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.
Getty Images.
Show Hide image

The problems with ending encryption to fight terrorism

Forcing tech firms to create a "backdoor" to access messages would be a gift to cyber-hackers.

The UK has endured its worst terrorist atrocity since 7 July 2005 and the threat level has been raised to "critical" for the first time in a decade. Though election campaigning has been suspended, the debate over potential new powers has already begun.

Today's Sun reports that the Conservatives will seek to force technology companies to hand over encrypted messages to the police and security services. The new Technical Capability Notices were proposed by Amber Rudd following the Westminster terrorist attack and a month-long consultation closed last week. A Tory minister told the Sun: "We will do this as soon as we can after the election, as long as we get back in. The level of threat clearly proves there is no more time to waste now. The social media companies have been laughing in our faces for too long."

Put that way, the plan sounds reasonable (orders would be approved by the home secretary and a senior judge). But there are irrefutable problems. Encryption means tech firms such as WhatsApp and Apple can't simply "hand over" suspect messages - they can't access them at all. The technology is designed precisely so that conversations are genuinely private (unless a suspect's device is obtained or hacked into). Were companies to create an encryption "backdoor", as the government proposes, they would also create new opportunities for criminals and cyberhackers (as in the case of the recent NHS attack).

Ian Levy, the technical director of the National Cyber Security, told the New Statesman's Will Dunn earlier this year: "Nobody in this organisation or our parent organisation will ever ask for a 'back door' in a large-scale encryption system, because it's dumb."

But there is a more profound problem: once created, a technology cannot be uninvented. Should large tech firms end encryption, terrorists will merely turn to other, lesser-known platforms. The only means of barring UK citizens from using the service would be a Chinese-style "great firewall", cutting Britain off from the rest of the internet. In 2015, before entering the cabinet, Brexit Secretary David Davis warned of ending encryption: "Such a move would have had devastating consequences for all financial transactions and online commerce, not to mention the security of all personal data. Its consequences for the City do not bear thinking about."

Labour's manifesto pledged to "provide our security agencies with the resources and the powers they need to protect our country and keep us all safe." But added: "We will also ensure that such powers do not weaken our individual rights or civil liberties". The Liberal Democrats have vowed to "oppose Conservative attempts to undermine encryption."

But with a large Conservative majority inevitable, according to polls, ministers will be confident of winning parliamentary support for the plan. Only a rebellion led by Davis-esque liberals is likely to stop them.

George Eaton is political editor of the New Statesman.

0800 7318496