My Lords, the amendment of the noble Lord, Lord Whitty, would require Ministers to publish and lay before both Houses of Parliament an updated impact assessment of the abolition of the Agricultural Wages Board prior to the commencement of the provision to abolish the board. The House has already debated the impact of the abolition of the Agricultural Wages Board at considerable length both in Grand Committee and at Report, and has voted in favour of abolition.
The best estimate of £250 million over 10 years, which includes the potential impact on wages, sick pay and annual leave, is based on empirical academic research, which looked at wage levels in the past.
As I have made clear previously, the impact on wages, which is the largest cost, would account for only 1% of the total agricultural wages bill over the 10-year period. However, the impact assessment makes clear that there is and will remain considerable uncertainty about the impact and that in fact there may be no reduction in workers’ wages or other benefits. That is because the reality of the impact will depend on the behaviour of employers of farm workers and a range of other factors, such as relative strength of supply and demand for agricultural workers and the need to be competitive with other employers in the same area—points made most eloquently by my noble friends Lord Deben and the Duke of Montrose.
Moreover, there are a number of reasons why the impact is likely to be smaller than that suggested by the external research. A majority of workers already receive terms and conditions above the agricultural minimum wage rates, so it is probable that their wages would not be affected if the board were abolished. The underlying market conditions suggest that there will be a sustained demand for agricultural workers. Research indicates that there is a shortage of workers with relevant skills in the agricultural sector, and that that shortage is higher than comparable shortages in other areas of the economy. The agricultural workforce is also ageing, with 55% of the sector workforce aged over 45, which, again, is higher than in other sectors of the economy.
Moreover, agriculture is a huge industry, with tremendous potential for growth to meet the challenges of feeding the world’s growing population. As I said in the debate at Report, £250 million over 10 years assumes that every agricultural worker would see a relative fall in their wages compared with what they would have been due. We think that that is a highly unlikely
scenario given the evidence of the demand for workers—a point made most eloquently by the noble Lord, Lord Curry. However, we deliberately decided to adopt a cautious approach in the impact assessment, given that there is some uncertainty.
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In the absence of the Agricultural Wages Board, agricultural workers will be fully protected by the national minimum wage, working time regulations and other, wider employment legislation applicable to all other sectors. Defra published an impact assessment as part of the consultation exercise on the future of the Agricultural Wages Board. Following the consultation exercise, the impact assessment was updated to reflect 2012 prices and to include a correction in the initial analysis by the independent researcher. The final impact assessment has been made publicly available on the Defra website.
We are satisfied that the impact assessment has been prepared with due care and diligence. As noble Lords will be aware, this is not an exact science. By its very nature, an impact assessment is bound to contain uncertainties, and that will not change, however many times it is updated.
I want to answer some questions raised. The noble Lord, Lord Whitty, said that he did not agree with the independent research and referred to a letter that I wrote to him.