Scottish Affairs Committee - Minutes of EvidenceHC 156

Oral Evidence

Taken before the Scottish Affairs Committee

on Tuesday 17 July 2012

Members present:

Mr Ian Davidson (Chair)

Fiona Bruce

Jim McGovern

Iain McKenzie

Pamela Nash

Mr Alan Reid

Lindsay Roy

________________

Examination of Witnesses

Witnesses: Ian Livsey, Chief Executive Officer, and David Nix, Head of Licensing, Gangmasters Licensing Authority, gave evidence.

Q364 Chair: Gentlemen, I welcome you to this meeting of the Scottish Affairs Committee. I remind you at the very beginning that this is the Scottish Affairs Committee and therefore, while matters furth of Scotland are of course of interest to us, we are mainly focused on what is happening in Scotland since that is where our remit runs. It would be helpful if you started off by introducing yourselves and telling us your positions in the organisation.

Ian Livsey: My name is Ian Livsey. I am the Chief Executive of the Gangmasters Licensing Authority and have been since 2007.

David Nix: I am David Nix. I am Head of Licensing at the GLA.

Q365 Chair: I presume you are aware of the general work that we have been doing and that if you have not read the minutes of the previous meetings then at least somebody has briefed you on them; that is what staff are for. It would be helpful if you could outline to us what the GLA is doing to tackle the sorts of issues that we have identified.

Ian Livsey: Thank you, Chairman. I will start and David can jump in as he sees fit. Thank you for sending us the minutes of particularly the fourth evidence session, with Gary Craig, Alistair Geddes and Nancy Kelley, which we have read. We have read the JRF report, which you refer to quite a lot. The first thing to say about the Joseph Rowntree report is that there is nothing in there that surprised us. That is what we would have expected to have found from what they did and where they went.

In terms of blacklisting and forced labour, I will start with a general description of the licensing scheme, the role of the GLA and what we do. Please do interrupt, and obviously ask questions. Clearly you know the history of the Gangmasters Licensing Authority, but I guess the best way to think of its evolution at the moment is as a set of three phases or stages. When the Act was passed and the organisation was set up, the first few years were for capacity building, establishing the system and promoting the licensing scheme. Licensing is at the heart of what we do.

The second phase, which we came out of about three or four years ago, was licensing the legitimate-bringing the sector into order. That meant excluding some of the rogues who were operating at the time, who variously were underpaying workers and putting them in shoddy accommodation. We have all seen pictures of that. In many ways we cleaned out the pond.

We have moved into what is now the third phase of the role of the Gangmasters Licensing Authority-perhaps later on we will touch on the Red Tape Challenge and the outcome of that-which is almost a policy formulation of where we have been taking the organisation. That is to take a much more enforcement-based approach, particularly targeting the criminals who operate in the UK food supply chain and, as you have pointed out in your evidence previously in discussions, in Scotland in particular. You will have noted some prosecutions that we have had in Scotland.

The Gangmasters Licensing Authority is, I would say, an enforcement body. As a description of how we operate-it is a general description of how enforcement bodies or regulators can be effective-there are three things that we do, and should do, in common with all regulators. The first thing is that we are intelligence-led. We work on the basis of intelligence that we receive about, say, forced labour or debt bondage-modern-day slavery is the way you look at it. We have an intelligence function that drives the analysis of the data we receive. We have 24,000 pieces of intelligence on our database. We get about 100 bits of information a day supplied to us about what is going on.

The second part about being successful is that we are enforcement-focused. That means, if you have identified that there is a problem, deal with it. We have quite extensive powers in the Act. We have powers of entry and powers of arrest. We can arrest people for obstruction and confiscate assets. It is intelligence-led, leading to enforcement-focused operations, which are increasingly multi-agency.

The third thing that we do is to tackle the right problems. The Government’s Red Tape Challenge-Jim Paice had a written ministerial statement on 24 May about us-says to us, "Yes, we know that there is serious organised crime going on; yes, we know that there is human trafficking, money laundering, forced labour, debt bondage, threats and intimidation and actual violence, and we want you to address those issues, whilst of course keeping the licensing scheme credible and operable." Tackling the right problems means that you avoid becoming bureaucratic and shooting fish in a barrel.

In spirit, that is what the Gangmasters Licensing Authority does. Do you want to ask any questions on that?

Q366 Chair: David, do you want to add anything to that at all?

David Nix: Perhaps I could expand on how licensing works and what we expect in compliance. It is basically existing law; so we don’t impose anything that any other legitimate business elsewhere across the UK economy wouldn’t be expected to comply with. That is contained in a document called our licensing standards. They cover a range of things, from basic employment law, national minimum wage and that kind of thing, and making sure people pay the right kind of tax and national insurance contributions, through to health and safety, and if you are providing accommodation and transport that they are of an adequate standard. That is a very clear framework and it is very easy for us to measure compliance against that. It is very clear what we expect people to do if they want to come forward and apply for a licence.

Q367 Chair: How many licences have you issued at the moment?

David Nix: We have more or less 1,200 licence holders at the moment. It has hovered around that figure pretty much since day one over the last six years.

Q368 Chair: There is a fairly comprehensive list of legislation that you are responsible for monitoring. How often would one of these 1,200 gangmasters expect to see you?

David Nix: Everybody who comes forward at the moment to apply for a licence has an inspection. After that, whether we have a reason to come out and visit somebody is purely determined by risk. We have a very good intelligence function within the Authority itself. We also have very good links and information-sharing provisions with other departments, which allow us to co-ordinate our work. That might be through joint work with other Government Departments and agencies, including the police and local authorities, or it might be that they provide us with information that leads to us conducting our own inspection or investigation.

Q369 Chair: I have had a look at your annual report, just to reassure you that somebody looks at it. You have put down a number of results-2,800 workers identified as subject to exploitation and so on. Do you have these figures broken down so that you could give me the equivalent figure for Scotland? I don’t expect you to have it off the top of your head, but is that doable?

David Nix: We could look and see what is possible. Those figures in the report are purely from inspections and investigations we have been involved in. The unquantifiable figure is how many workers we have protected because people have changed the way they behave because of our very existence.

Q370 Chair: I appreciate that, but I am always a bit worried when people claim the unquantifiable as their defence. What I want to look at is how well you are doing in Scotland compared with elsewhere in the country. I would have thought, therefore, that using the performance standards that you yourselves have identified would be an indicator.

David Nix: If it helps the Committee, we can certainly write to you with drilled-down details for Scotland.

Chair: That would be helpful.

Q371 Jim McGovern: Thank you very much for coming along. Do I take it from what you have said, David, that inspections are reactive rather than proactive? There is no such thing as a random inspection. It is just if somebody makes a complaint.

David Nix: Not so much complaint-led but intelligence-led. The system we use is the same as the police. It is the National Intelligence Model, where we grade intelligence and then task our work accordingly. Unfortunately, due to our nature, being a small organisation, we have to prioritise our resources in such a way that we don’t have the luxury of being able to do random inspections.

Ian Livsey: Can I rephrase the question, Jim? We don’t do routine inspections; we do intelligence-driven inspections.

Q372 Jim McGovern: By their very nature, routine inspections would be like when the Queen visits somewhere everything smells of fresh paint.

Ian Livsey: Yes; we don’t go every year to every one.

Q373 Jim McGovern: People would prepare for your routine inspection, but there is no such thing as a random inspection.

Ian Livsey: We do intelligence-led inspections, and they are often unannounced. If we have evidence that something is happening contrary to a certain number of our critical standards, we would go and do an inspection on them. What we don’t do is say, "We’re coming out in 12 months’ time at a scheduled date." As you say, they can prepare for that and get ready to be checked.

Q374 Chair: The point Jim was making was about random unannounced inspections.

Ian Livsey: I just don’t like the word "random". They are intelligence-driven, unannounced inspections.

Q375 Chair: Which, by definition, is not random.

Ian Livsey: That is right. It is driven by knowing about something.

Q376 Chair: Jim’s point was whether you do random investigations and the answer to that is no.

David Nix: "Random" in the sense that we don’t know anything about a business so we will just go along-we don’t do that.

Chair: If that’s the case, when we ask you a question like that, just tell us straight, "No, we don’t", rather than going round the houses.

Q377 Iain McKenzie: Picking up on the intelligence-led inspections, when you receive intelligence and you go on what we will term a "random inspection" based upon intelligence, do you specifically look at an individual point or do you go through a regular spectrum?

David Nix: It can be both. Sometimes we will go in and look at the very specific issue that we have identified. Alternatively, we will look at the whole range. Perhaps I could refer back to our licensing standards. The benefit of our approach in looking at a range of issues means that we might pick up one or two different things that tick different areas of legislation. It might be the national minimum wage, accommodation or transport. If there is something wrong in each of those areas, you might think there is something wrong completely across the board, so you are looking much more forensically. We have the ability to target a particular thing. It very much depends on-

Q378 Iain McKenzie: If you find a problem with a specific piece of information that you have been given and you go in and investigate, you would then widen-

David Nix: We can. The beauty of our approach is that we interview workers. In doing those interviews, we will tailor the rest of the investigation according to what they may say. If you interview six workers and there are absolutely no problems-

Q379 Iain McKenzie: Basically you are doing a sample investigation. If it fails on that, then you would open it up to a wider investigation.

David Nix: Yes, we have the capacity to do that.

Q380 Jim McGovern: If you get a complaint, you investigate it and the employer or the gangmaster says, "Yes, okay, I’ve been doing the wrong thing and it won’t happen again", do you then monitor that situation and go back and say, "Let’s make sure that they have corrected it"?

David Nix: There are a couple of ways we can react to that. First, we can attach conditions on the licence to say, "Okay, we have found one or two things wrong. They are not particularly serious but we expect you to correct them", and that should be corrected within a particular period of time. They would either have to send us evidence of compliance, if it is a documentary matter, or we could then come out and inspect them again.

Alternatively, if, for example, they owed an isolated number of workers some money and then paid them, and we decided proportionately that the problem has been corrected and we didn’t need to take any immediate action there, I imagine that would be something where we would look to have a follow-up visit at some point in the future. We would raise their risk rating, if you like, for follow-up action in the future.

Q381 Jim McGovern: That is not quite precise enough, "I imagine we would". Would you or wouldn’t you?

David Nix: We wouldn’t have a routine, "Yes, we will definitely go and inspect them in three months or six months." It depends on the circumstances.

Q382 Jim McGovern: If they just tell you, "Okay, we’ve done wrong but we’ve sorted it", do you just depend on that being the truth?

David Nix: No. We would satisfy ourselves by the nature of the circumstances of what has gone wrong and what has been corrected. For example, if they said, "We haven’t paid holiday pay but we promise we will pay it", we would expect to see evidence of those payments made to the worker. We would also look to corroborate that by getting in touch with the workers themselves.

Q383 Jim McGovern: Obviously there are a lot of different circumstances. Holiday pay is not the only one.

David Nix: Yes. I was using that as an example.

Q384 Jim McGovern: If employees are being abused or exploited, whatever word you want to use, and you go and investigate and find it substantiated that they are being abused or exploited, and the employer or gangmaster says, "It won’t happen again", do you just take their word for it or do you wait for another complaint?

David Nix: If there are more serious issues, we would revoke the licence.

Q385 Jim McGovern: Sorry, would you say that again?

David Nix: The licensing standards have a scoring category. We come in and assess the problems we have identified. Depending on the score that is totalled up, if it is above 30 points, we would revoke the licence. That is the action we take.

Q386 Jim McGovern: It would be helpful if we got some sort of example of how you score things: what is and what is not allowable, and what is serious. If you are going to treat a gangmaster leniently, on what basis do you do that?

David Nix: We have critical standards. They would be things like national minimum wage and tax-the most extremes of the forced labour indicators. They score 30 points and that is the pass mark. We also have non-critical standards. That might be pay slips, for example. If somebody is not being provided with pay slips, although they might still be being paid, and if that was the only thing wrong-

Q387 Jim McGovern: It is against the law, isn’t it?

David Nix: It is against the law, but we would attach a condition on the licence to say, "You must now start providing pay slips and you need to provide us with the evidence."

Q388 Iain McKenzie: Would you also attach a timescale for the improvement?

David Nix: Yes.

Q389 Iain McKenzie: The critical things would have to be addressed immediately, and on the non-critical you would agree a timescale to resolve them.

Ian Livsey: With the non-critical ones-the ones that we deem don’t merit revocation of the licence in their own right, in isolation-we would attach a licence condition, saying, "Within three months send us evidence that you have now started producing pay slips." If it is a critical licensing standard-for example, the workers have not been paid the national minimum wage, or there have been illegal deductions for transport and travel and subsistence, or there has been forced labour, debt bondage or intimidation-we would revoke the licence. We wouldn’t attach a condition to say, "Tell us that you’ve stopped being an abusive gangmaster within three months and you will be okay." When it passes through one critical issue, or more than 30 points, we revoke the licence. We have the power to revoke the licence with immediate effect if we think there is an imminent threat of danger to the workers. The ability to allow the gangmaster to prove that they have put things right is only for certain non-critical issues. Where it is serious and what we call critical, then we revoke the licence.

Q390 Iain McKenzie: As Jim said, if you have that standard document of evaluation, it would be useful if the Committee had that.

David Nix: Yes; we can write and explain that.

Q391 Chair: How many revocations have you had during the last year or for the last year for which you have figures? I just mention that Mr McGovern has to leave due to a prior appointment. He has been one of the drivers of this, but another commitment in his constituency means he has to go. There is no discourtesy intended.

Ian Livsey: If he wanted to have a conversation with us at some other time, that would be fine.

Jim McGovern: That would be great. Thank you.

Chair: Let it be recorded that they shook hands.

Q392 Chair: How many revocations?

David Nix: In total, since we started issuing licences in 2006, we have had 180 revocations. I don’t have the exact figure for the last year, but I would say it is of the magnitude of around 30 or so.

Q393 Chair: How many of those have been in Scotland?

David Nix: Overall in Scotland we have had 12 revocations.

