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Hand car washes Contents

3Labour exploitation

48.In this chapter we examine the extent of labour exploitation in hand car washes and the role of Government agencies such as the National Minimum Wage unit, Gangmasters and Labour Abuse Authority (GLAA) and Health and Safety Executive in enforcing labour market rules. The chapter will conclude with a consideration of the Director of Labour Market Enforcement’s proposal for a pilot licensing scheme to be introduced for hand car washes.

Sustainable Employment

49.Ending exploitation in the UK labour market is necessary for the UK to meet the UN Sustainable Development Goals. UN Sustainable Development Goal 8 is to ‘Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.’ Target 8.7 commits Governments to:

Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking …61

Extent of labour exploitation

50.Hand car washes compete predominantly on costs and convenience of access and we heard that this has led to widespread practices of undercutting labour standards.62 We were told that a ‘spectrum of exploitation’ is going on at hand car washes on Britain’s streets from non-payment of the minimum wage or holiday pay to more serious cases of debt bondage and potential trafficking.63

51.Dr Jardine from the Rights Lab in University of Nottingham pointed out that while ‘not all exploitative conduct will meet the threshold for human trafficking and modern slavery’, there was some evidence of extreme forms of labour exploitation taking place in hand car washes including trafficking within the UK:

Though some car wash workers willingly accept to work under such exploitative and informal conditions, there are others who are subject to more extreme forms of exploitation that prevents them from exercising free will to leave. There have been reports of passports and identification documents being withheld, threats of denouncement to immigration enforcement, infliction of physical abuse or threat of, and debt bondage to control workers.64

52.The Modern Slavery Helpline, established by the NGO Unseen in 2016, reports in its Annual Assessment 2017 that it recorded 194 cases concerning treatment of workers at car washes, representing 27% of the total cases of labour exploitation.65

53.Dr Ella Cockbain, Lecturer in Security and Crime Science at University College London (UCL), suggested that there is a clear link to human trafficking:

Our research has identified hand car washes as a fairly common context for trafficking into and within the UK for labour exploitation. Of the 450 victims whose detailed case files we examined (Cockbain & Bowers, 2018), 9% (n=40) were exploited in hand car washes. Most of these victims were adult males (n=36). The 40 victims exploited in hand car washes came from various Eastern European countries: Bulgaria, Czech Republic, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia. They were fairly typical of labour trafficking victims in the UK in terms of their countries of origin and gender profile.66

54.Dr Cockbain’s evidence cited explicit reports of dire living and working circumstances from the case files that she had examined during her research.67 Examples included victims:

Labour Market Enforcement

55.The Office of the Director of Labour Market Enforcement was established by the Immigration Act 2016 to coordinate the work of the three main public bodies charged with enforcing labour market rules: the GLAA, Employment Agency Standards (EAS) and HMRC’s National Minimum Wage (NMW) enforcement team.69 Government expenditure on the three labour market enforcement bodies in 2017/18 was just over £33 million, up from around £25 million a year earlier.70

56.The three bodies have a variety of powers, ranging from the HMRC National Minimum Wage team’s ability to levy financial penalties (fines), to regulatory disclosure (so-called naming and shaming), criminal prosecution and prohibiting employment agencies and labour providers from operating.71 Employment law violations investigated by the three enforcement bodies can be pursued as civil actions, criminal prosecutions or both. The Immigration Act 2016 also introduced a new suite of Labour Market Enforcement Undertakings and Orders (LMEU/O) to increase the enforcement tools available to the three bodies, with breaches punishable by a custodial sentence of up to two years. The National Minimum Wage unit and the GLAA have a direct role in ensuring that businesses like car washes are compliant with labour market rules.

