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Environmental Audit Committee

Oral evidence: Hand Car Washes, HC 981

Tuesday 10 July 2018

Ordered by the House of Commons to be published on 10 July 2018.

Watch the meeting

Members present: Kerry McCarthy (Chair); Colin Clark; Mr Philip Dunne; Mr Robert Goodwill; Dr Matthew Offord; Joan Ryan.

Questions 89-167

Witnesses

I: Dawn Frazer, Managing Director, Car Wash Advisory Services Ltd; Darryl Dixon, Director of Strategy, Gangmasters and Labour Abuse Authority; Tim Harrison, Deputy Director of Labour Market Enforcement; Helen Wakeham, Deputy Director of water quality, groundwater and land contamination, Environment Agency; Philip White, Head of Operational Strategy, Health and Safety Executive.

II: Victoria Atkins MP, Parliamentary Under Secretary of State for Crime, Safeguarding and Vulnerability, Home Office, and Thérèse Coffey MP, Parliamentary Under Secretary of State at the Department for Environment, Food and Rural Affairs.

Written evidence from witnesses:


 

Examination of witnesses

Dawn Frazer, Darryl Dixon, Tim Harrison, Helen Wakeham and Philip White.

Q89            Chair: Welcome, everyone, to this morning’s session. The Chair of the Committee unfortunately has a funeral to attend this morning. I will start by welcoming witnesses. Could you each briefly introduce yourself and which organisation you represent?

Dawn Frazer: Dawn Frazer, Car Wash Advisory Service and the Sandu Foundation.

Darryl Dixon: Darryl Dixon, Director of Strategy from the Gangmasters and Labour Abuse Authority.

Tim Harrison: Tim Harrison, Head of Secretariat, supporting Sir David Metcalf, the Director of Labour Market Enforcement.

Helen Wakeham: I am Helen Wakeham. I am the Deputy Director of water quality, groundwater and land contamination at the Environment Agency.

Philip White: I am Philip White, the Head of Operational Strategy at the Health and Safety Executive.

Q90            Chair: Thank you all. There will be some questions that are directed at particular witnesses. Don’t feel that you have to come in on every question but if there is something that you did want to come in on, by all means indicate.

The first question is to Dawn. We have had one session already in this inquiry and have heard that there are thousands of hand car washes across the country and it seems like most of them are unregulated and the authorities do very little enforcement. Would you agree with that? Have we had an accurate picture?

Dawn Frazer: I think you probably do. I know that you are probably wondering where those figures come from. They basically are based upon our investigations and the number of washes that equate to each person in the UK and that is where we come out at between 17,000 and 19,000 based on whether you are looking at Northern Ireland or just England, Wales and Scotland. It works out at about 3,500 car washes per person in the UK, based on the number of washes there are in an area in different areas of the UK. There is no significant investigation but it is something that the Sandu Foundation is working on for next September.

Q91            Chair: It is a pretty rough calculation?

Dawn Frazer: Yes.

Q92            Chair: Presumably there is quite a high turnover of these businesses. They don’t always—

Dawn Frazer: It is not as high as it used to be. There is not as much movement as there used to be, but you certainly get a high turnover of staff on the sites now and if you talk to the sites themselves they will say one of the problems is actually finding staff. One of the issues and what has led to it becoming such a big problem across the UK is that had we dealt with this 15 years ago it would not have been such an issue. The major problem we find—and unfortunately those people are not here today—is the planning groups, the planning departments across the UK. For the majority of the planning officers, when it comes to car washing there is some lack of knowledge, so we find very often that they will just go from B2 change of use. Unfortunately, a B2 change of use can’t be put in because you have chemical applications within it. You are then possibly looking at the actual paperwork that they complete. There will be information on it that says, “Have you sought guidance? Yes, we have. Do you have any trade effluent? No” and that is not being picked up. We had one that came through last Friday that said that it had been granted despite the water company saying they should not be working there because they are connected illegally into the town sewer but it has still been passed. There is no interceptor on site and it is going into the soakaway. It is right next to a hospital, so it is going to become a real problem.

Q93            Chair: The rest of you all have some sort of regulatory function for hand car washes. Do you accept the criticism that effectively the sector is unregulated? You will be aware of the concerns that Dawn has mentioned, the impact of water flowing off the sites but also concerns about labour that is employed there, ranging from the gamut of the national living wage through to modern slavery type situations. Do you think that it is fair to say that this is unregulated and the authorities are effectively turning a blind eye?

Darryl Dixon: I think it is fair to say that it is an unregulated area. One of the things that we have been effective at, in the way that the GLAA commenced in agriculture, is the framework we introduced that holistically looked at all areas of compliance. We tested out whether a company that required a licence from us was compliant with the national living wage, its tax affairs and health and safety, and that provided a better cohesive approach to assessing compliance. I think that is the key, to ensure that we have that sort of framework and closer engagement. The key to effective operational activity to identify irregular car washes is multiagency approaches and co-ordination.

Tim Harrison: I very much agree with that. Given our interests in the Director’s office, we are really trying to promote joint working, particularly in the labour space. I think there is a real opportunity to do more joint working to tackle this, whether it is regulated or not, remembering that the scope that we have covers the three bodies: the Employment Agency Standards Inspectorate, HMRC’s NMW enforcement and the GLAA. For instance, the Government’s naming round for NMW came out on Friday and HMRC is quite active in this area. It has been bearing down on car washes to identify non-compliance with the minimum wage and that seems to be bearing fruit. In the two naming rounds they have had this year, HMRC has identified over £65,000 in wage arrears for workers. Those are averaging over £750 per worker. When you consider that across all sectors in the naming rounds the average wage arrears is of the order of £80, at least from the data that 2018 provides, that indicates that there is probably an issue there with NMW, that car wash workers are being underpaid may be a problem. We are encouraged that HMRC is clearly on this.

Q94            Chair: Is HMRC’s interest in this particularly triggered by the fact that a lot of these businesses are cash in hand so they will not be paying tax, or is the trigger the concern about people not being paid the minimum wage?

Tim Harrison: This will be specifically under NMW enforcement but there are issues around tax, hence I think there is an opportunity here to draw together enforcement bodies. One of the Director’s recommendations in his 2018-19 strategy that came out in May this year was for regional pilots for hand car washes, led by the GLAA but working with local authorities, health and safety, the Environment Agency and the tax side of HMRC, to pull together what we know about non-compliance.

Q95            Chair: You said that there is some work being done and things like not being paid the minimum wage being picked up. We have heard from Dawn the scale of the number of these car washes that could be out there. Is HMRC’s enforcement so far pretty tiny compared to the actual scale of the business that is there?

Tim Harrison: I wouldn’t say so. HMRC this year has named just over 400 businesses and about 5% of those are car washes, which is probably proportionate if not slightly over representative of their share in the economy.

Q96            Chair: If there are up to 19,000 of these car washes, that 5% of 400 is a pretty tiny proportion of the actual car washes out there.

Tim Harrison: Yes, but it all depends on the degree of compliance across the population of car washes.

Q97            Chair: Do you have a view as to how prevalent abuses are across the hand car washes? Anecdotally there is a lot of people who feel quite uncomfortable when they use them and have concerns. Perhaps it is not something they can pin down in any sort of concrete way but just the fact that they are such a cheap service and cash in hand and so on rings alarm bells. Do either of you have a view as to the scale of the problem in this sector?

Darryl Dixon: Over the last year we have had in excess of 178 referrals to us about concerns with the operation of hand car washes. When you look at those, out of all of our operations, we have taken on only 11% of overall cases that are hand car wash-related. That is because we look at the nature of the exploitation that is referred to us and, with our widened remit to look at the labour market, there are more severe cases that were identified in other sectors such as construction and domestic servitude. The 11% of cases we have taken on would be the biggest risk ones we have spotted. Even within that, a lot of the nature of cases that we find and the intelligence that comes in originally is very vague, suggests that workers are unhappy or look like they can’t talk but obviously they are doing quite a high pressure activity. The range of problems that are identified and referred to us relate to not having the right protective equipment, high-vis jackets, the right boots and so on, and also issues about whether they are not being paid the national living wage. That concern will usually arise because of people saying, “If I only paid £3 for a car wash and there were five people working on my car, how can it be that those workers are receiving the right amount of money?”