Q394 Chair: That is a disproportionately high number of revocations in Scotland.

David Nix: Not in the last year. In total, over the last six years it is 12.

Q395 Chair: How does that compare? Six out of 180 is a disproportionately small proportion in Scotland.

David Nix: Yes, I suppose so-12 out of 180.

Q396 Chair: Is there a geographical pattern? Presumably gangmasters are more active in certain parts of the country and in certain industries. Is there anything we ought to take from that?

David Nix: If it helps the Committee, I can give a breakdown of the 180. We have 12 in Scotland. Two have been in Northern Ireland. We haven’t had any in Wales. We have had five from businesses outside the United Kingdom and 161 in England. Whether that says more about the English or not, I am not sure.

Q397 Chair: Presumably there are divisions between different parts of England as well, which comes back to the question of where these people are.

David Nix: Yes.

Q398 Chair: In terms of the numbers of employees that are covered by each gangmaster, obviously a gangmaster employing 5,000 is different from one employing five or six. Are you predominantly knocking off small ones or big ones, or is there a spread?

David Nix: The vast majority of our licence holders are what you would call small to medium-sized businesses. They will have a turnover of less than £1 million a year. In terms of the numbers of workers, obviously it will vary. When we write to you, we can give you more on the geographical breakdown and the numbers of workers.

Q399 Chair: Are the numbers that are struck off in proportion to the numbers and sizes of those that you have, or are they disproportionately large or small? Is there anything else coming out of it? Could we say that large gangmasters are disproportionately likely to be struck off because they are worse, that the converse is true or that there is no conclusion?

Ian Livsey: It probably depends upon what issues we are looking at. We will confirm this, but I suspect the majority that give us the most problems are the smaller ones. However, that will depend. If you are into things like tax evasion, then a lot of the larger ones are more organised for that kind of thing.

Q400 Chair: It would be helpful if you would let us have further information about who has been struck off, why and whether or not there is a correlation between size and the subject for which they are removed.

I want to come back to your general work. You mentioned first of all that there was the issue of licensing. What are the factors taken into consideration when someone is issued with a licence? Depending on how pejorative you want to be, what sort of hoops do they have to jump through and what sort of qualities or capacities do they have to demonstrate before they get a licence?

David Nix: When somebody applies for a licence they have to complete our application form and pay the licence fee. That is very basic information that you would expect to be filling in. It is the key details about the business and then the individuals involved in the business. Based on that information, we run checks, not just internally within ourselves and our own body of information that we hold within the GLA, but also with other Government Departments to see if they have any information as to compliance with their requirements. For example, it might be with HMRC; they could have a level of tax debt. Once those checks have come back in, we will then go out and conduct an inspection where we will go and interview the person running the business. For our purposes they are called the principal authority. In terms of what you can inspect at that point in time, it is a little bit more limited because, by their very definition, they are not up and running. They are not supplying workers because that would be a criminal offence. If they are an already existing recruitment business that might be operating in other areas of the economy and perhaps want to move into food and agriculture because there is an opportunity, we could look at what is already up and running and see things in practice. If there is nothing in existence, then obviously we are looking at the principal authority’s knowledge and understanding. It is basically their competence to run that business measured against our licensing standards.

Ian Livsey: It is in effect a fit and proper test for the individual running the business.

Q401 Chair: It is the equivalent of due diligence.

Ian Livsey: Absolutely, yes.

Q402 Chair: Once you have that, that’s it.

David Nix: There is a condition on every single licence we issue that they must notify us when they have started trading, within 20 working days. At that point we might decide to go and conduct a further inspection because a couple of issues might have been flagged up on the first inspection and it might be worth seeing them in practice once they have started trading. We may come and do an inspection, though it is not guaranteed, because it is obviously all about the best use of our resources. If we have no reason to go and visit we won’t, but that option is open to us.

Q403 Chair: I am just thinking of a parallel, say, with a motorcycle licence. There is not a period when you can only employ a certain number or go at a certain speed. As soon as you’ve got it, you’ve got it and you can employ as many as you like. There are no constraints, a building-up period or anything like that.

Ian Livsey: That is correct.

David Nix: I don’t have the exact figures to hand, but when we write, it might help to explain to the Committee the length that one of our revoked businesses had their licence before it was revoked. Just because somebody is newly licensed I don’t think they are more likely suddenly to be non-compliant and have problems. What we find is that people who have a licence have had one for a period of time but then, for whatever reason, drop below the standard. That is when the problems start to arise.

Q404 Chair: Would you be checking criminal records as part of the fit and proper person test?

Ian Livsey: Yes.

Q405 Chair: Are you able to obtain criminal records from abroad?

David Nix: We don’t have formal agreements but we do have systems in place where we can make checks with overseas authorities. Unfortunately, it is not a routine thing that we would routinely run checks against criminal records with authorities overseas, but we do have that facility.

Q406 Chair: Let me just be clear. Anybody from the UK would have their criminal record checked but anybody who is foreign would not.

Ian Livsey: They would have their UK criminal record checked.

David Nix: Just to clarify, we have access to the PNC, which is the Police National Computer, but in terms of our ability to check, we can’t use it for vetting purposes. We can only use it to confirm certain details if we are aware of them; we can’t use it for vetting.

Q407 Chair: If you are told that somebody has a criminal record you can check if that’s true, but if you don’t know if they have a criminal record you can’t check whether or not they have one.

David Nix: We can make approaches to the local police in a particular area and get the information from them.

Q408 Chair: But presumably they would use the Police National Computer.

David Nix: Yes.

Q409 Chair: You could systematically and regularly approach the local police for every case and check whether or not any British citizen had a criminal record in this country.

Ian Livsey: Or any EU citizen who had committed an offence in this country.

Q410 Chair: Or indeed any non-EU citizen.

Ian Livsey: Or indeed any non-EU citizen.

Q411 Chair: You could, but you don’t, check the criminal record of everybody that applies for a licence. Is that correct?

David Nix: That is correct; yes. There is an element of self-declaration in terms of our application form. We do ask people to declare whether they have any criminal convictions.

Q412 Chair: Whether or not it is checked for somebody coming from abroad depends upon the relationship you have or the British police have, or the access you have to records abroad.

Ian Livsey: Correct.

David Nix: Yes; that is correct.

Q413 Chair: We have already touched on the question of monitoring. What percentage of your licensees are farmers?

David Nix: We have a small number of farmers who are licensed because as well as being users of labour they also supply outwards. Some of them are participants in the Seasonal Agricultural Workers Scheme. Others are just large farms. There are exclusions for farmers from needing a licence. For example, if they have occasional loans of workers from perhaps their neighbouring farm and it is just for a very short period of time, they would not need a licence, but technically that would be-

Q414 Chair: Because they would be covered by somebody else’s licence.

David Nix: No. The Gangmasters Licensing (Exclusion) Regulations 2010 set out very specific circumstances when a licence isn’t required. That could be a farm-to-farm loan of workers or if a farmer uses a worker to provide a service to another farmer. Technically, that is licensable activity, but because of its nature, and the incidental and small-scale nature, they were taken outside the scope of licensing.

Q415 Chair: Is the picture any different in Scotland from the rest of the UK?

David Nix: No. The same regulations apply.

Q416 Chair: I meant in terms of the percentages of farmers that have registered or anything like that.

David Nix: It is a very small number of farmers who would be registered anyway. I could not tell you how many.

Chair: Maybe you could just check that. If it is significant you can let us know.

Q417 Pamela Nash: I want to go back to licences being revoked. What are the consequences for someone who has a licence revoked?

David Nix: It very much depends on the reasons why we revoke. If the business corrected the problems-perhaps they had not been paying the national minimum wage but they have corrected that and, going forward, they are therefore a complying business-we would be happy to entertain a new application from that business. We do have a lot of licence holders who have been previously revoked, who have sorted themselves out and learned their lesson, and they have come back into the system.

Q418 Pamela Nash: Is there a minimum period of time between the licence being revoked and them coming back?

David Nix: If they have got themselves compliant, they can come forward and apply for a new licence. A number have done that. Where it is a little bit more serious and we have found them basically not to be fit and proper, we have a policy that for a two-year period we would automatically refuse any subsequent applications from that business.

Q419 Pamela Nash: What is your procedure if there is found to be criminal activity? Is any evidence that you have handed over to the police or would you be the complainant?

Ian Livsey: Let’s take, for example, section 71, which is on forced labour. We would work with the police on that but they would take the case to the CPS; we can’t prosecute against section 71. If it is unlicensed activity, then section 12 of our Act applies and we would prosecute that.

Q420 Chair: Would that apply in Scotland as well?

Ian Livsey: Yes. The difference between England and Wales and Scotland in terms of our powers is that there is no power of arrest in Scotland. We have power of arrest everywhere else. If there are associated offences, not specifically our legislative offences, then we would work with other authorities to prosecute those offences; for example, UKBA, if there is illegality. If it is section 12 or section 13-the farmers-then we would prosecute that ourselves.

On the revocation point there is also the point about the workers. Particularly if we revoke a licence with immediate effect-i.e. we issue a stop notice and we stop that business trading-we have to take into account what happens to the workers, who then suddenly don’t get paid, maybe don’t have accommodation and could find themselves on the street. We have to do an impact assessment and find somewhere for them to be looked after. The ultimate sanction is when we stop them trading straight away.

Q421 Pamela Nash: Is it part of your responsibilities to look after the workers?

Ian Livsey: Part of our responsibility is to identify the impact. The handling of those kinds of people would be typically for the Salvation Army, who have that kind of contract from the Government.

David Nix: We don’t have a statutory duty to do that; it is just what we do because it is the right thing to do.

Ian Livsey: In planning an operation where we think, from the intelligence we have, that the consequence could be immediate revocation, stopping the business and putting, say, 147 Poles, which is a typical number, on to the streets of Derby in England, then we would do that assessment and inform the local authorities, the Salvation Army and people like that. They would then be aware that it was going to happen.

Q422 Pamela Nash: You have anticipated my next line of questioning on unlicensed gangmasters. What powers do you have to investigate reports of unlicensed gangmasters?

David Nix: It is a criminal offence to act as a gangmaster without a licence under section 12 of the Gangmasters (Licensing) Act. It is also a criminal offence under section 13 of the Gangmasters (Licensing) Act to use somebody unlicensed. That is the labour provider and the labour user, if you like.

Ian Livsey: The gangmaster and the farmer.

Q423 Chair: The farmer or a factory that uses an unlicensed gangmaster would end up liable under section 13.

Ian Livsey: He is committing a section 13 offence.

Q424 Pamela Nash: Is this part of intelligence gathering or are you dependent on someone reporting it?

David Nix: It is a combination of both. It is through our own intelligence sources. Within our intelligence function in the Authority itself, not only do we have our own inspectors out there in the fields gathering information and submitting their own reports to the system, but we have two dedicated intelligence officers whose job is basically to be out there doing covert and overt surveillance. They will gather information that can be part of criminal investigations.

Ian Livsey: The two key sources of our intelligence, I suspect, are workers themselves ringing in and telling us or passing information to us and the work of our inspectors. As they go round their work inspecting, they pick up intelligence about other things. Those would be the two sources.

Q425 Pamela Nash: Are those inspectors specifically inspecting gangmasters who are already licensed, or is it part of their job to investigate those who are not licensed?

Ian Livsey: They have both responsibilities. About three or four years ago we had two separate types of inspector. We had what we called compliance inspectors, who did the licensing function and who just went out and checked licences. That is a bit like Jim’s point about the routine stuff. Then we had those who were enforcement-trained and who could arrest and interview under caution-at the stronger end. What we tended to find as we evolved and started to get into the darker corners of the flexible labour market was that what looked like a simple licensing inspection turned out to be quite criminal in nature when we went out there. We equipped all our staff to one standard, which was the criminal standard. All our inspectors will at any particular time be doing either a compliance-type visit or an enforcement-type visit on illegal trading.

Q426 Pamela Nash: So they would be investigating both unlicensed and licensed.

Ian Livsey: That is correct; yes.

Q427 Chair: I want to follow up on one point. Did I hear you correctly? You said that you had two inspectors whose responsibility it was to try and seek out illegal gangmasters.

David Nix: Just to clarify that, there are two people who are dedicated purely to intelligence work.

Q428 Chair: Is that two across the whole of the UK?

David Nix: Yes.

Q429 Chair: At first glance that does not seem adequate if this is such a large-scale problem. Presumably there could be things happening all over the country that your two inspectors sitting somewhere would not be aware of.

Ian Livsey: Resources is something we could always do with more of. At the moment we have 63 staff to cover the UK. Just to clarify, the two field intelligence officers would typically be tasked on covert surveillance operations, for example. We have not split the country into two and said, "You do this and you do that." If, for example, on Solway Firth we were interested in cockles, we might do some surveillance there prior to the beds opening. It would be those two individuals, who happen to be trained and skilled in covert surveillance and that kind of thing, who we would deploy on that before we did an operation. In some ways they are the specialists who do the intelligence gathering for particular operations as much as anything.

Q430 Chair: But two across the whole country does seem, on the face of it, to be grossly inadequate.

Ian Livsey: Chairman, I think any Chief Executive sitting here would say that he would love more resources and I am no exception to that.

Q431 Chair: Yes. I used to be on the Public Accounts Committee and I have never yet met an official who said that he required fewer resources, unless he was looking for a knighthood at the time, and you are not quite at that stage of your career.

In terms of the intelligence operations that have been conducted in Scotland, how often would they be touring round? How would that be driven? The other point I wanted to raise was this. You mentioned calls coming in from migrant workers. What tests have you done to clarify how aware migrant workers are of your existence? You mentioned 147 Poles losing their jobs. How many of those, for example, would ever have heard of the Gangmasters Licensing Authority and would know that you are the people to contact?

Ian Livsey: It is very difficult for us to make that assessment. We try to distribute leaflets about what we do, in all the different languages for all the nationalities that are working in the sector, through as many channels as we can, and make them aware of the existence of the GLA. You are probably aware of something called the Pay and Work Rights Helpline, which was an initiative launched by BIS. It was heavily promoted about two years ago to make workers aware that they could get advice from that helpline. We are part of that.

