Love is blind, and so is Brexit

“Love is blind, and lovers cannot see”, says Jessica, daughter of Shylock, in The Merchant of Venice. And, while we can only guess what Shakespeare would have made of the tragicomical farce that is Brexit, with its unappealing cast of posh boys, snake-oil merchants and sovereignty-mad aristocrats, he probably would have come up with a more dramatic final scene than that which we are going to be forced to sit through a few weeks from now. Because you can forget about Canada Minus, Norway Plus, the slightly less titillating Jersey Model, the fantastical Chequers Plan, or a shit-your-pants exciting ‘no deal’ Brexit – we are sleepwalking (or, more accurately, sleep-stumbling) towards an anticlimactic Blind Brexit.

In recent weeks, with the point at which there is still time to negotiate any of the above ‘final deals’ having long passed, lots of journalists and policy analysts, and a few MPs, have been working themselves into a frenzy over the likelihood – and likely cataclysmic consequences – of a ‘no deal’ outcome to the current negotiations with the EU27. And they have been ably assisted by clueless Ministers uttering not entirely reassuring assurances that “there will be adequate food” after the UK leaves the EU on 29 March 2019. One group of ‘leading social scientists’ has even put the chances of there being a ‘no deal’ Brexit at “around 50%”.

A ‘no deal’ Brexit would indeed be chaotic and extremely damaging, to both the UK and the EU27. Which, as Jonathan Lis of the think tank British Influence and others have pointed out, is why it is (almost certainly) not going to happen. I’ve included that ‘almost certainly’ because, with irrational actors like Liam Fox and Dominic Raab around, anything is possible, and there can be no absolute certainty about anything Brexity.

But the bottom line is that, whatever they might say in public, both sides are desperate to avoid a ‘no deal’ outcome to the current negotiations – the EU27 want their £35-39bn (the financial settlement agreed in March), and an orderly, treaty-based departure of the UK, while Theresa May does not want to go down in history as the PM who presided over food rations, fuel and medicines being delivered by the army, in peacetime. Oh, and a ‘no deal’ outcome would be very bad for Michel Barnier’s burning ambition to replace Jean-Claude Juncker as President of the EU Commission in 2019. Never underestimate the power of personal ambition.

On top of that desperation lies the fact that the currently stalled negotiations with the EU27 are less a negotiation than a bureaucratic process. More to the point, it is the EU’s bureaucratic process, and the UK negotiators (in the form of David Davis, when he could be bothered to turn up, and now the ventriloquist dummy Dominic Raab and his operator, Olly Robbins) have been monstered by Michel Barnier and his team at every turn.

From the ‘staged approach’ to the negotiations, under which the UK’s disentanglement from the EU has had to be sorted before the future relationship can be discussed (remember ‘this will be the row of the summer’?), to the £35-39bn financial settlement (remember ‘go whistle’?), to the still not resolved NI border issue, Barnier has called all the shots. And, in doing so, he has simply carried out the mandate handed to him by the EU27 a few days after Theresa May stupidly triggered Article 50 before working out what she and her Cabinet actually want Brexit to mean.

As Tim Durrant of the Institute for Government and others have noted, what this process will deliver – what it can only deliver – is what it was designed (by the EU27) to deliver: a Blind Brexit, consisting of a Withdrawal Agreement covering the financial settlement (sorted), the transition period (sorted), citizens rights (almost sorted) and the NI border issue (not yet sorted), plus a quite possibly vague and definitely non-binding, so (almost certainly) meaningless, Political Declaration on the future relationship.

Work on turning that Political Declaration into a legally-binding treaty (or ‘final deal’) will not start until after the UK has left the EU. But it is the content of this non-binding Political Declaration that the UK and EU27 should have been discussing during the second phase of the negotiations that opened after the joint report of last December.

Instead, the negotiations have been stuck on trying to sort out the 20% of the draft Withdrawal Agreement that remained to be agreed when the draft was published in March. So, as of 24 July, when Robbins and Raab appeared before the DExEU committee of MPs (see Q2409), there was not even a first draft of a Political Declaration. (And, since 26 July, the two negotiating teams have not met – they next meet on 16 and 17 August).

