A Trades Union Congress (TUC) report has warned that the government’s failure to stop insecure and low-paid work could be costing HM Treasury £10 billion a year.
According to the research, which used the latest tax and benefit modelling, low-paid self-employment costs £9.7 billion alone each year, and more than £192 million a week, while zero-hours contracts cost a further £614 million.
The TUC stated that this is the result of low-paid self-employed workers and those on zero-hours contracts earning significantly less than regular employees, therefore paying less tax and national insurance (NI). People in low-paid self-employment and on zero-hours contracts were also found to be more reliant on social security payments to top up their incomes, in addition to tax rates being lower for these workers.
The report suggested that just a 1% rise in insecure work, as a proportion of the wider UK workforce, could wipe out nearly £1 billion extra from tax receipts.
The TUC highlighted that more than one million people are currently on zero-hours contracts and 3.6 million people in total are in insecure work, including those in low-paid self-employment, with more than half of those earning less than the minimum wage. It stated that this issue goes beyond the tax bill, as many people have been pushed into “false self-employment by employers who want to cut their tax bill and deny workers basic rights.”
TUC general secretary Frances O’Grady said: “The government’s failure to clamp down on shady employment practices is costing the Treasury a fortune every year, and that means less funding for our cash-strapped hospitals, care homes and schools.
“The time for excuses is over, ministers must stick to their word and deliver the long overdue employment bill. Leaving insecure work to flourish unchecked would be an act of betrayal and it would send a green light to bad bosses to carry on cheating their workers and the taxman.”