One of the most successful ways that we did that-sadly, we have lost the staff involved-was during a period of about two years when the Communities and Local Government Department funded what they called community enforcement officers. The concept was a very good idea. You mentioned where workers are. We know where the hotspots are in the country because of the seasonality of the produce. An enforcement officer was put in a specific area and told, "Don’t move out of that area. Find out everything that is going on. Make yourself aware." It acts in a preventative way and it is a high visibility way. That was an extremely effective way of doing locally based enforcement.

We have had the 25% cut over the lifetime of the Parliament that everybody else has had. Those posts have had to go, but that was a very effective way of getting workers to understand what we are doing.

Q432 Chair: In terms of the links that you have with the Polish Embassy or other representative bodies covering these sorts of groups, are those strong?

Ian Livsey: We were at the European Commission talking about this with other member states not long ago. The Bulgarian Labour Inspectorate will be a very good partner of ours. All the embassies would engage with us if we wished, but I have to say that European-wide enforcement of this kind of problem is different; it’s patchy and not as joined up as one would like. If we have particular issues, we can approach the Bulgarian Embassy, the Romanian Embassy or the Polish Embassy.

Q433 Chair: I understand that, but they would not see themselves as having a role in disseminating information.

Ian Livsey: No.

David Nix: We have in the past run events with embassies in this country to raise awareness with those communities. It is something we have done in the past and they have been effective in raising awareness, not just of the GLA’s existence but also of employment rights more generally in the UK.

Q434 Chair: If we were to tell you that contacts that we had had with migrant workers indicated to us that virtually nobody had heard of the GLA, would that surprise you?

Ian Livsey: In our sector?

Chair: Yes.

Ian Livsey: It might do. I would be surprised if that were the case in fresh produce. I might be less surprised if it were the case in things like fish processing. Because fresh produce is by far the largest sub-sector of agriculture, there is more awareness in fresh produce. If you were telling me it was bakeries and chicken catching, I might be less surprised about that.

David Nix: The other unfortunate thing is that we have had to cut back on our promotional activity. We used to run adverts in the foreign language press to talk to communities within the UK. Those are the things we have had to cut back on over the last couple of years. Because of the itinerant nature of people who returned home and new people coming in, perhaps we have not had the same visibility that we might have done four or five years ago.

Ian Livsey: Or even two years ago.

Q435 Chair: Do you have co-operation from farmers’ organisations, manufacturers of food products and employers of migrant workers in distributing material to their employees so that those who are presently employed by them would be aware and, also, when they move on somewhere else, that they would be able to carry that knowledge with them?

Ian Livsey: In terms of the actual on-the-ground passing out of information-you touched on this in your last session-I am sure that could be improved. I know you have the FDF and NFUS afterwards, both of whom are on our Board, and they both engage with us in the way the GLA runs and its activities. On the specific question about whether Farmer A hands out leaflets, I would doubt that. That may be because we don’t provide that many. You talked in your last session about how that could be improved.

Chair: Pamela, I am sorry I have cut across some of the questions. Have you covered those points?

Q436 Pamela Nash: I probably should have asked this question at the start. It would be useful for us if you gave a brief overview of the current situation for migrant labourers, particularly in Scotland.

Ian Livsey: In what respect?

Q437 Pamela Nash: Exploitation of migrant labourers. We often hear about what happened in Morecambe and other areas. Obviously that was why you were set up. Is there anything you can tell us about the situation in Scotland?

Ian Livsey: Unless David corrects me, I don’t think there are any particular things that jump out specifically in Scotland. This is a slight digression, but there is a lot of forestry in Scotland. That is an area for us but it is not an area of major concern.

We do see Romanians and Bulgarians from time to time in Scotland, but we see them everywhere else. I don’t think there are any particular types of reasons, although as we have said we will check this, for licence revocations being different in Scotland as opposed to the UK. There is a very big soft fruit activity in Scotland. That requires the same kind of picking and pays the same kind of piece rates and wage rates as, say, leeks and asparagus would.

We have recently talked about focusing on three areas of food production and manufacture that we have not looked at before. One is meat processing, which is on the back of the EHRC report about meat problems. I mentioned that one of the areas we are interested in is fish processing. That is very much up the east side of the country into Scotland. Incidentally, we feel that bakeries are an area where there is potential for a lot of exploitation as well.

Scotland has the same needs for casual labour as across the UK. It seems to suffer or be treated well in the same way as across the UK. Obviously the legal system is different and we work closely with the PF to bring prosecutions. We bring them separately in Scotland and Northern Ireland. There is nothing that immediately leaps out to me and says, "This makes Scotland look different from the rest of the UK."

Q438 Pamela Nash: What you have just said is very helpful. Is the origin of the workers different throughout the UK?

David Nix: We don’t routinely collect statistics on the demographic of the work force, but just from my own reading of inspection reports I don’t think the make-up of the work force is that different from the rest of the UK in terms of nationalities.

Ian Livsey: In many ways it might still be the same work force. What tends to happen is that the migrant labour work force will start in Cornwall in February picking daffodils because you have St David’s Day, Mother’s Day and Valentine’s Day all coincident and there is a need for daffodils. The gangmasters will move those same workers through Worcestershire to Lincolnshire for picking asparagus, leeks and the green stuff. They will then probably move into Scotland for picking berries in the late summer or summertime. It can be the same work force that is moving around.

Jim McGovern: Can I say, Chair, that I regard this inquiry as so important that I went and made a phone call, cancelled my business in Dundee tonight, went to the travel office and changed my flight? You have the return of the prodigal.

Chair: If that doesn’t bring a tear to your eye, then I don’t know what will.

Q439 Jim McGovern: My mum would be proud of me. You mentioned Bulgarian and Romanian workers. I am from Dundee and we are surrounded by berry fields, be they strawberries or raspberries. Further on it is potato picking. When I was at school it was schoolchildren and their parents-families-that did that. It is now almost entirely a migrant work force.

When I tried to get in touch with representatives of the Polish community, because I perceived it was the Polish community that did that work, I was told that the Poles have now by and large moved on into businesses-hotels and catering and so on-and it is Bulgarians and Romanians who are now working on the farms and who, in my opinion, are probably being exploited. I do not know if that applies right across the UK or if that is a Scottish dimension.

Ian Livsey: I think it applies right across the UK. The A2 nationals, with some exceptions, don’t have the right to work here legally, as you rightly say, except if they are self-employed. One of our big challenges in working in that kind of activity is determining whether self-employment is genuine or bogus. When we do raids or enforcement inspections, we have tests to see whether people are genuinely self-employed. If you are self-employed as a Bulgarian woman you can work here; if you are not, you can’t.

We read the transcript of the JRF where they talked about the Poles moving up in that respect. I suspect you are talking about bogus self-employment there. I think that is what is probably happening.

Q440 Jim McGovern: The Polish people I have spoken to say that they are no longer the most exploited and that the new exploited communities are Bulgarians and Romanians.

Ian Livsey: We are seeing not just Bulgarians and Romanians but Latvians, Lithuanians and other A8 member state nationals coming to work in the country. The model that people had in mind previously that it was a Polish work force is changing in that there are now different nationalities coming in.

David Nix: We still encounter a lot of Polish workers in sheer numbers, but in terms of where problems are identified it is fair to say that now it is not so much with Polish workers as it was five years ago. That is possibly because they have a better understanding of what their rights might be within the UK. It is an interesting discussion around Romanian and Bulgarian workers because of their employment status and whether that means that if they are being engaged in a dubious self-employment category, they are being denied their other rights.

Ian Livsey: The extreme of that would typically be an illegal worker who is illegally working here, who is the more vulnerable because of their status.

Q441 Jim McGovern: Yes, and being exploited.

Ian Livsey: Yes.

Q442 Iain McKenzie: The GLA has established a protocol with retailers and suppliers to improve standards and protect workers. How do you monitor it?

Ian Livsey: We have regular meetings. As background, this started as a supermarket protocol alone. Supermarkets control the vast majority of the food supply chain in the UK. They have great influence. I notice you touched on the adjudicator concept in earlier sessions.

We took the view for lots of reasons that to engage with the major retailers was one of the best ways we could work down their supply chain. One reason was the message it sends out, but there were also tactical reasons. When we turn up we can get entry to premises. If a major supermarket turns up to a supplier, then they start to listen to what is going on. The supermarkets have lots of influence.

We got together all the major supermarkets. It took some doing because there are a lot of sensitivities. We produced a protocol that, in intent, was a partnership between ourselves and the supermarkets to work together to clean out the supply chain. We then brought in the suppliers to have a whole supply chain approach. We all signed up to it. We meet probably once every six months to review what has gone on. At the minute, the effect of the protocol is largely profile and information exchange between retailers and the GLA.

Q443 Iain McKenzie: Is this protocol reflected in a contract between the large supermarket chains and suppliers?

Ian Livsey: No. It is non-contractual.

Q444 Iain McKenzie: So they don’t have terms and conditions at all.

Ian Livsey: It doesn’t involve itself in what I think will be the adjudicator’s role, which is the relationship between the retailer and the supplier. It is a question of how both the retailer and the supplier engage with the GLA in exchanging information about what is going on in the food supply chain.

Q445 Iain McKenzie: It is more a protocol between yourselves-that sort of triangle-than a direct link between supplier and retailer.

Ian Livsey: Very much so. It is not us having any influence on the terms and conditions or behaviour among the supply chain in terms of retailers and the suppliers.

Q446 Chair: Why not?

Ian Livsey: I don’t think we have the locus to do that. Our responsibility is with regard to workers. That kind of commercial thing is outwith what we are supposed to do.

Q447 Chair: Certainly in Public Accounts, we came across lots of odd structures where people at the top meet and have a conversation in a room somewhere. They exchange information-I agree that things are fine and you agree that things are fine, and we agree that things are fine generally. Further down the line that is not what is reflected on the ground. We have just had that with G4S and the debacle at the Olympics. No doubt everybody was sitting around the top table saying that things were fine.

Surely it would be appropriate for the big supermarkets to say, "We want certain minimum conditions applied throughout the supply chain." Have you not suggested that to them?

Ian Livsey: They do that and they do ethical audits of their own supply chain. The supermarkets have their own auditors and they audit the ethical behaviour of their supply chain. In fact, the precursor to the GLA was the voluntary supermarket scheme called the Temporary Labour Working Group, which did not work. It did not have the sanctions that the GLA has or the powers that we have. Supermarkets don’t have access to the kinds of other Government information we talked about-whether they have criminal records and all that kind of thing. It was voluntary. Crooks don’t volunteer to come forward.

The supermarkets are in fact big supporters of the role of the GLA because they see it as doing something that they could not achieve by themselves. In theory, they check the ethical nature of the trading that goes on with their main-it tends to be their first and second tier-suppliers. The problems largely tend to happen further down the field-to-fork scenario in the field. That is where we tend to come in rather than the major retailers.

Q448 Chair: That is right, but it seems reasonable to us that there is the issue of reputational damage. If we discovered that the big supermarkets were not being sufficiently vigorous in assessing their suppliers all the way back to the field or the factory, then that would be a cause for some concern. As far as you are aware, they are only following this to the top tier big suppliers and are not vigorously pursuing it further down.

Ian Livsey: That is probably too broad a generalisation. If I gave that impression, it was too broad. It will vary from supplier to supplier, food chain to food chain and retailer to retailer, but I think the supermarkets do recognise GLA’s role in the enforcement.

Q449 Chair: I can see how you complement each other. Ideally they should be forcing change from the top, while you are scurrying about at the bottom trying to catch people who are breaking those sorts of rules. I see nothing incompatible in those two approaches.

Ian Livsey: In the previous session and in the conclusions of the JRF report, they do point out the link between us and a nascent adjudicator. I have written to Norman Lamb about this recently. If there are price pressures on a labour-intense food supply chain, it will impact on the highest cost in the supply chain, which is labour costs. We will have a useful partnership with the adjudicator because there will be very similar issues as we go forward together.

Q450 Chair: We recognise that there are structural issues at play here. Joseph Rowntree were making that quite explicit in their evidence and we recognise that. But there are also people who will try and exploit whatever they can as much as they can, irrespective of the structures they are in.

Ian Livsey: Of course.

Chair: That is what we want to pursue.

Q451 Iain McKenzie: What do you think the consequences would be for a retailer or supplier who knowingly contracted and exploited a gangmaster?

Ian Livsey: As David said earlier, if it is a supplier who knowingly uses an unlicensed gangmaster, that is a criminal offence: six months in prison. There is a criminal offence of using an unlicensed gangmaster that would fall on the supplier. The Chairman is right in that one of the things that the supermarkets fear most about this issue is reputational damage. The idea that a supermarket is linked to abuse in any particular newspaper or media outlet is not something that they look forward to very much. That is also one of the motivations for engaging with us. If we go to the press and identify where abuses have happened and it links to a particular supermarket, it’s bad news. The implications for the retailer are bad press in many ways.

Q452 Iain McKenzie: Would the criminal aspect of it follow up the supply chain as well-to the supermarket?

Ian Livsey: No.

Q453 Iain McKenzie: The supermarket could simply say, "We were unaware."

Ian Livsey: No. The offence is between those who have contracted with the unlicensed gangmaster, in the criminality case. If a farmer has contracted with an unlicensed gangmaster, that is the criminal offence.

Q454 Iain McKenzie: It would be just reputational damage to the supermarkets associated with that chain.

Ian Livsey: And possibly disruption to supply. If we took the licence away from the gangmaster with immediate effect, and it disrupted the supply of leeks, then there is a supply issue as well, but I suspect what the supermarkets would regret most is the reputational damage that it would cause. A supermarket does not want to have it publicised that there is forced labour going on in its food supply chain.

Q455 Iain McKenzie: Do you think that supermarkets would do a bit of checking on a regular basis of their supply chain?

