Crystal Umbrella

Over the past year fines for companies found to be employing illegal workers has doubled from £11.2m to £22.1m. In correlation to this the UK Border Agency also issued over a thousand more civil penalties in 2009 (2210) than they did in 2008 (1164).

The resulting advice which comes from these figures is that all employers and recruiters must conduct thorough checks of all potential employees. Crystal Umbrella believes that the most basic checks are often missed, for example checking someone’s nationality by asking to view their passport.

It is the view of Crystal Umbrella that if the necessary systems are not employed now to prevent the employment of illegal workers then recruiters and employers will find themselves subject to the tougher penalties under the present clampdown.

Back in 2008, a new system was introduced by the government with the aim of reducing the number of individuals employed illegally in the UK. Under this system, the UK Border Agency had the power to issue civil penalties of up to £10,000 in respect of every illegal worker employed by any recruiter or employer.

This system is now being used more and more frequently by the UK Border Agency which shows how serious this issue continues to be. The fines issued are so far not working as a deterrent to those that continue to employ illegal workers – either knowingly or by failing to carry out the necessary checks to confirm legal status.

Prior to the introduction of this system, back in 2007 only 38 employers were prosecuted for the employment of illegal immigrants. The increase in the number of prosecutions during 2008 alone equates to an increase of 2963%.

Crystal Umbrella’s Scott Illingsworth believes that non-compliance with identity checking is becoming an increasing risk for recruiters and employers. However, it is likely that the fines for non-compliance will continue to rise as the tackling of illegal workers is at the top of the agenda for the new government.

The requirement is on recruiters and employers to carry out checks on each individual’s legal status. However, many of the paper based checks which are conducted are not actually fit for purpose. It would also seems that many employers fail to meet this obligation altogether.

The UK Border Agency can still issue fines if it deems the checks that were carried out were insufficient. This means that even if an employee has had a face to face interview and their passport has been viewed they could still be liable for fines if the individual is found to be here illegally.

There has been a call for the introduction of an automated system which would check an individual’s identity across a number of different sources including biometric passport data. This means employers would be guaranteed accurate information as all too often an individual checking a passport may be unable to determine its authenticity but biometric data cannot be forged.

Of course, even with the introduction of such measures the onus would still be on each recruiter and employer to actually use the systems at their disposal.

The new coalition government comprised of Tory and Liberal Democrat MP s has now been formed and all eyes are on this new partnership. William Hague, Tory MP, has described the partnership as taking the best bits of the Liberal Democrat manifesto and combining them with the rest of the Conservative manifesto. The result is David Cameron as Prime Minister and Nick Clegg as Deputy Prime Minister.

Director General of the British Chambers of Commerce, David Frost, has urged the new government to withdraw the planned rise in NICs. He said: “They [the government] must follow through on their promise to roll back the planned employer National Insurance rise in any emergency Budget.”

He continued: “The next 90 days are crucial for recovery. We need concrete proposals to reduce red tape and tax burdens on business; action to move the economy away from consumption and the public sector and towards exports; and commitments to improve Britain’s key business infrastructure.”

Meanwhile, chairman of the Association of Recruitment Consultancies (ARC), Adrian Marlowe, commented: “Now that Liberal Democrat MP Vince Cable has been given the role of overseeing banking and business, it is important that he pushes forward his party’s manifesto commitment to reduce the burden of unnecessary red tape by properly assessing the cost and effectiveness of regulations before and after they are introduced.”

The British Chamber of Commerce has released the results of its Q4 2009 Economic Survey which shows that while improvements are continuing, growth was slower than in the third quarter of 2009. The evidence gathered would suggest that the country is starting to come out of recession but it is still a slow process.

BCC Director General, David Frost, stated: “Although these results are not as impressive as hoped, they do contain some positive features – most notably strong improvements in employment and exports within the manufacturing sector. Businesses are showing resilience despite difficult and uncertain trading conditions. Confidence is improving, and the boost in exports must be nurtured in order to strengthen Britain’s trade position globally, and to help rebalance the economy away from an over-reliance on the public sector.

He continued: “It is vital that the government now demonstrates a determination to support wealth-creating companies in 2010. Additional business taxes must be avoided, and the 1% increase to employers’ National Insurance Contributions planned for 2011 should be scrapped. Unless the private sector is given the freedom to create jobs and wealth, the UK’s economic recovery will be slower than it should be, and we will face the serious risk of a double-dip recession.”

The BCC’s Chief Economist, David Kern, warned that this recovery will only happen if the government helps out and “strengthen Britain’s AAA credit rating by urgently producing a more credible medium-term plan for cutting the country’s huge budget deficit, and restraining public spending.”

The Forum of Private Businesses (FPB) is lobbying the government to include specified tax cuts within their pre-budget report on 9^th December. The FPB have recently surveyed all of their members and more than twenty per cent believe that the government should be focussing policies to relieve tax burdens on SMEs.

A number of changes have been suggested by FPB in their proposals to government. These include the creation of a national insurance holiday for businesses with less than ten employees alongside a delay in the implementation of the planned 0.5% NIC rise. They would also like to see corporation tax cut to 20%. They see this as a small concession by the government which could really benefit businesses.

VAT is another major taxation issue and the FPB would like the return of the 17.5% rate should be postponed to a more reasonable timescale. They also believe that VAT should be reduced permanently within labour-intensive sectors to just 5%.

Finally, they are asking that all small businesses are automatically enrolled for the Small Business Rate Relief as figures show that less than half of the businesses who qualify for this relief have actually applied for it.

Phil Orford, FPB’s Chief Executive, said: “There is still a long and difficult road ahead of us, but small businesses are key drivers of the economy and the Government must create a tax environment in which they can thrive. That means tax relief in specific areas that would help to foster cash flow, innovation and employment opportunities so that small businesses are able to seize the opportunities that will emerge as the economy emerges from recession.”

The shadow work and pensions minister, Mark Harper, has questioned how much the government’s Business Link service has spent on support for start-up businesses and contractors. Harper was asking how much of the £207 million Business Link budget was ringfenced for one-person ventures or new companies. He put this to Lord Mandelson’s business department, requesting figures for the past twelve months. However Pat McFadden, Lord Mandelson’s deputy, has refused to provide the requested information. He stated that the department would incur a prohibitive cost for gathering this data.

In response to Mr Harper’s question, Mr McFadden stated: “The department provides regional development agencies with funding in a single pot for the delivery of services. The RDAs contract with regional suppliers to deliver Business Link. The question requires gathering data from the nine regions and the multiple suppliers they contract with to deliver start up services locally and could be obtained only at disproportionate cost.”

Business Link are now providing courses where people can gain knowledge about how to run their own business. However, these courses are only accessible by people who have been claiming jobseeker’s allowance for a period of six months or more. The government have also recently conceded that some people on shorter term unemployment may also be eligible to attend some of the self-employment training courses. These concessions relate to specific groups including people with a history of homelessness and other disadvantaged members of the community.