One week later, a senior EU official told the Guardian that the Political Declaration could be as little as four sides of paper, as “we have not time to thrash out the details”. Quite. And, on 2 August, Michel Barnier himself said “we will not know what the future relationship will bring by Autumn 2018”.

However, if both sides want to avoid ‘no deal’, which they do, then completion of the Withdrawal Agreement (80% done, remember) and cobbling together a basic, all-things-to-all-people Political Declaration is the only game in town. Indeed, that is pretty much what the Government itself says, in its latest white paper, Legislating for the Withdrawal Agreement between the UK and the EU, published on 24 July.

Sure, that means finding some form of compromise on the NI border issue but, as others have noted, the EU is a master at cooking up last-minute fudges on difficult issues that can, at a squeeze, be put off to another day. On 25 July, the Telegraph reported that “after 16 months of facing off over the most politically sensitive issue in the EU-UK divorce, creative solutions are now being considered by both sides”. And the NI border issue can be put off, at a squeeze, as strictly speaking it does not need to be resolved until the end of the transition period, in December 2020.

In short, by far the most likely outcome to the current impasse – much, much more likely than ‘no deal’ – is completion of the Withdrawal Agreement at the October EU Council meeting, and the UK’s departure from the EU on 29 March 2019, without anyone knowing what the future relationship between the UK and the EU27 will look like. Or, more accurately, with everyone from Boorish Johnson to your next-door neighbour having their own interpretation of what the future relationship will look like. Nice.

“But the Brexiteers will never swallow that”, I hear you shout. But they will, because their long-dreamed of prize will be just weeks away, and by then the only realistic alternative will be not ‘no deal’, but no Brexit. The UK Government and EU27 will have shaken hands on the deal, neither side will want to re-open the negotiations, and MPs will be presented with a fait accomplis: vote for the Withdrawal Agreement; vote against the Withdrawal Agreement, and crash out with ‘no deal’; or cancel Brexit and stay in the EU. And there is simply no majority in the Commons for either ‘no deal’ or ‘stay in the EU’. This was always going to be the case, and the bitterly fought for meaningful vote was never going to be meaningful.

This may or may not be why some Remainer MPs have put all their eggs in the People’s Vote basket. But if Brexit is blind, and MPs cannot see the future relationship, then the voters will be no better sighted, and any People’s Vote would simply be reduced to a no doubt divisive re-run of the in/out farce of June 2016. For Leavers like Liam Fox it would be the easiest political campaign in history, to make up for not getting the easiest trade deal in history.

But for us Remainers it would be the opposite. What, exactly, would we campaign for, or against? As Anand Menon of UK in a Changing Europe said trenchantly late last month: “phrased as vaguely as the time constraints imply it must be, [the Political Declaration] will not provide a firm basis for informed debate. Instead, expect another campaign replete with competing claims about competing futures.”

Furthermore, as both the Institute for Government (see pp 24-25) and the UCL Constitution Unit have noted, holding a People’s Vote on the outcome of the negotiations would be “fraught with difficulties and added complexities”. Not the least of which would be that, given the time needed to pass the necessary primary legislation, make preparations for the ballot, and hold a meaningful campaign, an extension of the two-year Article 50 period beyond 29 March 2019 would be necessary. However, there are European Parliament elections due only two months later, on 23-26 May 2019, which would raise complex legal questions about the UK’s participation in those elections, were the extension of the UK’s membership of the EU to go beyond that point.

In any case, there will only be a People’s Vote if Theresa May decides it would be in her best interest for her to hold one. Which it would be, if she could be sure of winning it, since that would give her Withdrawal Agreement-based ‘deal’ legitimacy and quite possibly firm up her grip on the keys to Downing Street. But, if she’s not sure she can win it, then there (almost certainly) won’t be one. For the chances of at least 40 Tory MPs voting against her on the issue – as would be necessary, since there are at least 15 Labour MPs who would vote with the Government, regardless of their Party’s position – are negligible.

In short, the Brexit towards which we are sleepwalking while MPs holiday will be Blind, and neither they nor the voting public will see or know the future beyond.

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ET claims: the new normal? Maybe not yet.

“There is no such thing in life as normal”, sang my erstwhile hero Morrissey on his 2006 song ‘The youngest was the most loved’. But on this, as on so many things, Morrissey was wrong. Because, under the justice-denying fees regime introduced in 2013, the number of employment tribunal claims/cases became very normal.

