UK Government to introduce tough fines for companies that fail to pay national living wage

British Prime Minister David Cameron has said that the government will fine unscrupulous employers who do not pay their staff the national living wage, it was reported on Tuesday.

The government’s crackdown on national living wage non-compliance includes funding for a new HM Revenue & Customs (HMRC) unit that will enforce the pay policy. Cameron was quoted as saying that the new pay policy would only work if it were “properly enforced” and added: “Businesses are responsible for making that happen, and today I’m announcing how we will make sure they do.”

According to reports, fines for non-payment will double, which means employers could be liable for a penalty of 200% of unpaid wages, up to a maximum of GBP20,000. In addition, company bosses who fail to pay the fine will face disqualification as company directors for up to 15 years.

Previously, employers were required to pay the amount they had underpaid workers, plus a penalty calculated at 50% of the underpayment, up to a maximum of GBP5,000. The penalty was increased under the coalition government.

It was also reported that in the past, relatively few firms have been fined for not paying the minimum wage. However the Department for Business announced in February that a crackdown launched in October 2013 had led to 162 firms being fined for non-compliance, as well as being named and shamed.

Currently, the minimum wage for those aged 21 and over is GBP6.50 per hour. This will increase to GBP6.70 in October. The Chancellor of the Exchequer has also announced that from April 2016, employers will have to pay a national living wage of at least GBP7.20 to employees aged over 25. The so called national living wage is expected to rise to GBP9.0 per hour by the end of the decade.

UK chancellor confirms lower expectations for economic growth

The UK economy is now expected to contract by 0.1% in 2012 and then grow by 1.2% in 2013, the Office for Budget Responsibility announced today.

This is a significant downgrade from predictions made by the OBR in March, when it expected the economy to grow by 0.8% this year and 2% next year.

In a report published to coincide with Chancellor George Osborne’s Autumn Statement in the House of Commons, the OBR also revised upward its forecasts for public sector borrowing over the next five years.

According to the OBR, tax revenues will be lower because of the weaker outlook for the economy. As a result, the government is no longer likely to achieve its target of reducing public sector net debt by 2015-16.

The chancellor has now pushed back the target by a year, saying that debt will begin to fall as a proportion of national income by 2016-17. Osborne is also extending austerity measures by another year to 2018 in order to close the budget deficit, although he claimed that such measures would be implemented “fairly” with savings made from bureaucracy and a greater contribution from the richest households and those on benefits.

He pointed out that people on out-of-work benefits had seen their incomes rise at twice the rate of working people, and said that over the next three years benefits such as jobseekers allowance and child benefit will increase by just 1% per year. There will also be a further cut in tax relief on pension contributions, with the the amount that can be paid into a pension each year with tax relief reduced by GBP10,000 to GBP40,000 and the lifetime allowance cut to GBP1.25m from GBP1.5m from 2014-15.

Among other measures announced in the Autumn Statement, the chancellor said that he would increase efforts to collect tax from multinational companies operating in the UK, cut corporation tax to 21% from April 2014, cancel the planned fuel duty rise and lift the personal allowance – the amount that people can earn before paying income tax – by more than planned to reach GBP9,440 from April next year.