National minimum wage

57.Research undertaken by the Downstream Fuel Association has estimated the break-even costs for an outside wash and an “in and out” valet. It says an outside wash takes about 18 minutes for an average-sized car. Paying the national minimum or living wage with statutory holidays and pension contribution, and adding in the price of the materials used, rent/rates etc, comes out at a net cost of £5.73, giving a minimum breakeven price point, including VAT, of £6.88.72 For an ‘in and out’ valet, the Downstream Fuel Association say it would take 39 minutes at a net cost of £9.25, giving a breakeven price of £11.10 inclusive of VAT. If a car wash is offering services below these rates, it may indicate that the national minimum wage is not being paid to workers.73

58.Professor Clark’s research studying hand car washes in and around Nottingham found that the national minimum wage and the living wage were not enforced, neither were holiday pay arrangements and other employment protections.74 He told us:

When we did our research we calculated that what academics call “wage theft”—the underpayment in relation to the national minimum wage at the time, which was £6.50 an hour—was somewhere in the region of 15%, which accords with the literature in the United States, where hand car washes have been studied extensively in New York City or parts of California.75

59.The Department for Business, Energy and Industrial Strategy (BEIS) is responsible for NMW policy, including the policy on compliance and enforcement. HM Revenue and Customs (HMRC) enforce the NMW Act on behalf of BEIS.76 The Government currently uses the civil powers contained in the 1998 Act to enforce the NMW in most cases. HMRC take civil action to recover wage arrears for workers by issuing a Notice of Underpayment to the employer. A civil penalty is also imposed on employers for NMW/NLW breaches.

60.There have only been 14 minimum wage prosecutions since the National Minimum Wage Act 1998 was passed.77 All of these have occurred since 2007. In 2016/17, four employers were prosecuted for non-compliance with NMW/NLW regulations. So far in 2017/18 one employer has been prosecuted.78 BEIS says that prosecution is appropriate in the case of the small minority of employers that are persistently non-compliant or where there is a broader public interest in prosecution.79 HMRC will investigate the most serious cases and those NMW offences which form part of a pattern of criminality; including for example, a suspected tax fraud, or cross-government offences such as employing illegal workers. HMRC argues that:

There is a balance to be struck between effectiveness and value for money in enforcement. HMRC will focus criminal investigation on cases where prosecution will do most to deter employers from deliberately flouting the law.80

61.Since 2013 the Government has published an annual list naming and shaming employers that have been found to be not paying the minimum wage. Over 1,500 employers have been named and identified as owing over £8 million in back pay to 58,000 workers, and fined approximately £5 million. However, there are questions over how much of this owed pay has actually been recovered for workers.81

62.In 2018 the list has been published quarterly.82 At the time of writing, 420 employers have been named during 2018 for underpaying more than 31,400 minimum wage workers by £2.5 million.83 As well as attempting to recover back pay for workers the Government has fined the employers a total of £3.3 million in penalties for breaking national minimum wage laws.84 The back pay identified by HMRC in July was for more workers than in any previous single naming list and generated record fines of £1.97m.85 The most prolific offending sectors in 2018’s round were retailers, hospitality businesses and hairdressers. However, 22 car washes were also named, including some who operate on Tesco car parks:

Table 1: Car washes named by the Government as failing to pay National Minimum Wage

Car wash

Location

Total arrears (amount underpaid)