David Nix: The supermarkets will undertake their own technical audits, if you like, in terms of the quality of the produce and all that kind of stuff. They do their own ethical audits as part of the Ethical Trading Initiative-ETI. They are signed up to the ETI’s base code, which is similar territory to our licensing standards.

Ian Livsey: We work with them; we attend their events and we talk to their ethical auditors. At the end of the day we have powers they don’t have. We have intelligence they don’t have. They recognise that we are a more effective model for them and that is one of the reasons they are a big supporter of what we do. The BRC sits on the board.

Q456 Lindsay Roy: I am sorry I am late. How do you know these audits are rigorous and robust?

David Nix: The supermarkets’ audits?

Lindsay Roy: Yes.

David Nix: I don’t think they are as forensic as a GLA inspection, partly because of the skill set of our inspectors and the powers that we have to access information. Yes, they are very useful in that they are testing against key things, but obviously in terms of their rigorousness I would say that a GLA inspection does-

Q457 Jim McGovern: Forgive me, but you say "testing against key things". What are those key things?

David Nix: The issues within our licensing standards.

Ian Livsey: The ILO forced labour indicators and things like that that we look at.

David Nix: The benefit of the GLA model is that we are a statutory regulator. It gives us certain powers and allows us to probe a little more forensically.

Q458 Lindsay Roy: But the supermarkets are self-regulating; is that the case?

Ian Livsey: They do their best to check their supply chain.

Q459 Lindsay Roy: How good is "their best"?

Ian Livsey: It can’t be as good as what we do because of the powers and intelligence we have. They recognise that, which is why they would hate to see us watered down in any way. They have made that very clear. They do what they think is right for what they do, but they know that they can’t do it the way we do it.

Q460 Lindsay Roy: Their biggest risk is reputational risk.

Ian Livsey: They will have a particular ethical view about it and they won’t want it for that particular reason. Brand image is a very strong thing in retailing. Clearly if it is all over a media outlet that supermarket A has abuse of vulnerable workers in its supply chain, that is a very powerful message.

Q461 Lindsay Roy: It would be very damaging.

Ian Livsey: Yes, of course it would be very damaging.

Q462 Jim McGovern: I have attended local supermarkets in my constituency in Dundee to help them launch what they called Fairtrade Fortnight. As far as I am aware, Fairtrade Fortnight means that they pay a fair price to the people that supply, for example, tea, coffee and chocolate from abroad. It sounds contradictory if I find out that just three miles away workers are being exploited to provide them with strawberries and raspberries. Do you think that is a possibility?

Ian Livsey: We often think about this, Jim. It is a bit like Fair Trade Scotland. If this is what you are talking about, would a parallel Fairtrade concept or mark work in England, Scotland, Wales and the UK? It boils down to the question of whether the consumer would value it. Would they see it as something that they would differentiate products or supermarkets on? The build-up of Fairtrade took a long time. It took a lot of work and support. Whether it would work in a Scottish concept or an English concept, I don’t know.

Q463 Jim McGovern: If I stood there with a sign saying, "These berries are unfair trade"-

Ian Livsey: Absolutely. The Home Office is running pilots in the Boston area in Lincolnshire where they are doing exactly that. In supermarket outlets, they are promoting no to human trafficking type issues to see how the consumer views this kind of problem. One of the issues we have with trafficking and forced labour-modern day slavery-is that it is quite a hidden crime. People don’t necessarily or easily recognise it. It is not like you’ve had your car nicked from the drive and it’s gone. You don’t quite see it in the same way.

David Nix: The GLA publishes on our website guidance on the minimum charge rates that we say should be in place between the labour provider and the labour user; the gangmaster and the farmer, for example. By "minimum charge rates", I mean the rate the farmer will pay the gangmaster per worker per hour. That would cover all their statutory obligations such as the national minimum wage and then national insurance on top of that, plus any other kind of overheads. That is similar territory to Fairtrade.

It is not a statutory minimum rate but anything below it that sets off an alarm bell that corners are being cut somewhere. Within the industry it is taken quite seriously that that is the bare minimum. We get a lot of intelligence from people who are aware of rival competitors who are quoting charge rates well below what our indicative minimum guidance is, and that would prompt us to go and look more closely to see how that could be possible. Sometimes there is an element that if a deal is too good to be true, it is too good to be true.

Q464 Chair: I want to seek clarification on one point. In terms of minimum charge rates, does the gangmaster contract with the farmer or the workplace for a certain amount of work to be done, or does he contract for 25 people? "I will charge you x amount to clear that entire field of raspberries and this will be such and such an amount", rather than having a charge that is made up on a per hourly rate. Clearly if it is a bulk rate, then all sorts of things can be disguised within that.

David Nix: Yes. It obviously varies between different businesses. What you will find as a common industry norm is that it is quoted on an individual charge rate of an example unit cost of one worker per hour. That is the industry norm for measuring how competitive a contract might be if somebody is coming in-

Q465 Chair: Yes, because that is clearly directly comparable. If it was on a scale of a bulk amount, presumably it would depend how effective the individual employees are as to how long it would take them.

David Nix: What we find with the industries we regulate is that it is not really possible to go in with a loss-leading offer on a contract. It might be possible to get your foot in the door for the promise of future business over time, but by and large it is not possible to go in loss leading. Where eye-opening charge rates are quoted, it is very suggestive that something is going wrong behind the scenes and we would look to penetrate how they could quote that.

Q466 Chair: In that case there is no excuse for any farmer or anybody who buys products from a farmer to say that they didn’t know whether or not the appropriate rates were being paid.

Ian Livsey: That is the other benefit of the charge rates. It is a guide for the farmer to know what they should be paying. It is a flag that, if they are not paying that, then that ought to indicate there is something going wrong with the way the money is going down to the workers.

Q467 Chair: Similarly, if the product, whether it is potatoes or anything else, is sold to a factory, then they should be able to trace that back and identify what was paid for that and therefore whether or not they are buying-

Ian Livsey: If they do that, yes, you could follow that chain.

Q468 Chair: There is no reason why they shouldn’t, is there?

Ian Livsey: Not particularly, no.

Q469 Chair: Is that something that would be considered good practice by the people you meet in these posh boardrooms?

Ian Livsey: I don’t go to posh boardrooms.

David Nix: Linked to the protocol that we drew up with the retailers and the supply chains was a best practice guide for labour users, for farmers. It is not mandatory in the sense that it is something the GLA is regulating against the farmers; it just says, "Follow these practices and you have more chance of avoiding the problem." One of the things within that best practice guide is hourly charge rates.

I don’t know if it will help the Committee but I could take the charge rate for Scotland, taking account of the Scottish agricultural wage. The way that is broken down is that you will have the agricultural wage of £6.11, which I think is correct, but then there will be the employer’s national insurance contributions on top of that of 33p. It is also factoring in an amount for holiday pay, which is about 78p. Then there is another amount for holiday pay associated with the quirk of the agricultural wage. That will give you total wage costs of £7.28 for one worker for one hour.

On top of that you would have an amount of 10p for statutory sick pay. Then there will be a small amount to cover overheads associated with running the business. We calculated that as 55p. That would give you a charge rate of £7.93 an hour. That does not take into account any profit. It is just the bare minimum that we say should be paid per worker per hour to cover all your statutory overheads plus a small amount.

Q470 Chair: That figure would be known to those who were employing gangmasters, or should be known.

David Nix: Yes. That is widely publicised. If somebody comes in and quotes an amount that is below that, 1p or 2p is fair enough, but if it comes in 50p or 60p below it, that would set off an alarm bell for us.

Q471 Chair: So no employer of gangmasters should be paying multiple rates that are based on anything lower than that figure except at the margins.

David Nix: It would suggest that corners are being cut somewhere.

Chair: That is very helpful.

Q472 Iain McKenzie: In a recent debate another Member commented on the impossibility of effective policing when there is only one inspector covering a large area. How do you allocate resources in that respect?

Ian Livsey: This is the Westminster Hall debate with Stephen Barclay and our Minister responding. We have had a 25% reduction in resources. I have taken 50% out of back office and about 15% off the front line. I have protected the front line as much as we can, but we are still a small regulatory organisation. The way we deploy our resources is through what we call a tasking process based on intelligence. I can quickly run through that.

We use the National Intelligence Model, as David said, which allows us to take information or intelligence that we have received from workers, inspections or wherever and prioritise it. We look at the reliability, the timeliness and seriousness of the intelligence we have. We end up with a schedule or list of possible enforcement or inspections that we have to do. Bi-weekly, we sit down and allocate those to the various officers we have.

David Nix: We have a fortnightly meeting and if something urgent comes up it gets tasked immediately and we respond immediately, but there is a formal meeting every two weeks.

Ian Livsey: We allocate those. If it is in Lincolnshire, we have a team covering the east of England who will have seven to eight inspectors. That would go out to the head of that team, who would then allocate that work to a particular inspector. It is true to say that at every meeting we have more jobs than we have resources. We just have to keep working our way through those jobs. That is how we allocate the work with the resources we have.

Q473 Iain McKenzie: Do any other agencies assist you in gathering intelligence?

Ian Livsey: Very much so. For example, with the other Government Department checks we would typically talk to the police, HMRC, SOCA and other Government Departments like BIS or people like that. We have very good information gateways in our legislation that allow us to pass information across. We do those checks to build up part of the picture for a job or an enforcement operation.

Q474 Jim McGovern: David, you say you meet fortnightly. I think I know what your answer is going to be but, just for the record, if something urgent comes up, if it is an emergency, you don’t wait for the fortnightly meeting, do you?

David Nix: No, no, no.

Ian Livsey: We respond instantly and it will get tasked out. That would be if there was a particular and immediate danger to workers.

Q475 Pamela Nash: On the same subject, you have very few enforcement weapons, the ultimate penalty being to withdraw the licence. Do you see this as an effective deterrent?

Ian Livsey: If it is a criminal offence and they don’t have a licence, then I think people would say that the section 12 offence, which is up to 10 years’ imprisonment, is quite an effective deterrent. In the civil offence, where they breach licence conditions-

Q476 Iain McKenzie: But the removal of the licence-

Ian Livsey: -which can stop them trading.

Iain McKenzie: Is that an effective deterrent in itself?

David Nix: Yes.

Ian Livsey: Yes, because it stops them trading in our sector. They lose their business. You have to have a licence to supply labour in agriculture. If we take it away, subject to an appeal, then, as David said, you cannot trade for another two years. So you lose that business; your business ends. I think it is a deterrent.

Q477 Chair: If the threat of prison for somebody operating as an unlicensed gangmaster was an effective deterrent, there would be no unlicensed gangmasters. Is that the position we are in?

Ian Livsey: No. Criminals will always try to-

Q478 Chair: Clearly it is not an effective deterrent then, otherwise they would be deterred.

Ian Livsey: There are some issues here. In the same Westminster Hall debate there was a commitment from the Government to look at sentencing guidelines. What we find is that when we do take criminal prosecutions forward the outcomes tend to be-I was going to say not as draconian-less forceful or not what we would expect. There was a recent case in Leeds where the judge himself said it would be helpful if we had better sentencing guidelines on these offences. I do think that there is a need for more sentencing guidelines. It is an effective deterrent but it is probably not being deployed effectively.

Q479 Chair: If it is an effective deterrent, then presumably the scale of the sentence must be appropriate. How do you think it is not being applied? Do you mean that judges are not using it?

Ian Livsey: The outcomes of the criminal cases we have brought have disappointed us in that respect.

Q480 Chair: In the sense that you are losing them or the maximum sentence is not being given.

Ian Livsey: The maximum sentences are not given.

David Nix: The size of them.

Ian Livsey: The tariff.

Q481 Chair: There is a sentencing guideline that is not sufficiently-

Ian Livsey: There aren’t sentencing guidelines.

Q482 Chair: There aren’t any sentencing guidelines.

Ian Livsey: No.

Q483 Chair: Sorry; I misunderstood that point.

David Nix: Not for GLA offences.

Ian Livsey: And that is what we need. We need clear sentencing guidelines on this.

Q484 Iain McKenzie: On the same sort of theme, how often do you prosecute offenders and how many of them are given a custodial sentence?

Ian Livsey: We have never had a custodial sentence.

David Nix: We have not had a custodial sentence. Would it help the Committee to give up-to-date figures on our prosecutions?

Iain McKenzie: Yes.

David Nix: So far in terms of prosecutions to date, we have had 40. That is broken down by 22 in Scotland, three in Northern Ireland and 15 in England and Wales. That is where there have been convictions. They are by and large for the section 12 offence of operating without a licence but also include some under section 13 and another offence of obstruction, which is section 18 of the Gangmasters (Licensing) Act. We have had one conviction for that.

In terms of pending prosecutions, which are things that are either at court or where summons have been issued, we have 21 in England and Wales, two in Northern Ireland and two in Scotland. Then we have a further four being considered currently, as of yesterday, by prosecuting authorities, whether it is the CPS, the Procurator Fiscal or the PPS in Northern Ireland.

Q485 Chair: If there have been 40 prosecutions and 22 have been in Scotland, it either means that in Scotland people are much worse or that the catching is much better. Which is it?

Ian Livsey: We had some early successes in Scotland with prosecutions. We had some effective enforcement work through our officers, who did a particularly good job there. We are catching up in England and Wales. It is not that it is worse in Scotland, but we were very effective in terms of enforcement in Scotland.

Q486 Chair: One of the arguments about the reason for that was that, Scotland being a smaller community, there was more collaboration among the various agencies. Is that your view or was it just the efficacy of the approach that the individual officers were utilising?

David Nix: I think it is more the latter. It is still important to bear in mind that we are quite a young regulatory body. I don’t think you should draw too many conclusions about the numbers of 22 in Scotland so far and only 15 in England and Wales. I don’t think there is any great reason why there is that particular difference. It is just the way it has panned out.

Q487 Iain McKenzie: Of the 22 in Scotland you are saying that none has escalated to a custodial sentence.

Ian Livsey: No.

David Nix: No.

Q488 Iain McKenzie: Of the 15 in England and Wales, have any?

Ian Livsey: No.

