pay more, or the £250 million saving in employment costs outlined by Defra’s calculations cannot be achieved. You cannot have it both ways.
The Minister also said that this is likely to increase employment in the industry. That is not what the impact assessment actually says. It effectively says that such an employment effect is not proven either way. Indeed, in one respect, Lantra, the training body for the industry says that we need 60,000 new young workers to come into the agriculture sector. Most farmers would agree with that, if you consider in the long term the next decade or so of farming. The biggest effect on wage rates is the cut in the youth rate. This is hardly likely to attract young workers into the agriculture sector, much needed though they are.
My final point is that even if the Government present, and the government documentation presents, this as a blatant transfer out of the pockets of agricultural workers into the pockets of their employers, it may not be the reality. Unfortunately, we do not have a publicly available list of responses to the consultation but I understand that a disproportionate number of responses were from the horticultural sector. That sector is unique in the agriculture industry for two specific reasons. First, it depends even more heavily than other parts of the industry do on seasonal and migrant workers and therefore has a disproportionate interest in the minimum rate. The other aspect is that it is one of the sectors that directly supply the supermarkets.
When you look behind all this and at the responses of, for example, the Fresh Produce Consortium, which is a front for the supermarkets, the economic reality of the situation is that the farmers will not get the benefit of this reduction in wages because as soon as the supermarkets see the order disappear, they will require those farmers to cut their prices and the money will go
not from the pockets of rural workers to struggling farmers but from the whole of the rural economy into the pockets of the supermarkets. That is what this strategy means.
I do not believe that there is an economic case, and there is certainly not a moral or social case, for the abolition of this board. There may be arguments for the simplification and modernisation of the structures and committees and of the substance of the order. I certainly would agree with that. But removing the body altogether in a blatant act of redistribution of rural income—in many sectors out of the rural area and ultimately into the pockets of the supermarkets—is not acceptable and the Government should be ashamed of bringing this forward. Apart from the procedural points, there are strong substantive arguments and again I ask the Minister to withdraw this amendment.