Number of workers underpaid

Average arrears per worker

Witham Hand Car Wash

Braintree CM8

£10,051.99

6

£1,675.33

Craftsman Hand Car Wash and Valeting

Coventry CV6

£5,472.94

4

£1,368.24

Soap Suds Car Wash

Stoke-on-Trent ST1

£5,298.58

5

£1,059.72

Smart Hand Car Wash Plymouth Ltd

Plymouth PL3

£4,817.09

2

£2,408.55

Jeta Car Wash Ltd, trading as Queensway Car Wash

Arun PO21

£4,584.93

3

£1,528.31

Plymouth Car Wash Ltd

Plymouth PL4

£4,122.92

3

£1,374.31

N Pashkaj Car Wash Ltd

Southwark SE1

£4,023.68

2

£2,011.84

Handy Andy Car Wash Ponteland Ltd, trading as Handy Andy Car Wash

Northumberland NE20

£3,932.55

3

£1,310.85

Waves Hand Car Wash

Kensington & Chelsea W14

£3,758.56

13

£289.12

Nick’s 76 Services Ltd, trading as Nick’s Car Wash

Conwy LL22

£3,601.20

3

£1,200.40

A2 Car Wash Limited

Southwark SE1

£3,553.65

3

£1,184.55

Tesco Hand Car Wash

Calderdale HX1

£2,731.24

4

£682.81

Brent Park Hand Car Wash

Brent NW10

£2,463.23

5

£492.65

Whistle Super Hand Car Wash Ltd

Plymouth PL5

£1,706.26

2

£853.13

Fast Car wash Ltd, trading as Waves Hand Car Wash

Basildon SS15

£1,444.16

3

£481.39

ADI Hand Car Wash Ltd

Epping Forest CM5

£1,304.77

6

£217.46

Lodge Lane Car Wash Ltd

Liverpool L8

£1,068

4

£267

Olympic Hand Car Wash

Newham E15

£475.50

2

£237.75

Neath Road Car Sales & Car Wash Ltd

Wiltshire SA1

£348.69

5

£69.74

Hand Car Wash

Horsham RH12

£272.70

3

£90.90

Tesco Hand Car Wash

Barnet NW2

£197.62

4

£49.41

Valley Road Hand Car Wash

Plymouth PL7

£153.30

1

£153.30

Source: Gov.uk quarterly press releases for March 2018 and June 201886

63.From 1 April 2016, the Government increased the penalties imposed on employers that underpay their workers in breach of the minimum wage legislation from 100% to 200% of arrears owed to workers, capped at a maximum of £20,000 per worker. The penalty is reduced by half if the unpaid wages and the penalty are paid within 14 days. An increase in the penalties for underpayment of the minimum wage, was intended to strengthen enforcement.

64.Researchers from Middlesex University working on the Unpaid Britain project have argued that consequences for non-payment of holiday pay and minimum wage are so weak that they do not present a sufficient deterrent to employers with many continuing to reoffend.87 The Director of Labour Market Enforcement, Sir David Metcalf, has recently recommended that the NMW penalty multiplier be reviewed again and increased to a level that would ensure that there is a greater incentive to comply with the legislation.88 He also recommended that revenue from higher penalties should be recycled into the enforcement system as additional resource.89

65.HMRC says that it is increasing its operational response to non-compliance.90 Following the Autumn Statement 2015, it received an additional £800 million investment to crackdown on tax avoidance, aggressive tax planning and evasion. In the Autumn Budget 2017 the Government announced that it would be investing ‘in the transformation of HMRC’s operational approach to tackling the hidden economy.’91

66.Brian Madderson from the PRA told us that there was circumstantial evidence of widespread avoidance or evasion of tax liability by hand car wash operators not accounting for PAYE, National Insurance, Business Rates and Corporation Tax liabilities:

Our estimates, depending upon the number, vary from £500 million to £1 billion a year of tax evasion by the hand car washes, assuming they do not pay any VAT, any corporation tax, any national insurance, any taxation at all. It is a very significant sum. […] One of the things we would like HMRC to fund is a proper study to show us, along with the research that has already been undertaken, how many hand car washes there are and where they are. That would help local authorities and everyone else who is concerned with human trafficking, tax evasion and trade effluent disposal get a better understanding of how to take some action going forward.92

67.However, HMRC disputed those estimates:

HMRC estimates that the hidden economy tax gap was £3.2 billion in 2016–17, and for evasion, it was £5.3bn. Although we do not measure those tax gaps by sector, the numbers quoted in evidence to the committee look to be too high to be credible. HMRC wouldn’t expect tax losses from just the hand car wash sector to drive six to 12 percent of the relevant tax gaps (£500m - £1bn as a percentage of £8.5bn).93

Gangmasters and Labour Abuse Authority

68.Where more serious cases of organised labour exploitation exist, such as modern slavery, it is now the responsibility of the GLAA to coordinate enforcement action. The GLAA was first established as the Gangmasters Licensing Authority (GLA) to regulate and licence the agencies supplying workers to the agricultural, horticultural and shellfish industries following the cockle pickers tragedy at Morecombe Bay. The Immigration Act 2016 broadened the GLAA’s remit and gave it stronger powers to tackle labour exploitation across the economy, introducing the capacity to search and seize evidence and investigate modern slavery where it relates to labour abuse and other offences.94

