National Minimum Wage: Care Sector

Andrew Smith Excerpts

Wednesday 23rd March 2016 Westminster Hall

[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.

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[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.

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[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.

[Mr Andrew Smith]

Will the Minister give way?

[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.