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Paul Blomfield (Sheffield Central) (Lab)
I beg to move,
That this House has considered Government policy on enforcement of the national minimum wage in the care sector.
I am delighted that you are in the Chair, Mr Rosindell, and that so many colleagues are here to speak about this issue.
I am pleased to have secured this debate, although I am disappointed that it is still needed, because we had a debate on this very issue, led by my right hon. Friend the Member for Oxford East (Mr Smith), back in November 2014, during which it was acknowledged that we had a real problem. That was acknowledged by all sides, including by the Minister at that time, the right hon. Member for North Norfolk (Norman Lamb), because in March that year the National Audit Office had estimated that up to 220,000 home care workers in England were being illegally paid below the national minimum wage. Eighteen months on, we still have the same problem.
We could talk forever about numbers, and I am sure that a number of colleagues will cite statistics, but I think the human stories explain what the issue is really about.
Angela Rayner (Ashton-under-Lyne) (Lab)
I worked in the sector as a home help and represented home care workers. Does my hon. Friend agree that the human stories are quite tragic? What home carers end up having to do is subsidise their employers, who do not pay them travel time. A good employer will see the value of their staff, and pay them correctly and appropriately.
Paul Blomfield
I thank my hon. Friend for that intervention and I completely agree with her. I will illustrate that point further in my comments today.
Nick Thomas-Symonds (Torfaen) (Lab)
My hon. Friend has talked about the delay and the lack of action since the previous debate. Is not one of the reasons for that the fact that, when investigations are launched into these matters, they take an inordinately long time?
Paul Blomfield
My hon. Friend is absolutely right. Indeed, arising from our last debate, six investigations were commissioned. I asked a parliamentary question about those investigations. They were launched in February 2015 and have yet to report. That is clearly a disgrace.
I was talking about the human stories in my constituency. I know of two local women who work for a care company that uses GPS technology to monitor when they arrive for and leave appointments. They told me their stories. The company monitors the time that they spend travelling; to be accurate, it monitors the distances that they are travelling, but it does not pay them for that time. Incidentally, the company also rips them off on the cost of travelling; it pays them 12p a mile for using their own cars, when Her Majesty’s Revenue and Customs assumes for its calculations that 45p a mile is a reasonable benchmark.
One of the women, Sharon, told me that it was not unusual for her to be out of the house at 6.15 in the morning and not return until 11 o’clock at night. She gets a break, but she is only paid for seven hours’ work, which is the time she is actually at appointments. Never mind how long it has taken her to get to an appointment or to travel between appointments. Consequently, a so-called “hourly” rate of £7.52 means that, according to Melanie, who works alongside Sharon:
“A 15-minute visit is worth £1.88”.
These women have even been refused payment for the time they have spent waiting for ambulances to arrive for people in their care. Why do they put up with that abuse? As Sharon told me:
“You get in a bit of a trap, because I actually do love the work.”
We should be ashamed that tens of thousands of people like Melanie and Sharon across the country, who look after our most vulnerable, are treated in that way simply because they care.
It also makes a mockery of our national minimum wage legislation. Let us be clear that it is a criminal offence knowingly not to pay the national minimum wage. However, the situation has not improved since we last debated this issue. In fact, there are signs—
Melanie Onn (Great Grimsby) (Lab)
Does my hon. Friend agree that it is a disgrace that only 36 English councils out of 152 that are responsible for social care stipulate in their contracts that home care providers must pay for workers’ travel time?
Paul Blomfield
I do indeed and I pay tribute to those councils that are now changing their rules, so that when they commission they require workers’ travel time to be paid. Hopefully, more councils will follow their example.
I am disappointed that the Government seem to be taking this issue even less seriously than when we last debated it. Last summer, HMRC launched a new national minimum wage campaign that allows employers who have not been paying it to escape punishment. That is shocking. But it is simple: offending employers can declare details of arrears owed to their employees. They then “self-correct” and, with a cursory follow-up by HMRC, that is it—no more HMRC sniffing around and examining their practices. I do not know of many crimes where the offender escapes punishment entirely if they come forward. As I say, it makes a mockery of the increases in penalties for non-payment of the national minimum wage that were introduced under the coalition Government.
According to the Low Pay Commission, between 2011 and 2015, £1.75 million was recovered in arrears for 8,698 workers, which amounts to an average of £201 per worker. The shameful thing, however, is that that is just a drop in the ocean. The Resolution Foundation, which the Minister will know is chaired by one of his former colleagues, a former Conservative Minister, estimates that 160,000 care workers are collectively cheated of £130 million each year. The Resolution Foundation estimates that the average amount of arrears owed to care workers is more than £815, which is four times the rate at which HMRC is recovering the money.
The real scandal is that it does not have to be like this. The Government have the power to act, but they appear to lack the will to do so. Therefore, let me set out some proposals and I look forward to hearing the Minister’s comments on them.
For a start, the Government are far too reliant on self-reporting. The use of zero-hours contracts is rife in this sector; for example, both Sharon and Melanie, to whom I referred earlier, are on such a contract. So who is going to rock the boat when there is so little job security? Following up on every call made to the helpline is all well and good, but what are the Government doing to help those vulnerable care workers who do not dare to make such a call?
Chris Stephens (Glasgow South West) (SNP)
I thank the hon. Gentleman for giving way and I congratulate him on raising this important issue. Regarding self-reporting, does he agree that the biggest single reason that employees are reluctant to do that is fear of dismissal and, if they are not dismissed, fear that there will be a cut in their hours?
Paul Blomfield
I thank the hon. Gentleman for that intervention and I think he is right. It is the fear experienced by workers in this sector that is driving unreporting. The Government need to do something about that.
Establishing a formal public protocol to handle third-party whistleblowing would be a step forward. Currently, for example, when a union makes a complaint on someone’s behalf, it receives no feedback as to what is happening with that, and that is no way to facilitate reporting.
We also need proactive investigation into a sector in which we know abuse is rife. Following pressure from Labour that was led by my right hon. Friend the Member for Oxford East, the coalition Government began an investigation into six of the largest care providers, but that was over a year ago. What have they found out? Have affected workers been compensated? What is happening? I hope that the Minister will give some answers, because effective investigations will help to change the culture. Where HMRC investigations uncover non-compliance, why does it not then look at the whole workforce? The chances of co-workers being on the same terms and conditions and suffering from the same abuse is high, but HMRC does not follow through.
I have made a number of suggestions about how the Government might act—I will not speak for too long, because a number of colleagues want to contribute to this debate—but I want to focus on a single demand, which I emphasise would not involve the Government in significant cost, but would be transformative. It is a course of action that has been recommended by the Low Pay Commission and Unison, and it is simply to require employers of hourly paid staff to state clearly the hours they have been paid for on their payslips. We have heard how companies such as the one employing Melanie and Sharon have sophisticated technology to track exactly what their employees are doing. They already monitor the time spent at appointments and travelling for work. The proposal would be easy for companies to do and would introduce a level of transparency that would change those companies’ culture. It would also give workers the information through which they could challenge companies and utilise the helpline. Section 12 of the National Minimum Wage Act 1998 already makes provision for such regulation. Will the Minister work with me and his team to bring about that simple change?
All of us here know that there is a bigger fundamental problem with the chronic underfunding of the sector. Private providers are threatening to leave the market and not-for-profit providers are telling me that they cannot sustain the level of care that they want and rightly seek to provide. Vulnerable people, the elderly, those with learning difficulties and family members fearing for the life of their relative as they wait for an ambulance are all suffering as a result. That is before the national minimum wage increases to what the Government have laughingly called the national living wage. We all agree that is overdue. It is inadequate, but it is nevertheless a small step in the right direction.
