It's time to get tough on non-payment of the minimum wage

At least 300,000 workers in the UK still do not receive the legal minimum. The current compliance system is in desperate need of reform.

The national minimum wage, now 15 years old, is one of the most significant institutional innovations in Britain’s political economy. It has established a baseline for earning that no worker should fall below. Yet according to a new report, Settle for nothing less, out today from the Centre for London, at least 300,000 workers in the UK still do not receive the bare minimum to which they are entitled. This is not good enough in 21st century Britain: no one here should have to work for less than the legal minimum.

Compliance with the minimum wage is enforced nationally by HMRC on the government’s behalf. This arrangement costs about £8m per year but only identifies roughly £4m of arrears owed to short-changed workers. As well as securing the return of these arrears, it imposes fines on non-compliant employers and, on rare occasions, pursues them further in the courts.

In too many parts of the workforce, though, this system is not working. Thousands of home carers, doing some of the most important work in our society, are not getting paid for their travel time between clients. Apprenticeships are part of the answer for the million young people in our country now out of work, but their abuse in sectors such as hairdressing is endemic. Internships too often amount to proper work yet remain unpaid. Migrant workers are particularly vulnerable to exploitation, especially when their employer also provides the roof over their heads. General awareness of basic entitlements is low and the current regime of sanctions for non-compliance is weak. Moreover, workers who are being exploited are unlikely to pick up the phone to report their employers to a remote and distant Pay and Work Rights Helpline.

It does not have to be this way. Today’s report argues for change to address systemic challenges to minimum wage compliance, specific concerns about migration, low levels of awareness and negligible sanctions, and an institutional framework for the delivery of minimum wage enforcement that can be improved. 

The report’s recommendations include:

  • building a schedule that requires minimum wage payment into local authorities’ home care contracts;
  • abolishing the first-year apprentice rate of the minimum wage;
  • banning the advertising of unpaid internships;
  • removing the cap on fines for employers flouting the minimum wage;
  • prosecuting repeat offenders;
  • and naming every employer found to be in breach.

But the single best thing we could do to increase compliance with the minimum wage is to devolve primary responsibility for its enforcement to the local level.

Local authorities are much closer to the ground than HMRC could ever be. They already do enforcement work with local employers when it comes to trading standards, waste, health and safety, planning, licensing and more. The businesses that ignore these regulations are often the same businesses that flout the minimum wage. Local authorities know the employers in their patch – both the bad ones that may need investigating and the good ones who have a vested interest in leveling the playing field.

The current system for minimum wage enforcement is excessively centralised and exploited workers suffer as a result. From hotel cleaners paid unfair rates per room rather than per hour to migrant domestic workers treated as modern slaves, localised enforcement of the minimum wage would heighten the prospect of their unscrupulous employers getting caught.  

Empowering local authorities to enforce the minimum wage would help us ensure that it is worth the paper it is written on. After all, it is supposed to be a right, not a perk.

Andy Hull is a Research Associate at the Centre for London.

A restaurant worker protests against employers who pay less than the minimum wage outside Pizza Express on September 27, 2007. Photograph: Getty Images.
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What will Labour's new awkward squad do next?

What does the future hold for the party's once-rising-stars?

For years, Jeremy Corbyn was John McDonnell’s only friend in Parliament. Now, Corbyn is the twice-elected Labour leader, and McDonnell his shadow chancellor. The crushing leadership election victory has confirmed Corbyn-supporting MPs as the new Labour elite. It has also created a new awkward squad.   

Some MPs – including some vocal critics of Corbyn – are queuing up to get back in the shadow cabinet (one, Sarah Champion, returned during the leadership contest). Chi Onwurah, who spoke out on Corbyn’s management style, never left. But others, most notably the challenger Owen Smith, are resigning themselves to life on the back benches. 

So what is a once-rising-star MP to do? The most obvious choice is to throw yourself into the issue the Corbyn leadership doesn’t want to talk about – Brexit. The most obvious platform to do so on is a select committee. Chuka Umunna has founded Vote Leave Watch, a campaign group, and is running to replace Keith Vaz on the Home Affairs elect committee. Emma Reynolds, a former shadow Europe minister, is running alongside Hilary Benn to sit on the newly-created Brexit committee. 

Then there is the written word - so long as what you write is controversial enough. Rachel Reeves caused a stir when she described control on freedom of movement as “a red line” in Brexit negotiations. Keir Starmer is still planning to publish his long-scheduled immigration report. Alison McGovern embarked on a similar tour of the country

Other MPs have thrown themselves into campaigns, most notably refugee rights. Stella Creasy is working with Alf Dubs on his amendment to protect child refugees. Yvette Cooper chairs Labour's refugee taskforce.

The debate about whether Labour MPs should split altogether is ongoing, but the warnings of history aside, some Corbyn critics believe this is exactly what the leadership would like them to do. Richard Angell, deputy director of Progress, a centrist group, said: “Parts of the Labour project get very frustrated that good people Labour activists are staying in the party.”

One reason to stay in Labour is the promise of a return of shadow cabinet elections, a decision currently languishing with the National Executive Committee. 

But anti-Corbyn MPs may still yet find their ability to influence policies blocked. Even if the decision goes ahead, the Corbyn leadership is understood to be planning a root and branch reform of party institutions, to be announced in the late autumn. If it is consistent with his previous rhetoric, it will hand more power to the pro-Corbyn grassroots members. The members of Labour's new awkward squad have seized on elections as a way to legitimise their voices. But with Corbyn in charge, they might get more democracy than they bargained for.