Westminster Hall Debate: National Minimum Wage – Care Sector
Posted on 23 Mar 2016 under Latest in Parliament
Paul Blomfield (Sheffield Central) (Lab): I beg to move,
That this House has considered Government policy on enforcement of the national minimum wage in the care sector.
I am pleased to have secured this debate, although I am disappointed that it is still needed, because we had a debate on this very issue, led by my right hon. Friend the Member for Oxford East (Mr Smith), back in November 2014, during which it was acknowledged that we had a real problem. That was acknowledged by all sides, including by the Minister at that time, the right hon. Member for North Norfolk (Norman Lamb), because in March that year the National Audit Office had estimated that up to 220,000 home care workers in England were being illegally paid below the national minimum wage. Eighteen months on, we still have the same problem.
Angela Rayner (Ashton-under-Lyne) (Lab): I worked in the sector as a home help and represented home care workers. Does my hon. Friend agree that the human stories are quite tragic? What home carers end up having to do is subsidise their employers, who do not pay them travel time. A good employer will see the value of their staff, and pay them correctly and appropriately.
Nick Thomas-Symonds (Torfaen) (Lab): My hon. Friend has talked about the delay and the lack of action since the previous debate. Is not one of the reasons for that the fact that, when investigations are launched into these matters, they take an inordinately long time?
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”.
“You get in a bit of a trap, because I actually do love the work.”
It also makes a mockery of our national minimum wage legislation. Let us be clear—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?
Chris Stephens (Glasgow South West) (SNP): I thank the hon. Gentleman for giving way and I congratulate him on raising this important issue. Regarding self-reporting, does he agree that the biggest single reason that employees are reluctant to do that is fear of dismissal and, if they are not dismissed, fear that there will be a cut in their hours?
Paul Blomfield: I thank the hon. Gentleman for that intervention and I think he is right. It is the fear experienced by workers in this sector that is driving unreporting. The Government need to do something about that.
Establishing a formal public protocol to handle third-party whistleblowing would be a step forward. Currently, for example, when a union makes a complaint on someone’s behalf, it receives no feedback as to what is happening with that, and that is no way to facilitate reporting.
We also need proactive investigation into a sector in which we know abuse is rife. Following pressure from Labour that was led by my right hon. Friend the Member for Oxford East, the coalition Government began an investigation into six of the largest care providers, but that was over a year ago. What have they found out? Have affected workers been compensated? What is happening? I hope that the Minister will give some answers, because effective investigations will help to change the culture. Where HMRC investigations uncover non-compliance, why does it not then look at the whole workforce? The chances of co-workers being on the same terms and conditions and suffering from the same abuse is high, but HMRC does not follow through.
I have made a number of suggestions about how the Government might act—I will not speak for too long, because a number of colleagues want to contribute to this debate—but I want to focus on a single demand, which I emphasise would not involve the Government in significant cost, but would be transformative. It is a course of action that has been recommended by the Low Pay Commission and Unison, and it is simply to require employers of hourly paid staff to state clearly the hours they have been paid for on their payslips. We have heard how companies such as the one employing Melanie and Sharon have sophisticated technology to track exactly what their employees are doing. They already monitor the time spent at appointments and travelling for work. The proposal would be easy for companies to do and would introduce a level of transparency that would change those companies’ culture. It would also give workers the information through which they could challenge companies and utilise the helpline. Section 12 of the National Minimum Wage Act 1998 already makes provision for such regulation. Will the Minister work with me and his team to bring about that simple change?
and not-for-profit providers are telling me that they cannot sustain the level of care that they want and rightly seek to provide. Vulnerable people, the elderly, those with learning difficulties and family members fearing for the life of their relative as they wait for an ambulance are all suffering as a result. That is before the national minimum wage increases to what the Government have laughingly called the national living wage. We all agree that is overdue. It is inadequate, but it is nevertheless a small step in the right direction.
We all know that the recently announced council tax social care precept is nowhere near enough to plug the funding gap, so we should be deeply concerned by the wider crisis in social care, and not only in its own right, but because of the impact it will have on the national health service. Notwithstanding that and the desperate need to address the funding shortfall, the labour market enforcement measures that I have mentioned are necessary and will be a step forward, and I hope the Minister will engage with me in taking those up.
Andrew Rosindell (in the Chair): I advise the House that a number of Members wish to speak. There is only limited time, so I urge Members to be brief and to keep their contributions to no more than three or four minutes each. I hope that then everyone will be able to speak.
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.
