At least half – and potentially more than two-thirds – of fines owed to the Home Office by employers using undocumented workers have gone unpaid in the last five financial years.
Many of these employers have exploited undocumented workers as a way to pay far below the minimum wage. The introduction of more stringent fines was part of Theresa May’s “hostile environment” strategy when she was home secretary.
More than £170 million in illegal working fines have been handed out by the Home Office since March 2012, yet just £55 million has been collected in that time, new data shows. The figures were given out following a Freedom of Information request by the legal blog Free Movement.
The Home Office insists the numbers are not directly comparable because companies are incentivised to pay early with a 30% discount. But even in the unlikely event that every civil penalty was paid early, that would still leave £64 million unaccounted for.
Shadow Home Secretary Diane Abbott said the scale of uncollected fines showed the department was “enabling exploitative employers to profit from vulnerable people” while charging “unacceptably high” visa fees to those attempting to stay in the country legally.
David Wood, who was director general of Immigration Enforcement at the Home Office until 2015, said the uncollected fines showed it was “just a failed system.”
Wood, who worked at the Home Office for nine years after more than three decades with the Metropolitan Police, said many of the affected businesses are limited companies that simply change their name to evade a fine, while others just refused to pay.
“Lots are limited companies that then just change their name, quite frankly. A lot is just people saying they can’t pay and the following up and taking to court doesn’t happen because it’s seen as not cost effective. So it’s just a failed system, really.”
Employers who pay the fine within 21 days can get a discount. Some are reduced on appeal or given payment plans of up to 36 months, which could account for a small lag in the statistics.
But Wood said he thought nonpayment was the biggest factor. “It doesn’t work as a deterrent. Anyone that knows the system knows they can evade it, because they know they haven’t got to pay.”
He said that in his experience it was often small restaurants and takeaways that were caught out. “In some of the high street kebab shops and Indian takeaways they’re paying very low wages, and that’s why they’re [using undocumented workers]…. They’d be paying below minimum wage almost invariably, so it is exploitative.”
The collection of fines has been an issue for more than a decade. The value of fines doubled under May in 2014 to a maximum of £20,000 per undocumented worker employed.
Wood said dwindling staff numbers, “austerity, and a lack of resource to follow it up” likely made the situation worse.
Commenting on the new data, Abbott said: “These figures are yet another example of the chaos at the Home Office. This government’s failing systems, under their own hostile environment policies, are now enabling exploitative employers to profit from vulnerable people, many who have already had to pay unacceptably high fees.”
Since the Windrush scandal, Home Office immigration enforcement has declined across the board.
The collection of employer fines peaked at £16.5m in 2016-17. By last year the number was down to £14.1 million, and in the most recent quarter, just £3.6 million was collected.
Colin Yeo, immigration barrister and editor of Free Movement, said he was interested in the scale of uncollected money but didn’t think it necessarily showed the policy had failed if its aim was to further the “hostile environment.”
“If you’re seeing this as a money-raising exercise then it looks pretty failed, because they charge huge amounts and they’re not getting it back in. But if the policy is instead about changing employer behaviour, then arguably it’s been a success, because most employers react to the threat of a fine being imposed.”
Yeo said he thought some of the nonpayment related to small businesses potentially going bankrupt because of the high rates at which the fines were set. “Most newsagents can’t stand a £20,000 to £40,000 fine,” he said.
A Home Office spokesperson said: “We are committed to a fair and humane immigration policy which welcomes and celebrates people here legally but which tackles illegal immigration and prevents abuse of benefits and services.
“There are a number of reasons why the numerical value of penalties served differs from the value collected in any given month, including the Fast Payment Option in the case of a first breach, and installment payment plans.
“We vigorously pursue all fines issued and have collected over £35m in civil penalties since 2016.”