Car wash allegations recorded by the GLAA - 12 months to 1 May 2018

69.The GLAA told us that it had received approximately 297 referrals from the Modern Slavery Helpline (MSHL) during the year to 1st May 2018, and that of those 80 (27%) were linked to the car wash sector.95 In total it has received 178 referrals from all sources relating to the car wash sector in the year up to 1st May 2018.96 A significant number of referrals come from members of the public (directly or more often through MSHL or Crimestoppers) who may witness what they consider indicators of modern slavery.97

70.The GLAA cautioned that the public’s awareness of such issues has been raised by a number of articles in the media and that the high number of referrals relating to hand car washes may be due to the visibility of the sector:

The car wash sector is widespread and visible and therefore potential issues are more likely to be spotted and reported by the public than, for example, exploitation of workers employed in the kitchen of a takeaway.98

71.The GLAA provided the following table breaking down the various reports it had received on hand car washes in the year to 1st May 2018.99

Allegation

Detail

%*

No Personal Protective Equipment

Mainly from the public reporting workers wearing jeans and t-shirts (particularly in cold weather). No high-vis, boots, gloves or face masks also mentioned.

26%

Vague information

Mainly from the public reporting workers who appear unhappy, dejected, not talking to one another or engaging with customers.

23%

National Minimum Wage

Information from the public stating workers not being paid NMW, as, for example, there are 4–5 washing one car for £3.

Also, some reports from workers and partner agencies with regards to what they are paid.

13%

Withheld Wages

Not being paid on time or receiving holiday pay etc.

6%

PAYE and Tax

4%

Physical & mental mistreatment

Includes shouting at workers, threats to family.

3%

Sleeping on site

Includes duvets spotted in offices.

3%

Substandard accommodation

Includes possible overcrowded houses

2%

Excessive working hours

Includes allegations of working 12 hour shifts 7 days a week, little or no breaks

2%

No contract

1%

Environmental concerns

Public reporting water not going down the drains and soap being poured into the street.

1%

No breaks

1%

Withheld ID Docs

1%

Control of movement

1%

Debt bondage

1%

No payslips

1%

Other

11%

72.The GLAA says that the information received via referrals is triaged to identify cases of greatest risk, and relevance to the GLAA’s remit. It says that:

… often these referrals can be rather vague and relate to workers appearing unhappy and/or not engaging in conversation with customers. Therefore, to date 62% of car wash referrals (from all sources) are recorded as “intelligence only/no further action”.100

73.Approximately 20% of referrals received, progressed to investigation, or were linked to an existing investigation. Information received by the GLAA about potential exploitation at hand car washes has led to 34 GLAA led investigations. 25 investigations into car washes commenced and concluded between 01 April 2017–14 May 2018. Ongoing investigations where serious offences have been uncovered have resulted in submission of three cases to the CPS to consider prosecution. In another case jointly investigated with Derbyshire police, 5 individuals are awaiting court hearings.101

74.The GLAA provided us with the following table detailing the reasons its investigations were closed:

Reason investigation was closed:

Number of investigations:

No offences disclosed

10

Non GLA Offences Referred to other agency for Investigation

9

Intelligence only

2

No action–Insufficient evidence

1

No GLA value

1

Tasking not progressed–Closed No action

1

Not Progressed Insufficient Resources

1

75.The completed investigations took 1384 working days to reach appropriate investigation outcomes (an average of 55.36 days per completed investigation). These investigations represent a resource cost of £286,685 (£11,467/investigation).102 Because criminal investigations are resource intensive and serious allegations are increasing, the GLAA says that its strategy on hand car washes is to focus on a:

… preventative, and education campaign, to segment the market, driving up compliance where other levers could be employed effectively to create a pressure for compliance, whilst enabling operational resources to be available for the high priority allegations of exploitation.103