Mike Wood (Dudley South) (Con): It is a pleasure to serve under your chairmanship, Mr Rosindell, I think for the first time. I thank the hon. Member for Sheffield Central (Paul Blomfield) for securing this debate on an extremely important issue. Before I begin, I declare an interest in that my brother works in the social care sector—he started a new role on Monday—although he is not directly affected by the issues we are discussing this afternoon.
Social care is such an important feature of our society and social workers are integral to the care of people in need and those at risk. Despite that, too many social workers have suffered at the hands of unscrupulous employers—employers who have continued to flout the law and who simply do not pay the full national minimum wage. While HMRC maintains the operational enforcement of the national minimum wage, in my 10 months as a Member of Parliament I have yet to see either a coherent or sensible approach.
I will draw Members’ attention to two cases that I have seen since my election last May and contrast them with each other. The first concerns a care company in the black country. None of its care workers is paid for their travel time or when calls run over. The hourly rate therefore fell well below the national minimum wage over a substantial timeframe, but the HMRC investigation has been ongoing for nearly four years. To date, it has resulted in a notice of underpayment for only one of the employees who filed a complaint, even though the same principle applies to all the care workers.
My constituent, Debra, complained about not being paid the minimum wage in November 2012. It took 30 months before she managed to force HMRC to issue the care company with a notice of underpayment. She was forced to complain to the then Secretary of State for Business, Innovation and Skills and my predecessor, Chris Kelly. HMRC wrote to her in February 2013 to say that it was looking at all the care workers’ records, and wrote again following Debra’s complaint to the Secretary of State in June 2014 that the other care workers were also owed arrears for non-payment of the minimum wage. Nevertheless, HMRC then issued the notice only for her, as if she was the only worker who had not been paid the national minimum wage.
HMRC’s continuous delays have been shocking, and they have been ongoing since Debra’s complaint at the end of 2012. HMRC has also been looking at the cases of two other constituents of mine, Alison and Michelle, since at least March 2015, yet we do not seem to be any further forward than we were at this time last year. HMRC continues with what seem to be unnecessary delays and excuses—according to my case notes they appear to be the very same excuses given to Debra.
None of the care workers at the firm were paid for their travel time between calls or if calls ran over the allotted times. The company’s own paperwork—the rotas and pay slips—clearly show that they did not pay their care workers for what we would understand to be necessary working time. All the care workers were on the same terms and conditions, so the same position applies equally to all the workers.
Despite HMRC writing to Debra that it had “all workers’ records” dating back to February 2014, in a recent telephone call HMRC asked whether my constituents would be prepared to go to an employment tribunal and be cross-examined. That does not seem appropriate given the objectively verified facts. HMRC has not even calculated the arrears that the women appear to be owed. The same tactic had been used previously with Debra. HMRC does not have to mention any employment tribunal; its job is to get the evidence, calculate the arrears and issue a notice of underpayment. Only after the notice is issued can the employer force a tribunal, and an employer has only 28 days to do so following the issuing of such a notice by HMRC. Indeed, until a notice is issued the care company has absolutely nothing to appeal against.
There is clearly something very wrong indeed with how HMRC enforces compliance with the national minimum wage in the care sector. As I said, it has been investigating this care company for nearly four years, yet despite finding that not only Debra but the other care workers are owed minimum wage arrears, it has still issued only the one notice.
That case should be contrasted with HMRC’s response to another case, although it goes slightly beyond the narrow confines of the debate. At a manufacturer in my constituency, a genuine clerical error led to the underpayment of four pieceworkers out of a workforce of 240. Over three years, the underpayment totalled just under £600, or 0.005% of the total wage bill. It was clearly a genuine oversight that had not been identified in five external audits.
Despite the fact that that manufacturing company co-operated fully with HMRC—indeed, as soon as it was made aware of the underpayments, it repaid them, along with the penalty, on the next available working day—its response seems to have been very different from what happened with the care company. The manufacturer has been named and shamed and now has to deal with the resulting implications while trying to negotiate a contract with high-street retailers.
HMRC’s response has been very inconsistent. In my experience, it is focusing its energy on what might be seen as the easy cases—companies that are genuinely trying to do the right thing but may have made a mistake —while it does very little effectively to enforce the national minimum wage for companies such as the care company I highlighted, which have consistently obstructed and obfuscated and shown total disregard for HMRC and for their legal requirement to pay the national minimum wage. That has to change.
I urge my hon. Friend the Minister to ask HMRC urgently to review its general approach to the enforcement of the national minimum wage. I will also write privately with the details of the two cases to which I referred to ask him to speak to HMRC about what is going on and how we can have a more consistent and equitable approach to ensure that all employers pay the national minimum wage.
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.