We all know that the recently announced council tax social care precept is nowhere near enough to plug the funding gap, so we should be deeply concerned by the wider crisis in social care, and not only in its own right, but because of the impact it will have on the national health service. Notwithstanding that and the desperate need to address the funding shortfall, the labour market enforcement measures that I have mentioned are necessary and will be a step forward, and I hope the Minister will engage with me in taking those up.
Several hon. Members rose—
Andrew Rosindell (in the Chair)
I advise the House that a number of Members wish to speak. There is only limited time, so I urge Members to be brief and to keep their contributions to no more than three or four minutes each. I hope that then everyone will be able to speak.
Mr Andrew Smith (Oxford East) (Lab)
I will try to be as quick and as brief as I can, Mr Rosindell. I congratulate my hon. Friend the Member for Sheffield Central (Paul Blomfield) on securing this debate and on his powerful speech, which compellingly made the case for urgent Government action in this vital area. I fully support the case being made by Unison and the Low Pay Commission to use section 12 of the National Minimum Wage Act to require employers to provide workers with a statement showing compliance with the national minimum wage.
As my hon. Friend said, the present situation is scandalous. There has been some improvement in some places since we, the unions and those with a concern for the social care sector mobilised pressure, but it has been not nearly enough and a lot more needs to be done. The example of Oxfordshire County Council shows that we are not making an unreasonable demand. The council, which is Conservative-independent controlled, has recently commissioned a new home care service that will come into effect on 1 May. As part of that, the council will require providers to give a breakdown of their prices; to demonstrate the hourly rate that will be paid for care workers at or above the national living wage from 1 April; to include travel time and the hourly rate paid to care workers; to pay care workers for travel expenses, as they should; and to adopt an open-book accounting method. That will enable the council to understand whether the national living wage is being paid to care workers. If the provider does not comply, it can be suspended. That is the sort of practice we need to see everywhere.
As my hon. Friend said, it is vital that that practice goes along with other measures to raise the status, training and overall remuneration of this vital group of workers. I will give a local example of just how important it is that we get it right across the country. Because of the problems of delayed discharge from hospitals, which are as bad if not worse in Oxfordshire than just about anywhere else, the local hospital trust commissioned 150 places in intermediate care and private care homes so that people could be moved on from hospitals, which are not the best place for those people to be. It is also the most expensive place for them to be. Initially, that reduced the problem of delayed discharge, but then it got worse again because the intermediate care providers could not discharge those people to their homes because of the insufficiency of domiciliary care support. As a result, the hospital trust will shortly be recruiting 50 domiciliary care workers to try to address that problem. They will be paid for out of the hospital’s budget, rather than from the local authority social care budget, which is stressed and under pressure.
We are talking about workers who are vital to crucial health and social care services. I do not believe that Government Members—it is a pity that there are not more Members on the Government Benches taking an interest in this vital issue—want social care workers to be exploited or treated badly. Instead, because of their rhetoric against red tape and regulation and their antipathy sometimes towards trade union campaigns, I think they do not understand how vulnerable these workers are, or the pressure under which they work.
I appeal to the Government to think again and to see how the measure is essential for the dignity and proper reward of vital workers and for recruitment and retention in this vital sector, as well as how essential it is in ensuring that the people whom they are caring for receive the standards of care to which they are entitled. The Government must act now and, using section 12 of the 1998 Act, bring some consistently higher standards to this vital sector.
Mike Wood (Dudley South) (Con)
It is a pleasure to serve under your chairmanship, Mr Rosindell, I think for the first time. I thank the hon. Member for Sheffield Central (Paul Blomfield) for securing this debate on an extremely important issue. Before I begin, I declare an interest in that my brother works in the social care sector—he started a new role on Monday—although he is not directly affected by the issues we are discussing this afternoon.
Social care is such an important feature of our society and social workers are integral to the care of people in need and those at risk. Despite that, too many social workers have suffered at the hands of unscrupulous employers—employers who have continued to flout the law and who simply do not pay the full national minimum wage. While HMRC maintains the operational enforcement of the national minimum wage, in my 10 months as a Member of Parliament I have yet to see either a coherent or sensible approach.
I will draw Members’ attention to two cases that I have seen since my election last May and contrast them with each other. The first concerns a care company in the black country. None of its care workers is paid for their travel time or when calls run over. The hourly rate therefore fell well below the national minimum wage over a substantial timeframe, but the HMRC investigation has been ongoing for nearly four years. To date, it has resulted in a notice of underpayment for only one of the employees who filed a complaint, even though the same principle applies to all the care workers.
My constituent, Debra, complained about not being paid the minimum wage in November 2012. It took 30 months before she managed to force HMRC to issue the care company with a notice of underpayment. She was forced to complain to the then Secretary of State for Business, Innovation and Skills and my predecessor, Chris Kelly. HMRC wrote to her in February 2013 to say that it was looking at all the care workers’ records, and wrote again following Debra’s complaint to the Secretary of State in June 2014 that the other care workers were also owed arrears for non-payment of the minimum wage. Nevertheless, HMRC then issued the notice only for her, as if she was the only worker who had not been paid the national minimum wage.
HMRC’s continuous delays have been shocking, and they have been ongoing since Debra’s complaint at the end of 2012. HMRC has also been looking at the cases of two other constituents of mine, Alison and Michelle, since at least March 2015, yet we do not seem to be any further forward than we were at this time last year. HMRC continues with what seem to be unnecessary delays and excuses—according to my case notes they appear to be the very same excuses given to Debra.
None of the care workers at the firm were paid for their travel time between calls or if calls ran over the allotted times. The company’s own paperwork—the rotas and pay slips—clearly show that they did not pay their care workers for what we would understand to be necessary working time. All the care workers were on the same terms and conditions, so the same position applies equally to all the workers.
Despite HMRC writing to Debra that it had “all workers’ records” dating back to February 2014, in a recent telephone call HMRC asked whether my constituents would be prepared to go to an employment tribunal and be cross-examined. That does not seem appropriate given the objectively verified facts. HMRC has not even calculated the arrears that the women appear to be owed. The same tactic had been used previously with Debra. HMRC does not have to mention any employment tribunal; its job is to get the evidence, calculate the arrears and issue a notice of underpayment. Only after the notice is issued can the employer force a tribunal, and an employer has only 28 days to do so following the issuing of such a notice by HMRC. Indeed, until a notice is issued the care company has absolutely nothing to appeal against.
There is clearly something very wrong indeed with how HMRC enforces compliance with the national minimum wage in the care sector. As I said, it has been investigating this care company for nearly four years, yet despite finding that not only Debra but the other care workers are owed minimum wage arrears, it has still issued only the one notice.
That case should be contrasted with HMRC’s response to another case, although it goes slightly beyond the narrow confines of the debate. At a manufacturer in my constituency, a genuine clerical error led to the underpayment of four pieceworkers out of a workforce of 240. Over three years, the underpayment totalled just under £600, or 0.005% of the total wage bill. It was clearly a genuine oversight that had not been identified in five external audits.
Despite the fact that that manufacturing company co-operated fully with HMRC—indeed, as soon as it was made aware of the underpayments, it repaid them, along with the penalty, on the next available working day—its response seems to have been very different from what happened with the care company. The manufacturer has been named and shamed and now has to deal with the resulting implications while trying to negotiate a contract with high-street retailers.
HMRC’s response has been very inconsistent. In my experience, it is focusing its energy on what might be seen as the easy cases—companies that are genuinely trying to do the right thing but may have made a mistake —while it does very little effectively to enforce the national minimum wage for companies such as the care company I highlighted, which have consistently obstructed and obfuscated and shown total disregard for HMRC and for their legal requirement to pay the national minimum wage. That has to change.
