Calls by MPs for tough action against tax-dodging rogue hand car wash operators have been rejected by the Government.

Last November Parliament’s Environmental Audit Committee delivered its findings after an inquiry into the hand car wash sector.

It criticised the authorities for failing to enforce the law on combatting labour exploitation and called for hand car washes to be licensed. It also highlighted the problem of hand car washes ignoring pollution controls.

In its response the Government accepted recommendations on pollution regulations, but insisted HMRC was already doing a good job of tackling tax-evading operators. It rejected the call for licensing and said that instead it would monitor the pilot of the voluntary Responsible Car Wash Scheme.

Brian Madderson, chairman of the Car Wash Association (CWA), was scathing in his response, saying: “The CWA is disappointed to see that the Government has produced so little evidence to back up its claims that HMRC is enforcing tax compliance at hand car washes.

“The Government is claiming that ‘HMRC investigates hand car washes across the UK to tackle these failings and prevent further tax losses to the Exchequer’. But this does not reflect the reality reported to us by the police and automatic car wash operators.

“The police estimate is that there are up to 20,000 rogue hand car washes operating in the UK. If HMRC had caught up with even a fraction of these, it would be collecting over a billion pounds in taxes. Yet the Government has produced no evidence to show that it is collecting much tax at all from rogue hand car washes. We are being given words of reassurance, but what we need is firm action against the modern slave owners who evade taxes and exploit vulnerable workers.

“What action is the Government taking to deal with the problems of environmental damage from mishandling trade effluent caused by the 20,000 hand car washes in the UK that operate illegally? More needs to be done to tackle illegal hand car washes and bringing an end to modern slavery.”

The chair of the Environmental Audit Committee, Mary Creagh MP, was also disappointed by the Government’s stance. She said: “Our highly critical report into hand car washes found widespread and alarming breaches of planning, employment and environmental laws.

“We are pleased the Government has accepted two of our recommendations, by asking the Environment Agency to write to supermarkets and promising to update the pollution prevention guidance. These are positive steps towards ending the discharge of dirty water into rivers.

“There is more to do on tackling labour exploitation. This should have been addressed by adopting our recommendation of a trial licensing scheme. It is disappointing that ministers have opted for a pilot approach that is voluntary. With so few minimum wage prosecutions despite the exploitation of workers being commonplace, the Government must send a strong message to car wash operators that such practices are illegal and that it will not turn a blind eye.”