Month after month, for more than four years, the number of new claims/cases hardly varied at all. And, following the abolition of fees last July, the number of new claims/cases appeared to have settled at a new normal, with little variation in claim/case numbers in the four months September to December 2017.

However, the latest set of quarterly statistics, published by the Ministry of Injustice this morning, suggests that we may not yet have reached the new normal. Here’s some charts to show what I mean. Make of them what you will.

Or, if you prefer your statistics quarterly:

.

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Withdrawal symptoms: Will the Government withdraw the EU (Withdrawal) Bill?

The other night, I had one of those strange but strangely realistic dreams that it is hard to shake off upon waking. I dreamt that I had been sentenced to five weeks in prison, for putting too many ticks on the (complex) ballot paper for the People’s Vote on the EU Withdrawal Agreement. The court had left it to me to arrange the serving of my prison sentence and, after waking in some distress, I had spent five minutes worrying about how to ask my boss for five weeks off work – before belatedly realising it was all just a dream.

After 18 months slaving away over the EU (Notification of Withdrawal) Act 2017 and the EU (Withdrawal) Bill, which recently completed its rather bumpy passage through the House of Lords, I often wish that Brexit and all its attendant strangeness was also just a dream. Sadly, it is all too real, even if most public and parliamentary debate on the subject leaves me wondering whether I should have eaten all that cheese just before bedtime. Apparently, it’s perfectly normal, having decided to resign your membership of a club, to expect the club to then agree to change its rules so that you can continue to enjoy all the benefits of membership. Educated people still take you seriously when you call that “a jobs-first Brexit”.

Yes, Brexit is a nightmare, and we have all fallen a long, long way down the rabbit hole. The normal rules do not apply, nothing is predictable, and everything is possible, even if Michel Barnier tells you a hundred times that it really, really isn’t. Forty years of law-making can be unpicked with a Great Repeal Bill, a trade deal with the EU27 can be negotiated in weeks, and the magic money tree will cover the cost of umpteen new regulatory agencies to do the jobs of all the EU agencies that no one thought to mention during the 2016 Referendum campaign.

So, earlier this month, hardly anyone batted an eyelid when the mainstream media began to report rumours that had been circulating in Westminster for weeks: that the Government might not bring the EU (Withdrawal) Bill, and its 15 inconvenient Lords amendments, back to the Commons until after the summer recess. There’s no rush, David Davis knows what he’s doing, everything will be fine.

Conversely, just a few weeks later, on 23 May, pretty much everyone peed their pants with excitement when the political editor of Sky News, Faisal Islam, tweeted that Tory MPs had been told that Ministers would be bringing the Bill, as well as the long-stalled Trade and Customs bills, back to the Commons in mid-June.

That may or may not happen – at Business Questions in the Commons the following day, all Andrea Leadsom, the Leader of the House, would say is that she expects all three Brexit-related bills to make “swift progress in a matter of weeks, not months”. For sure, nothing will happen before Monday 11 June.

However, what is clear is that the Government no longer needs the EU (Withdrawal) Bill. Because there is no power or provision in the Bill that ministers need to have before they can give themselves the same (or refined) powers and provisions through the promised (and necessary) Withdrawal Agreement & Implementation Bill (the WAI Bill), which – assuming things stay on the Government’s intended track – we can expect to see very soon after the final Withdrawal Agreement is signed off by the UK and the EU27 at the October Council meeting. And the WAI Bill will need to pass through Parliament fairly quickly, as by definition it needs to reach the Statute Book some time before Exit Day (which may or may not be 29 March 2019, of course).

Most of the EU (Withdrawal) Bill’s provisions would only come into play on or after Exit Day. And the key exception – clause 12’s powers for ministers to issue secondary legislation “appropriate for the purposes of implementing the withdrawal agreement if the Minister considers that such provision should be in force on or before exit day” – could simply go in the WAI Bill. Indeed, use of the powers in clause 12 is explicitly subject to “the prior enactment of a statute by Parliament approving the final terms of the withdrawal of the UK from the EU” – that is, the WAI Bill.

