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Gangmasters (Licensing Authority) Regulations 2014

Volume 755: debated on Wednesday 16 July 2014

Motion to Approve

Moved by

That the Grand Committee do consider the Gangmasters (Licensing Authority) Regulations 2014.

Relevant document: 5th Report from the Joint Committee on Statutory Instruments

My Lords, the regulations were laid before Parliament on 9 June 2014. They revoke and replace the Gangmasters (Licensing Authority) Regulations 2005 and reform the governance of the Gangmasters Licensing Authority (GLA) by reducing the size of the board from its current 29 members to nine members and enabling board members to be recruited through open competition rather than by nomination from a restricted set of organisations.

The GLA was set up in 2004 to protect vulnerable and exploited workers after the tragic deaths of 23 Chinese cockle pickers in Morecambe Bay. The authority licenses businesses which provide workers to the farming, food processing and shellfish-gathering sectors to make sure they meet the employment standards required by law, and carries out inspections and enforcement activity. Since 2004 the GLA has issued over 2,500 licences and initiated the successful prosecution of 70 individuals. Since 2010, the GLA has identified £1.2 million in proceeds of crime and protected over 5,000 workers, recovering some £4 million for victims. The GLA became a Home Office non-departmental public body on 9 April 2014, transferring from Defra.

The regulations before noble Lords today reflect one of the key recommendations of the Red Tape Challenge review of the GLA’s operations and implement a measure announced in a Written Ministerial Statement presented to Parliament in May 2012 by the noble Lord, Lord Taylor, when he was Parliamentary Under-Secretary of State at Defra. The planned reform of the board was a key recommendation of the triennial review of the GLA, which reported in April 2014.

When the GLA was established in 2004, the main concern underlying the design of its governance structures was to encourage a high level of participation from the widest possible cross-section of industry stakeholders in order to secure support for the introduction of the licensing regime. This resulted in a very large, representative board with places reserved—subject to ministerial appointment—to specific organisations named in statute, as well as a number of ex-officio places for government departments and agencies with operational interests in common with the GLA. This approach succeeded in helping the GLA establish itself as a well respected and effective regulator. However, it was recognised that the governance structures enshrined in the 2005 regulations were intended to serve the authority during its early years of operation, and that they should be reviewed to ensure that they continued to enable effective leadership.

The Red Tape Challenge review of the GLA concluded that its developing role in tackling worker exploitation and criminal activity demands more focused leadership, and the review recommended the introduction of a smaller board to provide the authority with clear strategic oversight and direction. Reforming the board in the way provided for in these regulations will enable the GLA to better adapt to the changing circumstances that it faces. Strong and effective engagement with the sectors that the GLA regulates remains important. This will be ensured through improved advisory groups reporting to the main board, building on the current system of sector liaison groups. I commend these regulations to the Committee.

My Lords, I greatly welcome the measure introduced by the Minister, particularly the reduction in the number of people involved in running this operation. This will presumably result in better value for money in what is produced by the Gangmasters Licensing Authority. However, considering that originally—and, probably, even now—the expenditure was supposed to be recovered from the applicants, will this mean that the cost of the licences will now reduce? I do not know whether the GLA was successful in that regard. It might well have had a shortfall but, as the Minister mentioned, it certainly issued a great many licences over the period.

Originally, the GLA appeared to have only one set fee in obtaining a licence, and I wonder whether the new body will be allowed to differentiate at all between large and small employers. This is a topic that I have followed on and off for some time, and one of the interesting things is the range of activities that the GLA covers. The Explanatory Memorandum states that the GLA issues licences to businesses supplying labour in connection with agriculture, and the gathering of wild animals and wild plants. The Minister mentioned this in her introduction, but it may not be immediately obvious to Members of the Committee that apparently the gathering of wild plants includes forestry, and therefore the whole forestry industry seems to be brought into the regulations.

The particular issue that I came across was that many of the people who come to work in forestry are single, individual contractors. For example, I came across a fencer. In fencing it is much better to have two people, but as an independent contractor he would ask someone to come along and cut branches off the trees along the path of the fence he was building. If that person, however, finished his work and stopped to pick up a hammer in order to help the fencer, a gangmaster’s licence would be needed. The distinguishing feature is that if you are in charge of equipment, you are not part of a gang. The minute you become involved in manual labour for someone else, a gangmaster’s licence is required. I should be grateful to know how this has progressed and whether there will be any discretion under the new body to tailor the way in which it applies the regulations.

I thank the Minister for her explanation. From these Benches, I am unhappy and reluctant to endorse this measure as currently drafted. Several features of the order cause considerable concern.

