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Insecure work wastes billions

Tax losses cost Treasury £75m a week
Ryan Fletcher, Wednesday, February 15th, 2017

Insecure work is costing the government almost £4bn per year, a damning new report has found.


The costs equate to a loss for £75m a week for the Treasury – enough to pay for a quarter of the nation’s social care budget.


The shocking figure is down to lost tax revenues and benefit payouts caused by the rapid increase in low paid insecure work, new TUC research into the affects of Britain’s gig economy shows.


The research echoed warnings from the government’s own future of work advisor, Matthew Taylor, who has said that self-employed staff and contractors annually pay an average of £2,000 less in taxes than their equivalents with full employment contracts.


Millions of people in the UK now work in precarious zero hours or gig economy roles which pay much less than other forms of employment.


As a result they pay a reduced rate of tax and national insurance and are more likely to need in-work benefits such as housing benefit and tax credits in order to survive.


TUC general secretary Frances O’Grady said, “The huge rise in insecure work isn’t just bad for workers. It’s punching a massive hole in the public finances too.

“Zero-hours contracts and low-paid self-employment are costing the economy billions every year in lost tax revenues. That’s money that could be spent on stopping the crisis in our schools and hospitals and making sure every elderly person gets decent care.”


The analysis, carried out on behalf on the TUC by the Landman Economic consultancy, used tax and benefit models to measure the increasing impact of insecure work since 2006.


According to official data there has been a 26 percent rise in the number of self-employed people over the last ten years. Around 5m people, or 15 percent of the nation’s workforce, are now self-employed.


TUC research shows that the number of people in low paid self-employment has increased by 21 percent over the same period, with 40 percent of all self-employed workers now in low paid occupations. The increase in self-employment has been repeatedly linked to a lack of choice for people desperate to find work.


The TUC said that 10 percent of all UK workers are now in insecure work and warned that public finances will be even further reduced as casualised employment continues to spread.


O’Grady said the problem is caused by companies who employ staff on zero hour contracts or falsely declare them to be self-employed – cost cutting measures that scam workers out of rights such as holiday pay or the minimum wage.


She said, “Bosses who employ staff on shady contracts are cheating all of us. That’s why we desperately need more decent jobs that pay a fair wage.”


A government spokesperson said it was reviewing employment practises and considering changes to the tax system.


Unite assistant general secretary, Steve Turner, said there needs to be wide ranging change.

“Not only is (the gig economy and insecure work) a gross and blatant attack on workers’ rights, it is also eating away at our public finances by allowing large companies to get out of paying their fair share to society,” he said.


“If they’re serious about tackling wage and tax theft they can start by supporting strong, effective trade unions and providing the framework for sectoral collective bargaining, ensuring that every worker gets their fair share of the wealth they create and by properly resourcing and updating the tax system to ensure it’s fit for purpose to deal with a modern digital economy.”





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