With a stand-still transition until December 2020, and the postponement of negotiations on the future relationship with the EU27 until after Exit Day, there is no longer any evident need for ministers to have such powers much before Exit Day. At the time of the EU (Withdrawal) Bill’s introduction, everyone assumed that Parliament would spend most of this year awash in hundreds of draft Statutory Instruments (draft secondary legislation) issued under the Bill’s sweeping Henry VIII powers, and making the necessary legal changes to implement the future relationship from Exit Day.

That was always fanciful, of course, given how many years it took to negotiate e.g. the EU-Canada free trade agreement (CETA), but pretty much everyone swallowed it. However, there will be no need to make such legal changes to implement the non-binding (and quite possibly somewhat vague) ‘political declaration’ on the future relationship that will accompany the Withdrawal Agreement. There are only four months left to negotiate and agree the content and final wording of the political declaration. And, if the UK negotiating team’s latest proposals, published on 24 May, are anything to go by, discussions on the declaration haven’t got much further than proposals for some subject headings. So it’s hard to see the text being terribly definitive by October.

And, of course, withdrawal of the EU (Withdrawal) Bill would remove all risk of losing Commons votes on the 15 inconvenient Lords amendments. [Addendum, 3 June: As Andrew Rawnsley says in today’s Observer, “looming parliamentary votes on Brexit could detonate the Tory party and put [May’s] premiership in jeopardy.”]

On the other hand, the fact that ministers no longer need the Bill does not mean that they will withdraw it – at least, not yet. As already noted, in the dream world of Brexit, everything is possible, however irrational, and nothing is predictable. Ministers may well decide, for purely political reasons, to bring the Bill back to the Commons for Ping Pong, if only to try to bounce the Cabinet brexiteers over the Customs Union issue, and/or exploit Labour’s own internal divisions on the Customs Union and EEA, and/or just keep MPs on both sides of the Brexit divide fully occupied. And, if ministers fail to reverse or water-down the Lords amendments, they can always just abandon the Bill later. Even if the Bill did reach the Statute Book, with or without the Lords amendments, the WAI Bill could include a simple clause repealing it in its entirety, just as clause 1 of the Bill repeals the European Community Act 1972.

But by then, I imagine I’ll be having Brexit-related nightmares every night.

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Penny pinching: enforcement (or not) of the minimum wage

“A penny saved is a penny earned.”

So said the 18th century clever clogs, Benjamin Franklin. Allegedly. Maybe.

OK, it seems he probably didn’t say it. But, if he did, we could justly consider Franklin to be an astonishingly far-sighted commentator on enforcement of the national minimum wage in 21st century Britain. Because, for some of the country’s biggest and most profitable employers, cutting corners on compliance with the national minimum wage is a business model that pays – penny upon penny upon penny.

Last week, the Department for Business, Energy and Industrial Strategy (BEIS) named & shamed another tranche of employers found by HMRC to have breached the minimum wage – the 14th round of naming & shaming since the scheme was rebooted in 2013. In this round, 179 employers were named for collectively owing £1,096,246 to 9,123 workers.

As ever, press and media attention focused on the handful of household names among the 179, including the restaurant chains Wagamama, which was found to owe £133,212 to 2,630 workers, and TGI Fridays, which owed £59,348 to 2,302 workers. Yet, as ever, most of the 179 were (relatively) small-fry: 146 (82%) owed less than £5,000, 110 owed less than £2,000, 105 had underpaid fewer than five workers, and 56 had underpaid only one worker. Just five (including Wagamama, TGI Fridays and Marriott Hotels) accounted for 34% of the arrears owed, and for 60% of the 9,123 underpaid workers. The median arrears owed was just £1,356, and the median number of underpaid workers was three.

But my eye was drawn to the statement by BEIS minister Andrew Griffiths:

There are no excuses for short-changing workers. This is an absolute red line for this government and employers who cross it will get caught – not only are they forced to pay back every penny but they are also fined up to 200% of [the] wages owed.

Because, as Mr Griffiths knows very well, that is simply not true. Indeed, the naughty little minister manages to squeeze not one but two pork pies into his statement of just 46 words. Which is pretty impressive, even for a government minister.