That is probably the highest level of concern that comes out and the rest of the range of issues is similar to those we find in other allegations in other sectors such as how and where accommodation is provided, whether workers are controlled and where they are working. Generally, the nature of the allegations is very similar to those we find in other sectors and the level of cases we take on reflects the fact that we are also receiving evidence of more severe cases in other sectors as well. We take on the most severe cases such as the case that we managed in Durham with Durham Police where we arrested two Albanians who were exploiting a team of Romanian and Latvian workers. That is an extreme case, but in most of them you find breaches of a range of different other things. That is not to say that all hand car washes breach all regulations but there are probably some breaches of some regulations along the line.

Q98            Chair: I think we need to turn to the other two. Do you share the view that this is largely unregulated?

Helen Wakeham: From an environmental perspective, the regulations for water and water protection are very simple. The environmental permitting regulations have an offence to cause polluting matter to enter water and the defence to that offence is to have a permit. There is a regulatory system in place. We don’t permit hand car washes because the effluent from hand car washes is unsuitable for discharge to water. What we would advise always is for hand car washes to be connected to the foul sewer. We don’t hold any permits. That is the regulation. How do we find out?

Q99            Chair: Yes, that is what I am saying, is it unregulated? There are regulations in place but they are not—

Helen Wakeham: There is a reactive and a proactive answer to that question. From a reactive point of view, the Environment Agency responds to 40,000 reports of pollution to our hotline every year. Of those, about 15,000 are related to water. When we dig into those stats, 174 of the 15,000 related to hand car washes and further investigation of those showed that 32 of those incidents were having an impact on the environment. Less than 0.5% of confirmed water pollution incidents relate to hand car washing, so it is a relatively small part of the pollution picture.

There is more of a proactive element, though, because when we look at our monitoring data and the impact of different industries and different activities on water, about 11% of our water pollution problems, reasons why water quality is not good, are related to the urban environment and tucked inside of that is hand car washing. Where we have a suspicion based on our monitoring data or a group of incidents together that hand car washes are a problem, we go out and look. We have examples of where we have put in a specific investigation relating to hand car washing, but I would say that it is more common for a hand car wash in a location to be part of a bigger problem. On a trading estate we would investigate all of the businesses on that trading estate where we found a problem rather than focusing on the hand car wash.

Chair: We will get on to water pollution.

Helen Wakeham: Yes. As an overview, I don’t agree that they are unregulated but they are hard to tackle and hard to find.

Q100       Chair: Finally, the HSE?

Philip White: Similarly to other colleagues and witnesses, it is not unregulated in that the regulatory framework for health and safety applies at any workplace. Whether people are here legally or illegally, they are entitled to protection under the health and safety legislation. The key issue is about assessing compliance and how we achieve that sort of compliance. HSE has a very broad portfolio of work, regulating everything from offshore oil and gas through to construction sites, agriculture, waste recycling and manufacturing, let alone the leisure sector. There is quite a lot of demands and we have to prioritise our work to where there is risk and where harm is occurring. That said, over the last few years we have seen safety in hand car washes going up the agenda.

What is absolutely key here is how we work with other regulatory bodies, other agencies. Over half of the intelligence we get through in relation to car washes come from the police, particularly in relation to organised crime, and we work with them where it is appropriate to do joint operations. Our data is very clear that when we visit there is a fairly high level of what we call breaches of health and safety legislation and we will take action where we see those breaches. In some cases—we have to be clear here—breaches might be because the hand car wash operation is trying to do the right thing but is overlooking something or has something slightly wrong. That is at one end of the spectrum but at the other end of the spectrum we have been involved where there are some very serious other crimes going on and health and safety is an issue that is being dealt with collaterally as part of that operation.

Chair: We will come on to that in more detail in a bit.

Q101       Colin Clark: My question is to Dawn Frazer. You have explained how you get the figure of 19,000 and said that this could have been dealt with 10 or 15 years ago. Can you expand on that, please?

Dawn Frazer: Absolutely. I came into the industry 12 years ago and at that time there was already a significant issue and the reason that I do what I do—and I set up the company that I work for—is because nobody else was dealing with it. There was nobody investigating it, there was no company that was overseeing it and bringing it together to have it investigated, and that is part of what we do as well as our WashMark that we have put on to sites as having fully investigated things. We cover absolutely everything that is being discussed here within that to help that site become compliant. It is a real shame that we have got to where we are.

The Sandu Foundation is named in honour of Sandu Laurentiu-Sava who died in 2015. Maybe had I worked a little harder and made people listen at that time he would still be alive because, although a gentleman went to prison for four years because of what he did, his part of it, it was the council who failed to visit the site, that allowed that car wash to set up in the situation that it did. It was the land owner who did not see what was happening as well. There is a huge number of people who were responsible for his death, not just the guy who actually owned the car wash.

Q102       Colin Clark: If we had grasped this 10 or 15 years ago we might have had a more organised system?

Dawn Frazer: Yes.

Q103       Colin Clark: A question to Darryl Dixon: the Car Wash Advisory Service has estimated 19,000 and your organisation has estimated 20,000 hand car washes. Can you explain how you come to your figure?

Darryl Dixon: We haven’t estimated that figure. That is the figure that is used. There is a range of estimates that has been given; Dawn has given 19,000, other people have quoted between 10,000 and 20,000. It is an unvalidated figure, estimates based on some views on the number of car washes in particular locations extrapolated out.

Q104       Colin Clark: How robust is it?

Darryl Dixon: I don’t think it is entirely robust. We need to understand that figure better. There are things now being introduced such as the safe car wash app by The Clewer Initiative to enable consumers to geoposition where they have gone to a hand car wash. Only over time will that give us a better picture of where the car washes are. We have data on all the hand car washes from the supermarkets. We have a promise of the data on the locations of hand car washes on active forecourts from the Petrol
Retail Association. Of course, there are the complaints that have been referred to the Environment Agency, Health and Safety and others that we should have access to in identifying the locations. Over time that will give us a better picture of where they are and I think we will have an evolving understanding of the true size of that issue.

Q105       Colin Clark: Whether it is 19,000 or 20,000 and just plucking a figure out of the air, how many would be operating with reasonable standards?

Darryl Dixon: That is a difficult—

Colin Clark: I wondered if the app indicates that. Would people only use the app if they are worried about it or would they use the app if they were just trying to report to you?

Darryl Dixon: If they have the app downloaded, we would like them to use it anyway to position where they are and one of the things in that is to identify the price point that they are paying. That is useful data as well, particularly when we are talking about national minimum wage issues. We know that that app has been downloaded quite a significant number of times but so far we have not received any data from it, although The Clewer Initiative has been talking to us and the National Crime Agency to provide that information to us.

Q106       Colin Clark: Are you comfortable with citizens using an app to report alleged labour abuse? Is there any sort of downside? Is there any sort of risk attached to people doing that? I assume the system is completely secure and nobody can hack into it and accuse somebody of trying to drop them in it?

Darryl Dixon: It has been developed for The Clewer Initiative by a private company, so I am not party to the detail of the technical solution, but it is a useful app and we hope that that data is going to inform our intelligence and our operations. However, what I wouldn’t want people to do is to use that in a way that meant that where it suggests to people the things to look out for, is there accommodation at a car wash, for example—if you are having your car washed, unless you are sitting on the side having it valeted completely, you will probably be sitting in the car for the whole time that it is covered in all the washing materials. What you shouldn’t be doing is getting out of that car wash and wandering around. There is a health and safety risk to you anyway. If there is a lot of criminality going on there, you are putting yourself at risk. Equally, if there is a lot of criminality it may well be under investigation by the authorities and what we don’t want is people to operate in any way that might undermine that criminal investigation and put themselves at risk. What they see, what they can report via the app as opposed to getting out of the car is fine. We don’t want consumers to start putting themselves at risk.

Q107       Colin Clark: I haven’t downloaded the app but I took the opportunity, because the Committee is investigating, to go to look at the one in Aberdeen that my wife uses routinely at £40 a car wash. They were wearing proper toe-capped boots and the overalls. The one I was surprised about—SEPA uses pollution prevention guidelines as I understand it, and they have to discharge to sewers. They are not supposed to be discharging to surface water or capturing it. It is in a big multi-storey car park. Directing that to the regulators, how do you intend to use the data that is being collected from this app? Can you expand a little bit on what is going on in Scotland? What are they doing? Is it any different to what we are doing in the rest of the United Kingdom?

