Tuesday 11 February 2020
Business, Energy and Industrial Strategy
National Minimum Wage Enforcement
I am writing to inform the House of changes to national minimum wage enforcement. We want to make it as easy as possible for businesses particularly small and medium sized enterprises to comply with the law, whilst ensuring that workers get the wages that they are entitled to, and if they don’t, we will continue to crack down on companies that underpay their workers.
Last year, we consulted on specific aspects of the national minimum wage regulations (salaried hours and salary sacrifice). Following this consultation, we are making technical changes to the national minimum wage regulations. These changes will address areas of the regulations that are tripping up employers, without reducing worker protections. Businesses are supportive of these technical changes.
Salaried workers must be paid an annual salary for working a particular number of hours over the course of a year and paid in equal instalments. Changes to the regulations will widen the range of pay arrangements that are compatible with workers being treated as salaried hours workers to increase flexibility for the worker and employers, including:
increasing the range of compatible payment cycles to salaried hours workers, such as every two weeks or four weeks—currently only monthly or weekly payment cycles are compatible;
making premium payments to salaried hours workers compatible—such as for working on bank holidays—including where a salaried hours worker’s contract specifies a premium pay arrangement; and
enabling employers to specify the “calculation year” for their salaried workers, the reference point to identify when in a year a worker’s basic annual hours, for which they receive their salary, are exceeded.
The Government will also continue to name employers who fail to pay the national minimum wage, following a review of the scheme. We are making the public naming scheme more effective. We are increasing the frequency of naming those companies who underpay, and from now on, the threshold for naming employers who do not pay national minimum wage will rise to £500, meaning that any firm which owes arrears of more than £500 in national minimum wage payments to its workforce will be named. Whilst still tough on business, this will ensure that those that underpay by a minimal amount can set things right and correct their mistakes.
We recognise that there is a need to educate employers and support them to comply before enforcement action becomes necessary. To achieve this, future naming rounds will be supported by a quarterly educational bulletin to highlight details of common compliance issues, including anonymised case studies demonstrating how employers can become compliant. To better contextualise the relative severity of breaches we will publish additional information wherever possible.
Finally, as part of our drive to support businesses to comply with the legislation we are:
providing support via a helpline for employers who operate deduction or salary sacrifice schemes. Employers will be able to access support and information directly from HMRC;
requesting HMRC to do more to proactively support new, small businesses. HMRC will visit selected new, small businesses to educate them on the national minimum wage and support those businesses in getting their practices right from the start; and
producing enhanced, business facing national minimum wage guidance, which will be published shortly.
We will continue to look at these issues; for salary sacrifice and deductions we are waiving financial penalties for employers for certain breaches of rules—subject to eligibility criteria—recognising that, in some limited instances, employers may be penalised for offering these benefit schemes to workers and misunderstanding the rules. For example, those that offer a benefit to their workers, such as nurseries offering discounted childcare for staff, may find that they have inadvertently breached pay rules, as they make deductions which takes the take-home pay below minimum wage. Subject to strict criteria, including that the worker opted into the scheme, we will waive financial penalties for such breaches.
We are determined to increase compliance, whilst ensuring workers receive the pay they are entitled to, continuing to be tough on enforcement with companies that break the rules.
UK Statistics Authority Contingencies Fund Advance
The statistics board—known as the UK Statistics Authority—has sought a repayable cash advance from the contingencies fund of £33,000,000. The cash advance is required to support additional resource expenditure including the census data collection transformation programme (CDCTP) throughout 2019-20. The need for additional funding for 2019-20 is particularly due to revisions to the timing of the programme budget as set out in the programme full business case as approved at a Treasury approval point in July 2019. The revisions were identified as the financial modelling matured from the previous outline business case. The overall multi-year programme budget has not increased.
As a non-ministerial department, the authority has its own principal accounting officer and is responsible for its own estimates, separate to the Cabinet Office.
However, a written ministerial statement is required to give Parliament notice of the authority’s intention to seek an advance from the contingencies fund, and can only be made by a Minister.
These funds will be included in the supplementary estimates that will be published in February. The funds will only be released once the Supply and Appropriation Bill receives Royal Assent which is scheduled for March 2020. This is a standard process, available to all Departments if the required criteria are met and regularly used to allow cash to be drawn down prior to Royal Assent of the Supply and Appropriation Bill.
Parliamentary approval for additional £29,462,000 resource, £601,000 capital and £2,937,000 cash will be sought in a supplementary estimate for the statistics board. Pending that approval, urgent expenditure estimated at £33,000,000 will be met by repayable cash advances from the contingencies fund.
Reserve Forces and Cadets Associations External Scrutiny Team Report 2019
I have today placed in the Library of the House a copy of a letter that I have sent to Major General (Retd) Simon Lalor, the chairman of the reserve forces and cadets association external scrutiny team, to respond to the recommendations contained in the team’s 2019 report. I am most grateful to the team for their work.