I urge my hon. Friend the Minister to ask HMRC urgently to review its general approach to the enforcement of the national minimum wage. I will also write privately with the details of the two cases to which I referred to ask him to speak to HMRC about what is going on and how we can have a more consistent and equitable approach to ensure that all employers pay the national minimum wage.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
It is a pleasure to serve under your chairmanship, Mr Rosindell. I congratulate my hon. Friend the Member for Sheffield Central (Paul Blomfield) on securing this important debate.
My hon. Friends and I are proud that it was a Labour Government who, in the teeth of opposition, legislated for a national minimum wage. That national minimum wage is a right, not an optional privilege. At the moment, anything between 160,000 and 220,000 home care workers are still likely to be paid less than the legal minimum, collectively losing out on nearly £130 million a year, as my hon. Friend said—an average of £815 per worker. That is nothing less than a national scandal, not only because a significant minority of home care workers are being exploited—let us remember that they are low-paid and mostly women, that a growing number of them are migrants, and that they find it very hard to organise collectively because of the irregular and fragmented nature of their work—but because underpayment of the minimum wage on such a scale has a direct impact on the quality and dignity of the care provided to the older and disabled people who rely on that care.
As we have heard, there is a variety of reasons for underpayment of the national minimum wage in the care sector, ranging from hourly rates that are simply below the appropriate minimum wage rate to deductions from pay for unpaid training or business expenses. However, the most ubiquitous reason, in my experience, is that care workers are increasingly paid only for contact time. To be clear, that does not include all the time that many care workers actually spend with each client.
I worked for the Resolution Foundation before I was elected and I did a lot of work on this subject. I spoke to hundreds of home care workers from throughout the country about their experiences. I found that “call clipping” —where home care workers leave earlier than they might want to, to ensure that they are not working for free—does happen, but most stay for far longer than their contracted time. For many of the people being cared for, the care workers are the only people they see for hours at a time, perhaps for the whole day. Home care workers enjoy and value the work they do and they often stay for far longer than they need to, but the added insult for them is that, as my hon. Friend the Member for Sheffield Central said, they are often not even paid for that contact time.
Melanie Onn
Is my hon. Friend aware that when home care workers overstay their allotted time they can be subject to disciplinary procedures for failing to follow their company’s rules, which stipulate the limited time they are to spend with each of their clients?
Matthew Pennycook
Absolutely—I think that happens quite frequently. The way they are disciplined relates to a point made earlier by my hon. Friend the Member for Sheffield Central. Increasingly, they have to clock in and out, and sophisticated technology is used to monitor the time they are with a client. Yet, on their timesheets and payslips—I have seen many of them and they are incredibly confusing—their employers cannot give them the clear detail of how much they are being paid and whether they are being paid the minimum wage. The law in this area is very clear, and yet we still have hundreds of thousands of workers denied the legal minimum to which they are entitled. So why is that happening? At its root, as my hon. Friend said, is the lack of a sustainable funding settlement for social care, which is the result of successive Governments not doing enough, and we know the 2% precept will do little to address that.
Going forward in the medium term, we need to address the funding gap, which is growing on a yearly basis. Local authorities need to do more to ensure they commission care in such a way as to protect those who deliver it, and the independent care providers who employ the home care workers need to do everything possible to ensure that they meet their statutory obligations. There are good examples in the field, but unfortunately far too many do not meet their obligations. None of that should stand in the way of doing what we and the Government can to end non-compliance in this sector.
A variety of things could be done. To give them credit, some of the steps that the Government have taken have been welcome. For example, fines have increased to 100% of underpayments owed to each worker, up to a maximum of £20,000, and they are set to rise again in April. But the scale of the problem and the small solutions that the Government have proposed are clearly not having the impact that they need to, so more could be done. We could have the six investigations report in a timely manner, and we could do more to name and shame employers. Only 13 small social care providers have been named and shamed so far using the powers introduced in 2014.
We could do more to end the over-reliance on self-reporting and ensure that low levels of arrears are recovered. When an abuse is found, we could investigate the whole workforce at that provider, which currently does not happen. However, even if we did all that, we would still be back here next year or the year after talking about what more needs to be done. The Government must seriously consider amending section 12 of the National Minimum Wage Act 1998 so that we deal with the problem by proactively forcing employers, putting the onus on them to prove that they are paying their workers the minimum wage to which they are entitled rather than the other way round.
The sector employs 1.5 million people and has the potential to grow by another million in the next decade alone. If our country is to have the care service that it needs and that disabled people need, the Government need to do more—and quickly—in terms of recruiting and retaining staff who care about their job and of ensuring that those workers are not exploited.
Marion Fellows (Motherwell and Wishaw) (SNP)
I thank the hon. Member for Sheffield Central (Paul Blomfield) for securing this really important debate.
I looked around the room a moment or two ago and I think I qualify as the oldest person here, so this debate has a particular resonance for me. I am over 60—I will be 67 on 5 May—and I have a vested interest, so I should declare it right away. I am also very glad that, if I do require care at home, I will probably have care at home in Scotland. I do not say that everything in Scotland is perfect or that things could not happen there as well, but in the debate on securing the national minimum wage for the women—it is mainly women—who care at all sorts of levels and for paid home care workers, we are going too cheap for them; we should be looking for the living wage of £8.20 an hour. That requires political will, which I find sadly lacking in this Government. The Scottish Government have that will; they have a Cabinet Secretary for Fair Work, Skills and Training.
We need to pay the people who look after the most vulnerable people in our society a decent wage. If we pay a fair wage, we get fair work. I was a local councillor and I am conscious of the fact that a lot of women were very much underpaid and strived for years to get equal pay with male counterparts. It is still happening in Scotland. As I said, we are not a utopian society, but the Scottish Government have committed to paying the living wage and to giving enough money to local authorities to pay the living wage to people who take part in the health and care partnership. I cannot understand why that cannot be done here in England as well. It requires political will, which is sadly lacking.
Also required is the political will of the Government to hound, harass and do whatever they can via HMRC or any other agency to ensure that employers pay the minimum that is required in this country, and they should be encouraged to pay far more. I do not want to be in a position where—I will personalise it—someone is being paid to care for me and they cut short the time that I require and am entitled to, to rush off and help someone else. It is a sad reflection on society that we treat the most vulnerable in an almost callous way. We should look at it from the other point of view: would you want your parent, mother, sister or brother to be subjected to work from someone who is grossly undervalued and underpaid?
We need to change the entire context of care for the elderly and disabled across the United Kingdom. If we do not, we are building up a time bomb for ourselves and for those we care for most.
Andrew Rosindell (in the Chair)
There will now be a time limit of three minutes to allow everyone to speak.
Melanie Onn (Great Grimsby) (Lab)
It is a pleasure to serve under your chairmanship, Mr Rosindell. I will keep my comments brief. The notion of a kindly small care home no longer exists. The person who lives in your town or village, down your street or in your community, who cycles around and gives care to those who need it, no longer exists. The small companies that we used to know so well and recognise in our communities simply cannot compete with the large corporations.
I came across Mears when I worked with Unison. I speculate that companies such as Mears provide a multitude of public services alongside their own private interests. They can bid at incredibly low levels on a per hour basis. With the downward pressure on local authorities and the amount that they can afford to pay, such corporations are winning the contracts. There is a huge gap between the corporations at the highest level and the domiciliary care that is offered to people both in their homes and in residential care. We must not forget that what is offered is the most intimate and personal care.
