National Minimum Wage: Care Sector

Baroness Keeley Excerpts

Wednesday 23rd March 2016 Westminster Hall

[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.

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[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.

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[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.

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[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.