National Minimum Wage: Care Sector

Melanie Onn Excerpts

Wednesday 23rd March 2016 Westminster Hall

[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?

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[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.

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[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.

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[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.

[Melanie Onn]

Will the Minister give way?

[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.