Taxpayers were left more than £30 million out of pocket after only a fraction of the fines imposed on employers who hire migrants illegally were recovered by the end of the last financial year, inspectors have said.
Less than £6 million of the £40 million in penalties was paid and financial information published by the UK Border Agency (UKBA) was misleading and lacked transparency, independent chief inspector John Vine has said.
The UKBA has been too accommodating towards employers’ attempts to reduce penalties and the system has failed to create a hostile environment for those who benefit from illegal working, he added.
“Rather than being a deterrent to employing illegal workers, we believe that this leniency and perceived passivity may actually have had the opposite effect,” the inspectors said. Staff added they seemed to have “adopted ‘the customer is always right’ approach when dealing with objections and appeals because we accept everything at face value”.
The critical report of the agency’s operation of the civil penalties scheme in the North West found that while it exceeded its targets during the last financial year, they were not ambitious enough and the system was neither swift or effective. Worse still, in some cases the system was “slow, passive and cumbersome”.
Mr Vine said Parliament granted powers to enable UKBA staff to crack down on illegal migrant workers, “so it was disappointing to find that the UK Border Agency had a largely passive approach towards the civil penalties scheme”. It was also “too accommodating towards attempts by employers to reduce penalties”, he said.
The inspection team found UKBA staff were recording the total amount of fines issued but 70% of these led to an objection and 23% of those resulted in the penalty being reduced or cancelled, with the new – unpublished – figure being labelled as net recoverable debt.
An analysis of 74 cases found almost one in four (18) had the penalty reduced or cancelled, and in four of these cases the initial penalty was cut by more than £12,500. Of the £176,000 reduction across the 18 cases, £95,500 came from these four cases alone.
In the report, the inspectors said: “Overall, we found that the system did not create the hostile environment for those who benefit from illegal working that the Government had intended.”
One member of staff told inspectors: “Employers who pay up early are at a disadvantage because people who appeal or object can often enter negotiation and have their penalty reduced.”