Helen Wakeham: I can talk a little bit about pollution prevention guidelines and rates. I can’t talk about the app because we have not seen any data from the app. Broadly the approach in Scotland, England and Wales is the same. There is an underlying regulation, which I described: it is an offence to cause or knowingly permit pollution. I understand in Scotland there is also a general binding rule that reinforces that regulation but in practice the enforcement is the same. We would use the information available to us and use the impact of any pollution on the environment to determine what enforcement action to take. From what I can see from the figures I have seen, hand car washes have not given rise to any prosecutions but generally give rise to us issuing good practice advice and occasionally warning letters. I think in practice it is the same.

Q108       Colin Clark: Regulatory guidelines only really work for the ones that are already trying to comply with the law. They are not going to work for the ones that are breaking any number of the regulations, are they?

Dawn Frazer: May I say that in the investigations we have done, when it comes to the environment we get very little backup at all, unfortunately. We tend to find that even when we contact them they don’t visit, which is unfortunate. I live in Scotland so I know a little bit about that. While there are fewer hand car washes up there, we find that they are still polluting and we find there still is an issue.

Helen Wakeham: There is a little bit of evidence from some of the pollution prevention that we have done. For example, we did some work with the Car Wash Association and Severn Trent Water in Coventry where we investigated 47 hand car washes and we found of those 75% were connected to the foul sewer so would require a trade effluent permit but were not having an impact on the water environment. For the remainder, we issued warning letters and generally got a good response and a connection to the foul sewer. Our experience is that when our advice is given it is generally taken and we see very few repeat incidents from the same offender. We have had a trawl through and found very few over the past five years, so I think our advice is generally taken up.

There is an issue with finding these things and if they are part of a complex drainage network we will never be able to prove a connection to the surface water system. As I said before, there is an underlying urban drainage issue of which hand car washes are a small part and that is quite intractable. We do have some regulatory and some advisory handles on it, but of the different water quality issues we have, it is one of the most difficult to manage.

Q109       Colin Clark: Based on the 19,000 to 20,000 estimate figure and given that you have not seen the data from the app, do you have any good statistical evidence to indicate how many of these are polluting or operating illegally or are operating approximately within existing regulation?

Helen Wakeham: The environmental evidence, the incident evidence, is that there is very little problem. We found in the last year only 32 for the whole year that were having an impact on the environment, so the numbers are pretty low.

Q110       Mr Philip Dunne: We had evidence last week that compared to other countries in Europe, the UK has a significant problem across a range of your responsibilities with hand car washes, which does not appear to exist in other countries in Europe although coming into Ireland. This is a very open question: can any of you speculate as to why this problem exists in this country but not in our neighbours? Is there a regulatory failing?

Dawn Frazer: I was talking to a hand car wash owner last week and I said to him, “Why here? Why do you come here and not other countries?” and he said, “It is because we can. There is nobody here to stop us, that’s why”.

Darryl Dixon: As part of the review, I did do a quick trawl of my contacts through our Europol labour inspectorate network to see what views I would get from colleagues. Apart from the Republic of Ireland where there is an increasing issue, there is a similar issue arising, from the information I got back, in Finland and Belgium. The nature of the workers in Belgium is different; it is Afghan and Irani migrant labour there compared to here. The Republic of Ireland is pretty similar to us with the migrant community that is operating in those sectors. Countries like Spain and Portugal do not have it because in their responses from the labour inspectorate/the police services, where hand car washes operate they charge more than if it was a rollover or a jet wash. There is a price differential that seems to have some impact there.

Q111       Mr Philip Dunne: Would that be because they are applying minimum wage criteria better?

Darryl Dixon: I don’t know. It just appeared to be that they are trying to selling it as an upmarket service and, therefore, people are going for the cheaper option, as perhaps they go for the cheaper option here. The responses from colleagues in the east European accession countries to the EU are very much that it is not a problem there, obviously because the workers come across to the more western developed economies where the work is. In some other areas like Germany and in Belgium where they are trying to do some things, their local authority regulations are controlling it in relation to the environmental issues. There is a range of different ways it is occurring but it is arising in some other countries and I know from the feedback from Finland that it is experiencing quite a bit of migration as well.

Q112       Mr Philip Dunne: Mr Dixon, you have given us a lot of information about the work that you have been doing at the GLAA, and you have touched on some of it in your earlier evidence, in relation to the modern slavery helpline, where I think you said that the hand car wash sector is the largest sector being reported on through that helpline, and you have touched on there being one set of arrests in Durham recently. Why are you unable to prosecute if it is the most significant sector that is being reported?

Darryl Dixon: As was indicated in the evidence that Professor Ian Clark gave in the first session, the hand car wash industry is one of the most visible low paid, low skilled industries in the labour market at the moment. The workers are more visible than you might find in other industries that we deal with where there is exploitation, such as construction, care homes, cleaning, catering and so on, where you don’t come into or see those workers as you drive along. There has been a lot of media interest in that and I think that, plus the activity by The Clewer Initiative for example, has generated far more referrals to us. But as I mentioned earlier, out of the 178 referrals that we have received, 62% were non-specific, that it looked as though workers might be working hard or were unhappy. There was nothing that would suggest there was a criminal offence that we might use our new powers on. We don’t have a civil power of inspection in relation to hand car washes as we do in agriculture because that comes with the statutory licensing responsibility.

We don’t have that civil inspection power in hand car washes but what we do have is the new criminal powers that we were given and started to use from May 2017 that allow us to search and get warrants under the Police and Criminal Evidence Act and arrest individuals. We have been developing our staffing over that year and we have only completed our first full year. We have that power to go into hand car washes, but to investigate a hand car wash we will pass a certain threshold to consider it is a significant risk where a criminal investigation is necessary. Where it is so vague because it is 2% of those cases, it would not be a good use of resources, there would not be anything that indicated a significant serious criminal offence and, therefore, nothing that we could do. If there were indications of other issues we might pass those on, as we have done, to the national living wage.

Of all the cases that we had information on, only 34 led to investigations and, of those, 28 have been closed where there is no action necessary by us but referral on to others such as the national living wage, and six cases are still ongoing, one of which did lead to arrests, as I mentioned. You go to a very small minority of cases that are serious.

Q113       Mr Philip Dunne: That is in your first year of these new powers?

Darryl Dixon: It is in our first year, yes.

Q114       Mr Philip Dunne: Do you have any evidence as to how representative that would be of the population if we have up to 20,000 hand car washes? Can you extrapolate or is it too early to be able to do it?

Darryl Dixon: It is probably too early because we don’t know what the hidden figure of hand car washes is to see how many we have actually had information on. It is a small proportion of the level of cases we take on that has clear significant risks of forced labour.

Q115       Mr Philip Dunne: You have also indicated how expensive it is for you to undertake these investigations, which is helpful for the Committee. Do you feel you have enough resource within the GLAA to be able to pursue these? Can you give us a picture: if there are six investigations that are ongoing, what is that as a proportion of your investigations?

Darryl Dixon: They do take a considerable amount of time and effort, not only just in the investigation but if a case goes forward for any form of sanction, and particularly if it goes forward into referral to the Crown Prosecution Service, there is an associated resource impact and that case may be open for quite some months. Where we undertake operations it will not be just the use of a single GLAA operator. Admittedly, for example in the Durham case and others, we will be supported by the police as well because they are quite intensive operations. You could probably say as an average that in a case like that we might deploy three of our officers and they will be involved in it for quite some months for the preparation of the investigation, the action itself and the subsequent outcome and decision on the appropriate sanction. They can take quite some time to complete. They have quite a resource impact where we pursue the case through to prosecution.

