To ask Her Majesty’s Government what steps they are taking to enforce minimum wage legislation to end the practice of unpaid internships, and whether they have considered any legislative change.
My Lords, existing legislation already prohibits the practice of using unpaid interns as workers, and therefore we believe that further legislation is not necessary. What is needed is for employers to play their part by being good employers and making sure that they pay at least the national minimum wage for all interns from day one.
My Lords, in the light of low rates of reporting, lower rates of investigation and a near absence of prosecutions, does my noble friend not agree that it is time to deploy all of HMRC’s powers and to introduce legislative reform to put an end to the pernicious practice of unpaid internships once and for all?
I thank my noble friend for his question and of course for the enormous amount of work he is doing in this area. There has been a step change in the amount of resources that HMRC has to tackle this problem. Funding has doubled from £13 million to £25.3 million in 2017-18. In two years, we have doubled the funding. The Government are taking this issue very seriously and we are recruiting extra compliance officers so that we can proactively identify those exploitative businesses that go on to exploit interns.
My Lords, if there has been this step change, why did the recent IPPR report show a dramatic increase in the number of unpaid internships? I fully agree with the noble Lord, Lord Holmes, that it is not fair to get a leg up if others cannot afford one. As a trustee of City Year UK, an excellent charity which works with social action, I am a strong supporter of youth social action, which is very different from unpaid internships. Will the Minister confirm when the youth full-time social action review will be published?
My Lords, I will have to write to the noble Baroness on the last point, but I will say that accurately predicting the number of unpaid interns in this country is extremely difficult. There are no accurate forecasts. To return to prosecutions, it is interesting to note that from a criminal perspective, we prosecute only those companies that are the most pernicious offenders, but that HMRC takes action on a civil basis through the civil courts. In 2016-17, 1,134 businesses were taken through civil proceedings and we clawed back nearly £11 million for 98,000 workers. That is progress, but I recognise there is much more we can be doing.
My Lords, will the Minister assure me that any action the Government take in this respect will not damage the numbers of wonderful people volunteering for charities and various organisations, where they are doing a lot of good? That should be kept quite distinct from internship.
My noble friend makes a very important point; it is one of the reasons why further legislation might be difficult and would have unintended consequences. In 2015 1.93 billion hours were volunteered by people in this country. I think all noble Lords will agree that that is marvellous, but it was 7% less than the hours volunteered in 2012. We need to keep our volunteers able to do the work that they do because it is extremely valuable.
My Lords, on the wider point about minimum wage contraventions, the Minister has outlined the steps that the Government are taking to tackle what she rightly described as a scourge, and those steps are welcome. However, on the point of criminal convictions, between February 2014 and September 2016 only three employers were prosecuted under the criminal law. Although criminal prosecutions are effective in enabling people to get back money that is owed to them, what steps is the Minister taking to bring the full weight of the law to the most extreme cases of non-compliance?
My Lords, as I have already mentioned, during the time that this legislation has been in place there have been 14 prosecutions and, as I said, those were for the most pernicious and serious cases. We tend to choose the civil route is so that people can get their funding much quicker. However, there is one other way in which we can ensure that employers step up to the plate and stop exploiting workers: only last week we named and shamed an additional 260 companies across the country that are not doing right by their workers. I do not know whether noble Lords have had a chance to look through their local media, but I have recently, and it is interesting to note how often local media pick up these stories and ensure that people in their local communities understand what their local companies are doing.
My Lords, can the Minister explain to me the difference between an internship and work experience? Will she go out of her way to praise those employers who give young people the opportunity to have work experience, which is so important in order to gain employment in the current market?
My noble friend gets to the heart of the matter because this is about social mobility. We have to ensure that placements are available; for example, people who are on work experience placements as part of a university degree are not liable to the minimum wage in those circumstances because those places would not exist if that requirement were not needed. We must pay tribute to all companies that take young people and give them the confidence to proceed in their career as they want to do.
My Lords, just because the Minister says things are improving does not mean that they are. Can she provide to the House and put in the Library the information on which she is basing her claim?
I will certainly see what evidence I can find and put it in the Library. As I have already said to noble Lords, it is very difficult to give an accurate forecast or indeed any evidence as to how many people are in unpaid internships. What is important is the extra money that will mean that HMRC can be far more proactive about the work that it does. This is up to third parties as well. I encourage the noble Lord and indeed all noble Lords: if they see a person working and they should be getting paid, it is up to all of us to take responsibility and report that behaviour so that it can be dealt with.
My Lords, the Minister made some important points about being able to identify the right level of evidence. Further to the letter sent by her noble friend the Minister to the noble Lord, Lord Holmes, where we are looking at the body of evidence, why does Her Majesty’s Revenue and Customs have no records of prosecutions in relation to interns? If Her Majesty’s Revenue and Customs has never measured it, how can she make such claims?
I think I said earlier that there have been 14 criminal prosecutions under national minimum wage legislation, and that none of them related to interns. However, there is much further activity going on in civil action, some of which will relate to interns, but we do not have centralised data.