National Minimum Wage Enforcement

Andrew Selous Excerpts

Wednesday 28th April 2021 Commons Chamber

[Andrew Selous (South West Bedfordshire) (Con) [V]]

Thank you, Mr Deputy Speaker, and I am very grateful to Mr Speaker for granting me this debate.

I am very proud to support a Government who have committed to the national living wage being equivalent to two thirds of the median income by 2024, in addition to reducing the age for accessing the national living wage to 23 this month and to 21 by April 2024. We want work to be worth while and an effective route out of poverty, so it is important that everyone is entitled to the legal minimum wage.

Unfortunately, the combined impact of the National Minimum Wage Act 1998 and the National Minimum Wage Regulations 2015, along with the provisions of the Care Act 2014 and the enforcement role of Her Majesty’s Revenue and Customs, have all been completely ineffective in enforcing the law for one of my constituents, a carer who is owed £62,961 of unpaid wages below the minimum wage. Four other carers were in the same position. Who knows how many others across the United Kingdom are in the same position. I will use this case to demonstrate how the law has not worked effectively. I do not expect my hon. Friend the Minister to comment on the individual case, but I would like him to set out the plans the Government have to remedy the flaws in the current legislation, so that an effective remedy can be provided to people such as my constituent where now there is none.

My constituent—I shall call her Mrs Wright; it is not her real name—provided care for seven years to a disabled woman, whom I shall call Mrs Edwards, which is also not her real name. The wages to pay Mrs Wright were provided by Luton Borough Council and paid by a local charity into the account of the person being cared for. Checks were then made by Luton Borough Council to make sure that the money provided was paid over to the carer. Section 33 of the Care Act 2014 enables care to be devolved to the person being cared for, who enters into a contract of employment with her carer.

After seven years of good and faithful work caring for Mrs Edwards, the local charity that had received funding from Luton Borough Council sent the carer a schedule showing that, throughout the entire seven-year period, she had been underpaid a total of nearly £63,000. The local charity also paid the premium for an insurance policy to cover employers’ liability and legal expenses and costs should the carer have cause to sue the person being cared for—her employer, Mrs Edwards.

Mrs Wright, the carer, was never provided with the contract of employment by her employer. Both Luton Borough Council and the local charity say that they are not liable for this massive underpayment of wages because the contract of employment is between the carer and the person being cared for, and has nothing to do with either of them. The legal expenses insurer did not even bother to reply, which is completely shameful. There is no point in suing the person being cared for—the employer—because she lives in a rented flat, has no other assets and all her income comes from state benefits. As Mrs Wright’s solicitor said to me,

“this is a wrong with no remedy.”

The aim of this debate—so that the Minister and I are not wasting our time—is to make sure that a remedy is provided to Mrs Wright and other carers in her position, so that the law requiring the payment of the minimum wage applies to them as well as to everyone else.

This matter was first brought to my attention in the summer of 2018. I did my research and found out that everything I had been told about the inability to secure the payment of wages legally due was true. I contacted Her Majesty’s Revenue and Customs to try to get enforcement action. HMRC said in the letter back to me that it was

“determined that everyone who is entitled to the national minimum wage should receive it.”

That turned out to be a hollow phrase, because no effective enforcement action can be taken against an employer who has no assets and, indeed, never had any in the first place. Luton Borough Council wrote back to me to say:

“any issue regarding alleged historical underpayment of minimum wage will be a matter for the person being cared for and the carer to resolve.”

I should point out that there is no “alleged” underpayment, because the agency employed by Luton Borough Council to check wages paid against wages legally required to be paid came up with a schedule showing the underpayment of nearly £63,000.

Having hit a brick wall with HMRC and Luton Borough Council, which was the local authority responsible for providing the person being cared for with funds to pay for the care provided, I went to see the previous Minister for Small Business, Consumers and Corporate Responsibility, who was very sympathetic and agreed that there was a problem. At that meeting, I was told that local authorities did indeed have a responsibility for direct payments, in that they must be satisfied that personal budget holders are capable of paying the minimum wage, and the local authority should have undertaken a six-month review, after which it should have reviewed the making of direct payment no later than every 12 months.

The Minister’s predecessor then helpfully wrote to the chief executive of Luton Borough Council, pointing out that it should have had an “effective monitoring process” of the direct payments to ensure that the individual fulfils their responsibilities as an employer and that, following the six-month review, the local authority should have reviewed the making of direct payment no later than every 12 months. In its reply, Luton Borough Council said that the carer had been paid a fixed weekly rate based on unmeasured work hours, when in fact the carer had very clear hours that she was expected to work.

The Minister’s predecessor also wrote to the Minister for Care at the Department of Health and Social Care to explain the problem. The previous Minister for Care wrote back to say that Luton Borough Council should have been satisfied that the person being cared for was capable of managing direct payments by herself or with the help of the charity asked to provide that help. As I said, a local charity used by Luton Borough Council has produced a schedule showing an underpayment of wages throughout the entire seven-year period amounting to nearly £63,000.

I have raised this matter before on the Floor of the House with the Leader of the House, who said:

“I am clear that careworkers provide essential support to some of the most vulnerable members of society, and it is essential that they are paid in accordance with the law, including the national minimum wage, for the work they do. This is a responsibility of local authorities, which should ensure that personal budgets are sufficient to deliver a person’s care needs, including making sure that they cover the cost of wages, and local authorities have a duty to monitor how personal budgets are spent. However, the Department of Health and Social Care will take this up with the local authority and ask it to investigate what sounds like a very serious and concerning case.”—[Official Report, 25 July 2019; Vol. 663, c. 1450.]

I have also had a meeting with the Minister who is replying tonight.

In the 2019 Queen’s Speech, the Government announced that they would legislate to create a single enforcement body in an employment Bill. That Bill would give us the opportunity to remedy the very serious loophole that I have outlined. We should also remember the payment of premiums for an insurance policy to cover the employer’s liability and legal expenses and costs, which has been of no assistance whatsoever in this case.

The Minister will agree with me, I am sure, about the importance of people receiving the wages they are legally entitled to. We share a commitment to increasing the minimum wage to make it always worth while to go out to work and to lift more people out of poverty. I urge the Minister to make sure that the single enforcement body in the employment Bill will be up to the task of providing effective remedy in situations such as the one that I have described, and that it has retrospective power to help diligent, hard-working and highly compassionate carers such as my constituent, Mrs Wright.