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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Like it or hate it, it doesn't matter: Brexit is happening, and we've got to make a success of it

It's time to stop complaining and start campaigning, says Stella Creasy.

A shortage of Marmite, arguments over exporting jam and angry Belgians. And that’s just this month.  As the Canadian trade deal stalls, and the government decides which cottage industry its will pick next as saviour for the nation, the British people are still no clearer getting an answer to what Brexit actually means. And they are also no clearer as to how they can have a say in how that question is answered.

To date there have been three stages to Brexit. The first was ideological: an ever-rising euroscepticism, rooted in a feeling that the costs the compromises working with others require were not comparable to the benefits. It oozed out, almost unnoticed, from its dormant home deep in the Labour left and the Tory right, stoked by Ukip to devastating effect.

The second stage was the campaign of that referendum itself: a focus on immigration over-riding a wider debate about free trade, and underpinned by the tempting and vague claim that, in an unstable, unfair world, control could be taken back. With any deal dependent on the agreement of twenty eight other countries, it has already proved a hollow victory.

For the last few months, these consequences of these two stages have dominated discussion, generating heat, but not light about what happens next. Neither has anything helped to bring back together those who feel their lives are increasingly at the mercy of a political and economic elite and those who fear Britain is retreating from being a world leader to a back water.

Little wonder the analogy most commonly and easily reached for by commentators has been that of a divorce. They speculate our coming separation from our EU partners is going to be messy, combative and rancorous. Trash talk from some - including those in charge of negotiating -  further feeds this perception. That’s why it is time for all sides to push onto Brexit part three: the practical stage. How and when is it actually going to happen?

A more constructive framework to use than marriage is one of a changing business, rather than a changing relationship. Whatever the solid economic benefits of EU membership, the British people decided the social and democratic costs had become too great. So now we must adapt.

Brexit should be as much about innovating in what we make and create as it is about seeking to renew our trading deals with the world. New products must be sought alongside new markets. This doesn’t have to mean cutting corners or cutting jobs, but it does mean being prepared to learn new skills and invest in helping those in industries that are struggling to make this leap to move on. The UK has an incredible and varied set of services and products to offer the world, but will need to focus on what we do well and uniquely here to thrive. This is easier said than done, but can also offer hope. Specialising and skilling up also means we can resist those who want us to jettison hard-won environmental and social protections as an alternative. 

Most accept such a transition will take time. But what is contested is that it will require openness. However, handing the public a done deal - however well mediated - will do little to address the division within our country. Ensuring the best deal in a way that can garner the public support it needs to work requires strong feedback channels. That is why transparency about the government's plans for Brexit is so important. Of course, a balance needs to be struck with the need to protect negotiating positions, but scrutiny by parliament- and by extension the public- will be vital. With so many differing factors at stake and choices to be made, MPs have to be able and willing to bring their constituents into the discussion not just about what Brexit actually entails, but also what kind of country Britain will be during and after the result - and their role in making it happen. 

Those who want to claim the engagement of parliament and the public undermines the referendum result are still in stages one and two of this debate, looking for someone to blame for past injustices, not building a better future for all. Our Marmite may be safe for the moment, but Brexit can’t remain a love it or hate it phenomenon. It’s time for everyone to get practical.