BEIS: Not so good with the name thingies.

“I’ve never been too good with names,” sang Evan Dando and The Lemonheads on the title track of their fifth album It’s a shame about Ray in 1992. The song (and the album) is an indie classic that has easily stood the test of time. Well, it has in my house. Which is more than can be said for the Department for Business, Energy & Industrial Strategy (BEIS, formerly BIS), and its policy of naming & shaming employers found by HMRC to have flouted the National Minimum Wage (aka the National Living Wage, for those aged 25+). Not only does the naming & shaming scheme lack transparency – essential to the very purpose of the scheme – but it is not being fully applied to the very worst offenders.

Never slow to blow its own trumpet, in February this year BEIS puffed its latest round of naming & shaming (the tenth round to date) as listing a “record number” of NMW rogues. But of course, the 359 employers named in February was only a record number because six months had passed since the previous round, in August 2016, which BEIS trumpeted then as “the largest ever list of NMW offenders”. In contrast, the first eight rounds (in 2014, 2015 and early 2016) had come at much shorter intervals of as little as four weeks, and it is clear that the scheme, revamped in late 2013, is only now approaching full speed. I imagine BEIS officials are under strict instructions to ensure that the next round includes at least 360 employers.

Most of the associated press and media coverage focused on the list being topped by the household name retailer Debenhams, which had been found to owe total arrears of almost £135,000 to 11,858 workers. This is, indeed, the second largest sum of arrears owed by any of the 1,046 employers named & shamed by BEIS to date (since the naming scheme was revamped in late 2013), though still someway short of the whopping £1.74m owed by security firm TSS Ltd, named & shamed in February 2016. However, of more interest to me was the fact that, for the first time, BEIS published alongside its press notice (scroll to the bottom) an Excel spreadsheet giving basic details of each of the 359 employers.

Alongside the employer’s full name and address, and the sum of arrears owed to workers, the spreadsheet categorises each employer by sector – information that has not been available from BEIS for the previous nine rounds of naming & shaming. Since 2014, I have spent many happy hours surfing the internet in order to produce my own breakdowns of the named employers by sector, set out in some colourful charts. But I do have better things to do with my time, so it’s very welcome that BEIS have started to share their data.

Ten sectors are represented in the BEIS spreadsheet: Agriculture (4 employers); Childcare (20); Cleaning (6); Employment Agencies (8); Food processing (3); Hairdressing (39); Hospitality (84); Leisure & Sport (11); Retail (51); and Social Care (24). There is also one employer categorised as sector Not Known.

Social Care is a sector that has featured far less in the previous naming and shaming rounds than one might have expected, given its well-deserved reputation for low pay. According to the BEIS spreadsheet, three of the 24 Social Care employers named in February had underpaid 47, 40 and 19 workers respectively, but only four of the 24 had underpaid more than four workers, and 15 had underpaid only one worker. All but six owed total arrears of less than £1,000, and 14 owed less than £500; the ‘worst’ offender owed some £17,680 to 40 workers. Which tends to suggest that most are either small employers or relatively marginal offenders, or both.

Somewhat unhelpfully, however, no fewer than 109 of the 359 named employers are categorised in the BEIS spreadsheet as “non low-paying sector”. Yet simple internet research quickly reveals ten of these 109 employers t0 be in the Social Care sector, eight in Retail, three in Childcare; three in Leisure & Sport, two in Hospitality, and one in Cleaning. And, among these ten Social Care employers, for example, Pembrokeshire Care Ltd in Haverfordwest owed more than £55,000 to 154 workers, while the “national social care charity” Community Integrated Care owed almost £20,000 to 69 workers.