Labour is rightfully proud that in government it established the Gangmasters Licensing Authority. I remember that my noble friend Lord Whitty steered the Bill through this House without any amendment. It is unfortunate that the Government wish to press ahead with this order despite the misgivings voiced in the other place calling for a period of reconsideration, and the measure having been subject to a vote. That the Government wish to proceed with the governance alterations in spite of this controversy is to be regretted, given that the authority is so important and does such vital work.

My first anxiety stems from the fact that responsibility for the Gangmasters Licensing Authority passed from Defra to the Home Office in April this year. This runs the risk of interpreting the work of the authority as merely enforcement. I am sure the Minister will appreciate that there will be a difference of culture between the two departments. We are concerned that the Home Office may be focused only on prosecutions. Can the Minister outline how her department will widen the approach beyond mere prosecution towards prevention and guidance to encourage interplay in farming activities, with a view to achieving outcomes beyond prosecution?

Labour is approaching this area with a view to extending and building on the gangmasters legislation so that it covers other areas. In this regard, it is disappointing to hear that the Government may well have intentions to withdraw forestry from the authority’s areas of responsibility. The governance structure is a vital part of establishing full participation in the objectives and strategy of the authority, which is leading the way in tackling abuse among certain workers. The approach from my colleagues in the other place was to seek to be satisfied that the reduction in board representation from 29 ensured that the full skill set and expertise required by the authority would still be present. The Minister did not explain the logic behind reducing the number on the board to nine. While recognising that numbers could be reduced, we are looking for assurances that the board will continue to be effective, and indeed improved, by reducing its size to a certain number.

It is disappointing that the Minister in the other place did not explain how nine would be the correct number to ensure that the members of the board brought the level of expertise needed and that there was enough recognition from and connection to the community that will ultimately implement the regime. Instead, the Minister concentrated on the belief that the order had to be brought in immediately and could not be subject to further consideration. Since it is recognised that the board members will now be members on the basis of their own abilities and not as representatives of various organisations, the Government must have given some thought to the range of skills needed in order for the number nine to be proposed.

It would be helpful to understand better the consultation that was undertaken on the matter as explained in the memorandum. The explanatory document gives details of the consultation where the respondents agreed with the proposals to reduce the size of the board and to move away from a representative board to one recruited by open competition. Respondents were also asked to give details of their preferred mechanism for ensuring that a smaller board would have access to and take account of the wide range of stakeholder views. The memorandum says, at paragraph 8.5:

“Of those answering the question about the GLA Board structure, 56 agreed with the Government’s proposal for reform, while 5 expressed their disagreement. Forty five of the 48 responses to the question seeking views on how to maintain stakeholder contact with a reformed Board were in favour of the retention of a formal mechanism for ensuring these views were heard. There was no clear consensus on how this would best be achieved”.

I repeat the last sentence:

“There was no clear consensus on how this would best be achieved”.

Can the Minister say how many respondents came up with a number and how popular nine was?

I will be so bold as to suggest an amendment to the order today. Would the Minister consider an alternative, whereby the number of board members must total at least nine but not more than 15? That might go a long way to ensuring that the right skill set was always present on the board and make it flexible as to the operation of the authority and responsive to the challenges that may be thrown up in future. Would the Minister like to withdraw the order today to consider that? The TUC argued in its representation:

“If the Regulations are adopted, future Board members will be recruited against a generic skill-set. There is a risk that future Board appointees will have no knowledge of the agricultural, fresh produce and shellfish industries … The appointees are also likely to lack experience in representing or protecting vulnerable workers from exploitation”.

In her response today, will the Minister also include some further details that are not included in the regulations? Under Regulation 5, relating to,

“Tenure of office and remuneration of the Board”,

neither the length of time of a board appointment nor whether a board member may serve multiple terms of appointment is stated. Is this included in an earlier regulation that is not being changed by these regulations? Could the Minister perhaps expand with further details on how the department expects the board to be constituted and how it may operate? What assessment has been made of the impact of these changes on vulnerable workers? How will the Government ensure stakeholder engagement and provide joined-up government? Finally, will the Government review the impact of these governance changes on the Gangmasters Licensing Authority and its ability to perform its functions? On this crucial area, where so many people are vulnerable, I would like to be reassured by the Minister today.

My Lords, I thank the Minister for her explanatory statement. I did not find that it addressed all the issues of concern that my noble friend Lord Grantchester has already enunciated. I declare my interest as the acting chair of the Ethical Trading Initiative, the organisation that probably drove the previous legislation, along with the trade unions and corporates that were involved at the time. Understandably, we have a significant interest in the current proposal.