The corporations continually try to minimise their costs to such an extent that it falls on staff to subsidise their employment, whether that is through travel time, as has already been mentioned, or the purchase of uniforms, which happens frequently as well. I also know that many care staff have taken to buying biscuits or small treats for the clients they serve because their company had previously provided that as an option, which was something nice for the residents in the afternoon. Such things are now being taken away as margins are squeezed and companies have to answer to their shareholders much more than they have to answer to the people who receive the care or deliver it.
Simple things that mean so much to residents are being taken away. Individuals who give so much of their time and their love to their clients are being put in an impossible position in trying to create a less clinical environment. It is absolutely right to say that the people who work in the sector are mainly women, increasingly migrant workers. Why are the women who do those jobs put at the bottom of the pile when it comes to reward? Is it because there is still that traditional view that it is women continuing their household work in the wider community? If that is the only reason why it is so poorly valued, the Government must address that immediately.
Also, the large companies often do not engage positively with trade unions that wish to raise important issues perfectly legitimately and through the appropriate channels. Those workers deserve proper, full and easy access to independent support through a union, and the employers should take proactive steps to encourage their staff to become members, and support that by recognising the trade unions. Too often, trade unions must fight those corporations to achieve recognition. They cannot even get across the threshold of care homes.
I have worked alongside care workers who dared to put their heads above the parapet and who were representatives for the other workers. It did not do their careers any favours. They have been subjected to spurious disciplinary proceedings, and had their shifts reduced—they have limited-hours and sometimes zero-hours contracts. They are punished by having their hours reduced so that they do not take home as much money as they should, merely because they have tried to represent their members properly. They have been threatened with having the police called should they dare to gather outside the company’s property, which is a shameful way to treat staff who are only trying to improve the working conditions of the people who deliver the care.
Barbara Keeley (Worsley and Eccles South) (Lab)
It is a pleasure to speak in the debate with you in the Chair, Mr Rosindell. I congratulate my hon. Friend the Member for Sheffield Central (Paul Blomfield) on securing the debate and on the excellent way in which he opened it.
I want to talk about what I describe as the funding crisis in social care. Many providers are struggling to provide good-quality care—even if they want to, as they should—against the backdrop of years of cuts to local authority budgets for adult social care. The increased costs associated with the national minimum wage and the so-called national living wage are going to place providers under additional financial pressure, and that is of great concern. The Local Government Association has estimated that introducing the so-called national living wage from April will cost at least £330 million for home care and residential care providers. There was no additional funding for that in the Budget. There is a risk that too many providers will become financially non-viable. We do not want care providers to cut staff numbers even more, threatening the quality of care.
The social care precept is not the answer to finding enough funding for what is a Government policy change. My local authority, Salford City Council, needs £2.7 million to pay for the minimum wage increases in our local care sector, but the council can only raise £1.6 million from the social care precept. The Government are not providing funding for their own wage policy. In my area, the people of Salford are finding the money, from their council tax. I am sure that there will be agreement in the Chamber that care workers should be paid the national minimum wage. Care work is a demanding job that requires skilled workers who are compassionate and who provide empathy and good-quality care. It is completely unacceptable that a job that historically has been undervalued is still being exploited today, and that those workers are not being paid the basic wage.
I give credit to Unison for its work interviewing care workers and finding out in detail the constraints on them, such as having to rush between calls and reduce the amount of time spent with individuals who are socially isolated. We are concerned about social isolation among older people, and the fact that there is no time to care. Staff sometimes work from 7 am until very late in the evening, but they have dead time that they do not get paid for; and they do not get paid for travel time. The Cavendish review highlighted the impact of non-payment for travel time on care provision:
“Some low paid Home Care Assistants and support workers will…keep going as long as they feel they are still giving good care. But the advent of zero hours contracts, fee cuts and no payment for travel time”
is really to blame because it
“is making it financially prohibitive for some domiciliary care workers to struggle on.”
The Government agreed that the statutory guidance should require councils to include payment for travel time in provider contracts, but that guidance is clearly not being complied with. There are even examples, in an excellent Unison study, of a home care worker being given 20 minutes to visit an old lady of 102, to help her shower and get dressed, make food, tidy her kitchen, give her medication and put her bins out. That is not enough time to give safe and dignified care. Tackling non-compliance should be a priority. The Government must consider the impact of their policies and act on the chronic underfunding of the care sector that I outlined.
My hon. Friend the Member for Sheffield Central made a number of suggestions about how to improve national minimum wage compliance. We must have monitoring of the commissioning practices of councils; it should be a priority. Employers and commissioners could also publish, or provide employees with, a statement that they comply with the national minimum wage, increasing transparency. As he said, we must improve the protocol for supporting whistleblowers who bravely tell the story of what is happening. It is only when care staff are valued and paid adequately that service users will receive the good-quality, compassionate care they need. As he said, we should be ashamed that we trade on the good will and commitment of our home care workers.
Liz McInnes (Heywood and Middleton) (Lab)
It is a pleasure to serve under your chairmanship, Mr Rosindell. I thank my hon. Friend the Member for Sheffield Central (Paul Blomfield) for obtaining the debate. I will try to be brief.
The Labour party recognised the issue with the social care system prior to the last general election. In our 2015 manifesto we promised to end 15-minute visits and introduce year of care budgets, to incentivise better care in the home. We promised to recruit 5,000 new home care workers—an entirely new arm of the NHS—to help to care for those with the greatest needs at home. We promised to tackle workforce exploitation in the care sector, and to ban the use of zero-hours contracts where regular hours were being worked, improving the working lives of carers. However, that was not to be.
Figures show that up to 220,000 home care workers are illegally paid less than the minimum wage. Investigations by HMRC between 2011 and 2015 found that 41% of care providers were guilty of non-compliance. As has been mentioned, the Resolution Foundation has calculated that care workers are collectively cheated of £130 million a year.
Liz McInnes
One major way in which care workers are denied the national minimum wage, which has been referred to throughout this debate, is for the care providers to refuse to pay for travel time between calls. I had never heard of the practice, which my hon. Friend the Member for Sheffield Central described, of care workers being paid a miserly 12p per hour for travel time. That, to me, sounds more like a cycling rate.
The law states that workers must be paid at least the national minimum wage for travel that is a part of their work and not incidental to it. If someone’s work consists of assignments carried out at different places between which they are obliged to travel, the time they take to do so is regarded in law as work time and must be paid accordingly. The National Institute for Health and Care Excellence stated that care providers should ensure that workers have time to do their job without being rushed and without compromising the dignity and wellbeing of the person who uses the services. Not paying for travel time makes that impossible.
The BBC recently reported on a group of home care workers who are Unison members, who are owed up to £2,500 each as a consequence of being paid less than the national minimum wage—again, because they were not paid for travel time. In a recent case, which was settled out of court, a worker was paid £1,250 in compensation for non-payment of travel time.
Furthermore, in summer 2015, HMRC launched a new national minimum wage campaign, which allows employers who have not been paying their workers the national minimum wage to escape punishment. Employers who are guilty of non-compliance can now just notify HMRC of their transgression, declare that they have paid their workers any money owed, and agree to obey the law in future.
That all contradicts the Prime Minister’s August 2015 claim that
“the message is clear: underpay your staff, and you will pay the price.”
Such employers are not paying the price. We need a major change in policy if the Government are serious about stamping out that deep-rooted practice and protecting the legal rights of home care workers. The Government should make regulations, as provided for under section 12 of the National Minimum Wage Act 1998, requiring employers to provide their workers with a statement demonstrating compliance with the national minimum wage. The exploitation of care workers must stop; we must ensure that they get the pay to which they are entitled.
