Mr.
Swire: Would the Minister tell the Committee, for
interest, the geographical spread of those
prosecutions?
Mr.
McFadden: I do not have that information, but I shall look
into the matter to see whether I can enlighten the hon. Gentleman later
in the Committee’s deliberations.
Clause 12
remedies the situation by enabling HMRC to use the investigation powers
available to it under part II of the Police and Criminal Evidence Act
1984, as it can with other HMRC responsibilities. Those powers would
enable HMRC to require the production of, or to search premises for,
documents of substantial evidential value to an investigation. I
emphasise that those powers will be granted to HMRC only if the courts
agree that documents of substantial evidential value are likely to be
obtained and that such an order is necessary and proportionate in the
circumstances.
The hon.
Member for Huntingdon asked whether the powers will be usable only for
offences triable by indictment. I am happy to confirm that that is
correct. As I said earlier, clause 11 relates to clause 12, and vice
versa. The investigative powers in clause 12 could not be used if the
national minimum wage offences were triable only as summary offences,
as the Police and Criminal Evidence Act powers are available only for
indictable offences. The powers in clause 12 would enable prosecutions
for the most serious offences in the 1998
Act.
Mr.
Djanogly: Is the Minister therefore convinced that the
measure will not encourage more indictable offences, because people
will want to use the new investigatory
powers?
Mr.
McFadden: The measure gives HMRC the power in
circumstances in which, at the moment, they are frustrated, because
they have to rely on witnesses who are reluctant to come forward.
Obviously, the powers will be available only for indictable
offences—I have made no secret of that and have said it several
times. To some extent clauses 11 and 12 go together. Clause 12 will
enable prosecutions for the more serious offences under the National
Minimum Wage Act 1998, such as refusing or wilfully neglecting to pay
the national minimum wage, without having to rely on vulnerable and
reluctant witnesses.
The clauses
that we are discussing are all about looking at minimum wage
enforcement and asking, “Have we got the balance right?”
Our view is that the system needs strengthening. I stress again what I
told the hon. Member for Northampton, South: I believe that most
employers are decent and that they want to abide by their obligations,
but I also agree with the CBI that a strong enforcement system is in
the interests of both good business and vulnerable workers. When
developing the proposals in the Bill, our view was that, although the
minimum wage has been a great success,
the time is right to toughen up the enforcement regime. Clauses 10, 11
and 12 do that. I therefore do not agree with the
amendment. Mr.
Djanogly: Let me first thank the Minister for his
comprehensive response to my points. We are moving from a lax
system—everyone agrees on that—that does not work
especially well, to a tougher regime. No one has a problem with moving
to a tougher or better regime, but the question is whether we have
retained proportionality, because of the level to which we are
increasing the powers. I have voiced the Opposition’s doubts on
that. It
could be that because the powers of investigation in the clause are
triggered only by an indictable offence, we move from a lax regime that
brings no prosecutions, to an extremely harsh regime, rather than to a
system that brings more prosecutions for non-indictable offences, say.
The enforcement authorities would have to go for an indictable offence
to get the investigatory powers, and I can understand why businesses
are concerned that we are going from one end of the spectrum to the
other. That
is as far as I wish to take the matter at this stage, but on the basis
that we are going to think further about the measure, I beg to ask
leave to withdraw the amendment.
Amendment,
by leave,
withdrawn. Question
proposed, That the clause stand part of the
Bill.
Lorely
Burt: I did not take part in the last discussion but I
listened carefully to all the points that were made. The Liberal
Democrats are minded to support the Government on the clause. It is
important to give HMRC the teeth to complete prosecutions when
appropriate. At the same time, we understand that HMRC might become
over zealous. However, given its record, I would suggest that that is
not likely. We are therefore happy to support the
Government.
Mr.