Indeed, the ten Social Care employers wrongly categorised by BEIS as “non low-paying sector” between them owed twice as much in arrears (£86,033.61, to 326 workers) as the 24 Social Care employers that BEIS categorised correctly (£43,636.90, to 145 workers). It’s not clear how BEIS managed to not even suspect that employers called Apollo Care, Bay Care Domicilary Care Ltd, Community Integrated Care, Pembrokeshire Care Ltd, and Tailored Care Ltd might be Social Care employers, but maybe BEIS really did get Evan Dando to compile their Excel spreadsheet.

Whatever, here is an updated chart showing the number of employers named and shamed by BEIS to date, by sector (sectors with fewer than 15 named employers not shown).
While BEIS deserves credit for publishing the Excel spreadsheet alongside its press notice – a practice I hope will continue – the biggest problem with the naming & shaming scheme is what BEIS doesn’t tell us about the named employers. According to the spreadsheet and the press notice, the 359 employers named in February between them owed arrears of £994,685.83, to 15,513 workers. And between them they paid financial penalties of “around £800,000” on those arrears (penalties are currently levied at a rate of 200% of total arrears owed, but that rate only applies to underpayments made after 1 April 2016; for underpayments made between 7 March 2014 and 1 April 2016, the penalty rate is 100%, and for underpayments made prior to 7 March 2014 it is 50%; the penalty is also reduced by 50% for prompt payment of the arrears owed).

What you won’t find in either the press notice or the spreadsheet, however, is the fact that 60 of the 359 employers paid further arrears totalling £1,435,419, to 30,496 workers. This information was only extracted from BEIS by a written Parliamentary Question, and BEIS has refused to identify the 60 employers, or how much each one paid in further arrears. But, given the total sum of further arrears paid and number of workers involved, it seems reasonable to assume that at least some of the 60 are relatively large employers. More to the point, they clearly include the worst offenders. For all we know, some of those Social Care providers named & shamed by BEIS in February for underpaying just one or two workers might actually have underpaid dozens or even hundreds of workers.

Much the same happened with the previous round of naming and shaming, in August last year. According to the associated BEIS press notice, the 197 named employers between them owed arrears of £465,290, to 2,166 workers. But, according to BEIS’s answer to another written Parliamentary Question, 22 of the 197 employers paid further arrears totalling £410,967, to 1,574 workers. But the identity of the 22 remains a secret.

These further arrears were paid under a so-called self-correction mechanism quietly introduced by HMRC (presumably with BEIS’s blessing) in 2015. The new practice was never formally announced, but in October 2016, in its Evidence for the Low Pay Commission’s Autumn 2016 Report, BEIS stated:

“Where HMRC have investigated an NMW complaint, found arrears and issued a Notice of Underpayment detailing those arrears and penalty due in respect of the complainant [sic], they have the flexibility to instruct the employer to self-correct for the rest of their payroll – freeing up HMRC staff to work on more investigations. This approach is only used in cases where it is deemed appropriate and HMRC follow up with a sample of workers to ensure the arrears due have been paid.”

As is clear from the figures above, HMRC is deeming it ‘appropriate’ to apply the mechanism in respect of substantial sums, owed to a significant number of workers by a relatively small number of (presumably large) employers. Indeed, in its answers to further Parliamentary Questions, BEIS has confirmed that, in 2015/16, 113 employers took advantage of this mechanism to self-correct additional arrears of £3.84m, owed to 17,637 workers. And, not only will those employers not be ‘shamed’ for those sums by BEIS in its naming & shaming rounds, despite them being the very ‘worst’ offenders, but no financial penalties are imposed in respect of those additional, self-corrected arrears.

All of which somewhat defeats the very purpose of the naming & shaming scheme.

About wonkypolicywonk

Wonkypolicywonk is a policy minion, assigned wonky at birth, who has been lucky enough to work for two of the very best MPs in the House of Commons, and for Maternity Action, Working Families, Citizens Advice, the National Audit Office, the Law Society, and Amnesty International UK.
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1 Response to BEIS: Not so good with the name thingies.

  1. Pingback: Minimum wage, minimum shame? | Labour Pains

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