David Nix: No; we have not had any custodial sentences. In the vast majority of prosecutions people have pleaded guilty, which obviously has a bearing on the sentencing. We have not had a custodial sentence yet.

Ian Livsey: They tend to be small fines.

Q489 Jim McGovern: How many people have you prosecuted? It is not the GLA who prosecutes people, is it? You report it.

Ian Livsey: That is right.

David Nix: In Scotland it is the Procurator Fiscal.

Q490 Jim McGovern: And thereafter it is out of your hands.

Ian Livsey: Yes.

Q491 Chair: On that point, how many have you reported? You say 22 were guilty, but how many were taken to court and how many were passed to the Procurator Fiscal but not proceeded with?

David Nix: I don’t have those figures.

Q492 Chair: Can you let us have them and how Scotland compares with the rest of the country?

Ian Livsey: Yes.

Q493 Lindsay Roy: You said there were small fines. Are they a deterrent? Has there been any recurrence from people who have been fined?

Ian Livsey: I think when people are prosecuted they tend not to do it again. It has deterred them.

Q494 Lindsay Roy: How many recurrences have you had?

David Nix: Nobody has been prosecuted twice.

Ian Livsey: No, we have not prosecuted anyone twice.

Q495 Lindsay Roy: Have they been checked?

David Nix: Yes. We do follow-ups and there are one or two investigations to see what people are doing at the moment who have previously been prosecuted.

Q496 Lindsay Roy: So you have no examples of regressive behaviour.

Ian Livsey: No. That would occur more in the unlicensed part of our work.

Q497 Chair: I have a situation in my constituency where there are phoenix companies. It is not the man but it is then his wife. Do you have any of that?

David Nix: Yes.

Ian Livsey: Yes, all the time.

Q498 Chair: So people are being prosecuted and presumably they would not then subsequently get a licence, or would they get one if they had cleaned up their act?

Ian Livsey: Probably the latter.

David Nix: Just because somebody has been prosecuted for one of our offences, it would not be an automatic bar to having a licence. It depends if there are any aggravating factors associated with the unlicensed trading. First, they had been unlicensed, but how well have they been treating the workers? If there has been any mistreatment, then that would be the factor we take into account as to whether they should have a licence-not the fact that they just didn’t have a licence.

Ian Livsey: A specific example would be-it often happens-that there may be a short period of unlicensed trading when a licence had elapsed and for some reason they have not renewed their licence for three, four, five or six weeks. That is a criminal offence but that would not debar somebody from getting a licence again. If, however, there had been abuse and violence, then that would.

The phoenix issue is a huge one for us, for exactly the reasons you have given. They put up a stooge and probably operate in the background pulling the strings of the business.

Q499 Chair: Absolutely, and you have no powers to deal with them in those circumstances on the basis of the fit and proper test.

Ian Livsey: That is how we deal with it.

David Nix: We have had cases where we have revoked licences previously with immediate effect because of very serious problems and then those individuals have sought to get back into the licensing system by putting other people forward or perhaps controlling an already existing licensed business. We have refused applications and revoked the licences because of connections with people that we deem not to be fit and proper.

Q500 Chair: It would be helpful in terms of the information that you could give us. I presume you have a list of those who have been prosecuted and the sentences that they were given. Names and addresses and the penalties that were applied would be helpful. I also asked about the number that you had passed, particularly in Scotland, to the prosecutors that had not been prosecuted or pursued and also how many had gone to court and not been found guilty. What is your success rate on both of those?

David Nix: If it has reached the courts, they have all been found guilty.

Q501 Chair: You have 100% when it gets to court.

David Nix: Yes.

Ian Livsey: Or they plead guilty. They tend to plead guilty.

Q502 Chair: So you only take people to court if they are pleading guilty.

David Nix: No.

Ian Livsey: No; when they get there they plead guilty.

David Nix: In the majority of cases that have gone forward to court they have pleaded guilty. There has been a small number where they have pleaded not guilty but they have been found guilty.

Q503 Chair: They have been found guilty.

David Nix: Yes.

Q504 Chair: Is that 100% of the cases you passed to the Procurator Fiscal in Scotland?

Ian Livsey: That is the bit we don’t know. The question you are asking that I think we will have to look at is how many we have passed to the PF that have not been taken forward.

Chair: That would be helpful, and how that compares. In other contexts we have discussed health and safety with the PFs as well.

Q505 Jim McGovern: When you provide the figures for the people you have reported, regardless of whether or not they have been prosecuted, convicted or whatever, could you also give us a breakdown of the occupations of the people that were working and whether they were berry pickers, rural or in the construction industry, whatever they may have been? Could we get that sort of data?

Ian Livsey: It would not have been the construction industry.

Q506 Jim McGovern: It wouldn’t be.

Ian Livsey: No.

Q507 Jim McGovern: Whether it is berries or potatoes or whatever.

Ian Livsey: It will be agricultural.

David Nix: We will give you whatever information we can break down. We will give you as much as we can.

Q508 Jim McGovern: To be honest, when the Chair said name names and so on, I was not sure whether you would be allowed to do that. It would be perfect if you could.

David Nix: On the GLA’s website we list all the licences we have revoked. We think it is very important to operate in an open and transparent way. Wherever we can, we issue press releases to name and shame effectively.

Q509 Jim McGovern: But if you have reported people and they have not been taken to court, can you still give us details?

David Nix: We will have a look at what is possible.

Ian Livsey: We name and shame because prosecution by publicity is very effective. People won’t use you if you have been named and shamed. When a licence has been revoked and it has gone through the subsequent appeal process, we will name the person involved who has lost their licence and do a press release. Certainly when it has been in open court and there has been a decision, then we name that decision as well.

Q510 Chair: Following on from that, if somebody is done for being an unlicensed gangmaster and they are working on a farm, you would presumably go for a prosecution of the farmer as well in those circumstances for employing an unlicensed gangmaster. Are they named and have they been 100% successful as well?

David Nix: It depends on the particular cases and whether the labour users had a reasonable defence, for example.

Q511 Chair: "I didn’t know."

David Nix: Yes. We don’t always take forward a section 12 and section 13 offence at the same time. It would probably be quite helpful if we break down the stats as to where there have been some concurrent investigations and if there is a reason why there was a section 12 prosecution but not a section 13 one.

Q512 Jim McGovern: Maybe this was discussed when I had to leave for a wee while, but what are sections 12 and 13?

David Nix: Section 12 is where it is an offence to operate without a licence; section 13 is where it is an offence to use somebody unlicensed.

Q513 Jim McGovern: In line with what the Chair says, could we get the names and addresses of not only the gangmasters but the farmers who were possibly guilty of breaching section 13?

Ian Livsey: Where we have prosecuted them, yes.

Q514 Jim McGovern: But not where you have reported them.

Ian Livsey: I don’t know. We will have to find out about that and see what we can do.

David Nix: We will see what we can make available to you.

Q515 Chair: We would want it all made available to us. If you can’t make it available to us, then give us an explanation why. That would be helpful.

Ian Livsey: Yes.

Q516 Lindsay Roy: Have you considered any other methods of punishing non-compliant labour providers?

Ian Livsey: One of our key objectives going forward is the introduction of civil penalties such as fines. The outcome of the Red Tape Challenge, which was in the written ministerial statement, is to seek administrative or civil penalties for the GLA.

Q517 Lindsay Roy: What do you think of that suggestion?

Ian Livsey: I think it is a great idea. It is immediate justice in the right circumstances. It avoids lengthy and costly court trials with outcomes that at the moment are not as well codified as we would like. They would only be used in support of the criminal sanction and not as a total replacement for it. As a first offence or as a minor offence it may be that there is a fine in the first instance, but with repeat or serious offences the criminal sanctions would still apply.

Q518 Lindsay Roy: Do you have any examples of this in operation and its effectiveness?

Ian Livsey: We don’t have those powers now.

Q519 Lindsay Roy: No, but from other countries.

Ian Livsey: I can’t tell you off the top of my head.

Q520 Chair: I don’t know whether or not you just made this idea up on your own. Is there anything that happens anywhere else that makes you think, "It works there and we would like to transpose that here"?

David Nix: There has been quite a concerted drive across Government and different regulators to pursue alternative sanctions as opposed to criminal sanctions, and we can recognise that.

Q521 Chair: Could you point to any example that works?

David Nix: I am not aware of any.

Ian Livsey: It all started with Richard Macrory’s report. The Macrory powers were suggested four or five years ago as alternative civil sanctions to criminal penalties. That was recognition that we needed to try to introduce them. The obvious examples, not in our sector, would be road traffic offences.

David Nix: It would be something that we would like to bring in, not just on the criminal side but also on the civil side with our licensing regime, as maybe an alternative to a loss of revocation. You might want to issue financial penalties. We are also looking at getting powers for restitution orders, such as repayment orders for underpayment of the national minimum wage. It would fit with a wider suite of powers at our disposal.

Q522 Chair: I thought that the national minimum wage was enforced by someone else who would have those powers.

David Nix: Yes.

Q523 Chair: Presumably it is a question of you passing it to them and they would process that.

David Nix: Yes, but it would make it more efficient if we were there and have the information to hand rather than passing it to another regulatory body for them to do it. It would speed things up effectively and give an immediate benefit to the worker.

Q524 Lindsay Roy: We are aware that many labourers come to the UK to work and are not aware of their rights or the support that is available to them. What is your organisation doing about that?

Ian Livsey: In terms of making workers aware of their rights, as perhaps I alluded to a little earlier, we do have a suite or a whole collection of leaflets in the foreign languages of the workers and we try to distribute those. I am sure it could be better.

Q525 Lindsay Roy: Do they have contact numbers?

Ian Livsey: Yes. We have a direct helpline to the GLA for workers to ring us. There is then the Government’s Pay and Work Rights Helpline, which is the general one for workers.

Q526 Lindsay Roy: How many contacts does that generate and are you able to follow them up?

Ian Livsey: I will put that in the written answer to you about the number of calls we get per week on the helpline.

David Nix: Within our intelligence team there used to be two members of staff who can speak Polish and Russian, but one person has left unfortunately and we are looking to replace them at the moment. There is a facility for people to be able to speak in their native language, which we think is important.

Q527 Chair: I want to tie up a couple of points that have been raised. You mentioned that you had no power of arrest in Scotland. Has that caused you any particular difficulties?

Ian Livsey: We use the police where we need to arrest people, but I think it is a discontinuity. If it were a power we had, it would be welcome.

Q528 Chair: In terms of whistleblowing, have you had any experience of that resulting in somebody being blacklisted or anything similar? How do you follow up anything that happens to your whistleblowers, or do you just simply not know?

David Nix: We are not aware of individual workers being blacklisted. In terms of people whistleblowing to us, ringing up and complaining, we always keep that information in confidence. There may be a point in time when their identity is revealed because it might come to court or it might lead to a hearing if it is to do with a licence revocation. We put great emphasis on people being able to report information to us in confidence. They can do that anonymously. We have the facility through our website where people can supply information to us anonymously, but we always try and protect the source because obviously there are repercussions associated with that. We are not actually aware of anybody being blacklisted as such.

Ian Livsey: That does not mean that the informal blacklisting that you talked about in your previous session won’t be going on. I don’t think there is a formal list of names à la construction, but I would not be surprised if within the tight labour provider community or gangmaster community, there is word of mouth stuff.

Q529 Chair: The final point I wanted to pick up that concerns me a bit is that I can understand why you are intelligence-led and focusing on serious crime and related matters. That potentially allows a whole lot of ordinary run-of-the-mill exploitation of workers to go unpursued if you are focusing on the gangs involved in this as only a part of their enterprise. How do you balance that, accepting that if you are doing this big focus, a whole number of other things must be going by the board?

Ian Livsey: That is exactly the question we are talking about right now within the GLA. How do we balance the-I was going to say-"routine", but you know what I mean, with the very multi-agency labour-intense long-term operations? We have not solved that question at this moment in time.

Q530 Chair: I think that covers all the points. We usually ask people finally whether there are any answers they had prepared to questions that we have not asked or anything that they are bursting to get off their chest that we have not touched on so far.

David Nix: We will write to you with as much information as we can give you.

Chair: Depending on how other things progress we may see you again, but otherwise thank you very much for coming along.

<?oasys [pg6,cwe1] ?>Examination of Witnesses

Witnesses: John Picken, Vice-President, National Farmers Union of Scotland, and Melanie Leech, Director General, Food and Drink Federation, gave evidence.

Q531 Chair: I welcome you to the Scottish Affairs Select Committee. As you know, we are conducting an investigation into a number of labour practices, including health and safety. We have already met some of NFU Scotland’s representatives. We are also looking at blacklisting and migrant workers, and it is in that context that we are seeing you this afternoon.

Originally, Ms Leech, I think it is fair to say that your enthusiasm for coming to see us was less than total. As we have demonstrated from the previous session, we see that not only farmers but also people involved in manufacturing the raw materials coming from farms have an involvement and a responsibility in this area. Generally we take the view that both of your organisations are either going to be part of the solution or part of the problem. Depending on how the discussion goes this afternoon, it will be clearer to us how you see yourselves.

I start off by asking you to say who you are for the record, the organisation you are representing and what it is.

John Picken: I am John Picken, the Vice-President of the National Farmers Union of Scotland. I have been in the post for a little over a year. I have another few months to go until February. Fundamentally I am a farmer; I employ one man. We have a cereal farm two miles from St Andrews and we have cattle and sheep as well. My man has been with me for something like 45 years and does what I do.

Melanie Leech: I am Melanie Leech, Director General of the Food and Drink Federation, which is the trade association for food and drink manufacturing. We have a separate Scottish Food and Drink Federation that is part of us but devolved in Scotland. We currently do not have a director in Scotland. In any case, I thought it was appropriate that I come here today to represent the industry as a whole. May I just briefly respond, Chair, to your kind introduction?

Q532 Chair: Let me make it clear that it was a kind introduction, considering what I was originally thinking of saying.