76.The GLAA has made the strategic decision to target major supermarkets in this push to drive up compliance. It sought, and obtained, data on locations and activity of hand car washes on the forecourts of supermarkets to engage with the companies to develop a prevention and education approach:

This has led to the development of an approach with the supermarkets to create a code of practice, coupled with a regime to test compliance, with the potential for sanctions if a car wash does not meet the standards of the code.104

77.On 22 October, the Responsible Car Wash Scheme was launched. This was developed by the Downstream Fuel Association in conjunction with the GLAA, five major supermarkets, the police, the Health and Safety Executive, Environment Agency, HMRC, anti-slavery charity Unseen, and national car wash operator Waves. The scheme will provide operators with information and guidance on operating legally. It will allow members to display a Responsible Car Wash Operator logo which will enable consumers to choose a fully compliant operator, that has been through the accreditation process and verified by audits and spot-checks.105

Combatting modern slavery

78.In 2015, the Government introduced the Modern Slavery Act to tackle slavery, servitude, forced and compulsory labour and human trafficking. The Act gives law enforcement agencies the tools to deal with offenders and provides enhanced protection for victims.106 In 2017, Devon and Cornwall Police secured slavery and trafficking risk orders under the Act in respect of two defendants who were exploiting workers at a hand car wash in Exeter.107 The Government’s submission says the Act has increased transparency in supply chains.108 It says that it has made the UK the first country to require businesses to report on the steps they have taken to tackle modern slavery.109 Under the provisions in the Act, all large businesses with a turnover of £36m or more are required to publish an annual transparency statement detailing the action they are taking to prevent modern slavery in their business and supply chains.110

79.Concerns have been raised recently, by the Public Accounts Committee, which found that the Government does not monitor whether company statements made under the Modern Slavery Act comply with the legislation and has never used its powers to penalise companies that do not comply.111 Dr Jardine from the Rights Lab at Nottingham University also told us that the Modern Slavery Act had neglected the role of smaller businesses, such as HCWs, in the regulation of slavery by emphasising the role of large corporates in combatting slavery in their business operations and supply chains.112 The Act legally requires businesses with an annual turnover of £36 million or more to publish a slavery and human trafficking statement each year. The slavery and human trafficking statement should set out what steps organisations have taken to ensure modern slavery is not taking place in their business or supply chains.113 However, the Act does not cover smaller-scale operations which can also be complicit in related human rights abuses, and violate labour and health and safety regulations. Furthermore, HCWs are not picked up by corporate risk management systems of companies that are in scope of the MSA as the spend on HCW is a relatively minor expense and usually no formal relationships are established with the service providers of HCWs.114

80.A further shortcoming in the Act, according to Dr Jardine, has been the lack of attention to local implementation and enforcement of anti-slavery policy. She argued that although multi-agency operations are now being used in many areas to target potential sites of exploitation, these tactics have developed and spread organically over time, rather than through direction as part of a national anti-slavery strategy.115 Research conducted with local anti-slavery partnerships also shows that local multi-agency work also frequently lacks resources and co-ordination, according to Dr Jardine.116

81.The Government acknowledges that hand car wash businesses are unlikely to reach the £36m turnover threshold. It points, however, to the success of the Act in effecting change with hand car washes that operate on the premises of large supermarkets:

As a result of the legislation and work by the GLAA, major supermarkets, such as Tesco are now reporting on the risk of modern slavery in hand car washes and other franchise services operating on their premises as part of their transparency statements.117

Health and Safety

82.During the inquiry a number of shocking cases of health and safety violations were presented, including the death of worker housed in unsafe accommodation, workers who contracted trench foot from wet working conditions and workers who had suffered chemical burns from prolonged exposure to water and cleaning agents.118 Researchers from UCL set out that:

There was evidence in several files of specific injuries directly related to exploitation in hand car washes, including back injuries, cuts, an abscess and–above all–chemical burns on arms, legs and feet from the chemicals used at work. One victim described suffering such bad chemical burns from the hydrochloric acid based wheel cleaners that ‘half the skin’ on his feet was ‘peeling off’ them.119

83.Enforcement of the Health and Safety at Work Act is shared between the Health and Safety Executive (HSE) and local authorities.120 The HSE says that the growth of hand car washing industry, and the number of requests for multi-agency enforcement, has highlighted health and safety concerns. These range from unsafe use of electricity, storage and use of chemicals, inadequate personal protective equipment and in some cases, the provision of sub-standard accommodation connected to the workplace. The majority of multi-agency visits are referred to HSE by police forces and are usually part of operations to disrupt organised crime.