Some of the operational workforce of 59 officers are purely compliance inspectors who operate in the agricultural sector and some of them only have powers under the Gangmasters Licensing Act itself. In our first full year, we have been building up the number of officers who can exercise those wider powers, which is only in England and Wales but it is 37. We have also seen an approximately 250% increase in cases we have taken on during that time and a massive increase in the amount of intelligence we have received. It is like an iceberg. It is a question of how much of the iceberg we can now see. We have had clear support from the Home Office for the expansion of our resources. As a result of the new powers, we have doubled in size and that also expanded and practically tripled our intelligence section for analysis so that we can target the right cases for operations. As we receive more information and as we have more cases, clearly there may be an argument that the level of cases being referred to us is going to outstrip those resources and that is something we need to continue to gauge.

Q116       Mr Philip Dunne: Over a quarter of the calls coming in on the helpline are from this sector, and I accept that a lot of them are not worthy of investigation for the reasons you have described. Can you give us a sense of what proportion of your investigations are being absorbed by this sector, tied up in looking at this sector, so that we can get a sense of how significant it is?

Darryl Dixon: Yes. In that year to date from data up to yesterday there has been 305 investigations and of those the hand car wash cases have constituted 11%.

Q117       Mr Philip Dunne: We have had some evidence that the national referral mechanism is not being used by workers in the hand car wash sector because they do not believe that it is going to be able to help them. How would you respond to that?

Darryl Dixon: That is a general trend that we all experience and certainly a concern that police forces have. One of the key issues with anybody who is identified by any of us, whether it is the National Crime Agency, the police or us, is the fact that we might identify somebody who we believe is having their rights breached, who is in forced labour, and may wish to support them and consider them as potential victims to be referred to the national referral mechanism, but they can choose not to and quite often they will do. This is why colleagues in the Crown Prosecution Service have said that the number of referrals that reach them and go all the way to charge is about 7% of all forced labour investigations because the workers quite often would rather move on and find work than go into this scheme. That is why the legislation also introduced the duty to notify so that where we want to refer somebody in, where we believe they should go into the national mechanism to be correctly assessed as a victim, we will nonetheless report those numbers so that the UK has a better understanding of the potential number of victims in the labour market.

Q118       Mr Robert Goodwill: We are looking at three specific areas where abuses have taken place in the labour market, in modern slavery and water pollution, and specifically I would like to ask Mr White some questions about the health and safety aspects of this. We have heard some shocking cases of health and safety violations, not just the death of the Romanian gentleman who was electrocuted in substandard accommodation but also cases of things like trench foot and chemical burns. What is the Health and Safety Executive doing to ensure that hand car washes are abiding by health and safety regulations? As a farmer, I have to abide by the COSHH regulations. Every single chemical we use has to be assessed and the correct measures taken to prevent the person coming in contact at all and given the correct protective clothing. Is that something that Health and Safety is on top of in this area?

Philip White: As I mentioned earlier, the COSHH, that legal framework, among other regulations, applies equally to hand car washing as it does in agriculture, construction or wherever else. Our work in car washes is predominantly what we would call reactively driven, so where we get intelligence, particularly as I said earlier from the police and maybe from some other authorities, we will participate jointly or we will investigate those matters. We do have a concern and advice line where people phone in concerns about a whole raft of things. It could be concerns about a building site or about working in a factory. We do get some concerns about conditions in car washes and they are followed up.

Our work over the last three years has increased on the back of intelligence. Clearly, there is much more awareness of problems in this sector, plus I would suggest that we have raised our game in working with other agencies and this is clearly an area where we could do better in how we work with other organisations. I provided some figures for the Committee.

Last year at HSE, largely on intelligence, we did about 100 visits. In 75 of those we found what we call material breaches, which is about 63% of those visits. A material breach is where the inspector thinks the law has been broken and needs to write to the occupier or the duty holder and there is an element of fee for intervention. For the time it takes the inspector to put things right, the duty holder has to pay—

Q119       Mr Robert Goodwill: Do you generally issue advice to the businesses or does it go straight to prosecution in those cases?

Philip White: No, we have a suite of operating. It could be advice, it could be material breach and therefore there is a fee for intervention; it could be that we serve a prohibition notice stopping the work, and we have served a number of notices for issues ranging from electrical safety, welfare and also the handling of chemicals, non-compliance with COSHH regulations; we can serve improvement notices where people have a minimum of three weeks to put things right on a particular issue. Ultimately we do have the power to prosecute for serious breaches of health and safety legislation. There is a framework for decision-making.

There are obviously big demands on resources locally but some teams, on the back of some intelligence, have done local work in their areas with hand car washes. We also work closely with the environmental health departments of local authorities, because they have a role in enforcing health and safety in the workplace. It tends to be around offices and shops but there is a crossover in the hand car wash area. They are responsible for health and safety at petrol forecourts and we have done one or two initiatives with local authorities in this area. We did some work in the east of England where 140 hand car washes were inspected by HSE and local authorities. We took action with the service of notices. We also were asking specifically in some cases about whether businesses had employer liability compulsory insurance, which they are required to do if they employ people, and that was one thing where a number of notices were served. We will take action where we get involved and find breaches.

Q120       Mr Robert Goodwill: How many actual prosecutions have you lodged in this area?

Philip White: I am afraid I don’t have the figures on hand for the numbers of prosecutions or notices but it is something that I am sure I could provide to the Committee to follow up.

Chair: If you can follow up in writing, that would be helpful.

Q121       Mr Robert Goodwill: In cases where you do prosecute, what is the upfront cost to the HSE in getting the evidence and presenting it? How does that compare to the size of the fines that might be levied in those cases?

Philip White: That is a difficult one to answer because it depends on the type of investigation that you are involved with. If you take the example of the terrible incident that happened at Didcot power station a couple of years ago, that investigation is still on-running. There might be an investigation of a fatal or major injury where the evidence is fairly straightforward to gather, you are dealing with maybe only one specific duty holder, it is not a number of suppliers or whatever, and that could be fairly straightforward when we go to court. I am afraid it does vary and fines are down to the courts. They are guidelines that magistrates and judges have to follow. There are the sentencing guidelines that have been set down but they changed some two years ago and we have seen quite an increase in the penalties that have been handed out, particularly when there has been death or serious injuries at work, when those matters have been taken to court.

Q122       Mr Robert Goodwill: I guess there is also the risk that some of these businesses will just declare bankruptcy to avoid paying the fines, which is what happens quite often with immigration enforcement cases where it is £20,000 per employee. I suppose it is quite a difficult target to hit with some of these fairly transient businesses.

Philip White: Absolutely, it is, and it is challenging. In every investigation we not only look at the employer but we also look at decisions that have been made by the senior managers. We have on occasion, I can’t say for hand car washes—I ran HSE’s construction division for a number of years—taken cases against individuals where we felt that they clearly had a responsibility, they didn’t meet the standards they should have met as the owner of the business, and we prosecuted them as an individual. That can happen regardless of whether the business is still there or has gone bankrupt.

Mr Robert Goodwill: Thank you. That is very helpful.

Q123       Dr Matthew Offord: I want to ask the Environment Agency what is the proportion of rivers that are failing the EU water framework directive?

Helen Wakeham: 14% of waters in England meet good ecological status. Good ecological status is the endpoint for the water framework directive and it describes a water body that is at near natural status, so it is a very high standard to reach in an industrialised country. We talk about good ecological status at 14%, but we call all the things that go to make up good ecological status—chemical, biological and quality of the water—elements and of those 76% of our water bodies meet that good ecological status barrier. The challenge for a good ecological status as a whole is that each water body needs to meet that standard for every single element to qualify as good ecological status, so it is a very high standard to reach.

Q124       Dr Matthew Offord: What about the other 86%?

Helen Wakeham: Of the 86%, 76% of determinants, as I have said, are good and improving. We know that since 2015 we have enhanced 3,000 kilometres of water bodies, so we are stepping towards good ecological status all the time. It is something to aim for but it is not the best way to measure progress because until you get absolutely every element to good, it does not qualify as good ecological status, so 3,000 kilometres enhanced in three years—

Q125       Dr Matthew Offord: I am trying to establish what is not achieving that quality. You mentioned 76% good, so what is failing?

Helen Wakeham: There are some issues that are very intransigent. The Thames will never meet good ecological status because it has an embankment. The physical modification of the Thames will prevent it from getting to good. However, the water framework directive is proportionate and flexible in that it offers different standards for water bodies where it is technically or financially not feasible to get to good. It offers a lower standard for those where we look at good ecological potential and it also offers us longer to get there. The directive as written said that member states should aim to get to good for 2015, but there are different standards applied to different bodies of water based on the feasibility and the cost of getting to good.

