My Lords, these amendments will simplify employment legislation for around 40,000 farm businesses in England and Wales. They will ensure the same levels of employment protection for agricultural workers as for workers in all other sectors of the economy. They will also abolish 31 public bodies whose functions are now used infrequently or have simply fallen into disuse. This is an important reform, which will contribute to the Government’s key objective of encouraging economic growth as well as the programme of reducing the number of public bodies. We brought these provisions forward in Grand Committee but they were not accepted. We believe that the case for them is very strong and therefore we have reintroduced them.
The agricultural wages committees were set up in their current form nearly 65 years ago, just after the Second World War, although their origins go back even further. The Agricultural Wages Board is now the only remaining sector wage council; the 26 others were abolished 20 years ago, in 1993. Agricultural workers represent 0.5% of the total workforce. There is no reason why they should be treated differently from the other 99.5% of workers, who are all protected by the national minimum wage and other statutory employment provisions.
Agriculture today is very different from 65 years ago. It is a now a global, international business. Farmers compete against not just each other but farmers overseas to sell both here and in international markets.
Technological developments and increased mechanisation mean that workers need to be highly skilled and qualified to operate complex machinery, and to be able to keep up to date with modern animal husbandry methods. The industry is also becoming increasingly diverse, particularly as businesses move away from mixed farming to specialise in specific sectors. Around a quarter of farms now also operate non-agricultural businesses; for example, a farm shop or bed and breakfast. This means that many farm businesses have to employ workers under both the agricultural minimum wage and the national minimum wage regimes. They therefore have to comply with two sets of employment legislation, which is an unnecessary cost to farm businesses in both time and resources.
Even within what are traditionally regarded as agricultural activities, there are grey areas where a farm business has to determine whether employees are employed in agriculture and entitled to the agricultural wages order terms and conditions as opposed to general employment terms. For example, livestock and poultry rearing would normally be considered agricultural activities and covered by the agricultural wages order, but this is not necessarily the case for on-farm slaughtering operations. Similarly, where there is a farm packing business, packing of produce grown on the farm would normally be covered by the agricultural wages order, whereas packing of bought-in produce is not.
The abolition of the agricultural minimum wage will remove the need for farm businesses to operate two employment regimes and end the confusion of whether activities fall within the national minimum wage regime or the agricultural minimum wage regime. It is widely accepted that the legislation which underpins the Agricultural Wages Board is outdated and hampers the ability of the industry to offer more modern, flexible employment packages. For example, it effectively dissuades employers from offering the payment of annual salaries, which is disadvantageous for workers as it hinders long-term financial planning—and thereby better security for farm workers and their families.
The abolition of the Agricultural Wages Board and the agricultural minimum wage regime will allow farmers to agree terms and conditions that take account of the requirements of the farming sector and suit the particular circumstances of both employers and workers. It will make it easier for employers to offer opportunities for workers to work the same number of weekly hours, but over a compressed period. This could be beneficial for businesses, who may want to provide for longer shifts, and for workers with family and domestic responsibilities.
Abolition will enable farm businesses to compete for workers on a level playing field with other local employers. It should encourage longer-term and more permanent employment of farm workers, which will boost growth and have wider benefits. For the avoidance of doubt, research suggests that there will continue to be considerable demand for farm workers in the years ahead, which will mean that employers will need to offer competitive pay rates to attract new workers. A majority of workers already receive terms and conditions
above the agricultural minimum wage rates, and as contracts are already in place their wages should not be affected if the board were abolished.
The underlying market conditions suggest that there will be a sustained demand for agricultural workers. The 2011 survey from the UK Commission for Employment and Skills indicates a shortage of workers with relevant skills within the agricultural sector, and that this shortage is higher than comparable shortages in other areas of the economy. The agricultural workforce is also ageing: 55% of the sector’s workforce is aged over 45, which again is higher than in other sectors of the economy. These factors mean that we can expect demand for both workers and skills in the sector to increase over the next 10 years and beyond, which means that market drivers will ensure that wages remain competitive. Farm businesses will be wise and prudent to provide career and development opportunities to encourage workers into agriculture and offer attractive terms and conditions to retain them.
It is also important to remember that agricultural workers who have contractual rights reflecting the terms of the agricultural wages order at the time of the board’s abolition will retain those rights until either their employment contract is varied by agreement or their employment comes to an end. New workers coming into the industry or workers who negotiate a new contract will have the same level of employment protection as workers in all other sectors of the economy. Furthermore, agricultural workers who are supplied by a labour provider and who may be at the lower end of the wage scale will continue to have the added protection of the gangmaster licensing legislation.
Turning to the 15 agricultural wages committees in England, most of their functions have now lapsed in practice or have been replaced by wider legislation. Their only remaining active function is to appoint members of the 16 agricultural dwelling house advisory committees in England—or, as they are more generally called, ADHACs.
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ADHACs 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 during the 1980s, the number of requests for advice from ADHACs has declined significantly from 500 then to around 10 requests per year now. It is not a statutory requirement to consult an ADHAC, and while a local authority is required to take account of the advice of an ADHAC in making its assessment of an applicant’s case, it is not obliged to follow that advice. We understand that many local authorities are very comfortable taking decisions on rehousing without the advice of an ADHAC.
Therefore, the 15 agricultural wages committees and 16 ADHACs in England are now effectively defunct bodies. It is difficult to justify their continued existence at public expense so the Government’s view is that they should be abolished. With regard to 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. Therefore, the amendment will not in any way jeopardise the position of tenants with protected tenancies.
In summary, the Government firmly believe that these amendments will benefit the agricultural industry by removing regulatory burdens from farm businesses, allowing the industry to modernise and compete for labour on an equal basis with all other employers, while ensuring that agricultural workers have the same levels of protection as other workers. All this will encourage the development of a sustainable and prosperous industry for the future, which is good for businesses and workers, as well as consumers and the country as a whole. These amendments will also remove 31 obsolete public bodies, contributing to the Government’s wider programme of public body reform.
I hope that, in the light of my remarks, noble Lords will accept these amendments. I will address the opposition amendments when we have heard from noble Lords. In the mean time, I beg to move Amendment 83.
Amendment 83A (to Amendment 83)