Melanie Leech: I will respond in equal kind, if I may. The Food and Drink Federation is a membership organisation. We invite membership from across the whole of food and drink manufacturing, which, as this Committee will know very well, is a jewel in the crown of the economy both in Scotland and across the UK as a whole. Taken in that broader perspective, it is a high value-added sector. In Scotland it employs 46,000 people, of whom 97% are permanent and 80% are full-time. They are operating in very high-tech environments. They are operating in world-class facilities, investing over £1 billion a year across the UK in R and D. In the majority, my members come from that picture. They come from high value-added facilities in which they are investing significantly. They are investing significantly in their employees. We don’t in the main represent farmers or primary processors who package farm produce for retailers nor, other than a small number of high end companies producing premium products, do we have any members who pack meat for retail.

My concern in responding to the invitation from the Committee was that I cannot in the main respond specifically to the issues that the Committee is looking at and those represented by the Joseph Rowntree Foundation report, because that report doesn’t cover the activities of my members and they are the ones I can speak directly for. But I am more than happy to assist the Committee with a general view on the issues in the report and to do what I can to help. That was my concern in the correspondence that we had. I hope that is clear and helpful.

Q533 Chair: I wonder if you could clarify your role in the food chain. It is much easier for the farmers because you are the beginning. You understand the nature of our concerns about these issues. We were working initially on the report from the Joseph Rowntree Foundation, but since then quite a number of other people have spoken to us with similar sorts of evidence. It is obviously an issue that causes us great concern. Therefore, in the whole spectrum, whether it is field to fork or whatever analogy is used, we see you as having a role to play.

It would be helpful if you could initially tell us what steps you as an organisation, or representing your organisations, take to try and make sure that there are no bad practices in your part of the food chain and in the parts of the food chain before you, as it were. Unless you could draw all your raw materials from abroad, then clearly you are drawing them from farmers in the UK. It would therefore be helpful to clarify what steps you took to make sure that none of your suppliers was involved in the sorts of practices that have caused us and others concern. Which of you wants to go first?

Melanie Leech: I will take that at two levels, if I may. There is what FDF can do as a membership organisation and as an organisation trying to work across the sector as a whole. I think we have quite an important role to play. Ian, your previous witness, kindly spoke about our role on the board of the GLA. When the GLA was being created, we strongly supported that as a way of raising standards in the sector and being appropriate regulation. The food sector is quite unusual in that quite often we strongly support regulation where other sectors might perhaps do nothing but complain about red tape. We are actually quite strong supporters of proportionate risk-based regulation, because unless consumers have confidence in the food that they buy none of my member companies will be able to prosper. We do support regulation, and we did support the creation of the GLA and lobbied quite hard in favour of that.

We raised awareness of that among our members. We tried to identify for them what the implications were and what their responsibilities were. We have quite an important role in raising awareness and making people aware of the obligations and regulatory structure that they operate within. Beyond that, we have a role in identifying good practice and trying to raise awareness of that, disseminate it and challenge the members who may be lagging behind to move forward with that good practice. We have done quite a lot in a number of different areas to try and do that, and we still do around employment issues.

We can work with other organisations and agencies to try to facilitate information flows, dialogue and so on. As FDF we have a role that we can play. We are primarily reaching out to our members naturally and we would love to have more members and the ability to reach further into the sector, but primarily what we can do in raising awareness with companies will be focused on our members. The role we can play in relation to working with other partners might be a broader role where we will try to bring as much intelligence as we can across the sector as a whole.

In terms of some of our companies, in preparation for today I had a look and talked to some of our member companies who are operating in Scotland about whether or not they use agency workers and what steps they take to satisfy themselves. I am very pleased to say that there is a lot of good practice out there. A number of them talked about ethical trading policies that mean that they go and do audits. You talked about that in your last session. A number of them benchmark themselves by making sure, for example, that they pay exactly the same whether or not they are employing permanent staff or seasonal workers. They pay above the minimum wage because they want good people and they want people who will be committed to them.

I did find a number of examples of good practice among the Scottish members and I can give you more details of those and specific companies if that is helpful. That is an important assurance for me that our members are taking their responsibilities seriously.

Q534 Chair: There are two things arising from that before I come to you, Mr Picken. One is that you have outlined a number of activities that you are doing. How effective are they? It comes back to the discussion that we had earlier about people sitting in a nice posh office and agreeing that the world should be a better place. How do you know that what you are doing is actually working?

The second major point is that you mentioned the labour standards that your member companies apply to their own employees, but you did not mention the point I raised about further down the food chain and whether or not they are taking an interest in the practices that are occurring at the suppliers. You could maybe respond to that as well.

Melanie Leech: In respect of the first one-how do we know that what we are doing is working?-I think it is because we can see good practice being applied when we look at what our members are doing. Inevitably, with a membership organisation, your members will tend to be those who want to do the right thing, are trying to do the right thing and striving to do the right thing. We are not going to be reaching companies who are just outside that conversation completely, which is why we would support the need for regulation and enforcement that is proportionate to tackle those people, because we are not going to reach those people. We will work up to a point, but we will tend to be most effective with the willing participants and the people who want to do the right thing in the first place; I would accept that.

Q535 Jim McGovern: Are the major retailers all members?

Melanie Leech: They are not members of the FDF. We stop before retail. We are not consumer-based. We are by and large the people who supply the major retailers.

Q536 Jim McGovern: So we are not going to be able to ask questions about supermarkets.

Melanie Leech: I am afraid not, no.

Q537 Chair: They will be next week.

John Picken: You can ask me, if you like. I will give you an answer.

Melanie Leech: I have not answered the second part of the question, which was about looking back down the chain. In general, issues that bear across the chain tend to operate on a one-up, one-down basis, and the same would be true of food safety. You tend to most directly focus on your supplier and then be accountable to your customer. In general, processes don’t depend on driving all the way back down.

Clearly where I have members who are closer to the primary end of the chain, you would expect to see more. They are satisfying themselves directly and clearly that it is incumbent on anybody who is buying a product, as I think you were hinting at, Chair, to satisfy themselves that they are buying legally and from a supplier who is complying with their legal obligations. But, in general, the processes would not be in place to go all the way back down the chain where my members might be operating at several removes from a primary processor or a farmer. It would not be a general thing that they would do.

Q538 Chair: Given the point that we made earlier on about reputational damage as that would apply to supermarkets, as I understand it-having been at one of the dinners held by your association to sing their own praises obviously and trying to impress upon us how high quality they were in both food and soft drinks, that is an area where reputational damage could be considerable-I am quite surprised that you don’t seem to take much more of an interest in what is happening all the way through. Anything untoward at any stage before it reaches you could obviously impact upon the image of not only the individual company but your association generally.

Melanie Leech: I didn’t at all mean to suggest that companies don’t take those issues seriously. The issues are different for retailers. In the types of activities that the Joseph Rowntree Foundation report was looking at, for example, you are talking about retailers buying directly from the companies who are supplying in the circumstances that the report looked at. If you are buying as a supermarket direct from a fresh produce provider and packer, it is a very short chain.

In terms of long chains, I accept absolutely that there is a responsibility on my member companies at six or seven paces removed from that to satisfy themselves as to the provenance of the supplier they are buying from. It is reasonable for them to expect that the legal and regulatory framework that is wrapped around the chain as a whole should operate in terms of due diligence at several steps removed. If they had to check at every stage that the regulatory authorities had done their job effectively or that the predecessor suppliers had done their due diligence effectively, that would add huge costs to the system that I don’t think the evidence would suggest would be justified.

Q539 Chair: Mr Picken?

John Picken: We take a lead position in anything to do with reputation and brand within our industry. We regard ourselves as encouraging best practice. Through experience and farm assurance we have formed partnerships higher up the supply chain. We would not go as far as to say that we provide all the answers, but with our partnerships with retailers, for instance, they put on us a higher than regulatory requirement for a legal product. There are legal requirements in place to be a farmer and produce fruit. A retailer will add to that and a lot of that is to do with best practice. They come and inspect, sometimes without notification. They will descend on a fruit farm and have a look at books. It is an open-book policy. If you were a direct supplier to Tesco, you would have to comply with all the assurance requirements to be a member of that supply group. That would mean that they would come and open up your books at any time without notice, if they wanted to. They would then inspect your premises, inspect your cold store and inspect all the other aspects right down the line to the chemicals that you apply, making sure that you are legally entitled to use those chemicals and are able to apply them. They would want to know who applies them, whether the operator is licensed and if the machine is licensed. It is all there in farm assurance. They would check that and they would check the machine. They are squeaky clean as far as the pressure of getting it done is concerned.

The reason that we do all this is because if we aren’t on their list-we are delisted-you can’t sell your produce. There are lots of supermarkets-at least four big ones-but nonetheless they all play the same game. Everyone knows everyone, and if you are delisted from one you will be delisted from them all. That threat is enough to make sure that farmers stay within the law. Farm assurance is one of the best ways of getting to a base level of acceptance to sell your product.

Scotland’s quality allows it to export all over the world. Whisky has been one of the best business cards anywhere throughout the world, and with that has gone Scotland’s food and drink, with other products. Whisky has been a great product for such a long time. It is that same model that we try and generate for beef, sheep, fruit and anything else.

A lot of our big markets are south, in England, so we tend to look there for the first call and it is only when the markets are beginning to be saturated. Earlier on one of your questions was about daffodils and the pickers. We could not get these pickers to go north. The whole crop of daffodils in the whole country, because of the weather pattern, was ready at the same time. We could not entice them north, no matter what we tried to pay them. They would not come, so the daffodil crop in Scotland was ruined.

The three fields around Arbroath that were growing daffodils were really laid to waste this year. It was a disaster. However, the pickers would normally have progressed north and that is how the system works. We can’t afford to employ people for three weeks just to pick daffodils. It is seasonal demand and the pickers move around.

Q540 Jim McGovern: John, we get a very brief biography; it is one sentence. It says that you own three farms at Priorletham, St Andrews and Fife. It all sounds like Fife to me.

John Picken: Yes; that is the thing. When I started farming, farms were 150 acres. Now you have the same building blocks but you have one farm that is looking after 1,000 acres. I currently farm 550 acres and I rent 150 acres. My business is roughly 700 acres.

Q541 Jim McGovern: Over three farms.

John Picken: They are small farms, but, yes, effectively.

Q542 Jim McGovern: But all in Fife.

John Picken: They are all in a block. My father had two farms and I bought another one next door.

Q543 Jim McGovern: They are all in Fife.

John Picken: They are right next door to one another. It is just a wee block. It is a square mile, roughly.

Q544 Jim McGovern: Is it soft fruit?

John Picken: No, that is my neighbour; he does soft fruit. I will harvest anything that is above ground. It is grain: wheat, cereals and grass.

Q545 Jim McGovern: So you don’t have to employ groups of people to bring that in.

John Picken: No. Maybe this year I might have employed a shearer, but I managed to do them all myself so I didn’t need a shearer. My neighbour employs about 350 pickers. He has 120 acres of soft fruit that he sells to all the supermarkets. If it is of any use to you, if you wanted a visit out on these farms, we could easily organise a trip around some of the farms, if that was of interest.

Jim McGovern: I used to pick berries for the whole summer. I have been to many a berry field.

Q546 Chair: It is always part of the difficulty that the places we would be taken by people like you would be good farms. It is a bit like seeing good boys at the Boys Brigade, isn’t it?

John Picken: I know it is your job to pick holes, trying to find where the problems have come from, but I have to say that nowadays, with the self-policing that goes on within the industry, it is very difficult to have all these problems every week. You may get one or two problems initially or maybe just because of personality clashes. Who knows? But it happens, and it happens on a small scale, I think, in Scotland. I must admit that with the Rowntree Foundation report nobody wants to read of those problems that we had, but in context is it such a big problem? The retailers put such an onus on us that we have to be squeaky clean. They don’t want bad publicity.

Look what happened to Asda today. They have increased their price by 2p per litre of milk. They took 4p off about a month ago and then again last week, but they have reinstated 2p. Why did they do that? It was because of bad publicity. It was just that fact. The pressure of being a bad retailer was enough for them just to go ahead and offer that.

Q547 Chair: If everything was fine, we wouldn’t be having this hearing. It is because it has been drawn to our attention by the Joseph Rowntree report and by other sources that we are pursuing it. You are not suggesting that bad practice does not exist. We believe it does and we want to discuss with you how we reach the standards for everyone of the sort of people you are referring to.

Just coming back to the point that I raised initially, what do you as an organisation do to try and raise standards among your members? I understand the point about market demand. In many ways that has been one of the beneficial effects of the supermarkets. We can debate the effects of the supermarkets on another occasion, and I can see how that has had a positive impact, but clearly not everybody lives up to that standard. I am not clear whether or not the NFUS would see itself as having a responsibility to disseminate good practice. We had a similar discussion with one of your colleagues about the question of health and safety. I understand some of the problems about the sole trader, people working on their own and so on, but here it is not quite the same. Can you clarify for us what role you see yourselves as having in dealing with the abuses we have identified?

John Picken: From the membership point of view-I would be similar to Melanie on this one-you have to show the way. We lead in all of these things. If health and safety is the issue-maiming and damage and bad practice-we would encourage farmers to get more involved with the local health and safety groups. It is not so much that they come down on you with a ton of bricks if there is a problem; the point is to get to them and inform them, and prevent accidents. Nobody wants to be responsible for hurting or maiming or bad practice. It is trying to get things in place.

We are talking to various groups just now who are actively out there with models of what we should be buying into as an industry. We are just trying to assess our next move. The company that is responsible is SFQC. It trains assessors for various assurance schemes. This one will hopefully train people to come round and include health and safety in all of this. We are hoping to get better buy-in from them as to what we need to do as an industry because our record is not brilliant for accidents and health and safety.

Q548 Pamela Nash: Do you specifically see it as part of the role of your organisation to promote the work of the Gangmasters Licensing Authority?

John Picken: Yes, we do. I was at a meeting with Ian previously at Holyrood. From that discussion, the Gangmasters Licensing Authority had shown that their responsibility had increased and the problems had reduced over the six years they had been in power. His problem was a lack of resource. He was asking for more resource and maybe not more legislation. Time would help. I don’t know what timescale your Committee is working on, but he was certainly pleading for more resource.