Firstly – as noted on this blog a few weeks ago – not “every penny” of the £1,096,246 of arrears ‘identified’ by HMRC in this round of naming & shaming will end up in the pockets of the workers from whom it was thieved. Because we know that, each and every year, a significant – but unknown – proportion of the arrears ‘identified’ by HMRC are not paid back. And BEIS is seemingly so unbothered by this troublesome fact that it can’t even say how money much does reach the workers in question, or how many workers receive all the unpaid wages thieved from them by their short-changing employer.

Secondly – as also noted, somewhat tediously, on this blog – the worst offenders, in terms of total arrears owed and workers underpaid, are not fined for some or even most of the wages owed. Because much of the arrears ‘identified’ by HMRC enforcement are in fact identified not by HMRC but by employers themselves, under a self-correction mechanism quietly introduced by BEIS and HMRC in 2015. And, not only are those employers not named and shamed by BEIS for those self-corrected arrears, but no financial penalties are imposed in respect those self-corrected arrears. Which means the employers in question have enjoyed an interest-free loan equal to those arrears, which they may or may not repay in full. And a lot of pennies saved is a lot of pennies earned.

So, in January, Mr Griffiths confirmed – in his Answer to a Parliamentary Question by Caroline Lucas MP – that, of the 1,049 employers named by BEIS in the August 2016, February 2017, August 2017 and December 2017 naming rounds, for collectively owing £5.2 million to 47,336 workers, 169 were instructed by HMRC to self-correct additional arrears, for which they were not named, totaling £4.1 million and owed to 71,766 workers. And, far from the 169 employers being ‘fined up to 200%’ of those self-corrected arrears, no financial penalties at all were imposed in relation to that £4.1 million. Which is a fuck of a lot of pennies saved. Or earned. Up to 820 million pennies, in fact.

Furthermore, in recent weeks, a series of Parliamentary Questions tabled by Jo Swinson MP have revealed that, of those 169 self-correcting employers:

In short, the 169 self-correcting employers include the very worst offenders.

All of which somewhat undermines the transparency and credibility of the naming & shaming scheme. Not to mention the credibility of Mr Griffiths.

So, it’s good to see a cross-party group of more than 40 MPs, led by Caroline Lucas and Jo Swinson, calling for a review of policy on both the naming & shaming of non-compliant employers and the self-correction of arrears. Why not ask your MP to add their name, if they haven’t already?

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ET claims: the new normal

So, with today’s publication by the Ministry of Injustice of the latest set of quarterly tribunal statistics, giving us five full months’ worth of ET claim/case statistics since the Supreme Court did the High Court’s job for it and ruled ET fees unlawful, we now know that just under 3,000 new cases per month is the new normal. In other words – as countless law firms will no doubt be informing their employer clients in highly excitable emails today – the new normal is just about 100% higher than the old normal.

Which looks and sounds pretty dire. Stop hiring, employers!!! Those new employees will only take you to the Tribunal.

Except that, the new normal is only 100% higher than the old normal because, thanks to ET fees, the old normal was a pretty small number. That’s the way statistics work. As we can see from the following chart, a 100% increase in a pretty small number does not compensate for a 65% fall from a much bigger number. (I know you’ll be struggling to follow this, if you’re a High Court or Court of Appeal judge, but … well, just book yourself on a training course).

Yes, the number of ET cases is up 100% since July 2017. But it is still quite a bit lower than it would be, had ET fees and mandatory Acas early conciliation not been introduced in July 2013 and May 2014 respectively. And most of the difference is explained by the (positive) impact of that Acas early conciliation. It will be interesting to see if this remains the case over the coming months.

So, let’s not get too over excited (I’m looking at you, Peninsula Business Services). On average, even after that 100% increase, each of the UK’s 1.3 million employers now faces an ET claim just once every 37 years. But then the UK’s managers are a bit rubbish.

And maybe what we should be concentrating on is the inability of the much denuded ET system to cope with a sudden 100% increase in the number of cases. Because, let’s face it, Tory ministers are more likely to reach for a new fees regime than they are to green light an increase in judicial and administrative resources.

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Cochlear implants: as told by Wonky Junior

Today is international #CochlearImplantDay. If you’ve not heard of cochlear implants, they are an amazing technology that enables an increasing number of profoundly deaf children and adults to ‘hear’ sound, and so learn to communicate primarily by speech (often supplemented by lip-reading and, in some cases, use of sign language). The technology and medical science involved is really quite extraordinary.

