The Home Office is "failing" to punish rogue employers caught hiring illegal migrants as newly released data reveals as little as 5 per cent of fines have been collected.
Yvette Cooper, the Home Secretary, insisted in July that raids on "unscrupulous" nail bars and hand car wash businesses that hire illegal workers would be stepped up as part of a Government crackdown on the cash-only, black economy.
But the move has been described as "ineffective" after official data has revealed 12 of the worst-offending hand car wash companies, which were given civil penalties worth more than £650,000 in 2023 for hiring illegal workers, had paid only £33,750 of fines owed.
The data, released under Freedom of Information laws in October, means just 5 per cent of the debt had been collected in a year.
Brian Madderson, chairman of the Car Wash Association (CWA) which represents major forecourt operators, said such "failings" meant raids and fines were neither an effective punishment nor deterrent for an industry linked to criminal gangs and money laundering.
"It is hugely disingenuous of ministers and civil servants to boast of these fines being a deterrent to illegal immigration and use of non-registered workers if so little is being collected," he told The Telegraph.
"No wonder these non-compliant hand car wash companies continue to thrive by finding more workers from the black economy to take the place of those who are removed. Only effective coordinated action - not words - will tackle this problem."
The CWA analysed official Home Office data for the number of fines issued to hand car wash companies caught employing illegal workers.
Nearly £2.5 million of civil penalties were issued in the first six months of 2024, the equivalent of all such fines for that whole sector for all of 2023.
The CWA - the sister organisation of the Petrol Retailers Association - then identified the 12 worst "offenders" out of the 391 hand car wash companies fined in 2023.
The civil fines ranged from £30,000 given to one company in Catterick Garrison, North Yorkshire, to two £105,000 penalties given to one firm in Cheltenham and another in Lambeth, South London.
Mr Madderson said such "hefty fines" should have forced such small businesses to the wall, but the CWA saw "no discernible" change in the number of hand car wash companies. So, he submitted a Freedom of Information request to test how well the fines were being enforced.
In October, the Home Office's Immigration Enforcement Secretariat responded by revealing how the 12 hand car wash firms had been fined £645,000 but the total debt collected was only £33,749.
The response stressed how each case was "at different stages" of the "recovery process" and the "employer may have agreed to pay the penalty via a monthly instalment plan and therefore the debt may be collected over a much longer time period."
The CWA wrote to Bas Javid, the director general of immigration enforcement at the Home Office, to express "grave concern that only 5 per cent of the fines meted out during 2023 had actually been collected."
The letter says that "although the level of fines had been significantly increased, the lack of proper enforcement is allowing hand car wash [businesses] to continue operation with impunity."
Mr Javid warned last month that people who use cash-only car washes were "feeding the problem" of illegal immigration.
The CWA claims that since 2010 the UK has become the car wash capital of Europe with an estimated 5,000 hand car wash companies operating across the country.
The organisation is calling for a national licensing scheme because the cash-only industry is often "blatantly disregarding employment law" and often employs illegal immigrants, some of whom are paid below the minimum wage and are exploited.
Chris Philp, the shadow home secretary, called for criminal prosecutions and imprisonment for the worst offending companies which hire illegal Immigrants.
He said: "Yvette Cooper seems to think issuing a press release is the same as action. The last Government issued hugely increased levels of fines, but Yvette Cooper and Labour isn't even bothering to collect them. I want to see an urgent increase in enforcement to actually collect the fines.
"It is clear we also need tougher criminal sanctions - meaning prison - for the owners and operators of unscrupulous businesses employing illegal immigrants. These illegal car washes act as a magnet for illegal immigrants and we have to shut them down. 20 years ago these car washes were automatic.
"Some hand car washes are even in the carcass of the old automated ones. We should be using technology and mechanisation, not mass illegal immigration, for these basic tasks. Yvette Cooper needs to concentrate on gripping this problem, not issuing press releases."
A Home Office spokesman said collecting civil penalties for illegal working is "not straightforward", but debt is "pursued in every case"'.
The spokesman said: "Allowing instalment payments for those who provide substantial evidence of their inability to pay the penalty up front is not a lenient approach; it ensures that where individuals cannot meet the full cost at the outset, they do not evade payment and instead face the appropriate consequences over time.
"In addition, some businesses inevitably go bankrupt as a result of our enforcement action and that is an acceptable price to pay for getting unscrupulous firms out of the market, even if it means they cannot pay their penalties. In those cases, we work closely with the Insolvency Service to disqualify directors where appropriate and stop them starting up again."
He added how High Court action can be used, along with debt collection agencies. The amount of debt recovered can appear lower due to some companies going bankrupt and defaulting on payment.