Every now and then, someone in the Labour Party has a pop at the Tories for not prosecuting enough employers for breaching the national minimum wage. When he was shadow business secretary, Chuka Umunna was not averse to skating on this very thin ice. In March 2015, the ‘Danger: Thin Ice’ warning signs were brazenly ignored by Stella Creasy and whoever was then running Labour’s twitter account. And, last weekend, tax law genius and all-round good guy Jolyon Maugham QC waded in, suggesting on Twitter – in response to a Citizens Advice report suggesting that wage theft by rogue employers has risen sharply in the past year – that “if you’re a business exploiting the most vulnerable, the Tories are a reliably sleepy policeman” and “there’s money to prosecute those who overclaim benefits; but none to prosecute those who underpay the minimum wage”.
Now, regular readers of this blog – Hello Gem! Hello Mum! – know that I’m not unwilling to have a pop at the Tory scumbags we are obliged to call Her Majesty’s Government. But in my humble opinion those two assertions by Jolyon need levelling with a few basic facts.
The first is that we shouldn’t get too carried away by what Citizens Advice has chosen to say about a single year-on-year change in its casework recording statistics, so as to get its name in the paper. I worked at Citizens Advice for 13 years, so I know how gnomic – and prone to unexplained fluctuations – those casework statistics can be. One or two CABx recruit enthusiastic new (volunteer) advisers, or send their existing ones on a training course, and suddenly you have a ‘surge’ in cases tagged as involving some particular third-tier problem that many advisers never bother to record. The following year, it’s gone. (It would have been helpful for Citizens Advice to include the figures for previous years, so we could see any trend, but they didn’t. Maybe they flunked Policy Wonk School.)
That said, an increase in the incidence of ‘unlawful deductions’ – or wage theft – by rogue and unscrupulous employers is exactly the kind of outcome that I and many others predicted for the justice-denying employment tribunal fees dreamed up by cuddly Ken Clarke, and introduced by the somewhat less cuddly Chris Grayling in July 2013. Even Michael Gove – everybody’s favourite justice secretary … ever! – has acknowledged this prediction as “a perfectly internally coherent theoretical argument”, while at the same time dismissing it on the grounds that he doesn’t see “evidence that employers are behaving in [such] an outrageous way”. Which is the kind of thing Tory scumbag politicians say when they’re thinking: “You’re right, of course, but I don’t give a fuck.”
However, ‘wage theft’ is not necessarily the same as ‘breaching the national minimum wage’. It is perfectly possible for a worker to be getting the minimum wage (if only just), while at the same time losing hundreds or thousands of pounds to wage theft by their employer. I saw hundreds of such cases during my 13 years at Citizens Advice. And, in such cases, enforcement of the law (via the ET system) falls to the individual worker concerned, not the government.
This was less than satisfactory even before the introduction of hefty ET fees, and I spent a lot of time and effort trying to get the Blair and Brown governments to do something about it. But they wouldn’t, and now the scumbag Tories are doing something that might help address the issue. If I were (still) a member of the Workers’ Party, I’d be a tad embarrassed about that. For an effective Fair Employment Agency could tackle the systemic but often hidden exploitation such as that in London’s hotels.
As for ‘money to enforce the minimum wage’, under the scumbag Tories the annual budget for NMW enforcement has reached a level that humble policy wonks like me could only dream of in the New Labour years. In the last year of Gordon Brown’s government, the budget reached £8.3m, up from £6.8m in 2007/08, and just £5.6m in 2005/06. It then stuck at £8.3m for each of the first three years of the Coalition – despite cuts of 25% or more to most departmental budgets – then increased to £9.2 in 2014/15, before rising again to £13.2m for 2015/16. In the last year of the Labour government the HMRC enforcement team had 140 full-time equivalent staff; it now has 224 FTE staff. And the enforcement budget is set to increase again in 2017/18.
Admittedly, very little if any of that £13.2m goes on criminal prosecutions of NMW rogues – there have been no such prosecutions since 2013. But then – as Chuka Umunna, Stella Creasy and others tended to overlook – it took Labour until 2006 to get around to introducing criminal offences in relation to the minimum wage. And then they only managed seven prosecutions before being booted out of office in 2010.
With criminal prosecutions costing an average of 27 times the average cost of an HMRC investigation and civil enforcement, I can’t see this changing while the Tories remain in power – though ministers have said that some of the increased funding will be used to “establish a new team of compliance officers in HMRC to investigate the most serious cases of employers not paying the NMW”, and that might well lead to some prosecutions. But if Labour want to do things differently, then they really need to spell out how that substantial extra cost would be met. The 2015 manifesto did not contain any pledge of extra funding for NMW enforcement, so a switch to criminal prosecutions would simply have led to a substantial reduction in the level of civil enforcement.
None of this is to say that the current level of civil enforcement of the NMW is adequate – it certainly isn’t, as I have said repeatedly and as today’s news of a successful legal challenge against care company MiHomecare reminds us. Nor is it to say there shouldn’t be some criminal prosecutions – I myself have recently questioned why the security firm found by HMRC to have thieved a whopping £1.742m from 2,500 of its workers hasn’t faced criminal prosecution. But the number of criminal prosecutions is not a reliable indicator of the level of NMW enforcement, and it’s disingenuous of anyone in Labour to suggest otherwise.