Multilateral Development Banks
Delivering the sustainable development goals (SDGs) will make the world wealthier, healthier, greener and more equal. Multilateral development banks, such as the World Bank and the African Development Bank, provide financing and expertise at scale, playing a central role in helping the world’s poorest countries to meet the SDGs, supporting UK development, security and prosperity priorities. The World Bank’s International Development Association (IDA) and the African Development Bank’s African Development Fund (ADF), which provide support to the world’s poorest countries, are replenished by donors every three years. Given the close fit with UK priorities, the UK has been the largest donor to recent IDA and ADF replenishments.
In December, IDA concluded negotiations of its 19th replenishment (IDA19), covering the period from July 2020 to June 2023. Participants agreed that the replenishment would support $82 billion of development financing. IDA has a track record of achieving results and IDA19 is expected to support:
immunisations for up to 140 million children;
safe childbirth for up to 80 million women; and
an additional 10 gigawatts of renewable energy generation capacity.
Following successful engagement from the UK and others, IDA19 includes significant commitments from the World Bank to further enhance IDA’s impact. These include: enhancing its support for fragile and conflict-affected countries; increasing to 30% the proportion of support to tackling climate change; more focus on jobs and skills; and increasing attention on inclusion with a new focus on supporting people with disabilities and an enhanced focus on gender equality.
Given IDA’s close fit with UK priorities, and the results and commitments it is expected to deliver, the Government pledged £3.062 billion support to this replenishment. This represents an inflation-adjusting increase on our pledge to the previous IDA replenishment, and the UK remains the largest donor.
In December, negotiations on the 15th replenishment of the African Development Fund (ADF15) also concluded. The ADF is the African Development Bank’s (AfDB) concessional lending and grant-giving arm, that operates in the poorest countries in Africa. The total ADF15 resource envelope for the period January 2020 to December 2022 is the equivalent to almost £6 billion.
The fund has a track record of delivering results in the poorest countries in Africa. With these resources ADF15 is expected to deliver the following results over the replenishment:
improved access to transport for up to 20 million people;
improvements in agriculture for up to 6 million people;
new electricity connections for up to 5 million people;
up to an additional 170 megawatts of renewable energy capacity;
up to 4,150 kilometres of roads built; and
up to more than 1 million jobs created.
The UK has pledged to contribute £633.09 million to this replenishment, which includes a performance incentive component of £102 million to support the AfDB to meet its reform objectives (including those set out below).
In October, shareholders and management of the AfDB concluded negotiations for a seventh general capital increase (GCI7) . This will enable the bank to increase its overall annual lending to Governments and the private sector, from approximately £5.5 billion currently, to over £13 billion in 2030, supporting progress towards the SDGs in Africa. The cost to the UK to buy new shares allocated to it as part of this capital increase is £1,576,230,660. Some £94,569,682 will be paid in over eight years and the remaining £1,481,660,970 is a contingent liability that can be called on if needed. It is worth noting that no contingent liabilities have been called in by the AfDB previously.
Through the negotiations the UK and others secured a range of reform and policy commitments from the AfDB, including: a $25 billion investment in climate finance between 2020 and 2025; improved operations in fragile states by recruiting and deploying more expert staff to fragile environments; and new strategies on staffing, climate change and energy, governance, gender and the private sector.
Consistent with the International Development Act 2002, and before any financial contributions are made, the Government will lay statutory orders relating to the IDA19 and ADF15 replenishments and the AfDB capital increase for the consent of the House of Commons. Consistent with HM Treasury guidance, the Government will also lay a departmental minute relating to the callable capital associated with the AfDB capital increase.
A general capital increase is where shareholders provide additional capital in line with their existing shareholdings.
Work and Pensions
Personal Independence Payment
I would like to update the House on the Department’s progress in making backdated payments to personal independence payment claimants who are benefiting from the MH and RJ decisions of the upper tribunal.
The MH decision changed how overwhelming psycho- logical distress is considered when assessing someone's ability to plan and follow a journey. The RJ decision concerned how we decide whether someone can carry out everyday activities safely or not, and whether they need supervision.
We are committed to ensuring everyone with a health condition or disability gets the support they are entitled to. This is why we have dedicated substantial resource to checking claims, so that we can pay eligible people as quickly as possible. We remain on track to finish this exercise in 2020.
Thanks to our continuous monitoring of the exercise, we know which claimants are most likely to benefit. This now allows us to focus on those cases and to make backdated payments to eligible claimants more quickly. We will write to all other claimants in scope of the exercise, explaining the upper tribunal decisions and how they can get in touch with us if they think they may benefit and want to ask us to review their case.
We have said that we will keep the House updated and I can announce that the Department has today published the third ad hoc release of management information on this exercise: https://www.gov.uk/government/publications/pip-administrative-exercise-progress-on-cases-cleared-at-5-january-2020
Since the exercise began on 25 June 2018 (HCWS793) up to 5 January 2020, we have cleared 720,000 cases against the MH decision and 820,000 cases against the RJ decision, with most cases being cleared against both upper tribunal decisions. In total, we have paid £28 million in arrears to 5,900 claimants.
We are continuing to monitor the numbers of revised awards closely and have a comprehensive quality assurance framework in place to ensure we make the right decisions. In addition, my officials and I are always happy to hear of any specific feedback on the exercise.
We have set out new and updated information on the administrative exercise in the updated frequently asked questions. I will deposit a copy of this document in the Library.
I will continue to update the House.