Binley: I can understand what the Minister has said on the
clause, but to help with the policing of this measure and the minimum
wage, the understanding of business is an important part of the process
and allows the Inland Revenue and other bodies to do their job
correctly. I would want the Inland Revenue to take that into account in
its codes of practice, because the last thing we want—I am sure
that the Minister would agree—is an over-zealous approach to the
issue, which would do harm to the general involvement of business. We
do not want business becoming protective in this respect. I simply ask
the Minister to seek an understanding of that by the powers that be,
who are given increased powers by the
clause. 5.15
pm
Mr.
McFadden: Part of the reason for the measures is the
criticism that the system is not zealous enough. We are told to be more
zealous but asked not to be too zealous. Our overall judgment is that
the system needs strengthening. HMRC has done a good job in recovering
arrears for workers—it recovers £3 million to £4
million a year—and we should not lose sight of that in a
discussion on strengthening the system.
However, we
would not be introducing the measures if we thought that the current
system was perfect. We do want to strengthen it. I am sure that HMRC
will have heard what the hon. Gentleman said about taking care in
applying the proposals. I repeat what I said: in future, the vast
majority of cases of non-payment will be dealt with by a civil process
and the application of the new penalty procedure. I do not believe that
that will involve any more than a small minority of
cases. I
also think that signals from Parliament are important, and the signal
that we are sending by legislating along these lines is that this is
not a voluntary option but the law of the land. We are strengthening
the penalty regime, and it will be possible to take the worst and most
persistent offenders not just to the magistrates court but to the Crown
court, where the potential fine is
unlimited. Question
put and agreed to.
Clause 12
ordered to stand part of the Bill.
Clause
13Cadet
Force Adult
Volunteers Question
proposed, That the clause stand part of the
Bill.
Mr.
McFadden: We take a slightly different direction in this
clause, in the sense that its purpose is the avoidance of doubt. It
clarifies a question about entitlement that was posed to
us. The
combined cadet force—the Sea Cadet Corps, the Army Cadet Force
and the Air Training Corps—are voluntary, community-based
organisations. I am sure that we are all familiar with them and the
valuable and important work that they do throughout the country. They
currently engage about 130,000 young people in a range of challenging
and positive activities, using military themes based on the culture and
ethos of the armed forces. Cadet force adult volunteers, as used in the
Bill, is the generic term adopted by the Ministry of Defence to refer
to any adult who volunteers to assist alongside military personnel in
the delivery of the MOD-sponsored cadet force programme. There are
currently 26,000 such
volunteers. Clause
13 makes it clear that those adult volunteers do not qualify for the
minimum wage. It does not affect those who perform work for the cadet
forces in the course of Crown employment, nor does it affect any
entitlement that cadet force adult volunteers may have to the minimum
wage outside their activities as a cadet force adult
volunteer. The
volunteers have a long tradition of offering their time and effort for
free. However, along with the high level of responsibility that they
take on in their quasi-military role, there are features of being a
cadet force adult volunteer that might lead to their being deemed
workers, and therefore deemed as coming under the remit of the minimum
wage. For example, some of them undergo special security clearance,
which includes signing the Official Secrets Act; some are trained to
allow safe access to Ministry of Defence facilities and equipment,
including firearms, often to the same level as members of the armed
forces; and some sign personal declarations or agreements to undertake
certain standards of behaviour on joining that could be misinterpreted
as a form of
employment contract. Although there is no legal entitlement to
remuneration, cadet force adult volunteers may be remunerated for
attendance at weekend training and summer
camps. Those
features are unique to the cadet forces. They stem from their alignment
with the armed forces and enable their activities to take place in a
military environment and to integrate with the military chain of
command. Under the next clause, we will discuss the Bill as it affects
volunteering more widely, but for the purposes of this clause, we
wanted to make it clear, lest there was any doubt, that cadet force
adult volunteers are doing a very valuable job, but it is a voluntary
job that does not bring them into entitlement to the minimum
wage. Mr.
Stephen Crabb (Preseli Pembrokeshire) (Con): Has the
Minister or his Department received any representations from
individuals who serve as cadet force adult volunteers saying that they
should be entitled to the minimum
wage?
Mr.