Q126       Dr Matthew Offord: That is helpful. I will certainly have a look at the directive in a bit more detail. How many car washes have been prosecuted or taken an enforcement action for polluting water courses and rivers?

Helen Wakeham: For last year we issued warning letters to, I think, four car washes out of the 32 where we found an environmental incident occurring.

Q127       Dr Matthew Offord: What would that warning letter consist of?

Helen Wakeham: That letter would consist of a warning that if they did not cease and desist that activity and that discharge into a surface water drain or directly into a water course, we would consider further action. But our experience over the last few years is that where we have issued warning letters and advice, that advice has been taken.

Q128       Dr Matthew Offord: What potential damage could have been caused and what remedial action was taken to address that apart from just the warning letter?

Helen Wakeham: Generally, what we expect operators to do is to divert the drainage into a foul drain because there is not a simple thing that a hand car wash operation could do to clean up the water to put into a surface water drain. The cost of a treatment system for a small hand car wash would be prohibitive, so the simplest and cheapest thing for them to do and the best thing for the environment is to connect to the foul sewer.

Q129       Dr Matthew Offord: Scotland has similar rules but different rules. Would it be easier to ensure that every business had the correct drainage if you had the same rules as we have in Scotland?

Helen Wakeham: I think the rules are broadly similar, so technically there is an offence in England and in Scotland of discharging into a surface water drain. I think the regulations are written slightly different but the effect is the same.

Q130       Dr Matthew Offord: It is my understanding that some of the guidance is more readily available in Northern Ireland, Scotland and Wales and it is not so readily available in the English regions, from the Environment Agency in England.

Helen Wakeham: That is true. There is a series of pollution prevention guidelines that were called in England pollution prevention guidance. I think the title has changed slightly now. They were withdrawn in 2015 in England as all of our guidance went on to gov.uk and the reason that happened was to reduce the volume of guidance that was available from the Government. However, the guidance in the pollution prevention guidelines in Scotland would stand in England and it is actually really useful stuff. I have to claim an interest in that I spent quite a lot of my career writing pollution prevention guidelines. I think they are a relatively simple and easy way of making sure that very small businesses have access to good advice. However, they do come at a cost in that they need to be created and maintained.

Q131       Dr Matthew Offord: What would you change about that guidance, as you have such an insight?

Helen Wakeham: I think it is helpful to provide guidance that is recognisable to business sectors so they can say, “Yes, that is about car washing. That guidance is for me”. Having something that is directed towards a substantially-sized industry made up of small businesses is really helpful. The question is whether that is provided by a Government agency or by an organisation like the Car Wash Association, for example. There has always been a debate about whether guidance is better provided by the public or private sector.

Q132       Dr Matthew Offord: This is not trying to put you on the spot, but just to confirm that car washing is not really a priority in comparison to some of the other water pollution-related incidents that occur; is that correct? I understand it is on a risk-based approach.

Helen Wakeham: On a risk basis, car washing will never make it to the top of the list. However, we know that about a third of the incidents and a third of our water pollution problems arise from the water industry where we have a sophisticated regulatory regime and a source of income for that because water companies can charge their customers. About a third of issues arise from rural land and agriculture where there are mechanisms by which we manage that impact. The final third is much more difficult and the 10% or 11% that arises from urban areas is really hard to tackle because it is lots and lots of very small sources. Hand car washing is a part of that; people washing cars at home is another part of that; road drainage is part of that. There are things that we need to do and ways that agencies need to work together to tackle that 11% because it is tricky and there is not a magic bullet for it.

Q133       Joan Ryan: Can I direct this question to Mr Harrison to start with? We have heard about a whole spectrum of labour exploitation, illegally low wages, cases of debt bonded, possible trafficking. Do you think that our agencies have the tools at their disposal to tackle this exploitation?

Tim Harrison: Generally, yes, although I guess we would have a concern with the investigation powers that the agencies have. To a certain extent we have reached the situation where, on the one hand, for the enforcement bodies to intervene they would need actionable intelligence and a good reason to go in. On the other side, we need to be able to get that intelligence for business sectors, consumers or whatever. One of the things that we highlighted in the Government strategy this year was the approach they use in Scotland, for instance, with the Agricultural Wages Board. Part of that legislation includes something called compliance test inspections where they are able to visit something in the region of 100 farms a year, essentially to give a sample of the levels of compliance or non-compliance and what the nature of that is. That may be helpful in this case, for instance, particularly going to a pop-up car wash and being able to do an inspection to find the level of compliance and take further action.

Q134       Joan Ryan: We have talked about the Modern Slavery Act—and perhaps we could bring in Mr Dixon on this as well—and that it is ineffective at combatting exploitation at these pop-up car washes and other small places such as nail bars. Has it helped in your work? Does it make a difference, either of you?

Darryl Dixon: When we talk about the Modern Slavery Act, quite a lot of the conversations are about the transparency in supply chains requirement to produce statements on how a business is operating, whether it is exercising due diligence in its supply chain, and that really only applies to businesses with a turnover of £36 million. Appreciating the point you are making, we are looking at very small enterprises in hand car washes and nail bars. They are outside the scope of that but they can be within the scope of the supply chain, to use that term, for a landowner. If all of a landowner’s enterprises mean that it has a turnover of over £36 million, it needs to exercise due diligence on all the activities that occur on its land to make sure it is not contributing to modern slavery in the way that it might rent out that land for a different activity. It can have an impact but what we need to do, because it is still early days, is educate those landowners that they have a part to play in making sure that their property is not used for irregular practices. I think that is still an emerging picture in relation to the application of the transparency in supply chains requirement and how people understand and exercise due diligence and look beyond just simply their very immediate business.

The Immigration Act 2016 amended the Modern Slavery Act further and that is where our ability to investigate those offences came in. Now we have the ability to investigate a forced labour offence in the Modern Slavery Act. That is the powers that I mentioned earlier that we have been taking on since May 2017. It is still early days but I think that has enabled us, as an organisation that is experienced in labour exploitation, to be able to operate more effectively across the labour market. Prior to that we tended to operate purely in the agricultural sector but also advising police forces on what constitutes forced labour, effectively as a technical adviser in some cases where it was outside our sector. Predominantly we would have operated in the agricultural sector. Now we can deploy our experience on a wider basis.

Q135       Joan Ryan: Do you think the Modern Slavery Act neglects the role of small businesses? Like you say, they are not in scope unless they have this turnover of £36 million and the only other way is if they are on a piece of land that gives the landowner a responsibility. It seems to me there are holes in this.

Darryl Dixon: I think the aim of it was to create a nudge to business to better understand and control those subcontractors, users of land, and so on, on compliance and that is a starting point. Anything that assists in building a greater awareness and prevention of forced labour in supply chains is key because that will ultimately assist us in reducing the number of cases where labour exploitation does occur. It is part of a package. It is not the only thing. Pursuing the investigations is equally part of that package. The ability to have an operational response to investigate and prosecute forced labour is key but we need to also ensure that we have raised awareness and prevention to support a longer-term reduction of some cases.

Q136       Joan Ryan: What do you think, Ms Frazer? Do you think there is a lack of local implementation?

Dawn Frazer: Generally there seems to be a lack of understanding of what a car wash is and how it works to start, right across the board. I do not think we see as much human trafficking on car washes. I think it is more to do with exploitation, which is hard to detect unless you go in and investigate it, which obviously we do. It is really hard to find that, clearly. We know what to look for and obviously if we were to find that then we would pass it on.

This part of it is such a new thing. Obviously we have only been doing it for a year so it is quite a new thing and it is something that will build up. Our hope is to work with them proactively to make sure they are aware they are being watched and to start them on the right path in all car washes to stop that from happening in the first place.

Q137       Joan Ryan: Do you not think, anybody who wants to address it, that the fact The Clewer Initiative, a voluntary organisation, has brought forward the app demonstrates that there is a failure in the regulatory system? It is a great initiative.