Christina Rees (Neath) (Lab)
It is a pleasure to serve under your chairmanship, Mr Rosindell. I congratulate my hon. Friend the Member for Sheffield Central (Paul Blomfield) on securing this important debate.
The care industry and, in particular, its workforce play a vital role in our society. The UK has a care sector that is ever growing, which is essential with an ageing population. It is important to ensure that, as people age, they can still live in their own homes for as long as possible. That will not only allow people to enjoy the comforts of home as they spend more time there, but will help to reduce the pressure on the NHS, which we all understand would help enormously.
Where it is not possible for people to remain in their homes, they should be provided with the best care possible in a care home facility that meets the high standards we can expect in our society. To ensure that people are given the opportunity to remain in their home as they get older, the work of home care workers, who care for the elderly and disabled in their own homes, is vital. That is why it is so shocking that so many home care workers are routinely paid less than the national minimum wage. The absence of the most nominal of payments is condemning huge numbers of home care staff to the contemporary phenomenon of in-work poverty, as well as significantly undermining care standards across the industry.
The direct effect of underpayment is that care workers are plunged into poverty, leading to much higher rates of staff turnover, with a subsequent negative impact on care standards. Too many experienced or skilled care workers are being forced out of the industry simply because they cannot afford to stay. That is unacceptable.
Due to the lack of time, I will move swiftly on and cite an example from my constituency. The Government’s lack of concern about care workers not being paid the national minimum wage is in stark contrast to the efforts of the Unison branch at Neath Port Talbot County Borough Council. The union has worked closely with the local authority to ensure that social care has remained a priority, reaffirming that care workers feel appreciated and, most importantly, that they are not being taken for granted.
The care sector in Neath Port Talbot, as in many other places, is a mixed economy, whereby the local authority directly provides around £11 million of services, and commissions about £32 million more from third-party providers from the private and voluntary sectors. Council staff are already paid at the national living wage rate, so in-house services act as a pacemaker for pay and conditions in the local care economy—that is to be commended. Were those in-house services not to exist—so with the absence of a pacemaker—we would be in danger of seeing a race to the bottom on pay and conditions, as third-party providers sought to maximise profit by decreasing resources.
A mixed economy works because the local authority uses its influence responsibly, as a quasi-monopoly purchaser of services, to ensure that workforce contracts do not cause detriment to local communities. A good and topical example is the recent decision by members of Neath Port Talbot Council to meet in full the national living wage for staff employed in private sector residential care homes, from which the council purchases a significant amount of residential care. Neath Port Talbot Council is one of the few local authorities in the UK that has decided to afford the national living wage from the outset—it might even be unique. It is important to point out, however, that the council has not simply gifted the money to residential care providers; it pays to ensure that its high-quality standards are met. If third- party providers fall below the standards, funds are withdrawn.
To conclude, perhaps that model will be adopted by the Government. I look forward to hearing the Minister’s response to the proposal.
Judith Cummins (Bradford South) (Lab)
It is an honour to serve under your chairmanship, Mr Rosindell. I, too, thank my hon. Friend the Member for Sheffield Central (Paul Blomfield) for securing this important debate.
As has been spelt out in the Budget debates over the past few days, the Tory Government’s stated goal is to make work pay, so I will spend a few moments examining their record, given that we are considering the 1.5 million care workers who day in, day out, do noble work caring for our elderly and disabled population.
A March 2014 National Audit Office report found that an astonishing 220,000 home care workers are paid less than the national minimum wage. The main reason that so many care workers fail to receive the national minimum wage is that, despite resounding court judgments declaring this practice illegal, hundreds of thousands of workers are still not paid for the time they spend travelling between visits. They are, disturbingly, only paid for the time that they spend with their clients. That would be unacceptable in any other line of work, but, quite wrongly, it is still common practice in the care industry. As a matter of decency, care companies should meet the amount that Parliament has legislated for as the minimum that workers should receive in their pay packet. Each and every worker should not fear that, at the end of the working week, their employer has short-changed them. The national minimum wage is simply not happening in our care industry, and that is a national scandal.
The Tory Government need to step up and take action to ensure fairness in our care sector. Thankfully, under the national minimum wage legislation brought in under a Labour Government, the Tory Government have inherited the necessary powers to take much needed and long-overdue action. To be specific, under section 12 of the National Minimum Wage Act, care providers as employers can be required to supply a written statement to each care worker, in which they should clearly set out the amount that the worker is being paid, the hours worked, and how that means that the employer is not short-changing them. With that in mind, I ask the Minister to commit to exploring the potential for introducing regulations under section 12.
At present, the work of many hundreds of thousands of care workers simply does not pay. They are still not guaranteed a national minimum wage. They are simply being short-changed, and that scandal must not continue.
Kate Osamor (Edmonton) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Rosindell. I, too, thank my hon. Friend the Member for Sheffield Central (Paul Blomfield) for securing this debate.
In September 2015, I made representations to the Minister on behalf of a social care organisation in my constituency, North London Homecare and Support, which was concerned about its financial capability to accommodate the increase in the national living wage. The Minister, in his response, informed me that the Government were working with the social care sector to consider the overall cost of social care and funding for local government, and that the result would be announced in the spending review. In spite of commitments about further funding, however, the social care sector is still not receiving adequate investment.
According to Local Government Association estimates, the social care precept will raise £372 million, which stands far short of the £2 billion figure suggested by the Government. The majority of that will be used to cover the cost of the transition to the new national living wage. In addition, although the better care fund is expected to deliver around £1.5 billion by 2019-20, the gap in social care funding is expected to reach £3.5 billion by the end of the Parliament in 2020.
With an ageing population and an NHS under increasing pressure, it is clear that we need the social care sector.
Mr Jim Cunningham (Coventry South) (Lab)
I thank my hon. Friend for giving way, and I congratulate my hon. Friend the Member for Sheffield Central (Paul Blomfield) on securing the debate. One of the tricks that the Government have pulled is to shove the responsibility for social care on to local authorities. That is not necessarily a bad thing, but what the Government have not done is give them the resources to do it—they have given them about 2%. Three or four years down the road, we will reach a point when the Government come back and want to cap the local authorities, because they are spending too much—that is what the Government will say. We have had all that before. The other thing we should bear in mind is that at the moment local government is badly funded, to say the least.
Kate Osamor
I could not agree more. Those points are alarming and worry us all, and that is why we have all come to speak in the debate.
Only a thriving social care sector that is valued and respected will be able to give our NHS the support it needs to provide integrated healthcare solutions. The Minister and the Government must accept their responsibility to support social care through the transition to the national living wage and beyond to 2020. Sustainable, long-term investment is desperately needed.
Chris Stephens (Glasgow South West) (SNP)
It is a pleasure to serve under your chairmanship, Mr Rosindell. I refer Members to my entry in the Register of Members’ Financial Interests and declare my 20 years of trade union activity for the Glasgow city branch of Unison before my election to Parliament.
There are far too many instances of care home providers who provide services for a profit ignoring or disregarding their legal responsibilities to their staff. It is particularly insidious that those who are paid the least and provide some of the most vital services needed by our society, which we will need more and more as our demographics shift, are being denied even the most basic protections by their employers. In two recent cases, MiHomecare settled a national minimum wage pay claim with one employee for £1,250 and, as we heard from the hon. Member for Neath (Christina Rees), in south Wales Unison colleagues secured backdated wages for 100 workers amounting to up to £2,500 each after it failed to pay workers for time travelling between clients.
A leaked document from MiHomecare sets out exactly how much workers are being short-changed by. Its internal analysis in the wake of an HMRC investigation into its employment practices revealed that 44 workers could have been out of pocket by as much as £2,000 a year each. A Resolution Foundation report estimated that as many as 160,000 care workers are receiving less than the minimum wage simply on the basis of non-payment for travelling time, to say nothing of the myriad other changes to their salary. That amounts to more than £300 million and, as a sum being withheld from some of the poorest workers in the country, I find that breathtaking.