84.Over the last three years the HSE has carried out an increasing number of inspections at hand car washes.121 The HSE provided us with the table below showing that the number of visits has risen from 10 in 2015–16 to 100 last year:

Year

Number of visits

Material breach/poor control of risks

2015–16

10

5

2016–17

42

23

2017–18

100

75

85.In the last 3 years the HSE has taken enforcement action against 103 hand car washes. It has issued Prohibition Notices to 45 businesses which required an immediate stop to work activity and Improvement Notices to 27 businesses, stating improvements to be made within a specified time period. A further 31 businesses were served with more minor enforcement action. However, the HSE has not prosecuted any car wash through the courts.122

Strengthening enforcement & ensuring compliance

86.There was a consensus amongst witnesses that labour market enforcement needed to be strengthened. The Government and GLAA have stepped up efforts in the last year, but the results of this may take time to be seen. The lack of enforcement in this area has led to third sector organisations such as the Church of England and Unseen taking action such as setting up the Safe Car Wash app and the Modern Slavery Helpline respectively.

87.Dr Jardine from the University of Nottingham argued that there is a need for a system to register and licence HCWs to ensure compliance:

The enforcement of regulations has … been inadequate as authorities struggle to gain traction on this new phenomenon. Ensuring that regulations are enforced also requires collaboration between agencies such as HMRC and law enforcement bodies, and the involvement of Local Authority regulatory services.123

Proposed Licensing system for hand car washes

88.In May 2018, the newly established Director of Labour Market Enforcement Sir David Metcalf published his office’s first annual strategy on labour market enforcement calling for a ‘significant increase’ in fines for non-compliance, greater use of prosecutions, and a pilot licensing scheme for hand car washes to be introduced.124 The Director argued that the current level of fines for non-payment of the minimum wage do not provide a strong enough incentive to comply - especially given the low probability of inspection and detection.125 He points out that for non-compliance with NMW, beyond the repayment of wage arrears to the worker, employers only face a penalty of up to 200 per cent of the arrears.126 In 2016/17, the average wage arrears were £110 per worker, which implies an employer penalty of just £220 per worker.127 This may be further reduced if the employer reimburses the employee speedily. The Director said that there may be a case for using fines linked to turnover instead. His report also argued that there has been insufficient use of prosecutions with only 14 minimum wage prosecutions since 1999.128

89.The Director’s report pointed out that although car washes have a number of regulations to which they should be adhering, the sector currently has no compulsory registration or licensing, although there are voluntary accreditation schemes such as Washmark.129 To gain Washmark accreditation, an operator must comply with standards for all aspects of the car wash operation from insurance and planning consents to chemical handling and management of wash water. However, the Director argued that while the WashMark was a model of good practice, as a voluntary scheme it does not tackle the most serious offending.130

90.His report called for two pilot schemes to be run and evaluated to test the feasibility and impact of extending GLAA licensing (which currently covers the agricultural sector) to businesses in different sectors.131 These should be done on a geographically limited basis and cover:

91.These two sectors were targeted because of the evidence of non-compliance across multiple regulatory areas and because they both cross a spectrum from accidental contravention of regulations to organised crime and modern slavery.133 His report argued that licensing is potentially a way of simultaneously tackling several types of non-compliance, across multiple regulatory areas, from environmental standards to employment practices. It is also a way to deal with rogue employers, business owners and landlords in an effective manner.134