Darryl Dixon: It illustrates that there is certainly a role for the assistance of the consumer and voluntary organisations in raising awareness and giving us information that helps to broaden our picture of where hand car washes are. We are also looking at the fact—Tim will probably come on to this in a moment—that although the Director of Labour Market Enforcement recommended licensing as a pilot by the GLAA for hand car washes in a distinct area, clearly that would require additional legislation that will take some time to come through, bearing in mind other priorities.

That is why we are working with the industry to develop a code of practice that we will be looking to operate from September. That is being supported by ourselves and Government Departments, in particular Health and Safety, with advice on what that would constitute and how we would advise that organisation, as well as the approach with trends and irregularities that we identify for criminal investigations so that we can start to build a more compliant industry. We are working through the supermarkets with all their franchises as a starting point. We will test out the West and East Midlands in September and then look towards how we can expand that to those members of the retail association and other forecourt activities such as gym chains and garden centres where these operations also exist, so that we build that in a very similar way to what we did with the licensing approach.

Notwithstanding that, it will not raise the compliance of every single business. It will identify those that need support to become compliant, it will identify those that do not fancy the idea and have to take themselves out of the business, and it will assist us in restricting our focus to those who want to continue to operate but want to operate in an irregular and non-compliant manner, helping to focus our enforcement activity in those areas in much the same way as we have been effective in the agricultural sector since 2006. That does not mean to say there are not unlicensed gangmasters still operating.

Q138       Joan Ryan: I do not decry developing a code of practice at all. However, it does not sound like your efforts are focused on where the more serious forms of labour abuse are more likely to be taking place.

Darryl Dixon: We need to be clear that we are building a compliant industry sector rather than one where there can be non-compliance even by supermarkets, or in other forecourts and other landowner-operated activity. What we want to do is make sure that consumers have certain locations where there is greater confidence of compliance with the national minimum wage and less likelihood there will be risks to workers—either health and safety risks or modern slavery risks—and therefore segment the market in a manner that means we can focus our activity on those that are more likely to be the risky ones, as you referred to. That equally reduces the amount of intelligence information we receive that is non-specific and relates to issues that will not be our focus. We will be dealing with those through a prevention approach rather than an investigation approach.

Q139       Chair: We have the Ministers waiting outside so just a very quick question for Mr Harrison and Ms Frazer about licensing. Is there not a risk, similar to what we have just heard about the code of practice, that you will find that legitimate businesses will adopt the licensing regime but the people who want to go under the radar will carry on doing so?

Tim Harrison: Licensing as we have proposed it would be state-led and be mandatory. That would include everyone.

Q140       Chair: We are talking about businesses that are cash in hand, are not paying tax and are not paying the minimum wage. Why do you think, if there was a mandatory Government-led scheme, they would necessarily comply with that?

Tim Harrison: Drawing parallels with the GLAA’s approach to the licensing in the four sectors that it covers, it enables them to have more of those inspection powers that I mentioned a moment ago and therefore bolsters the enforcement effort to ensure greater compliance.

Q141       Chair: You would need pretty significant enforcement resources for this to have any meaning. Perhaps we could bring Dawn in. You have been running the WashMark. You audit it. What do you think about a licensing scheme?

Dawn Frazer: We are finding that as we go out to sites and we explain to them that there is a possibility of licensing coming in the future and that clearly if they are not compliant by them there may well be an issue, they are very receptive to it and very open. A lot of them will say, “We do not know who to talk to. We have never been given this information”. Our first visit is to sit down with them and find out what they do not have. Then they have 120 days. We will work with them through that to completion. It is a five-star review and every one of those sites has to be registered with Companies House, which immediately makes them very visible.

We are currently training more staff to get out there because we do not believe in giving compliance from an office. We feel that it is important to go out and sit and talk to these guys and it gives us a very good view of what is going on onsite as well. What it will eventually do is pinpoint those sites that are compliant and give the registry bodies the ability to be able to target those that simply will not comply.

Q142       Chair: This is a voluntary scheme at the moment. Would you like to see a mandatory licensing scheme?

Dawn Frazer: It would be very difficult and incredibly expensive to put into practice. If it was a case of having a voluntary scheme, there was a much tighter regulation and my colleagues here were prepared to go in, work on those sites where there was a major problem and close those sites down, that would very quickly change the industry. We do not just work with hand car washes; we work with all vehicle washing. We love vehicle washing. As a consequence, we just want to see that it is being compliant. We would say that any site that is WashMarked is going to have a minimum of a £9 start price to ensure that the minimum wage can be paid. We would like to see that rolled right out across.

Chair: Thank you all very much for coming. Sorry to rush you a bit at the end but the Ministers get impatient if they are left waiting out in the corridor for too long. Thank you very much. It has been very interesting.

Examination of witnesses

Victoria Atkins MP and Thérèse Coffey MP.

Q143       Chair: Thank you, both Ministers, for coming along, but we are obviously particularly pleased to see Dr Thérèse Coffey back in her place after a recent absence. You look in the best of health and that is good to see.

To start, obviously this is an area that spans both of your remits and those of various other Government colleagues as well but it does seem to be an area that has passed under the radar in terms of legislation and enforcement. The regulations might be there but in a number of spheres, whether it be paying workers the minimum wage, health and safety rules or environmental pollution, it really does seem that the law is being flouted in plain sight on our streets. Would you agree with that assessment?

Dr Thérèse Coffey: I do not have any basis to be able to say that the law is being flouted. I am sure there is no doubt from all our constituency experience that we have seen a rise in consumers wanting to do this. The ROC did a survey a few years ago that showed about half of car washes are done by people at home and they just put it off in the road and into the water system without any thought about pollution. This is definitely growing as a convenience thing for constituents that we represent.

I am content with the approach we are taking in terms of consideration of the environment. There has been some good work done by the Environment Agency working with, for example, Coventry City Council, to follow up on some of the thoughts there, where there have not been the connections into the water network that most other urban areas have. I think we are responding well. We respond, of course, when people put in complaints or concerns about potential pollution and those do get followed up. I do not think we are ignoring it but the overall assessment from the EA is that this is a low-risk situation.

Victoria Atkins: May I thank the Committee for taking an interest in the modern slavery aspect of hand car washes? We know that unfortunately modern slavery tends to hide in plain sight. Following the implementation of the Modern Slavery Act, which is world-leading in its ambition to tackle modern slavery and trafficking, one of the problems we have is that we know we need the help of the public and the help of businesses to identify where exploitation is carrying on. The Government have a clear programme of tackling modern slavery and trafficking and indeed we extend it not just domestically but overseas as well with the Prime Minister’s call to action last year at the United Nations to end trafficking by 2030.

Q144       Chair: May I can just bring it back down, Minister, to these specific issues? There has been a lot of excellent work done on modern slavery and trafficking but many people do feel that only very recently—perhaps over the last 10 years or so, we have heard—there has been no action taken on what we see as examples of certainly labour abuse, if not modern slavery, on our high streets. In that respect the focus has all been on the big companies rather than the nail bars, the hand car washes and the cash-in-hand places. It is important, obviously, that we deal with the big companies and we look at transparency in their supply chains but our inquiry is about the hand car washes. I am sorry to rush you but we are a little bit pressed for time.

Victoria Atkins: No, absolutely. It was just to set it into the international and national context. Hand car washes is a way in which people can be exploited. We know that of the 1,328 modern slavery operations since December 2016, 86 have stated the involvement of labour exploitation in car washes. Of these, 37 were live operations where the primary exploitation type is labour exploitation at a car wash. If the Committee concludes that the scale of it is on the lower side at the moment, I suspect we would agree with that. We need the public’s help and businesses’ help to uncover it where it exists.

Q145       Chair: We will go on a bit later to the Church of England’s efforts in that respect. These businesses are cash in hand and I know that neither of you are directly responsible for this but have the Government made any assessment of the tax revenues that would be lost by the amount that is going uncollected in the informal economy?

Dr Thérèse Coffey: I do not know the answer to that. I am trying to remember who it is. Mel Stride would probably be best to provide that information.

Q146       Chair: Perhaps as a Committee we should write directly to the Treasury and try to make an assessment of that.

Going back to Victoria Atkins, there seems to be a bit of overlapping of responsibilities or a lack of clarity as to who may be responsible. We have the Anti-Slavery Commissioner, we have the Gangmasters and Labour Abuse Authority, who we have just heard from, and the Director of Labour Market Enforcement, and we have just had the Deputy Director. Putting to one side the health and safety and the environment aspects, is it clear where responsibility would lie for the labour abuses and so on? Where is the starting point?