The closure of HMRC offices across the country concerns me greatly. HMRC’s enforcement work is invaluable in taking to task the criminality that sadly some employers believe is justified. The centralisation of services and cutting of jobs will inevitably give the green light to more employers to think that they can flout the law and get away with it.
Angela Rayner
As a former Unison activist and comrade, may I thank the hon. Gentleman for the work he has done in the sector? To come back to legality, is it not an absolute shame that many home carers will not be able to seek legal redress because of employment tribunal fees? It is unions such as Unison that enable carers to take cases to employment tribunals, because they pay the fees.
Chris Stephens
I agree with my Unison comrade and friend. One barrier to getting back-payments in this sector in particular is that the fees charged are often greater than the wages claimed for. I thank her for making that point.
If the green light is to be given to more employers, they will take that. In Scotland, with only two offices—in Glasgow and Edinburgh—to be retained under the proposals, it is simply not credible to suggest that, despite best efforts, HMRC’s minimum wage enforcement can continue at the same level. Given that the workforce in the care sector is female-dominated, it seems that a double whammy is created. We as a society pay women less overall and, even when a legal floor is put in place to stop wages falling below a certain level, many women are victims of their employers’ criminality and earn even less. There can be no place in a civilised society for the law-breaking that appears to be happening in areas of the care sector. A civilised Government should do all they can to stamp out that insidious practice.
Other Members have set the scene. As usual I enjoyed the contribution from the hon. Member for Sheffield Central (Paul Blomfield). He rightly said that the sector looks after the most vulnerable. The hon. Member for Ashton-under-Lyne (Angela Rayner) indicated her personal experience and the right hon. Member for Oxford East (Mr Smith) was correct when he said that it is not unreasonable to demand that the national minimum wage is paid.
Barbara Keeley
Many practices have been talked about during this debate, but we have not addressed the new practice of paying care staff by the minute—minute rates. I do not know of any other group of people paid and measured by the minute.
Chris Stephens
I am not aware of that either, but it is an important point. Bad employers will try such methods. I am concerned to hear about companies that are trying to get around paying the living wage by taking premium payments off staff. That is another important point that this Parliament will need to address.
Mixed messages are coming from the Government in this regard. Ruby McGregor-Smith, the leader of a home care company that the BBC had revealed was not paying its home care workers the national minimum wage, was recently elevated to the House of Lords. In August 2015, the Prime Minister commented to The Times:
“So to unscrupulous employers who think they can get labour on the cheap, the message is clear: underpay your staff, and you will pay the price.”
Also in the summer of 2015, HMRC launched a national minimum wage campaign that allows employers that have not been paying the national minimum wage to escape punishment. The Government have been saying to companies that HMRC
“will not undertake an enquiry or investigation on your National Minimum Wage records”.
That is a mixed message.
That leaves an over-reliance on workers making complaints to HMRC. As has been revealed during this debate, many care workers fear reporting their employers because reprisals can include dismissal or having their hours cut. As was stated earlier, many home care workers are on zero-hours contracts.
Action needs to be taken. I hope that the Government will give a commitment that where a company is non-compliant, HMRC will extend its investigation to cover that company’s whole workforce. HMRC should publish results regularly, carry out assurance checks in the sector and allow third-party reporting. We have heard from many Members who have spoken so far about the vital role that the trade union movement is playing in the sector. HMRC should maintain records of the number of employees who contact it through the helpline, and there should be a formal protocol for HMRC to ensure that no action is taken against whistleblowers.
Minimum wage rates exist to protect working people and their wages, with a legal floor that stops wages going below a certain level. The insidious practice of not paying the national minimum wage must end, but it can end only if the Government are willing to ensure that compliance with minimum wage rates is monitored rigorously.
Yvonne Fovargue (Makerfield) (Lab)
It is a pleasure to serve under your chairmanship, Mr Rosindell. I too congratulate my hon. Friend the Member for Sheffield Central (Paul Blomfield) on securing this debate. I am pleased that so many of my colleagues have come to put forward cases; it is just a pity that there were so few on the Government Benches to listen to the human stories put forward by the hon. Member for Dudley South (Mike Wood).
I would like to start by paying tribute to care workers. They allowed my mum to live in her home at the end of her life, and that gave me the confidence to work here and her the confidence to stay at home. I have to say that in many instances they have the patience of saints. We rely on these people to look after our loved ones, and yet, as we have heard, so many are routinely and illegally still paid less than the minimum wage. I too would like to thank Unison for its briefing and its long campaign to support workers through all means, including legal action.
As the hon. Member for Motherwell and Wishaw (Marion Fellows) said, we all have an interest in this debate, either sooner or later. We heard from my hon. Friend the Member for Heywood and Middleton (Liz McInnes) that investigations by HMRC of care providers found that 41% were guilty of non-compliance between 2011 and 2015. The Resolution Foundation calculated that care workers are collectively cheated out of £130 million per year due to below-minimum-wage payments. The effect on care workers and those they care for is immeasurable. It plunges care workers into poverty, as was highlighted by my hon. Friend the Member for Neath (Christina Rees). It leads to high staff turnover and therefore a lack of continuity of care, which is so valued by the person being cared for. The care worker is not just a paid employee or a carer; they become a friend.
So how do providers get away with that? It is by not paying for travel time, which encourages call-clipping—leaving a few minutes early to minimise time spent working for free. However, as we heard from my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook), many care workers do not do that because they care about the people they are working for. Effectively, they are subsidising our care system.
We heard about how the combination of cuts to council funding and the rise in the minimum wage will increase the problem. The funding is simply insufficient for social care, both now and in the future, as was so eloquently put by my hon. Friends the Members for Worsley and Eccles South (Barbara Keeley) and for Edmonton (Kate Osamor), who have long campaigned on the issue, and I pay tribute to my hon. Friend the Member for Sheffield Central and my right hon. Friend the Member for Oxford East (Mr Smith) for their work on it.
Pressure from my colleagues led to the Government ordering HMRC to carry out an investigation into the six largest care providers. Care providers are businesses, as we heard from my hon. Friend the Member for Great Grimsby (Melanie Onn), who spoke passionately about the large corporations and some of their actions, which are less than compassionate. Despite the Government ordering HMRC to carry out that investigation in February 2015, it has still not been completed. Why is that? When will it be complete?
Just a handful of small care providers—13—have been named and shamed since BIS commenced this policy in 2014. Of those 13 providers, eight were identified as owing arrears to just one care worker. How can that be if care workers are working under the same terms and conditions? Is HMRC extending its investigation to other care workers within the companies? If not, why not? We have heard that that is partly due to the process; HMRC recovers arrears only for the worker who contacted it, and employers are allowed to self-correct and pay back the other workers with minimal oversight. Effectively, they are shamed as bad employers that are not to be trusted, but are then trusted to do the right thing by the employees who they cheated in the first place.
The assurance process on this is minimal. It relies on workers knowing how much they are owed, but, as my hon. Friend the Member for Bradford South (Judith Cummins) rightly highlighted, many care workers are not currently provided with a proper breakdown of all their working time. HMRC also consistently identified a very low level of arrears, with an average of £201 per worker. Should HMRC not be made to carry out assurance checks, publish the results and talk to a wider range of people about this, including the trade unions?
Some may ask why people do not report these abuses. As we have heard, there are low levels of awareness among workers that they should be paid for travel time, as well as a fear of losing jobs, of cuts in hours and of tribunal fees, as my hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) highlighted.