92.The pilot schemes would aim to test the feasibility of licensing hand car washes as a sector, resourcing requirements, best practice in processes and the impact of licensing on compliance. The Director’s report suggested that the GLAA work in close cooperation with local authorities, the Health and Safety Executive and the police to develop a licensing model that covers all areas.135 Alastair Chisholm suggested to the committee that the licensing process could be used to ensure that hand car washes had an adequate drainage plan in place and the trade effluent consent was in place before the licence was granted.136

93.Several witnesses agreed that licensing would be a useful way to ensure greater compliance.137 However, a number of concerns were raised in our evidence sessions around licensing. Brian Madderson from the Petrol Retailers Association argued that a form of licensing already existed in the environmental and Trade Effluent permits but that this was not being enforced by the Environment Agency or Water companies:

‘ … all hand car washes should have an environmental permit already if they if they are handling trade effluent. That environmental permit would not allow them to put their effluent into surface drains, as most of them do one way or another. That is already an example of where we have a regulation but it is not enforced. We also have the water authority. They too have permits, again probably not fully enforced … ‘138

94.The question was broached in our hearings, as to whether businesses that are currently non-compliant would be any more likely to comply and sign up to a licensing scheme. The need for inspectors to have expertise in multiple areas was also raised as a necessity.139 However, Tim Harrison from the office of the Director pointed out in evidence that a licensing regime would give the GLAA greater powers of inspection - which it currently holds for the other agricultural sectors it licenses.140 Currently the enforcement bodies need actionable evidence before they go in and investigate a hand car wash.141 The Director’s report also argues that licence revocation is a much swifter way of excluding a non-compliant firm from operating in the licensed sectors as prosecutions take significant amounts of time.142 The Government is considering Sir David’s recommendations and will publish a response to the strategy later this year.

95.It is important to note that not all hand car washes violate labour, employment, taxation, health and safety and environmental regulations. Nevertheless, there appears to be widespread and flagrant rule breaking taking place at hand car washes across the country. This is unacceptable.

96.When it comes to combatting labour exploitation, the failure of authorities to enforce the law appears to be a wider problem. We were astonished to discover that there have only been 14 minimum wage prosecutions since 1999. Prosecuting more employers for non-payment of the minimum wage would send a stronger signal that the Government is serious about enforcing labour market laws. HMRC should work with other Labour Market Enforcement agencies and consider using prosecution for non-payment of the minimum wage as a means to clamp down on premises where serious labour exploitation is suspected to be taking place.

97.We also encourage HMRC to explore potential tax evasion by hand car wash operators to establish the extent of material revenue leakage from the public purse from these operators and to develop strategies to recover tax due.

98.We are encouraged that the GLAA and Director of Labour Market Enforcement are stepping up their efforts to tackle labour exploitation at hand car washes. Ensuring that hand car washes operating on the car parks of major supermarkets are compliant is the first step. We welcome the Responsible Car Wash Scheme. The public must have confidence that hand car washes at major supermarkets operate within the law. The Government should ensure that large businesses hosting hand car washes include them in their Modern Slavery Act transparency statements.

99.To make enforcement easier, the Government should trial a licencing scheme for hand car washes that brings together all of the major compliance requirements, including on environmental pollution, into a single, more easily enforceable, legal requirement. The Government should also review whether the Modern Slavery Act 2015 could be updated to cover businesses as small as hand car washes.

61 https://sustainabledevelopment.un.org/sdg8

62 The Rights Lab, University of Nottingham (HCW0008)

63 Nottingham Trent University (HCW0005)

64 The Rights Lab, University of Nottingham (HCW0008)

65 Modern Slavery Helpline, Annual assessment 2017

66 Dr Ella Cockbain, UCL (HCW0007)

67 Dr Ella Cockbain, UCL (HCW0007)

68 Dr Ella Cockbain, UCL (HCW0007)

69 Office of Director of Labour Market Enforcement (HCW0017)

70 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

71 Director of Labour Market Enforcement, Annual report 2018/19

72 Downstream Fuel Association (HCW0014)

73 Downstream Fuel Association (HCW0014)

74 Nottingham Trent University (HCW0005)

75 Q2

76 Department for Business Energy and Industrial Strategy, National Minimum Wage Law Enforcement: Policy on HM Revenue & Customs enforcement, prosecutions and naming employers who break National Minimum Wage law (Nov 2017)