Victoria Atkins: The starting point is, of course, the moment at which a person is trafficked across national borders into this country so that they can be exploited in car washes or elsewhere.

Q147       Chair: But if you have a car wash where there is a concern, who steps in first?

Victoria Atkins: We know now, sadly, that the highest number of referrals into the NRM are UK nationals. It is not just international trafficking; it is domestic trafficking as well.

There are a number of approaches to this. In law enforcement it is the National Crime Agency that has national oversight of this but of course local police forces play an absolutely critical role. In Lincolnshire, my own constabulary had a landmark prosecution last year where a gang of exploitative criminals were using people to do all sorts of things on their farm.

It is the NCA, it is local policing, but of course we also have the very important work of the Gangmasters and Labour Abuse Authority, who have recently had their powers increased so that they can go into premises where they suspect a criminal offence is happening and they can investigate as well. They work very closely in partnership with the NCA and with local policing because we recognise that if there is an operation in a county or a market town the local police may not have the experience or people on the ground to deal with it. They can draw on the help of the GLAA and the NCA. Alternatively, if the inquiry is directed towards the GLAA they will need others to help as well. This teamwork is absolutely critical to tackling modern slavery, not just in hand car washes but across the board.

Q148       Chair: There is still a concern about who pulls it together when there are various people who could intervene, but perhaps we can come on to that.

Victoria Atkins: There is the Independent Anti-Slavery Commissioner, Kevin Hyland, and if I may I will record my thanks formally to him for the extraordinary work he has done as the first commissioner. He plays an important role. He is not law enforcement. He is there to hold the Government, local government and others to account. He has done some valuable work on hand car washes particularly and this year he has commissioned research with the University of Nottingham to find out more about exploitation within this industry and possible answers to it.

I appreciate there are a lot of people who have responsibilities in this but we are all very clear that they have to work together as a team with their different roles and responsibilities so that we can tackle it effectively.

Q149       Joan Ryan: My question is more to Minister Coffey. The DEFRA and Environment Agency submission suggests that this is not the largest water pollution problem nationally. However, we have heard that wash water can be toxic to aquatic life and cause problems at the local level. Should we not be doing everything we can to enforce water quality standards across the board?

Dr Thérèse Coffey: The EA has looked into a number of incidents. I think there were 32 that they have identified, which were category 3, “minor impact”. That does not mean you would want that to happen. They will use their powers but it is normally about trying to correct an outcome. A good example is that when they went to Coventry they found that 75% of the hand car washes were properly connected and 25% were not. Those 25% then sorted that issue out. It is about trying to respond to issues where we know they exist but I am not going to pretend that the EA has resources to proactively go and check every single hand car wash around the country. We need to respond to evidence and there is already pretty good evidence that the majority of hand car washes are not causing problems.

Q150       Joan Ryan: There is a major concern that the EA does not have the resources to deal with anything other than major pollution incidents, so that much of this becomes flagrant law-breaking that hand car washes may feel is tolerated.

Dr Thérèse Coffey: I do not think it is the case that the EA only has resources to deal with major pollution incidents. I am giving you the example of the ones they investigated. They identified 32, which were minor. That does not mean they were ignored but in terms of the grand scheme of impact on the environment I would say the EA has done it. What I suggesting is that the EA does not have the resource to turn up to every single hand car wash around the country as part of a routine check. They would tend to respond on the basis of risk to the environment and at the moment their assessment is that the risk is low.

Q151       Joan Ryan: Are you telling the Committee that the EA has sufficient resources to enforce water quality standards across the board?

Dr Thérèse Coffey: I believe it does. I do not recall being asked by the chief executive for greater resource in that regard. They are the independent regulator in that sense.

Q152       Joan Ryan: Would it make it easier for the Environment Agency to ensure that every business had the correct drainage in place if we had similar rules to Scotland?

Dr Thérèse Coffey: I understand that Scotland has what is called a general binding rule. We have a law, passed in 2016 through the environmental regulations, that it is an offence to release toxic pollutants into a watercourse. The outcome is the same. They are both trying to get to the point where these things are disposed of properly. I do not see any particular reason why changing the regulation in the Scottish way would make the outcome any different. They have not prosecuted people. It is not the case that it seems to be doing more.

Joan Ryan: It is more about enforcement than—

Dr Thérèse Coffey: I think it is that the regulatory framework approach is slightly different in Scottish law than it is in English law.

Q153       Joan Ryan: Do you think we should put more onus on the water companies to ensure that hand car washes in their areas are connecting to the correct sewers?

Dr Thérèse Coffey: Water companies deal with the hand car washes by issuing the permits. That is the way they connect to the foul sewers. In the vast majority of urban areas, what goes into the surface water ends up going into the combined sewerage network anyway. It is about understanding and recognising the age of some of our infrastructure. There are some parts of the country where those connections do not exist. I think the example I used of Coventry is one and Leicester is another. I believe the water company has done more work to make sure there is that kind of connection but I am not aware that they have massively invested to change the water infrastructure within the city itself. There might be something there that could be done in future.

Q154       Mr Philip Dunne: Minister, you said a couple of things there that it would be very helpful for the Committee if you were able to substantiate. You said that there is pretty good evidence that hand car washes are not causing a major environmental problem. We have had evidence that, while that may be right across the country as a whole, in localised examples there can be significant runoff causing pollution of other waterways. If the EA has given you evidence that that is not the case it would be very helpful to have that.

Dr Thérèse Coffey: I am sure we can write in. I have been told there are 32 incidents recorded.

Q155       Mr Philip Dunne: Secondly, you suggested just then that in many areas of the country surface water tends to be picked up by the foul sewerage system.

Dr Thérèse Coffey: The combined sewerage, yes.

Mr Philip Dunne: The evidence that we were hearing in previous sessions was that the problem with the unregulated hand car wash sector is that they go into the storm drains and many of the storm drains go directly into the watercourses and not into the foul sewerage system. Again, if there is any evidence to suggest that it is picked up, that would be very useful to have.

Dr Thérèse Coffey: I think it is more by default. I am not pretending this happens in the countryside, by the way.

Mr Philip Dunne: It certainly does not happen where I live.

Dr Thérèse Coffey: In the majority of urban areas is where the connections do happen. It would be helpful to understand—we perhaps need to look back through the evidence that has been given—where this storm drain issue has been highlighted. As I say, we are conscious of certain urban areas where there is no direct connection of the surface grid into the combined sewerage, but there has been a lot of work done already to get the hand car washes connected to the right foul sewer. If there is a particular issue emerging from an area, I am sure the Environment Agency regional manager for that would be happy to build on the work that we did in Coventry and make that happen.

Q156       Mr Robert Goodwill: My question is for Minister Atkins. You may be aware that the Church of England has created an app for people to report incidents of modern slavery at hand car washes. Do you think it is safe or advisable for individuals to be investigating these issues when there could be organised criminals and other dangerous people involved?

Victoria Atkins: May I welcome The Clewer Initiative’s programme? It is a really simple app to put on your phone and I encourage members of the Committee and everyone else to put it on their phones if they are in the habit of washing a car regularly.

It is independently designed but having looked through it myself, it is very clever. You log the location. It is on your phone so there is no reason that the people at the car wash would know that you are doing this. It takes you through a series of questions and, depending on the answers, they may suggest whether or not there is cause to be concerned. If a certain number of answers come through as positive, I suppose, you are encouraged to ring the modern slavery helpline. The data from that helpline feeds into the National Crime Agency. We are very much hoping that if people use this app it is going to help us understand where there are car washes that people are worried about.

Q157       Mr Robert Goodwill: Do you think it is appropriate to basically outsource monitoring to civil society like the church or even private bodies like the Car Wash Advisory Service? Should the Home Office or other bodies of the state be more proactive themselves?

Victoria Atkins: We have to work together on this. With the best will in the world, we cannot have a police officer on every country lane across the country, or in every street in every town and city. The point is what Ms McCarthy was referring to in her first question. Very often this exploitation happens in plain sight. The more we can educate the public and ask for their help in spotting this sort of exploitation, the better response we will have where there are those pockets of exploitation.

