My Lords, I thank the noble Earl for ending this part of the debate by giving me a chance to say that he is quite right to pick up on the Prime Minister’s commitment in this area. What is interesting about the speeches made by the noble Lord, Lord Rosser, and by my noble friends is that they, too, echo the sentiment on this issue within Government at this time. As I reply to the debate, noble Lords will pick up the messages and echoes of that. Of course, some of what we have been talking about lies outside the provisions in the Bill. The noble Lord, Lord Rosser, would like to include certain provisions in it, but I hope I can persuade the Committee that what noble Lords seek might be best done through a comprehensive package of measures based on the work that is now going on.
Clauses 39 and 40 amend the existing legislation governing the sequence for objecting and appealing against a civil penalty notice for employing illegal workers and how we may recover penalties where an employer fails to pay. My noble friend Lord Avebury was particularly keen to know how that would work. I will come on to that. Currently, an employer can exercise their right to object to a civil penalty and appeal simultaneously, consecutively or alternatively. Frankly, this is wasteful and unnecessarily expensive for all. Clause 39 simply requires an employer to raise an objection before a formal appeal. The objection process provides a fast and efficient means of reviewing penalties and can negate the need for an appeal to the court altogether. I am sure that noble Lords will see that as desirable.
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The objection process is a meaningful one. In 2013, the Home Office issued 1,821 civil penalty notices. Employers raised objections in 646 cases, 24% of which resulted in the penalty being reduced or cancelled, so employers were able to raise mitigating circumstances. Raising an objection is free to the employer and fast. Employers have 28 days from the date of the civil penalty notice to lodge an objection and the Home Office has a further 28 days to respond. At the end of this process, an employer may still formally appeal to a court if they are dissatisfied with the outcome of the objection process.
Clause 40 changes the way civil penalties for employing an illegal worker are enforced. It allows an outstanding penalty to be enforced as though a substantive judgment had already been issued by the relevant court in England and Wales, Scotland or Northern Ireland. This change will eliminate the need for the Secretary of State first to make an application to the court for a substantive order for payment. This will make it much easier to take action against rogue employers who refuse to pay their penalties. The change will not affect the employer’s rights to object or appeal upfront against a civil penalty, as I have already explained.
On Amendment 67, in the name of the noble Lord, Lord Rosser, the Government are committed to protecting the rights of UK workers. I note that this is the seventh consecutive quarter in which we have seen a large rise in the employment of UK nationals and a smaller growth in the employment of non-UK nationals. Under this Government, employment levels have risen by 1.3 million, of which 78% is accounted for by UK nationals. Under the previous Government, in the five years to December 2008, when the financial crisis occurred, more than 90% of the increase in employment was accounted for by foreign nationals. However, I recognise that there is a problem with a small number of unscrupulous employment agencies that source labour exclusively from overseas, particularly eastern Europe. While I am sympathetic to the intentions behind this amendment, I note that it would not achieve its aims. An agency could evade its scope simply by signing up a single UK resident as part of a recruitment process. We agree, however, that more should be done to tackle these types of unfair recruitment practices. Ministers will actively consider how best to protect British workers from this type of discrimination and we will seek to bring forward proposals shortly.
I understand that Amendment 68 is intended to provide more information about the impact of large-scale EU migration since EU enlargement in 2004. However, as noble Lords will know, the Government are already ahead of the amendment’s intentions. At the Home Secretary’s request, the Migration Advisory Committee is already looking into this, and related issues, as part of its review commissioned last September into migrant employment in low-skilled work. It will report back in May. We will not therefore have to wait 12 months after Royal Assent to get a report on this issue, which will inform government for the future.
We are also already taking action to prevent abuse of our public services and benefit systems by migrants, including EEA nationals. We have introduced a three-month delay before a European jobseeker can claim benefits, and a tougher six-month test to assess whether claimants have a genuine chance of finding work. The Government have also issued new statutory guidance to make sure that local authorities set a residency requirement before a person qualifies for social housing.
We are also taking tougher action against the abuse of the national minimum wage. From 7 March, the financial penalty increased from 50% to 100% of total underpayments owed to workers, and the maximum fine was increased from £5,000 to £20,000. The Government also plan to legislate at the earliest opportunity so that employers will be given penalties of up to £20,000 for each individual worker, rather than as the maximum for all abuses. I trust that this will have the Committee’s support.
I turn now to Amendment 69. This Government are already taking action to strengthen the existing civil penalty scheme for employers of illegal workers, following a full review and public consultation last year. We are increasing the maximum penalty per illegal worker from £10,000 to £20,000. We have also published new, tighter proposals on mitigating factors
that could reduce the penalty where employers actively co-operate with enforcement officers. These will be set out shortly in a new statutory code of practice.
Perhaps I can now address the concerns expressed by my noble friend Lord Avebury on this matter. What are we doing to increase the deterrent impact of the civil penalty scheme? This Government are committed to taking tough action against rogue employers. To improve the deterrent impact of the civil penalty scheme we are doubling the penalty to £20,000 per worker, doubling the current starting point for the calculation of a first-time penalty to £15,000 per worker, and narrowing the criteria under which an employer can be issued a warning notice rather than a financial penalty. It has been too easy for rogue employers to evade paying a penalty.
The Immigration Bill will therefore also simplify and accelerate the enforcement of civil penalty debts in the civil courts. We are working with the Insolvency Service to ensure that, where appropriate, directors are considered for disqualification action where they have employed illegal workers and wound up their businesses to evade penalties. It is therefore not necessary to prescribe a minimum amount in primary legislation, as we have indeed set tariffs at a level a great deal higher than previously.
I turn now to the question of gangmasters and Amendment 70. I understand and share the concern that we should take effective action against exploitative working practices. The Gangmasters Licensing Authority is one of a range of current responses to the problem, focusing on abuses in the agricultural sector in particular. As was said by the noble Lord, Lord Rosser, this is not the only sector where contract labour suppliers operate. The Committee will be aware that the Government are currently considering the functions and form of the Gangmasters Licensing Authority, through a triennial review announced in Parliament in September 2013. We hope to publish that review shortly. It would be more helpful to return to this issue when we have the review’s findings, and to look at the Gangmasters Licensing Authority’s role alongside wider regulatory safeguards for workers.
I hope I have shown that the Government are very active in this area. I hope, too, that this has reassured the Committee that the amendments tabled by noble Lords are unnecessary, and that Clauses 39 and 40 should form part of the Bill.