Insecure and low-paid work costing taxpayer £10bn a year, union warns

TUC calls for an employment bill in tomorrow’s Queen’s Speech, as report shows moving the lowest paid onto more traditional contracts would boost tax receipts

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Insecure and low-paid jobs are costing the taxpayer billions every year, a union has warned, calling for the government to bring forward the long-awaited employment bill in the Queen’s speech tomorrow.

A report from the TUC has estimated that the Treasury would be £10bn a year better off – through higher tax and National Insurance payments and lower welfare spending – if the lowest earning self-employed workers and zero-hour contract employees were on traditional contracts.

The analysis of tax and earnings data, compiled by Landman Economics for the TUC, found that the lowest two quintiles of self-employed workers alone were contributing £9.7bn a year less than if they were employed.


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Similarly, it estimated that employees on zero-hours contracts were costing the Treasury £614m a year through lost tax revenues and higher welfare costs.

The report says the total being lost to the Treasury from low-paid, precarious working is more than £192m a week, and warned that a 1 per cent rise in insecure work as a proportion of the wider UK workforce could see tax receipts drop by another £1bn annually.

The TUC has called on the government to bring forward its employment bill in tomorrow’s (10 May) Queen’s Speech to ensure that all workers have the same rights as employees.


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“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,” said Frances O’Grady, general secretary of the TUC.

“Ministers must stick to their word and deliver the long overdue employment bill,” she said, describing the failure to do so as an “act of betrayal”.

The government first promised to introduce a unified employment bill in 2019, but has yet to bring such a bill forward.

Many commentators expressed surprise and frustration at its omission from last year’s Queen’s Speech, with Ben Willmott, head of public policy at the CIPD, describing it a “missed opportunity” to address key employment issues as the UK looks to rebuild after the pandemic.

“The labour market enforcement system in particular is broken and requires urgent attention to boost state-based enforcement and address the weaknesses in the employment tribunal system,” Willmott said.

However, it has already been widely reported that the bill is likely to be delayed for another year, with the government prioritising other issues including energy policy and crime. Matthew Taylor, author of the 2017 Good Work review, told the Guardian it was “highly disappointing to see the government failing yet again to act on” his recommendations.

“This leaves unaddressed many harmful weaknesses in our system of labour regulation and employment taxation,” he said.