We feel that the general direction of travel during the past few years has been to make the GLA a bit more biddable to the Government’s agenda, including a focus on enforcement, possibly to the detriment of licensing and standards-setting work, which is widely acknowledged as having been important in driving a change in attitudes in the industry. It is often stated that it was a part of the Government’s Red Tape Challenge in its early days to consider whether to dissolve the GLA as a burden to business. I hope that the Government have moved away from that.

The noble Duke, the Duke of Montrose, talked about better value for money. It depends on how you assess that value for money: whether we are talking about just the cost to business of providing the scheme or about whether potential employees in these industries are still being adequately protected. We know that a lot of the risks have not gone away. I do not profess to be knowledgeable about the forestry industry; I am more familiar with the meat-processing and shellfish industries. We need to be careful about how we assess value for money.

I share the views of my noble friend Lord Grantchester about the move from Defra to the Home Office and his feeling that it will focus attention on enforcement and prosecution. While we do not regard that as unimportant, there is a concern that it will be to the detriment of standards-setting and best practice development. I would welcome the Minister’s comments on that, because we think that prevention, rather than dealing with the symptoms through prosecution, is just as important. We know that the risk is still there and in some ways has an impact on modern slavery, of which we have had examples in these industries. We should not be under any illusions about the level of risk. We may not have had a Morecambe Bay tragedy—and thank goodness for that—but we have had other tragedies of individuals being held more or less in a situation of bondage or slavery, with passports confiscated, living in terrible conditions and not even being paid minimum wages. We should not forget that.

I listened carefully to what was said about the size of the board. If we are changing to a board of nine, it is legitimate to ask whether there will be a sufficient skill set in the way that my noble friend has suggested.

I want also to ask about the advisory committees that are referred to in the consultation document, which states that,

“this instrument permits the Board to establish advisory committees. Unlike the existing stakeholder liaison groups, the measure introduced in this instrument obliges the Board to pay due regard to the advisory committees findings and recommendations”.

Can the Minister give any more detail on “pay due regard”? Will the board publish the recommendations of the advisory committees and will we be able to see how the Gangmasters Licensing Authority reacts to them? That is important, because it is inevitable that the committees will raise the concerns of stakeholders in those industries.

By having the right type of legislation and a body with a statutory mandate, positive lessons have come out of the GLA experience for tackling deep-rooted practices such as labour abuse. I am not sure how one would tackle modern-day slavery across different industry sectors without bodies such as the GLA.

On the review process, I notice that the Explanatory Memorandum states that there is no need for an impact assessment because there will be no changes that merit it. Nevertheless, this is a fundamental change to the operation of the Gangmasters Licensing Authority. Will the Minister reflect on the suggestions made by my noble friend Lord Grantchester? If she is not prepared to go quite so far as he suggested today, will she consider the need for a review process before a triennial review given the change that is taking place?

My Lords, perhaps I might come in again. It was very interesting to listen to the noble Lords opposite and hear their concerns. I wonder if we have a clear picture of what the members of the Gangmasters Licensing Authority are required to do. Presumably they have a very great role in drawing up the regulations and looking into the particular circumstances of any industry. By and large, the regulations are fairly clear. The enforcement is laid on those who employ the gangmaster. At the same time, of course, the police and various other bodies can carry out the enforcement. I do not know whether the members of the Gangmasters Licensing Authority are asked to go round and check on what is happening in different circumstances. Particularly if there is a legal case that arises, I suppose that they are required to appear in court. I wonder on how many occasions the members of the Gangmasters Licensing Authority have been asked to appear in court to defend their regulation.

There were two figures that the Minister quoted that I thought were interesting. I missed exactly whether the £1.2 million was the licence fee—I might have got that wrong but she can correct me if so. As interesting was the £4 million compensation that was obtained. I presume that was in circumstances where, for one reason or another, employment rights had been transgressed, whether it was minimum wage or whatever the circumstances were. It would be interesting to have some detail about what that compensation involved.

My Lords, I thank all noble Lords who took part in the debate. First, I will discuss the future direction of the GLA now that it has become a Home Office body, which has been touched upon in various speeches.

The Government are determined that criminals who engage in forced labour, trafficking and other abuses, and unscrupulous employers who exploit vulnerable workers should face tougher enforcement action and stronger penalties. That is why the GLA became a Home Office body in April, to enable it to strengthen its enforcement and intelligence-gathering capabilities. In the Home Office, the GLA can benefit from closer co-operational links to the wider law enforcement family and it will work in partnership with the National Crime Agency, regional crime hubs, local police forces and immigration enforcement teams. The GLA will be able to secure expert support from the National Crime Agency intelligence hub and immigration enforcement intelligence. The GLA will also have access to College of Policing-accredited training developed for immigration enforcement investigators.

