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UK jobs: Insecure low-paid work costs Treasury £10bn each year

·Business Reporter, Yahoo Finance UK
·3-min read
A Jobs Centre Plus sign is seen in central London
Jobs: Currently, more than 1 million Brits are on zero-hours contracts and 3.6 million people in total are in insecure work, including those in low-paid self-employment. Photo: Toby Melville/Reuters

Insecure low-paid jobs are costing the UK Treasury Department as much as £10bn ($12.3bn) a year, a new study has found.

According to the Trades Union Congress (TUC), low-paid self-employment is costing the exchequer £9.7bn alone each year, while zero-hours contracts are making a £614m hole in public finances.

The report revealed the “eye-watering” costs were a result of low-paid self-employed workers and those on zero-hours contracts earning significantly less than regular employees, and therefore paying less tax and national insurance.

It was also due to these same workers being more reliant on social security payments to top up their incomes, and tax rates being lower for self-employed workers.

Read more: McColl's collapses into administration with 16,000 jobs at risk

The TUC highlighted that the money could have been spent on vital public services after twelve years of under-funding. The £10bn annual cost of insecure, low-paid work is the equivalent of nearly two-fifths (38%) of England’s annual adult social care budget.

Just a 1% rise in insecure work, as a proportion of the wider UK workforce, would wipe out nearly £1bn extra from tax receipts, the group added.

The union body has called on the government to take action, blaming ministers for the hit to tax revenues “after more than a decade” of not doing anything to resolve the problem.

Currently, more than 1 million Brits are on zero-hours contracts and 3.6 million people in total are in insecure work, including those in low-paid self-employment.

The TUC highlighted how more than half of those in self-employment earn less than the minimum wage.

Read more: Is the UK heading into a recession?

It comes as the government will deliver its long overdue employment bill at the Queen’s Speech on Tuesday.

The employment bill was first promised in December 2019 as the prime minister vowed to make Britain the best place in the world to work. But reports suggest that the government will shelve the legislation, despite ministers repeatedly committing to bringing forward a bill.

The TUC stressed that without action to tackle precarious work vulnerable workers and the public finances will continue to suffer.

“Britain’s insecure work epidemic isn’t just punishing workers — it’s starving the public finances too,” 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.”

She added: “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.”

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