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Gangmasters (Licensing) Act 2004 (Amendment)

Volume 461: debated on Wednesday 13 June 2007

I beg to move,

That leave be given to bring in a Bill to amend the Gangmasters (Licensing) Act 2004 to extend its provisions to cover construction work; and for connected purposes.

As the House will know, gangmasters are labour providers who operate throughout the UK economy. The House will also be aware that in summer 2004 the private Member’s Bill on gangmasters received Royal Assent. With the indulgence of right hon. and hon. Members, I should like briefly to remind the House of what the Gangmasters (Licensing) Act is all about. It applies to all labour providers operating in the agricultural and shellfish industries and the food processing and packaging sectors. It requires all those gangmasters to be licensed, establishes the Gangmasters Licensing Authority to run a register of gangmasters and enforce a licensing scheme, and creates penalties of up to 10 years’ imprisonment for gangmasters who break the law. The Act had support from every political party and from across society, the endorsement of trade unions and employers, and even the backing of legitimate gangmasters. As legislators, we should be proud of the Act, especially as the passage of that landmark law coincided with the heart-rending loss of life that took place in the Morecambe bay tragedy.

The Act is performing four crucial tasks: first, it is protecting vulnerable workers from exploitation and abuse; secondly, it is driving rogue labour providers out of business by driving them into court; thirdly, it is safeguarding the future of the decent, law-abiding agencies which do well by their workers and play by the rules; and fourthly, it is ensuring that the Treasury is not cheated and defrauded of millions of pounds of tax and VAT by criminal gangmaster bosses. However, while I can rightly argue that the Act is good law, I am also forced to admit that it is a limited law, because it applies only to a narrow, albeit important, sector of industry. Two years on from its hitting the statute book, the impact of its limitations is becoming all too apparent, especially if we take a long, hard look at the UK’s construction industry.

Let us make no mistake about it—construction matters to this country. It employs more than 2 million people, contributes more than £70 billion a year to our economy, and is literally helping to build a better Britain—from terminal 5, to constructing the power stations that we need to deliver energy security, to providing the homes that we need to solve the housing shortage, to the construction of the Olympic village. In the context of the Olympics ideal, fragmentation and self-employment across the 9,000-strong work force would be a gangmasters’ gold rush which would compromise safety, drive down pay and conditions, and fail to deliver the promised legacy of creating skills and jobs for local people. The benefits of regulated employment can be seen from other Olympic examples. At least 13 construction workers died during the building of the Athens Olympic site in 2004, which relied on casualised self-employed workers. There was one fatality during the construction for Sydney in 2000, which used a direct employment model. We do not need another Morecambe bay-type tragedy that would tarnish the London Olympic games.

Sadly, UK construction has a darker side, where vulnerable workers are ripped off by unscrupulous labour providers, health and safety law is ignored by dodgy employers, and the lives of innocent, hard-working people are lost through criminal, but too often unpunished, negligence. If we look carefully into the long shadows of construction, we will detect the outline of a familiar figure—the rogue gangmaster. Yes, there are a huge number of decent labour providers who not only provide an excellent service to a construction sector dependent on a quality work force but abide by the law and treat their workers with respect, but there are also a growing number of rogue operators in the unregulated construction sector who operate in precisely the same shameful way they once did in the sectors now regulated by the 2004 Act. By that, I mean that they will break any law, cut any corner, undermine any good employer, evade any tax, exploit any worker, and use any loophole to earn a quick buck and make a quick getaway. The sad paradox for vulnerable workers and decent bosses is that construction is the fastest growing sector of the economy, yet it is also the least regulated. Although I would never argue for any industry to be overburdened with regulations that it does not need and which would not work, I believe that balanced regulation is as good for business as it is for workers. In other words, I am talking about regulation for a purpose, not regulation for its own sake.

Let me give a few examples of why construction is crying out for balanced and meaningful regulation. Construction workers are being forced to operate under bogus self-employed status so that their employers can avoid their tax and national insurance responsibilities. They are being redesignated as security staff so that they can sleep on site at night. They are being brought in from the EU and sent on to sites without the training or the language skills to understand health and safety warnings. Pay is plummeting as rogue employers force wages below the going rates. Fly-by-night gangmasters are driving down costs and putting legitimate labour providers out of business. Worst of all, health and safety laws are being broken to such an extent that deaths in construction rose by a staggering 25 per cent. last year. In fact, things are now so dangerous that construction workers are seven times more likely to die at work than workers in any other industry. With the greatest respect to our emergency services and our armed forces, whenever there is a death in any of those professions there is widespread reporting by the press and media. However, when construction workers lose their lives it goes largely unreported.

The number of rogue gangmasters operating in construction is growing at a rate of knots, but here is the irony: many have simply switched from providing labour to farms and food processing factories to providing labour to building sites and construction firms. Why is that? It is because the licensing, regulation and enforcement that would seek them out and lock them up in the food and agriculture sector is absent from the construction sector. Put simply, there is a legal vacuum in construction and the rogues have filled it. In construction, no law means no chance—no chance to protect vulnerable workers, no chance to track down the rogue operators, and no chance to bring them to justice.

If we take a moment to think it through, we can see that the absence of effective law in construction makes no sense at all. Where is the logic in a state of affairs where a labour provider needs a licence to supply a worker to a food processing plant but does not need one to supply that same worker to a building site? One does not have to be Einstein to know that there is no logic in that. A worker is a worker is a worker; a principle is a principle is a principle. Everybody is equal under the law or nobody is equal under the law. Members should not take my word for it; they should ask the Government. After all, Ministers support licensing and registration in other sectors, both in principle and in practice. When the Government have recognised a problem and witnessed exploitation, they have acted through the law. I ask them to do the same with construction.

I have admitted that the Gangmasters (Licensing) Act is limited in scope, but I have also argued that it is effective in practice. Its effectiveness brings me to my feet today. The Act offers a template, which provides a model for the way in which labour providers in the construction industry could and should be regulated. I am not alone in thinking that. Even the chair of the Gangmasters Licensing Authority, Paul Whitehouse, has argued the case for including construction in the remit of his regulator.

The law matters—it is what we do here first, last and always. It is why we were elected. Therefore, a failure to give the protection of legislation to vulnerable workers and decent bosses in construction is not merely a failure of law but an abdication of our core responsibility and solemn duty as Members of Parliament.

Question put and agreed to.

Bill ordered to be brought in by Jim Sheridan, Mr. Nicholas Brown, Mr. John Denham, Tony Lloyd, Anne Moffat, Mr. Jim McGovern, Mrs. Madeleine Moon, Mr. Peter Kilfoyle, Mr. Stephen Hepburn, Mr. Michael Clapham, Harry Cohen and Mr. David Hamilton.

Gangmasters (Licensing) Act 2004 (Amendment)

Jim Sheridan accordingly presented a Bill to amend the Gangmasters (Licensing) Act 2004 to extend its provisions to cover construction work; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 29 June, and to be printed [Bill 122].