Mr Andrew Smith
My hon. Friend is making an excellent speech. As was pointed out earlier in the debate, a high proportion of these workers are migrant workers. With the awful rhetoric directed at them from some sections of our society and political parties, do not those workers feel additionally vulnerable and scared about reporting such things?
Yvonne Fovargue
I agree with my right hon. Friend. Many workers in this sector are already exploited, as we heard from my hon. Friend the Member for Great Grimsby. They are women. They are migrant workers. They are people who do not traditionally complain. Another issue is the length of time before the judgment in tribunal cases. In 2014-15, it was on average 74 weeks before a judgment was reached.
Does the Minister feel that a voluntary statement of a national minimum wage is sufficient? In view of the widespread non-compliance, should the national minimum wage not be compulsory in this sector? As we have heard, many care workers do not know the hours they are paid for. Does he agree that we must go beyond the Low Pay Commission’s suggestion of simply having a review, and that there should be a requirement for payslips of hourly paid staff to clearly state the hours for which they are paid?
Details on the number of care workers who contact the pay and work rights helpline should be collected, as they were previously. That is vital, because it gives a sense of the levels of awareness about non-payment and the willingness to complain.
Councils’ commissioning processes should be monitored as to whether they are insisting that providers pay the minimum wage. Councils also need support to carry out spot inspections of providers’ payroll records, which should be clear, and they should carry out regular, anonymous staff surveys, in conjunction with trade unions, to identify any risks of non-payment.
We rely on care workers to look after the most vulnerable, and yet we are allowing them to be exploited and underpaid. They work in one of the most demanding sectors, caring for our loved ones, and they deserve to be looked after by all available means without further delay.
The Parliamentary Under-Secretary of State for Life Sciences (George Freeman)
It is a pleasure to serve under your chairmanship, Mr Rosindell. I start by congratulating the hon. Member for Sheffield Central (Paul Blomfield) on bringing this debate to the House. It has been a very helpful opportunity to focus attention on this important area, and it gives me a chance, on behalf of the Government, to make clear our commitment to ensuring that this issue is properly dealt with. I know he is a robust champion of workers in the care sector, and I want to praise him for his work in representing them here today.
I also pay tribute to the right hon. Member for Oxford East (Mr Smith), the hon. Members for Brighton, Pavilion (Caroline Lucas) and for Hampstead and Kilburn (Tulip Siddiq) and others who have taken such an interest in this issue. Opposition Members may be surprised to hear me single out and congratulate Unison and the Resolution Foundation, which have done really good work on behalf of workers in the sector by shining a light on the complex issues and some of the completely unacceptable practices that have gone on for too long.
I take this opportunity to pay tribute to our nation’s 1.5 million care workers, who, as hon. Members have said, work tirelessly to provide invaluable support to some of our most vulnerable citizens. Without their support in caring for the frail, the disabled and the elderly, we simply would not be able to cope as a society with the pressures of an ageing population. Hon. Members are right that we must ensure care workers are treated fairly by their employers and receive the money to which they are legally entitled—and that is a priority area for the Government, for this Minister and for the Minister for Skills, my hon. Friend the Member for Grantham and Stamford (Nick Boles), who leads on this within the Department for Business, Innovation and Skills.
Perhaps I could take this moment to make it clear, lest anybody watching the debate is in any doubt, that this generation of Conservatives in government strongly supports the national minimum wage. We are very proud that we have gone further and introduced the national living wage, as well as increasing penalties from £5,000 per employer to £20,000 per employee, which last year saw one investigation lead to a fine of half a million pounds.
We have also increased the budget for compliance by 50% since 2010 and strengthened the naming and shaming provisions. Let me send the strong signal that we will not tolerate non-compliance with the national minimum wage. It applies across all sectors, and the nature of the work that these care workers do, in a fragmented, challenging and geographically difficult sector, is no excuse for non-compliance.
I want to make it clear that any employer who treats the Government’s commitment to this space with contempt needs to be very careful. I am very disappointed to see that the Business, Innovation and Skills Committee’s request for Mike Ashley from Sports Direct to come and give evidence has not been responded to. Let me take this opportunity to say that contempt for this area of law is not acceptable, and to welcome the recent court case in which Caroline Barlow successfully prosecuted MiHomecare. It led to the court ruling that she and, by implication, others should have been properly paid. I welcome that, and the signal should go out very clearly to businesses, councils and all those who employ the low-paid that they have to abide by their duties under the law.
[Mr Philip Hollobone in the Chair]
Barbara Keeley
Most Members here would agree with the Minister about Mike Ashley, I am sure, and would applaud the Chair of the BIS Committee and the Speaker for the way in which they are handling the situation.
The key point I want to make is this: although it is good that the Minister is proud of the Government’s policy on the minimum wage, does he not think that the Government should have funded that? Is not the key problem the one that I outlined: the 2% precept will only raise £1.6 billion, but my local council will need £2.7 billion just to deal with these pressures? We cannot get to a position in which those in the care sector can pay the minimum wage unless there is funding for it, and that is the Government’s responsibility.
George Freeman
I will come on to the funding of social care, which is a major issue that we all face as a society and will require some pretty deep thinking over the years ahead. I will also describe the extra money that the Government have put in. Although there is never enough money, we have made this priority very clear.
It may help if I review how we got to be where we are today. In 1999, the national minimum wage came in. It was the first time that legislation had been introduced in the UK to ensure a minimum level of pay for virtually all workers. Its aim is to help as many low-paid workers as possible, end extreme low pay and ensure a level playing field for employers. We are absolutely clear that anyone who is entitled to be paid the national minimum wage or, from 1 April, the national living wage must receive it.
George Freeman
I will continue, if I may—I am under a tight time limit. The enforcement of the minimum wage is therefore essential to its success and we are committed to cracking down in every sector across the economy on employers who break the minimum wage law. Our approach is simple: through effective national minimum wage enforcement, we are able to support workers and businesses by deterring employers from underpaying their workers and removing the unfair competitive advantage that underpayment could bring.
George Freeman
I will very briefly, but I am going to run out of time if Members keep intervening.
Mr Andrew Smith
Does the Minister not agree that those efforts would be very strongly buttressed if the power were taken under section 12 of the National Minimum Wage Act for mandatory statements showing compliance?
George Freeman
I will deal with the right hon. Gentleman’s points, with which I have a lot of sympathy, if I am given time to crack on.
Hon. Members have rightly raised the issue of non-compliance with the minimum wage in this sector. I want first to set out the measures that we are putting in place now and that we have put in place already, before touching on some things that we may go on to do in due course. HMRC responds to every complaint made by workers through the ACAS helpline. When a third party reports suspected non-compliance, HMRC evaluates the report and investigates the employer when there are grounds to do so.
Since HMRC began enforcing the minimum wage in ’99, it has identified more than £65 million in arrears. Between April and November 2015, HMRC took action against 557 businesses, clawing back over £8 million for 46,000 workers who had been illegally underpaid. That is already the largest amount of arrears identified in any single year since the national minimum wage was introduced and is possible as a result of the increased investment and extra measures we have put in place to support enforcement.
We are going further. The Prime Minister has committed to a package of measures that are currently being implemented that will build on Government action to date and strengthen the enforcement of the national minimum and living wage. First, we are increasing the enforcement budget from April 2016, demonstrating our ongoing commitment to ensuring that the hardest-working and lowest-paid people receive the pay that they are entitled to. HMRC will also continue to promote compliance with the law and respond when employers have got things wrong.