McFadden: We consulted on that. I do not think that there
were a huge number of representations, but the MOD and the Government
more widely were keen to clarify the situation. The exemption will
allow the volunteers to continue to operate as successfully as they do
now, while removing any doubt that exists about the minimum wage. It
will enable them to continue to deliver what are very valuable and
often exciting programmes of challenging developmental activity to
young people throughout the
country.
Mr.
Djanogly: We support the clause. We are aware of the grave
concerns that these voluntary and very valuable cadet organisations
have and their wish for the clause to be included. We recognise the
huge benefit that these voluntary leaders provide and the contribution
that they make to their communities and young people in this
country. Question
put and agreed
to. Clause
13 ordered to stand part of the
Bill.
Clause
14Voluntary
workers Question
proposed, That the clause stand part of the
Bill.
Mr.
McFadden: This clause, too, deals with voluntary workers,
but in a much wider sense. It broadens the scope of expenses that can
be reimbursed to voluntary workers without triggering eligibility for
the minimum wage. Again, I am sure that members of the Committee will
be appreciative of the hugely valuable work done by voluntary workers
in all our constituencies. The clause will mean that as well as being
able to reimburse expenses incurred in the performance of duties, which
has been the situation until now, organisations will be able to
reimburse expenses that were incurred to enable the voluntary worker to
perform the duties. That will enable expenses such as those for child
care and travel to and from voluntary work to be reimbursed should an
organisation wish to do that.
We received
many representations about the issue from voluntary organisations
throughout the country. We do not seek to place barriers in the way of
voluntary work. In fact, we want to encourage, foster and promote it,
and the clause helps us with that. Voluntary workers are a very special
class of workers, both in the legal sense and in a more general sense.
They can be employed only by charities, voluntary organisations,
associated fundraising bodies or statutory bodies. The exemption for
voluntary workers means that they can continue to give their time for
free without being eligible for the minimum wage. In turn, it also
means that voluntary organisations can continue to benefit from their
dedication and pay them appropriate expenses, enabling them to carry
out the voluntary
work. We
are determined to ensure that voluntary workers are not out of pocket
as a result of their good work, but at the same time it is important to
ensure that low-paid jobs beneath the minimum wage do not emerge in the
voluntary sector under cover of voluntary work. However, neither can we
allow spurious expenses to be claimed as benefits. The clause strikes
the right balance and minimises those
risks.
Mr.
Swire: On a drafting point, or perhaps something more than
that, proposed new subsection (1A)(a) refers clearly to
expenses “incurred
in order to enable the worker to perform his
duties”, but
proposed new subsection (1A)(c) refers to those that “are not
accommodation expenses”. That suggests that at no stage would a
voluntary worker need overnight accommodation. I do not understand why
one contradicts the
other.
Mr.
McFadden: The hon. Gentleman is right that accommodation
expenses are not covered by the clause, as is set out quite
clearly.
Mr.
Djanogly: Is it not the case that if the accommodation is
inside the building, the rules are different? I thought that there was
a difference between outside and internal
accommodation.
Mr.
McFadden: That is not quite the difference. The difference
is that section 44 of the National Minimum Wage Act 1998 allows a
voluntary organisation to provide accommodation by paying rent directly
to a landlord, but it does not pay the rental costs to the voluntary
worker.
Reimbursed
expenses must have been incurred, or reasonably estimated to have been
incurred, so reimbursement is always for an outlay. The expenses must
legitimately enable voluntary workers to perform their duties, and they
must not be reimbursed for expenses unrelated to their work.
Furthermore, those expenses must be reasonably incurred so that the
voluntary worker does not benefit from claiming excessive expenses. We
will issue guidance to voluntary organisations and volunteers
accompanying the changes in the
Bill. We
received a significant number of representations on that issue and the
clause was amended in the other place along the lines in front of us. I
believe that that gives significant reassurance to voluntary
organisations and workers that they can receive the appropriate
expenses to enable them to carry out their valuable work without
getting tied up with the minimum wage.
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