My son Sam, now 18, has been a cochlear implant user since he was two, having been left profoundly deaf by severe pneumococcal meningitis in infancy. And, along with other families, we have been asked to use today to demonstrate the difference that cochlear implants have made to Sam’s life. So, over the last few weekends, Sam and I have had a chat about it. And here is a summary of what Sam said, with some photos from the last 16 years of Sam’s cochlear-implanted life.

Sam says that the best thing about having cochlear implants (and so being able to use his admittedly less than perfect speech as his primary means of communication) is that he can enjoy interacting with pretty much anyone he meets (well, as long as they speak English, and are not Jacob Rees-Mogg, David Davis or Nigel Farage). Sam is a fluent user of sign language (BSL), but that’s not much help if the person he’s trying to talk to does not sign. And only 0.02 of the UK population do sign. So this, for example, is Sam with a (non-signing) pirate he befriended in Turkey in 2013.

And this is Sam with five-times Olympic champion (Sir) Steve Redgrave, with whom Sam had a nice little chat after we bumped into him at Henley regatta in 2010. As you do. Steve had recently fractured his wrist (and cheekbone) while trying to cycle 3,000 miles across the USA for charity. So, Steve and Sam swapped hospital stories. As you do.

The next best thing about having cochlear implants, says Sam, is being able to enjoy music. Which in turn means dancing. Like his Dad, Sam has become something of a dance floor legend, with his move-perfect performance of all three minutes and 40 seconds of PSY’s Gangnam Style in particular attracting huge crowds of admirers. This is Sam throwing some shapes at Alton Towers (me and The Specials came later).

And this is Sam about to enjoy Katy B and Duran Duran with his sister Neisha and (hearing) mates Lucy and Kate, at the Common People festival in Oxford, in 2016.

Another thing that Sam says he likes about having implants is ‘hearing the roar of the crowd’ at sporting events. So, for example, Sam loves laughing at all the Harlequins fans moaning about how useless the Harlequins players are as we watch them lose, again.

And here is Sam enjoying the roar and the love of the crowd as he approaches the finishing line in the British 10K in 2016. (Yes, that’s me behind Sam, trying to grab some of that love myself, before I succumb to heart failure. That year, we crossed the line together. Last year, Sam beat me by five minutes. This year … well, I’m just gonna train harder.)

On 15 July this year, Sam’s younger sister Neisha will be joining us as we run the 10K to raise money for the Cochlear Implanted Children’s Support Group (CICS), from which we have received so much support and guidance over the years. And we would be delighted if you could sponsor us by visiting our fundraising page.

No doubt Sam would be having a great life without access to sound, as a user of sign language only – he has some great friends who communicate primarily by sign. But Sam and I are deeply grateful to the NHS – and all the brilliant surgeons, doctors, audiologists, speech & language therapists, and teachers of the deaf along the way – for giving Sam the opportunity to enjoy the world in ways that would otherwise not have been available to him. So, we are definitely going to celebrate #CochlearImplantDay. With a beer, maybe. Probably.

 

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Honey, I shrunk the NMW arrears

As noted previously [Shurely ‘tediously’? Ed] on this blog, Tory ministers have not been slow to crow about their apparent success in fortifying HMRC’s enforcement of the national minimum wage (NMW) in recent years. In April 2016, the then business minister, Nick Boles MP, boasted to the House of Commons that

“we are enforcing the national minimum wage more robustly than any previous Government and will be enforcing it more robustly every year. In 2015-16, Her Majesty’s Revenue and Customs identified more than £10 million of arrears for more than 58,000 workers across the economy—three times the arrears identified in 2014-15 and for twice as many workers. I am delighted to be able to share with hon. Members that we will increase the HMRC enforcement budget to £20 million in 2016-17, which is up from £13 million in 2015-16 and from only £8 million in the last year of the Labour Government.”

And, in December last year, when announcing the latest round of naming & shaming of employers found by HMRC to have breached the NMW, then business minister Margot James stated:

“There is no excuse for not paying staff the wages they’re entitled to and the government will come down hard on businesses that break the rules. That’s why today we are naming hundreds of employers who have been short changing their workers; and to ensure there are consequences for their wallets as well as their reputation, we’ve levied [sic] millions in back pay and fines. Since 2013, the [naming & shaming] scheme has identified [sic] £8 million in back pay for 58,000 workers, with 1,500 employers fined a total of £5 million. This year the government will spend a record £25.3 million on minimum wage enforcement.”

