This article was written by Daniel Boffey, for The Observer on Saturday 22nd November 2014 20.28 UTC
The coalition’s record on low pay has come under attack as new figures revealed that not a single company has been prosecuted in the past year for paying less than the national minimum wage. Despite ministers’ claims that the government is getting tough on under-payers, the last successful criminal prosecution was in February 2013.
That was one of only two prosecutions during the government’s entire term of office to date, according to figures given to parliament. The cases involved the imposition of fines to the value of £3,696 on an opticians in Manchester and £1,000 on a security company in London.
The Annual Survey of Hours and Earnings for the Office for National Statistics recently found that about 287,000 workers were paid at less than the minimum wage in 2012, although the TUC puts the figure closer to 350,000.
Chris Mould, chairman of the Trussell Trust, the charity that runs 400 emergency food banks, said that the increasing numbers of people attending its facilities was clear evidence that ministers needed to do more to protect people who were living “on the edge”.
The number of people helped by Trussell Trust food banks in the first half of the 2014-15 financial year is 38% higher than in the same period last year. The trust reported this weekend that 492,641 people were given three days’ food and support, including 176,565 children, between April and September. That compared with 355,982 during the same period in the previous year.
Problems with the social security system continued to be the biggest overall trigger for food bank use (45%), of which “benefit delays” accounted for 30% of referrals, and “benefit changes” 15%, according to the charity.
However, an emerging trend, according to the charity, is that 22% of those helped were referred because of “low income” compared with 16% of referrals in the same period last year – meaning 51,000 more people were referred to a food bank due to low income.
“It is up to the democratically elected parliament to make some decisions and one route is to make it less easy for people to be exploited at the bottom of the labour market. We see people forced to cycle in and out of poverty and they are so close to the edge that it is easy for them to slip under.”
HM Revenue and Customs (HMRC) said that it prosecutes the most serious breaches of the national minimum wage “and where there is clear evidence to do so”. A spokesman said the average cost of a successful prosecution was around £50,000 and that HMRC believed it was preferable to recoup wages for workers through civil penalty powers. In 2013-14, HMRC conducted 1,455 investigations and issued 652 financial penalties.
But the shadow business secretary, Chuka Umunna MP, said that the coalition was not taking the action needed to enforce the minimum wage. Failing to pay the minimum wage was made a criminal offence in 2007. Under Labour, seven organisations were prosecuted, including Torbay council.
“The national minimum wage is one of Labour’s proudest achievements in government and it has made a huge contribution to making work pay, boosting living standards and tackling in-work poverty.
“It is clear that the Tory-led government is not going to take the action needed to properly enforce the minimum wage – so that is why Labour is clear that we need to see higher penalties for rogue companies who don’t pay employees the minimum wage and far more effective enforcement, including by giving local authorities new powers.“
An HMRC spokesman said that the number of staff enforcing the minimum wage now stood at 194 – 40 more than in 2009-10. He said:
“Paying less than the minimum wage is illegal and, as HMRC’s record shows, if employers break the law they will face tough consequences. We conducted 1,455 investigations in 2013-14, securing over £4.6m in wage arrears for over 22,000 workers.
“The vast majority of national minimum wage cases are dealt with using civil penalty powers, as this route is usually the most appropriate, ensures workers receive the wages they’re due, and provides the most cost-effective resolution for taxpayers. However, in more severe cases, HMRC will take criminal action and seek a prosecution.”
Source – Welfare Weekly, 22 Nov 2014