Q549 Pamela Nash: What is the Farmers Union doing to promote the work of the GLA?

John Picken: They go round as an independent and we will accompany them if we are asked, but other than that there is no hand holding. They work on a separate level.

Q550 Pamela Nash: Sorry, not with the GLA but among your members, what are you doing to promote the work of the GLA?

John Picken: We don’t really. Everyone is well aware. You are not talking about a big country. There is only somewhere in the region of 8,000 acres of soft fruit. It is increasing, but none the less we know them all and they are all highly specialised. All of them will be employing 100-plus seasonal workers. They would be better to get their house in order and we will help them with that. The retailers are the ones that really police it more than the GLA. The GLA come in if they hear of a problem. It is the retailers-

Q551 Pamela Nash: I suppose I am talking about prevention rather than cure. It is their job to police it. I am trying to find out how they are informed about it. Melanie, could I ask you the same question? How do you promote the work of the GLA among your members?

Q552 Melanie Leech: We run a number of groupings of companies-representatives-to come together around specific issues. We have a very active employment and skills forum where we bring together the HR directors. That would be the place where we would talk about a whole range of employment issues, including the employment of agency workers, the working time directive, the minimum wage and all those kinds of things. We would draw information from that group, on the one hand, so that we understand what is happening in this sector and where the issues are in responding to proposals for new legislation and so on, but we would also disseminate information back outwards. That would be the channel and the grouping that we would use if, as sometimes happens, an organisation like the GLA comes to us and says, "Can we talk to your members or can we promote a particular issue?" We use our channels to do that.

Q553 Pamela Nash: What are those channels? Are they local meetings or newsletters?

Melanie Leech: Yes. As I have said, we have committee meetings. The HR directors will meet. In Scotland we have a forum of just Scottish companies that meets regularly. There is a range of other things. We have newsletters. We do a lot on our website. We are quite web-based in the way we handle information. We will put links to other organisations on our website. We will promote activities that they are doing. It is all of those kinds of things.

Q554 Pamela Nash: John, you quite clearly don’t see it as part of the role of your organisation to police your members to make sure they are complying with the legislation. Would you share that view for your members? Does your organisation have any responsibility for ensuring that your members are complying with the gangmasters legislation as well as any other relevant legislation?

Melanie Leech: Is that to me?

Pamela Nash: Yes.

Melanie Leech: We can’t directly take on the responsibility to police our members. What we can do is make our members absolutely aware of what their obligations are and challenge them to look for good practice beyond that. Coming back to the reputational issue, we want to promote an industry that has a fantastic reputation on all fronts, especially as a good employer. Across the UK as a whole we employ about 400,000 people. We have to replace a third of those in the next five years, so it is absolutely in our interests to be seen as a good employing sector. For that reason and for many others we will do what we can to promote good practice that goes way beyond the minimum legislative requirements because it is in our interests as an industry, and it is in our members’ interests, that we do that.

Q555 Chair: That covers the question of your own employees, doesn’t it? On the issue about further back down the supply chain, you are still in the position where you are saying, "No, that’s not our responsibility."

Melanie Leech: There is a proportionality test here. I would be really interested to hear where the Committee ends up on this. On the one hand, as I’ve said, we have a sector that is employing 400,000 people. Grant Thornton did an independent report for us looking at economic indicators around our industry because we wanted to make the case for what a great industry we were. If I look at the labour market intelligence that the Sector Skills Council produces, we are employing a high number of permanent employees. Across the UK and the sector as a whole we are giving them above average wages. We are quite a highly educated sector. A fifth of the work force has A-levels or higher degrees. They are operating in increasingly skilled and automated environments in world-class facilities.

Across the sector as a whole we think that is a great picture, but there is a lot more we can do to build on that. It is not a picture with the kinds of serious issues that the Joseph Rowntree Foundation have identified. If you look at sector level, those don’t come across as significant problems. The issue is, in truth, how significant are they and what are the proportionate measures that the sector and the responsible companies might need to take that they are not currently taking in order to tackle those issues. It is about the balance of risk and proportionality.

Q556 Chair: I think you are right. We have this very high-tech, high-value industry. You are good employers and all the rest of it. I understand all that. There is the question of how much that would be damaged if it was found to be based on exploitation of the worst sort, along the lines of the evidence from the Joseph Rowntree Foundation. I must admit it seems to me that perhaps your industry is, if not entirely in denial, not quite as aware of the scale of reputational damage that could occur if it was identified that some of your member companies were benefiting from the low prices of raw materials that have then worked their way through the chain.

As we investigate this, we are obviously going to get further materials from the Gangmasters Licensing Association. We are going to get some material from people on the ground. Some of this is going to start coming out fairly soon. We would intend, certainly, to try and follow it through the chain. It is going to be very interesting for us to see whether or not we can identify where it ends up. It is in that context that reputational damage is potentially quite substantial.

I do not know whether or not you might get cut off from the supermarkets on the basis of the product that you are selling them. If I want to pursue the supermarkets for taking fruit or potatoes directly from the farm, we would equally want to pursue it if we thought it was coming in directly via a company like you. The sorts of answers you were giving there were not quite as supportive and helpful as we might have looked for, quite frankly. You can maybe reflect on that. This is an ongoing discussion that we will have.

Q557 Pamela Nash: I want to ask one short practical question. If it did come to your attention or your organisation’s attention that a member was acting illegally or was using improper and illegal labour practices, what is the policy of the Federation to deal with that?

Melanie Leech: I don’t think we have a formal policy as such. If we became aware of that, we would immediately draw that to the company’s attention. We would clearly be in a very difficult position. If we became aware that a company was acting illegally, the first thing we would do would be to make them aware that we were aware of that and to hear what they had to say about it. Ultimately, as a citizen, whether I represent FDF or whatever, and you become aware that something illegal is going on, you have a duty to do something about it.

Q558 Pamela Nash: But in that case your first port of call would be the company and not the relevant authorities.

Melanie Leech: It would be only reasonable to allow the company to respond because I could have got it wrong. It could be a malicious allegation or all sorts of things. As a matter of natural justice, the first thing you would do would be to make someone aware of information you had been given or an allegation that had been made against them. You would then act in response to whatever response you got from that.

Q559 Pamela Nash: John, can I ask you the same question?

John Picken: I have to agree. If they are being investigated anyway and there are criminal charges being put to them and it was found out-it is already dealt with-we would not necessarily be there to-

Q560 Pamela Nash: I am definitely thinking of pre-

John Picken: Pre that stage? But how would we hear? My role as a Vice-President, and the union’s role, would be there to inform. We would be there to try and prevent it ever getting to the stage where they are at the point of breaking the law, because we would encourage and lead on best practice. That is part and parcel of what we do. We would be there to encourage them to form partnerships with trade associations that enhance their business, which is endorsing all the best practice with labour, inputs and customer relations. We get involved in the whole thing. Higher up the chain, they take a credible product from our farms, which they then market. I presume the next level in the chain is to accept what we have done with our farm assurance and our retailer partnerships and then build on that to where they have to go to satisfy their customers. I see that as the way the supply chain operates at the moment.

Q561 Pamela Nash: Do you know how many of your members are licensed labour providers at the moment?

John Picken: I don’t think there are many. Most of the fruit farms-you could correct me if I am wrong or I could certainly find out more for you-come through a Government agency. A lot of the adverts going out seasonally for fruit farms are open to anyone. You could apply whoever you are or wherever you are from. They would then be looked at to see if they were able to work in the UK or the EU. There are restrictions for various countries. It is a seasonal job so people want to come here to work. It is only there for the hours of fruiting. It is not going to be there for anything else. There is a demand every year for it and every year it is met.

Q562 Jim McGovern: John, if I understood Melanie correctly, she said that if she was aware that one of her member companies was breaking the law, she would feel obliged to report it. There are 500,000 people employed in the FDF. John, I don’t know what the depth of membership is, but I think there are 9,000 members in the NFU.

John Picken: You are right.

Q563 Jim McGovern: I don’t know how many farmers there are but there are 9,000 members anyway. Would you feel equally obliged to report it to the law if you knew that one of your member farmers was breaking the law?

John Picken: I would imagine so; it is all part of best practice. In reply to Pamela, it is doubtful if we would be the first port of call to report them. It would have happened before we hear of it generally. I know we are well connected regionally.

Q564 Jim McGovern: But what would you do if I, Lindsay Roy as a Fife MP, Menzies Campbell or somebody phoned you and said, "Do you know that one of the local farmers is exploiting people and breaking health and safety rules? I want you to do something about it"?

John Picken: I would do something about it.

Q565 Jim McGovern: What?

John Picken: I would have to inform the authorities. I would take the farmer, I would take the authorities and I would have to go to that farm. If you or Menzies Campbell had phoned me, I cannot see that there would be any other route of action because otherwise you then get embroiled.

Q566 Jim McGovern: Maybe that is a bad example. If it is an MP that phones you, it is obviously going to go further if you don’t do something about it.

John Picken: It is the same thing if we talk about whistleblowers.

Q567 Jim McGovern: If a farm employee phoned you and said, "I am being exploited", what would you do?

John Picken: I take your point. These are real issues and we have to deal with them.

Q568 Jim McGovern: By reporting it to the authorities.

John Picken: We would have to deal with it with the authorities, yes.

Q569 Jim McGovern: If it was a farm employee.

John Picken: There is a route there and you have to deal with it. You cannot let it slide. You are right about the membership. We have 75% of full-time farmers as members.

Q570 Jim McGovern: Do they pay subs to the NFU?

John Picken: They do indeed, willingly.

Chair: You are stretching credibility there.

Jim McGovern: I have never heard of a farmer parting with money willingly.

Q571 Iain McKenzie: In a previous evidence session we heard from the Joseph Rowntree Foundation. They suggested to us that the terms and conditions for labour are made pre-contractually and it is encouraging suppliers and farmers to ensure their labour provider is operating legally. Can you tell us how that is achieved?

John Picken: The monitoring of the system?

Iain McKenzie: Yes.

John Picken: We heard from the last session that it relies on everyone doing their bit. If they are not, then you hear about it, or how else would you be challenged? There has to be a problem before it is challenged.

Q572 Chair: Earlier on we had the GLA telling us about guidelines for cost rates, for example. Does the NFU have any way of clarifying with its members that they are meeting those cost rates? Suppose a farmer beside you-not the one beside you because you have mentioned him, but suppose somebody near you-had the chance to get labour at not half the price but 20% off the price and signed up for it. You would not necessarily know about that, but does the NFU have any role in making sure that its members are aware that they are expected to abide by these sorts of minimum standards?

John Picken: As you will know, I am sure, we have two systems of labour law in Scotland. We have the Scottish Agricultural Wages Board, which is still in operation in Scotland. Every year the NFU and the Unite union negotiate a rate, and it is reviewed every year for the next October. That rate is then published and given to all our members. There is a schedule of conditions and then there are rates of overtime for seasonal and full-time. Everybody that is a member of NFUS and more, because it is published in all the farmers’ papers and local newspapers, should be aware-who can read-of what they are supposed to be paying.

Q573 Chair: That covers direct employees, but there are set rates when you are contracting with a labour provider, with a gangmaster. I am not sure if you were in the session earlier on when we were discussing the rate and what the multiplier would be so that your people would know whether or not they were being offered a deal that was undercutting that. Do you have any role in policing that or encouraging your members to make sure that they are paying a decent rate?

John Picken: As policing, it has not been apparent that we do up until now. I would think we, as an industry, have never been able to pay the minimum. I am not joking. You may know of instances but I don’t. Generally, supply and demand of labour is such that we have to pay higher than the minimum. A case in point is where the seasonal worker tends to come from outwith the shores rather than from within. Everyone’s expectation of work is different, but none the less we cannot fill our jobs with local labour no matter how much we try. We always have to pitch at a level that will attract people to the job.

I hear your point exactly. Where you are contractually giving that role to someone else, we tend to pay at a level that would be very much higher than the minimum wage. Off the top of my head, I could open up a machinery ring. We work a collective supply and demand co-op of members, if you like. In that, someone supplies and someone contracts or demands. I would demand the labour of someone else. The labour would be pitched at a headline rate of £10 an hour and that is what we pay. I would probably not know what that contractor then pays his employees to supply to me unless I asked him, but I would ask him.

Q574 Chair: I do understand that. The point we were being told earlier by the GLA is that there would be an expectation rate that had been built up in a variety of ways. It would not be reasonable to expect you to police everything; for example, that tax and national insurance was being paid. If Rangers do not pay it, why should you necessarily be expected to police whether everybody you are involved with is doing it? But you wouldn’t be expected to be paying less than that guideline rate. That is the point I was trying to clarify with you. Is that equally well publicised by you with your members? If it came to your attention that somebody was paying less than that, would that then be something that, while not illegal necessarily, you felt obliged as a union to be involving yourself in?

John Picken: I haven’t been asked the question before, Ian, but I would be inclined to say that it would be self-defeating because it wouldn’t happen for long enough. The person who was getting paid that small amount would move. There are more jobs out there than people to fill them. That would be my take on it.

Q575 Chair: I find myself in some difficulty here, as we did when we were meeting in Edinburgh. I paraphrase slightly, but you seem to be saying, "There’s no problem here", because of the sort of reasons you have indicated. Yet clearly there is. We wouldn’t be having these hearings and the Joseph Rowntree Foundation would not have been reporting these abuses if they weren’t happening. Clearly they are happening and something is going wrong. It is almost as if you are just in complete denial that it is some of your members. The people that are reporting to the Joseph Rowntree Foundation are presumably not making it up. If we concede that they are not making it up, they are working on farms. If they are working on farms and being paid less than all these rates, then unless the farm ends up denuded of labour, which clearly is not happening either, then somebody is doing it.

This comes back to the question of whether or not you are part of the solution or part of the problem. We would much rather work with you and see what we could do to pursue this than just assume you are one of the obstacles in the road and we have to find ways round you, try and identify bad practice on our own, and name and shame and all the rest of it. There is always more than one way to skin a cat-not that I am advocating skinning cats; I had to say on a previous occasion that is not a policy of mine or my party.