However, there is increasing evidence that “levied millions in back pay” and “identified £8 million in back pay for 58,000 workers” does not mean that those 58,000 workers have actually received the £8 million owed to them by their thieving employers. Indeed, the evidence suggests that a significant proportion of that £8 million has never reached the pockets of the workers in question.

In late November, the report by Nick Clark and Eva Herman of Middlesex University Business School, Unpaid Britain: wage default in the British labour market, highlighted the case of security firm TSS Ltd, which in February 2016 was named & shamed by BEIS for owing no less than £1.742 million to 2,519 workers – still the largest sum of arrears owed by any of the 1,539 employers named & shamed to date, and representing 22% of that £8 million boasted of by Margot James. By examining the firm’s annual accounts lodged with Companies House, Nick and Eva found that, in the 2014 and 2105 accounts, the firm had made provision for £1.736m of “payroll liabilities”.

However, in the 2016 accounts, the firm had written off £1,039,292 of that £1.736m, on the basis that, due to the length of time since the workers in question have left the company, “management do not believe that these amounts remain payable”. In short, it would appear that at least 60% of the £1.742m for which TSS was named & shamed by BEIS in 2016 never reached the pockets of the workers from whom it was unlawfully withheld, and has instead continued to line the pockets of TSS Ltd’s directors and shareholders. And, if that is the case, then at least 12.5% of the £8m boasted of by Margot James has never reached the pockets of the workers from whom it was thieved.

This rather disturbing finding prompted a written Parliamentary Question to BEIS by Caroline Lucas MP, asking “how much of the £1.74 million of minimum wage arrears owed by TSS Security Ltd and identified in the BEIS press release of 5 February 2016 has been paid to the workers in question”. To which the Answer (on 11 January 2018) was: “HMRC do not divulge information relating to an individual or company for reasons of confidentiality”. Which is a little odd, given that, in February 2016, BEIS and HMRC were happy if not delighted to divulge that TSS Ltd owed £1.742m of NMW arrears to 2,519 workers. Perhaps, as David Davis might say, that was then, this is now.

However, the Treasury’s Answer of 11 January went on to state: “Where arrears are identified HMRC complete assurance checks to ensure employers have repaid the arrears owed to workers. If employers do not repay arrears to workers HMRC will pursue civil recovery of arrears through the courts.” Which begged the questions: how many employers HMRC initiated civil action against in pursuit of unpaid minimum wage arrears in each year since 2010; and what is the total sum of unpaid minimum wage arrears recovered through such civil action?

Cue further Parliamentary Questions by Caroline Lucas MP, and we learnt last week that, since 2010, HMRC has initiated civil court action for non-payment of identified NMW arrears against no fewer than 532 employers. However, HMR is unable to say how much was recovered in total by this legal action, or – somewhat incredibly – even how many of the 532 civil court claims resulted in the recovery of unpaid NMW arrears. Perhaps the National Audit Office should ask, next time they are in HMRC.

To put that figure of 532 in context, it is equivalent to one in three of the 1,539 employers that BEIS has named & shamed since 2013, and represents one in 12 of all 6,351 employers that HMRC has found to have breached the NMW since 2010. In 2015/16, HMRC initiated civil court action for unpaid arrears against 108 – one in nine – of the 958 employers that it had found to owe NMW arrears to workers.

Which perhaps explains why BEIS press releases and submissions to the Low Pay Commission always refer only to the sum of NMW arrears “identified” by HMRC enforcement, never to the sum of arrears actually recovered for the workers in question.

I can imagine ministers and senior officials feeling rather smug at having got away with this sleight of hand for so long. But maybe they should instead be thinking about whether they need to be doing more to ensure that the ‘levying of millions in back pay’ actually does have consequences for the wallets of the law-breaking employers in question.

Source: Table 4 of NLW and NMW: Government evidence to the Low Pay Commission, BEIS, July 2017; and Minimum Wage: Arrears, Answer to Written Question 122436, House of Commons, 19 January 2018.
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