If I may, I will give you an example. Very recently a local sixth-form college, Boston College in Lincolnshire, joined forces with the GLAA to help educate their students on the signs of modern slavery. This is from two angles. First, in an agricultural area, it is about understanding the signs of agricultural workers who may be at risk of exploitation. Secondly, it is about resilience building. If they are in a job where perhaps the boss suggests that they will not pay them the national minimum wage, that young person will know that that is not right, they do not have the accept it and they should not be working in those conditions. I hope it will give them resilience as well to look after themselves.

With all of these forms of exploitation—hand car washes are one example but nail bars are another thing that we know the Director of Labour Market Enforcement has been looking at—if we can help the public make an informed choice, we hope that will be a tool in cracking down on those gang leaders who are exploiting other human beings.

Q158       Mr Robert Goodwill: Often the reason that individuals can be susceptible to modern slavery is because their immigration status has not been regularised. They are visa overstayers, they have come into the country illegally or have been smuggled in specifically to be employed in that type of situation. How closely do you work with immigration enforcement and your colleague the Immigration Minister to ensure that you can clamp down on people who are being lowly paid or, in some cases, not paid at all, and ensure that people who have no right to be here can be removed as well?

Victoria Atkins: I am very conscious of your expertise and experience in that area. We work very closely together. When a police officer suspects that a person is the victim of modern slavery, they refer them into the national referral mechanism. It is the system that supports them and protects them. We are introducing various reforms to further strengthen and improve the NRM. One of the improvements is that we are in the process of consolidating into a single unit of expertise in the Home Office all the people who will be considering NRM applications. They will also be taking into account issues of asylum, immigration and so on. We are very conscious that if someone is in this country illegally because they have been trafficked, we have to help them come out of the NRM and not be susceptible to being retrafficked.

Q159       Mr Philip Dunne: My first question is also for Minister Atkins. Laudable as the Modern Slavery Act is, and we all applaud it, it has some thresholds that mean all of its terms may not be applicable to small businesses like nail bars and hand car washes. I think there is a £36 million threshold for corporate compliance. Do you see that as a barrier to enabling regulators to take action where there is evidence in small businesses?

Victoria Atkins: I would be very conscious of the Committee’s conclusions on this in due course, but the approach of the Act seeks to address not just the large corporates through section 54, transparency and supply chains, but also the individual criminal offences for which an individual can be prosecuted. On the section 54 provisions, we are pleased that, for example, Tesco in its modern slavery statement recognised a vulnerability with regards to the car washes that operate on some of its forecourts and it is taking action as a result of that. That is to be welcomed.

Of course the Act applies to the very small car washes just as much as it does to any other employer and, what is more, there are a host of regulations in other fields. Health and safety has been mentioned, as well as the national minimum wage and so on. I believe the full body of law does place real responsibility on small businesses to ensure that they are treating their workers properly and with respect.

Q160       Mr Philip Dunne: You reference Tesco as being a good exemplar and I think you are right to do so. Does the fact that Tesco has taken action and used its modern slavery statement to explain what it has been doing give rise to any questions in your Department as to whether other similar major companies who have similar activities happening on their sites should do anything proactive about it?

Victoria Atkins: Very much so. I am pleased that the GLAA is supporting the pilot scheme called the Responsible Car Wash Scheme, along with the modern slavery police transformation unit and the East Midlands regional organised crime unit. It is a scheme that major supermarkets including Asda, Marks & Spencer and Sainsbury’s are participating in to develop a code of practice and ensure their businesses follow that.

This is one of those classic case, I would argue, where it is not just about legislation and regulation, important though those are. It is not just about law enforcement, vital though that is. It is also about a culture change. If we can take business with us so that they themselves are looking at their own supply chains and their own practices and adapting their business models accordingly, that surely is a good thing.

Q161       Mr Philip Dunne: I completely agree with that. Sir David Metcalf, however, has said in his first report that there is a case for licensing. Would you like to comment on that in light of what you have just said?

Victoria Atkins: We are very grateful to Sir David for his report. It was a very detailed report. I hope the Committee will understand that we are in the process of analysing the report at the moment because, of course, this touches on so many different Government Departments and the suggestion he has come up with does require careful analysis. We are looking to respond to that later this year.

Q162       Mr Philip Dunne: If you are minded to go along that route, would you also be looking at what kind of enforcement mechanism would be required?

Victoria Atkins: Yes. It would seem to me that if a pilot or other type of scheme were to be set up, of course we would have to look at how that would be enforced.

Q163       Mr Robert Goodwill: Just on that point, sometimes charities have pop-up car washes and people volunteer. I hope that nothing that comes in would prevent those sorts of short-term charitable operations being carried out.

Victoria Atkins: So would I, not least because the last time I had my car washed, which I have to confess was many months ago, was in fact by a local school who were fundraising for their school premises.

Dr Thérèse Coffey: We have to save bob a job.

Mr Robert Goodwill: Yes. It is a headline.

Q164       Mr Philip Dunne: Minister Coffey, if licensing were to be a route that is pursued by the Home Office presumably your Department would also wish to take part in it in some way so that the environmental aspects can get wrapped up.

Dr Thérèse Coffey: We would have to consider that in due course. One of the things I was trying to get across to the Committee is that the majority of people do their own car washing. We have Scouts, Guides, all those sorts of things. We have fire stations often doing charity fundraisers. If you are creating licensing for an activity, what do you do about the majority of the activity that would not require a licence? We have to be sensible in how we approach this: what is it we are trying to really tackle?

Q165       Chair: Clearly the difference from somebody washing their car on their driveway—which happens less frequently than it ought to, I think, in most people’s cases—is the sheer quantity of chemicals and polluted water that would be generated from a hand car wash, which is basically washing a car every few minutes or so. There are harsher chemicals being used as well, from some of the evidence we have had. In the interests of speed, they are using harsh chemicals to get some of the worst of the grime off. I think there would be a way of developing a licensing scheme that would address the people who are doing it commercially and not bring in people doing it for Comic Relief or whatever.

Dr Thérèse Coffey: Indeed. Well, I think we would need to look at the evidence behind that. That is the best way of saying it. It is whether it is proportionate, really. It is not a topic that has come up for discussion so far. Of course if it is a recommendation in your report we will have to give it careful consideration.

Q166       Mr Philip Dunne: One thing we talked about in the previous week and that has not come up much today is the planning requirements around hand car washes—again, this is not the responsibility of either of you—and whether moving towards a change of use requirement to establish a car wash on a forecourt would be subject to normal planning procedures as opposed to permitted development, which it is at the moment. Has that come up that either of you are aware?

Dr Thérèse Coffey: I am not aware.

Victoria Atkins: I am afraid I do not recall having that raised with me.

Dr Thérèse Coffey: I would have thought your issues would be least on the forecourts because to some extent there will be connections.

Mr Philip Dunne: Yes. It is supermarket car parks that don’t have the same—

Dr Thérèse Coffey: I know the EA has approached supermarket retailers to talk about how that process is working. I would have thought the biggest challenges are your pop-up ones, which literally are on the move quite regularly.

Q167       Mr Robert Goodwill: One other thing that struck me during our previous evidence session is that we have experts on the environment and water quality, we have experts on human trafficking and labour infringements, and we have experts on health and safety and chemicals. If we were to move to a licensing arrangement, do you think you will need to find people who have expertise in all those areas rather than have different inspectors inspecting different things? It did strike me that if the Environment Agency went to a car wash, it is not equipped or qualified to necessarily take a view on some of the other infringements that might be taking place.

Dr Thérèse Coffey: You may appreciate, being a farmer, that we sometimes have that challenge on other inspections and we are looking at ways to try to simplify that and increase things. I do not know what powers would be required for the officers to be able to undertake the different investigations that you suggest. I am not an expert, I am afraid, on that aspect of the law.

Victoria Atkins: This is why we are looking at it very carefully, because there are many potential ramifications for such a system. It is something we are looking at with great care.

Chair: If there are no more questions, it was quite a short but sweet session. There have been times when Dr Coffey has been in front of us for probably three times as long. I am sure you are not going to complain at the fact that we have now come to an end. Thank you.