77 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

78 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

79 Department for Business Energy and Industrial Strategy, National Minimum Wage Law Enforcement: Policy on HM Revenue & Customs enforcement, prosecutions and naming employers who break National Minimum Wage law (Nov 2017)

80 Department for Business Energy and Industrial Strategy, National Minimum Wage Law Enforcement: Policy on HM Revenue & Customs enforcement, prosecutions and naming employers who break National Minimum Wage law (Nov 2017)

81 https://labourpainsblog.com/2018/02/04/honey-i-shrunk-the-nmw-arrears/

82 https://www.gov.uk/government/news/nearly-200-employers-named-and-shamed-for-underpaying-thousands-of-minimum-wage-workers; https://www.gov.uk/government/news/record-22400-minimum-wage-workers-to-receive-millions-in-backpay

83 Ibid.

84 https://www.gov.uk/government/news/nearly-200-employers-named-and-shamed-for-underpaying-thousands-of-minimum-wage-workers

85 https://www.gov.uk/government/news/record-22400-minimum-wage-workers-to-receive-millions-in-backpay

86 https://www.gov.uk/government/news/nearly-200-employers-named-and-shamed-for-underpaying-thousands-of-minimum-wage-workers and https://www.gov.uk/government/news/record-22400-minimum-wage-workers-to-receive-millions-in-backpay

87 Trust for London website, Employers withholding billions of pounds from workers in Britain

88 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

89 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

90 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

91 HM Government, Autumn Budget 2017: policy costings (November 2017)

92 Q85

93 Letter from HMRC to the Committee, July 2018 https://www.parliament.uk/documents/commons-committees/environmental-audit/correspondence/180705-HMRC-to-Chair-Hand-Car-Washes.pdf

94 http://www.gla.gov.uk/whats-new/press-release-archive/16516-powers-and-remit-to-change-at-gla/

95 Gangmasters and Labour Abuse Authority, (HCW0011)

96 Gangmasters and Labour Abuse Authority, (HCW0011)

97 Gangmasters and Labour Abuse Authority, (HCW0011)

98 Gangmasters and Labour Abuse Authority, (HCW0011)

99 Gangmasters and Labour Abuse Authority, (HCW0011)

100 Gangmasters and Labour Abuse Authority, (HCW0011)

101 Gangmasters and Labour Abuse Authority, (HCW0011)

102 Gangmasters and Labour Abuse Authority, (HCW0011)

103 Gangmasters and Labour Abuse Authority, (HCW0011)

104 Gangmasters and Labour Abuse Authority, (HCW0011)

105 Follow up letter from the Local Government Association to the committee (18 July 2018)

106 Defra (HCW0019)

107 Defra (HCW0019)

108 Defra (HCW0019)

109 Defra (HCW0019)

110 Defra (HCW0019)

111 Public Accounts Committee, Reducing Modern Slavery, (May 2018)

112 The Rights Lab, Nottingham University (HCW0008)

113 https://www.gov.uk/government/publications/transparency-in-supply-chains-a-practical-guide

114 The Rights Lab, Nottingham University (HCW0008)

115 The Rights Lab, Nottingham University (HCW0008)

116 The Rights Lab, Nottingham University (HCW0008)

117 Defra, (HCW0019)

118 Q13

119 Dr Ella Cockbain (HCW0007)

120 Local Government Association (HCW0016)

121 Health and Safety Executive (HCW0022)

122 Email from HSE to committee staff 25/07/2018

123 The Rights Lab, University of Nottingham (HCW0008)

124 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

125 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

126 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

127 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

128 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

129 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

130 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

131 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

132 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

133 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

134 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

135 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)

136 Q38

137 Q38, Q83, Q84

138 Q82

139 Q167

140 Q140

141 Q133

142 Director of Labour Market Enforcement, Labour Market Enforcement Strategy 2018/2019 (May 2018)



Published: 15 November 2018