03 December 2013

Think tank: Councils should have bigger minimum wage enforcement role

Think tank: Councils should have bigger minimum wage enforcement role image

Councils should be granted a bigger role in ensuring local employers pay the national minimum wage (NMW), a report has recommended.

While enforcement of the NMW costs the Government around £8m per year, at least 300,000 people in the UK are not receiving the minimum wage to which they are entitled, according to think tank Centre for London.

At least 5% of workers were paid below the NMW in eight London boroughs last year, the Settle for Nothing report found, with the high proportion of immigrant labour, volume of low paid work and concentration of high-risk industries being blamed for non-compliance in the capital.

Enforcement of the baseline wage remains excessively centralised and primary responsibility should instead sit with individual councils, the report said.

While suggesting initial government investment would be required to ensure partial devolvement was successful, Centre for London said investigations should be self-funded by councils thereafter.

Newham, Hackney, Islington and Haringey LBCs have all reportedly expressed an interest in piloting localised NMW enforcement schemes.

While accepting localism ‘brings a degree of variation’, the report said funding models could provide an incentive for authorities to undertake new responsibilities effectively and ‘swell starved council coffers’.

Mayor of Newham, Sir Robin Wales, said: ‘Newham and the GMB have campaigned for localised enforcement of the NMW for some time, and author Andy Hull’s excellent report shows just how important that is.

‘The minimum wage is useless unless we enforce it properly and local authorities are the people to do it.

‘It’s great this issue is gaining momentum and I look forward to working together to make local enforcement a reality.’

General secretary of the Trades Union Congress, Frances O’Grady, said: ‘While hard-pressed HM Revenue and Customs staff regularly recover more than £3m a year for workers on illegal poverty pay, it is clear that far too many unscrupulous bosses are still getting away with ignoring the NMW.’

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