The GLA is at the forefront of the fight against worker exploitation, forced labour and slavery. Some noble Lords touched upon modern slavery. A reformed board able to steer the organisation through change and provide leadership is essential. This reform is even more important now that the GLA sits alongside enforcement bodies in the Home Office, sharing intelligence and reducing crime.

The first point made by my noble friend the Duke of Montrose was about value for money. The reform is not primarily about saving money but about increasing effectiveness. The cost of licences is a slightly separate issue, but there is no current plan to change the licensing fee structure. The fees are currently banded according to the turnover of businesses, which I think one noble Lord touched upon, and the lowest fee is £400.

My noble friend also touched on forestry businesses. Forestry businesses were excluded from the need for licensing under an order in October 2013. As in the example given by my noble friend, forestry is therefore not an issue in this case.

Going back to the move to the Home Office, it is not about narrowing the focus of the GLA to prosecutions only. The move will only enhance partnership working, in our view.

The noble Lord, Lord Grantchester, talked about getting the right skills for the board. We are aiming for a board that has the best skills and expertise, which includes the expertise of the sectors being regulated but also those with other relevant experience; for example, commercial, financial and legal expertise, and expertise in the regulation of comparable sectors. Each individual applies through open competition and will go through a recruitment process. We want the right make-up for the board so that it can take forward the reforms that are needed to ensure that the GLA can continue to fight for workers and ensure that they are not exploited.

Noble Lords also touched upon the advisory committees that will sit alongside the main board. It is a matter for the board how it establishes and works with advisory committees. The Government’s transparency agenda would expect the board to publish relevant papers as appropriate.

There has been quite a lot of discussion this afternoon about why the Government want to reduce the current number of board members. I do not know whether noble Lords have sat on boards; I certainly have, and a board of 29 does not make decisions in a very efficient manner. Just from personal experience, I would rather sit on a board of nine than 28 or 29. The current make-up of the GLA board was designed 10 years ago to encourage all stakeholder groups affected by the licensing scheme to take part in establishing the authority. Now that licensing is established in the regulated sectors, the GLA needs a more streamlined board with a clear remit to provide strategic oversight. Having a board appointed on merit through open competition will bring the GLA in line with similar public bodies and widen the pool from which candidates can be drawn.

One noble Lord—I think it was the noble Lord, Lord Young—talked about the wide variety of stakeholders to be heard and asked how the board would do that. The advisory committees will help in that endeavour, and the existing stakeholder liaison groups, which cover the labour providers, labour users, workers and businesses concerned, will also continue.

Noble Lords asked why nine is the magic number. We believe that the right skill set can be gained through a board of nine members, while also ensuring that it is able to take swift and clear decisions. Nine is not inconsistent with comparable boards of other arm’s-length bodies.

If I could just touch on the point that the noble Lord, Lord Young, made about the £1.2 million, that is how much the GLA has identified in proceeds of crime and in protecting more than 5,000 workers and recovering some £4 million for victims. That is where the £1.2 million has come from.

I do not know whether I have satisfied the concerns of the noble Lord, Lord Grantchester, but I am sure that he is about to stand up and tell me if I have not.

I start by saying that I omitted to mention my farming interests in a dairy farm. I apologise to the Committee for that omission. However, in my experience in the farming sector I have never heard of a lack of back-up for any of the enforcement authorities that cover the many regulations that the general practice of agriculture has to abide by.

I listened very carefully to the Minister but I do not think I picked up how it was explained that the Home Office would ensure that best practice guidance and prevention would be maintained, even though there would be a greater emphasis on enforcement. Perhaps I could gently ask for that assurance to be given.

Similarly, I recognise that 29 is a very unwieldy number and that it could be reduced now the GLA is established. If the Minister could say a little more to reassure me on several of the further questions I posed about the GLA’s continuation of its functions, so that the Home Office could reassure stakeholders and the TUC, as the representative of workers, that possession of the proper skill set will be part of the background assessments in making an appointment, that would be most helpful.

I asked whether the Minister would consider the review timetable. I do not know whether the existing triennial review is all that is proposed but, given the changes that are taking place, a shorter period would seem to be appropriate. If the Minister could respond to that, I would be grateful.

As I understand it, the GLA’s current role and practice will continue. I will write to noble Lords and correct this if I am wrong, but I understand that there will also be a slight budget increase for next year. We are not taking anything away in the move to the Home Office. As to whether the GLA will focus only on enforcement, it will continue as a regulator in the sectors that it covers. It regularly issues briefing notes to the sector on licensing employment and the awareness of exploitation, and I understand that that will continue.

As I understand it, there is currently a triennial review, but I will clarify that in a note to the noble Lord.

Motion agreed.