How do we deal with this? You have batted back almost everything we have said on the basis that the weather is fine and there are sunlit uplands. It is the only time we have ever heard farmers say that the weather is fine. But there is still a problem here. What do we do about it?

John Picken: I don’t see us as the problem. I see us as the solution, you will be surprised to hear me say. We are the solution without a doubt. We know what is happening. You are asking me for my impression of my industry. I have to say that I am ashamed of our industry if it is as bad as the Joseph Rowntree Foundation found it. To me, it is entirely self-defeating. As I say, these guys who are being badly treated won’t last a season. They will be gone in a week. They wouldn’t put up with that. Nobody would put up with that.

I don’t know which one of you asked the experts earlier about conditions of employment. They have improved in the last six years. We are such a small, improving industry in Scotland. We are getting better connected with sister organisations. The products are important to us. I can’t stress enough the reputation that comes with the responsibility of employing people. If you could prevent it, you would prevent it rather than having the hardship of losing your brands, your reputation and your business. That is the stick that beats in Scotland. It is not the legislation that may come our way. We are there already, set in place, to make sure that people behave responsibly.

Supermarkets are animals. They will move away from you if there is something wrong. They will not touch you. That is the biggest incentive that any business has. When Joseph Rowntree showed the 62 examples to us, it was almost to the point where we didn’t hear an alternative from them. You heard them yourselves. They were giving their side of the story but there was no alternative. I would like to believe that it is not as bad. That is why I counter you on many of the points where you are trying to say it is our fault because I have to say that there are two sides to a story and it didn’t come out at that meeting.

Q576 Jim McGovern: You made the point about supermarkets distancing themselves from any supplier who has a bad reputation. I cannot help but put the other side of that coin. It must be a very difficult and fine line to walk to keep your reputation intact but also to cut prices to the absolute minimum, which I dare say the big supermarkets demand.

John Picken: You have hit the nail on the head, Jim. Technology is what cuts our costs. It is not shaving labour. It is not getting them to work another 10 hours. They want to work as many hours as you can give them, but legislation prevents us from letting them do that because they are restricted in the hours that they can work. They have to work 48 hours a week.

Q577 Jim McGovern: They are allowed to say, "I am only going to work 40 hours a week." They can sign an opt-out.

John Picken: They can, but why should the farmer pay overtime? This is the other point. The legislation has geared it to such a point where it puts people off working. That shouldn’t be so.

Q578 Jim McGovern: You may have heard me speaking earlier on in the evidence, and even to yourself. When I was at school we went to the berries for the whole of the school holidays. I slept in tents and huts at Blairgowrie and stuff like that, picking berries.

Chair: Slept in tents? You were lucky.

Jim McGovern: I was absolutely spoilt; you are right. I was ruined. It wasn’t a tent; it was a blanket.

Chair: You were lucky.

Q579 Jim McGovern: As far as I am aware now, school kids don’t go to the berries in the summer. It’s all migrant labour. When we went, whole families went. You weren’t subject to national insurance or tax or anything like that. You got paid for every bucket that you weighed in and stuff like that. What happens now? Is there a minimum wage and decent accommodation?

John Picken: Yes, there is. There are caravan parks and they are all housed. If they are not housed in the caravan park, they are housed close by. They weigh the berries. They either have a number or they have an electronic card that they use. Their daily weight comes up and they are paid per kilo. If they don’t come up to the minimum wage on that, they get the minimum wage. That is the way I’ve been led to believe that they get paid. You are smiling, Ian.

Chair: No, that is my understanding.

Q580 Jim McGovern: I feel slightly sceptical as well when you say that is what you have been led to believe.

John Picken: At the end of the day there are so many workers and so many hours that they work. They don’t work 24 hours a day. There are only so many hours of daylight. The berry people have to get it fresh to market. I know that there are chillers and all the rest and they do carry over stock to the next day, but none the less there is processing that has to go on too. You have to get rid of the leaves and the husks and clean up the berries. It is not all picking in the hours of daylight; they only have certain hours.

Q581 Jim McGovern: I hear horror stories about people getting the national minimum wage but having something like two thirds of it taken back for sleeping in a hut. Do you think there is any credence in that?

John Picken: The rates in the wages schedule are set by the Wages Board. It is a negotiation between the Unite union and the farmers with three independents. That is agreed every year. Everyone has an opportunity to negotiate. It is good that you should be able to negotiate one way or another, up or down. It rarely goes down; it only generally goes up.

Q582 Jim McGovern: I must just finally say that the Polish community or the eastern European community I know from Dundee pick the berries in Perthshire and Angus and so on. I am not aware that too many of them are members of Unite.

John Picken: The opportunity is there to join Unite.

Jim McGovern: Of course it is.

John Picken: If they want to join, they can join. The whole point is that their job is annual. They come back every year, so that speaks for itself. How many berry pickers do we have in Scotland? It is a big industry now for Scotland. There must be in the region of 30,000 berry pickers. My neighbour is one of 120 fruit growers in Scotland. He employs 350. If you expand that, it is a lot.

Q583 Jim McGovern: If there are 350 non-union members, will he still comply with the union rates?

John Picken: I don’t know. They don’t have to be a member of a union.

Q584 Jim McGovern: But will he still comply with the rates?

John Picken: Yes, he has to, because if he doesn’t, if somehow the calculation doesn’t work out, the retailer would pick him up on it without a doubt.

Q585 Mr Reid: I have a question for John. In their evidence the Joseph Rowntree Foundation said that they had surveyed six areas of the UK, one of which was east central Scotland, which I presume includes Fife. They say there are sharp practices going on. One that they have given is the under-work scam where the employer recruits too many workers and is therefore able to force wages down. Yet the evidence that you are giving is that there are not enough workers and that is forcing wages up.

John Picken: That is right.

Q586 Mr Reid: Are you absolutely confident in what you are saying?

John Picken: Yes. They are not slaves. There is no reason why that worker would stay there. They have mobile phones. They contact all the people they know in the other farms. If you see a fruit farm, you see five fruit farms. It is all in the same area and they talk.

Q587 Mr Reid: So there are no farms that aren’t your members.

John Picken: There is no barbed wire.

Q588 Mr Reid: I can’t understand in any way why the Joseph Rowntree Foundation are saying one thing and you are saying another. Do you have any understanding of why that is?

John Picken: All I can think of is what I said almost at the beginning. These are just a few practices at the start, the end or the middle because of some problem that has arisen. I don’t think it would be a continuation right through a season. It wouldn’t be a continuation right through one farm. It is presumably because the wrong person is in charge and before the end of the season he has gone, I think.

Q589 Chair: I must confess that I find this quite astonishing. It is almost a complete denial by you of what the Joseph Rowntree Foundation were telling us they found. Have you or the organisation met with the Joseph Rowntree Foundation and gone over some of these detailed issues?

John Picken: Only after that meeting; I met with Alistair and he said he was coming here.

Chair: That might be worthwhile at some stage because, if you seriously believe that this is marginal and-you didn’t quite say they were making it up-grossly exaggerated and all the rest of it, I think it would be helpful for you to engage with them directly. Certainly I do accept that there will be examples of excellent practice in high-class farms across Scotland. I am also clear that there are some practices that are not quite as good. It is a question, again, of whether or not you are part of the solution or part of the problem. If you don’t recognise that there is a problem, then that indicates to us that there is a problem and you are part of it, to put it not too delicately. Iain wants to make a couple more points and then we will draw this to a close.

Q590 Iain McKenzie: Continuing with the point on direct engagement, have the NFUS had any conversations with the gangmasters over the accommodation that they do provide for the labourers?

John Picken: Certainly in Angus, where they had a problem with the accommodation at the start, that farm has since altered its practices. Due to the talking and all that, I think the standard of accommodation has greatly improved. It is an ongoing education. I would imagine the units that are in now know what the regulations are. At the start, as in any industry, we were trying to resurrect from the acreages that used to be grown; it was in decline until the polytunnels came out. With the polytunnels came a totally new and vibrant industry. There were maybe a few over-enthusiastic people at the start, but they have gone now, as far as we are aware.

Q591 Iain McKenzie: Do you think your members would be more inclined to provide more on-site accommodation if that was made easier?

John Picken: On-site you have control of their time. If they are on your farm, you know where they are and they will want to work. That is why they are there. If they are off your farm, you don’t really know where they are. So from that point of view-

Q592 Iain McKenzie: Do you find permission from the local authorities easy to obtain?

John Picken: It is such an important industry for Scotland that I would suggest the planners really need to get their heads around that. I would like to see less regulatory requirement up front. Fair enough, you have to get the standard right, but the whole idea that you are a holiday park is just outrageous. It is provision of jobs and it is of a high enough standard that people want to come back; and they do want to come back every year.

Q593 Chair: I want to pick up a final point that Joseph Rowntree sent us; it came up to some extent with the GLA. That is the question of whether or not purchasers should be enforcing contract compliance conditions right the way down the chain. You would be at the bottom of this. The FDF would be somewhere in the middle of it. Does that seem an idea that in principle would be acceptable to you? That is to either or both of you.

John Picken: Yes, it is there. It depends if you want to add in new legislation that is going to force the retailer to put that condition on, but the market is the market. So if these conditions are in force, we end up doing them because we are at the kicking end of the supply chain.

Melanie Leech: I will have another go at what I said earlier on, which you said had disappointed you, Chair. I will try and do better, and if it still disappoints you at least it won’t be, I hope, because I can’t express myself.

There are varying lengths of supply chains. In some cases, and in the majority of the cases that the Joseph Rowntree Foundation looked at, you are talking about quite short supply chains. In those cases it absolutely should be the case that if you are buying from a producer, whether a farmer or a processor or if you are the processor, you should satisfy yourselves that the person you are buying from is complying with the legislation. Ideally you would want people to go further than that. Some of the things that the Joseph Rowntree Foundation report starts to impact go beyond legislation and introduce more qualitative elements to that. The more guidance there is, whether it is from the GLA or informed by the kind of debate that JRF are good at provoking, which allows you to identify good practice that goes beyond the bare minimum, the better. Absolutely people should be using that to satisfy themselves.

If you think about spiralling out supply chains, they might have eight or nine links in them before you get to retail. I come back to this point. If at each point due diligence is working appropriately and if the system is being policed, whether by the GLA or the adjudicator in the grocery supply code of practice, which tries to make sure that fair pricing is operating at each point in the chain so that there is the ability for everybody to make a margin and make a living fairly-if all of that is working effectively-it seems to me that, if you are seven or eight points removed from the point of primary production, you should be able to rely on a combination of due diligence at each point in the chain and the chain being policed and operating effectively and not yourself have to go and check each of those points. As I said before, that would add huge cost burdens to a chain that is, in the main, operating responsibly.

Q594 Chair: I understand that. That is a bit clearer in terms of what you are suggesting. However, I was not aware until now-in fact I am still not entirely aware that you are saying this-that your entire supply chain would be self-approved or checking backwards at each stage. I am not sure you are saying to me that you know that the people who are buying from the farmer at that first stage are actually making those sorts of checks.

Melanie Leech: Specifically if you are seven steps removed from it, you will not be checking around employment status-at that primary stage.

Q595 Chair: Is there a certificate saying it is already ticked off, as it were?

Melanie Leech: As far as I know, that would not be happening because you would be relying on the fact that the people down the chain had taken care of those issues.

Q596 Chair: And if they haven’t?

Melanie Leech: As I understand it, if they haven’t, you wouldn’t know that because you would not be specifically checking.

Chair: That clarifies things for us.

Q597 Iain McKenzie: I would be surprised at what you are saying about the supply chain if large retailers did not put in place a fully integrated supply chain rather than what you are describing as a sliced-up supply chain.

Melanie Leech: I can’t speak for the retailers, but some of my manufacturing members do have integrated supply chains. You are right; I should probably make that distinction.

Q598 Iain McKenzie: In that respect they would know all the way down what was happening in the supply chain.

Melanie Leech: Some big multi-national processors will have an integrated supply chain. McCain is an example, but they are quite close and it is quite a short supply chain. A company like McCain, which is buying potatoes and making potato products which then go into retail, is an example of quite a short supply chain, where you would expect that kind of integrated approach to operate in that chain.

Q599 Iain McKenzie: Would that be applicable over a larger supply chain?

Melanie Leech: Over a larger supply chain I think it becomes much more difficult. At the moment, to the best of my knowledge, these kinds of issues would not be specifically checked at several steps removed where it is not an integrated chain.

Q600 Iain McKenzie: But wouldn’t it be more necessary the longer the chain? At any point it could impact so you would need to know.

Melanie Leech: It is for a combination of reasons. It is partly because only relatively recently has it been suggested that there is a major problem here. There has not been the perception of a high risk around this area. It is partly because in any case you would expect that at the point at which this is most relevant on the evidence we have from JRF, whatever view you take of it-I am not in a position to take a view on that, but assuming that were an entirely accurate picture-it applies primarily at particular points in the chain. They have only looked at quite a narrow part of the total supply chain.

Q601 Iain McKenzie: But you can imagine the large retailers would be interested down to the point that John has described where there are more jobs than workers, because that would have an impact along the chain.

Melanie Leech: I can’t speak for the retailers. John knows better than I do the way the retailers operate. He has already described that they have quite sophisticated systems for auditing along their supply chains. The big manufacturers will have the same. Until the JRF report and so on, I don’t think this has been specifically identified as a high risk area to which they need to pay particular attention. That may change.

Chair: "Aweel, ye ken noo", as they say in other contexts. As we have said to everybody else, are there any answers you had prepared to questions that we have not asked? Is there anything else that you feel you want to get off your chest? Not now, but if there is anything that occurs to you on your way home and you think, "Oh goodness, I wish I’d said such and such", providing it is not libellous or obscene, we would be happy to have that as well.

Thank you very much for coming along and subjecting yourselves to our questioning. I will close the meeting.

Prepared 15th April 2013