Secondly, the Government are further increasing the penalties that employers will have to pay when they break the law. From 1 April, the calculation will increase further, to 200% of the arrears that an employer owes. By increasing the penalties for underpayment of the national minimum wage, we intend that employers who would otherwise be tempted to underpay comply with the law and that working people receive the money they are legally due.
Furthermore, under changes being implemented through the Immigration Bill, we are creating a statutory director of labour market enforcement, who will set out a single set of priorities for the enforcement bodies across the spectrum of non-compliance. That should ensure a targeted approach that addresses problems and best helps victims.
Under the Immigration Bill, we are also creating a new type of enforcement order. That labour market enforcement undertaking will be supported by a criminal offence for non-compliance. We want to tackle employers who deliberately, persistently and brazenly commit breaches of labour law and fail to take remedial action. That cannot always be done satisfactorily through the repeated use of existing penalties or offences, which may lead to the continued exploitation of workers.
Christina Rees
I am grateful to the Minister for giving way. Will he provide examples of where that happens in the care sector? He is quoting a lot of statistics overall about the national minimum wage and recovery, but they are not specific to the care sector.
George Freeman
Perhaps I can come back to the hon. Lady on specific cases—I do not have them to hand. I just want to talk about what we are doing to deal with the issues that have been raised, but she makes an interesting point.
In the care sector, we have a particularly high incidence of workers who have not been paid the national minimum wage in the right way. Other sectors are hairdressing and retail, and there is some dispute about where the worst practice exists, but the care sector clearly has a major historical problem. That is in part attributable to the fact that many of the more complex rules on calculating working time are prevalent in the sector—for example, the calculation of travel and sleeping time. On those points, although I am sure that Members will appreciate that I cannot comment on individual cases, I want to restate the Government’s position: when workers are performing work under their contracts, they must be paid the minimum wage.
It is also worth noting that there is no perfect measure of non-compliance within the sector, and there is a possibility that current estimates of non-compliance overestimate work time and underestimate pay, because the information is reported by workers themselves. That is why we are continuing to work with the Low Pay Commission, the Office for National Statistics and others in order to improve our estimates and better understand the scale of the problem.
On the point that was mentioned by the right hon. Member for Oxford East (Mr Smith) and others, the Low Pay Commission’s proposals on transparency merit serious consideration, and we are looking at those and a number of its other recommendations. We are determined to continue to drive forward and send the very clearest signal to companies and employers that we are becoming less tolerant of non-compliance, and we want them to recognise that.
None the less, increasing compliance with the minimum wage in the sector remains a top priority for us and we are taking a number of steps to promote compliance and take stronger action against those who break the law. First, HMRC continues to focus on tackling non-compliance, but that activity is no longer reliant on worker complaints and instead targets employers with the highest risk of non-compliance, based on a range of intelligence and information. HMRC can now analyse information from, for example, other Departments, trade union representatives and the Low Pay Commission, and the evidence indicates that this targeted approach in the care sector is working. From April 2013 to January 2016, HMRC opened 443 cases in the social care sector and closed 308 of those. Of the 308 closed cases, underpayment of the national minimum wage was found in 32% of investigations—for total arrears of £442,000 to 3,000 workers, with penalties issued for a total value of £100,000.
Members have also raised the important issue of affordability within the sector, given the introduction of the national living wage. That pay rise for the lowest paid could be seen to be a threat in terms of increasing non-compliance. That is partly why we are taking steps to signal strongly our commitment to clamp down on it.
With an ageing society, social care funding is a major strategic issue for the country and this Government. We are engaging closely with all the relevant stakeholders on that issue to ensure that councils recognise the need to increase the price that they pay for care in order to cover costs and to reflect rising costs and, not least, the national living wage. That is partly why we are giving local authorities access to an extra £3.5 billion of new support for social care by 2020, to be included in the better care fund. Councils will also be able to introduce a new social care precept, allowing them to increase council tax by 2% above the existing threshold. Taken together, the new precept and the additional better care fund contribution mean local government has access to the extra funding that it will need to increase social care spending in real terms by the end of this Parliament.
Barbara Keeley
I thank the Minister for giving way again, but there is a two-year gap. There is nothing from the better care fund this year, only £100 million next year, and—as I said in giving the example from my local authority—the 2% social care precept only covers about half of what is needed. Nationally as well as locally, that is the problem and that is why the Local Government Association asked the Government to bring forward £700 million.
George Freeman
I understand. These things are never straightforward or simple. As the right hon. Member for Oxford East pointed out, a lot of creativity is required from councils and the healthcare sector. There is best practice across the country to ensure that health and care are better integrated. [Interruption.] It is all very well for Opposition Members to shake their heads as if this were an easy problem to solve. It is a problem we inherited from the last Government. I am trying to be reasonable in setting out our commitment to deal with it, but it should be remembered that we inherited the problem from the Members who are shaking their heads and suggesting that it is easily solved. I hope that the measures I have set out provide reassurance that we are taking the matter seriously.
Perhaps I may conclude by framing the central elements of the package that we are putting in place. We have toughened up the sanctions and made it easier to name and shame. We have now named 490 employers, raised over £1 million in penalties and recovered over £30 million in unpaid arrears. We are now running at a 94% rate of naming since our revisions to the code in 2013.
Several hon. Members made the point about four-year delays, including my hon. Friend the Member for Dudley South (Mike Wood). I think that that is completely unacceptable. Although we are seeing progress in the speed and rate at which investigations are being pursued, I will talk to the Minister for Skills to make sure the very strongest signal is sent to HMRC saying that we cannot tolerate such delays.
As I have signalled, we are seriously interested in looking at the Low Pay Commission’s recommendation on payslip transparency. It is important that employers are held to account and that employees, particularly when it comes to individual elements of time, can see clearly what time they are being paid for.
I want to highlight the fact that the advice available for employees is free and confidential and that we have introduced important measures to ensure that, when HMRC has information from a third party to carry out an investigation, it keeps the complainant’s identity confidential and that that should trigger a whole workforce investigation.
I also want to highlight the fact that HMRC offers a free service to any employee who believes they are not being reimbursed properly. HMRC also has powers to enforce the reimbursement of expenses. That gives me the chance to highlight the fact that all expenses properly incurred by care workers in the course of doing their duty, often in a sector that requires them to travel extensively across large areas, should be, must be and the Government expect will be, properly reimbursed.
I hope that that helps to set out the Government’s real commitment to tackling the issue. I again thank and congratulate the hon. Member for Sheffield Central on raising it and giving me the opportunity on behalf of the Government to set out how strongly we support cracking down on non-compliance.
Paul Blomfield
I congratulate you, Mr Hollobone, on the seamless and unnoticed way in which you assumed the Chair.
I thank all Members for their contributions, which are too numerous to cover in a couple of minutes. They have illuminated the scale of and damage caused by the problem. It is ironic that a sector that is supposed to be about care shows so little duty of care to its employees. To illustrate the cross-party concern, I cite the words of the hon. Member for Dudley South (Mike Wood) that something is very wrong indeed with national minimum wage enforcement in the care sector and that has to change.
I thank the Minister for the constructive way in which he has engaged with the debate and the issues that we have raised. I do not think he covered all the points that a number of us raised. I will write to him and I hope he will have an opportunity to get back to me on those.
I want to follow through on the Minister’s suggestion that the Government may take up the issue raised by the Low Pay Commission and Unison and to ask him to indicate—he can do so simply by nodding—that he is willing to meet me, the commission and Unison to discuss how we can move forward with implementation of transparency on payslips.
Paul Blomfield
The Minister is nodding and I am pleased to acknowledge that we will be able to have such a meeting.
Question put and agreed to.
Resolved,
That this House has considered Government policy on enforcement of the national minimum wage in the care sector.