Care Sector: Minimum Wage

Lord Newby Excerpts

Wednesday 27th November 2013 Lords Chamber

[Lord Beecham]

To ask Her Majesty’s Government what steps they will take to enforce minimum wage legislation in the care sector, in the light of publication by Her Majesty’s Revenue and Customs of figures disclosing non-compliance with the legislation.

[Lord Newby (LD)]

My Lords, employers found not to pay minimum wage must pay arrears plus a penalty, and may be prosecuted. From 1 October 2013, all those who break minimum wage law will be named, as an additional deterrent alongside existing financial penalties. Non-compliant employers identified during this evaluation in the care sector will meet the new criteria for naming if investigated from 1 October this year. HMRC continues to investigate every worker complaint from the care sector.

[Lord Beecham (Lab)]

My Lords, the announcement of naming and shaming and perhaps heavier financial penalties is welcome. However, given that the HMRC investigation showed that 48% of care sector employers surveyed were paying staff below the minimum wage and that only a tiny number of prosecutions had been brought, what further steps will the Government take to enforce the law. and what additional resources will they make available for this purpose?

[Lord Newby]

My Lords, in addition to the naming and shaming, the noble Lord will have heard the Prime Minister announce today that the maximum fine payable under the law will be increased fourfold. However, the work that is done with key stakeholders is a very important element of ensuring that the law is enforced and indeed understood. The Government work very closely in this sector with the UK Home Care Association and the trade union enforcement group, of which UNISON is the principal member.

[Baroness Gardner of Parkes (Con)]

My Lords, is the Minister aware—I have mentioned this to the House before—that self-employed carers are often paid as little as £3 per hour, and that there is no control whatever over the self-employed? People who work officially for care sources are paid the minimum wage per hour but get nothing for the travel time between jobs. It could be that for every hour they work as a carer there is another unpaid hour, which surely makes a nonsense of saying that they are getting that amount per hour. What does the Minister believe can be done to improve the situation, because the care service is very important?

[Lord Newby]

My Lords, if people are paid the minimum wage for hours when they are working and not being paid for travelling time between periods of work, that brings down the average amount paid per time at work to below the minimum wage. Therefore, employers are acting illegally. One of the principal findings in the study, which is the subject of this Question, is that the travelling time of people working in domiciliary care is one of the main reasons for people being paid below the minimum wage. HMRC operates under a contract from BIS to manage this process. The system has remained essentially unaltered since the minimum wage was introduced some 15 years ago, and the resources made available to it have been protected during the period of this Parliament.

[Lord Morris of Handsworth (Lab)]

My Lords, does the Minister agree that the biggest single problem regarding deprivation and poor health is, in fact, low pay? Will the Minister therefore show support not just for the minimum wage but for a living wage?

[Lord Newby]

I agree with the noble Lord; the Government encourage employers to pay the living wage. However, another thing we are doing is that my colleague Vince Cable has asked the Low Pay Commission to see what scope there is for increasing the minimum wage beyond the rate of inflation without having a significant negative impact on jobs.

[Lord Palmer (CB)]

My Lords, how many actual prosecutions have there been of those who failed to comply with this legislation?

--- Later in debate ---

[Lord Newby]

My Lords, in the period since 2006 there have been nine prosecutions. The policy on prosecutions was set by the previous Government and is based on the concept of selective and exemplary cases. That is why the number of prosecutions is relatively low, whereas the amounts of arrears collected and the number of employers who have received penalties are significantly greater. The number of employers who received a penalty in the past financial year is 708.

[Baroness Pitkeathley (Lab)]

My Lords, the Minister mentioned stakeholders. I believe the Government are committed to seeing service users and patients as the most important stakeholders in service provision. Since care workers often have the first and the closest contact with such service users, does the Minister believe that the way we value and support such workers is of the utmost importance? Does he further believe that the current problems with local authority budgets are bound to have an effect on both the number and the quality of care workers?

[Lord Newby]

My Lords, I certainly pay tribute to the work done by care workers. Obviously, local budgets are constrained. However, to the extent that local authorities are commissioning care, they have an obligation to ensure that their commissioning is done in such a way that the people providing it are not in breach of the conditions on low pay. One of the key points in this area is the provision by HMRC of a free pay and work rights helpline for people who feel that they may be suffering because they are not getting the minimum wage as a result of things such as the travelling time problem that we discussed earlier. The helpline is heavily used, but everybody who rings it will have their case looked into.

[Lord Stoneham of Droxford (LD)]

Does not this report indicate the determination of the Government to insist on compliance with the minimum wage legislation? Within what timetable does the Secretary of State for Business expect his investigation on linking minimum wages to the living wage to come to fruition?

[Lord Newby]

My Lords, the Secretary of State at BIS—Vince Cable—very recently asked the Low Pay Unit to look into this matter with considerable urgency, although I do not think that he has put an absolute date on it. However, the Government take this issue extremely seriously. We hope very much that we can make quicker progress than we have in the past in raising the level of the minimum wage.