Rachel Reeves MP

Member of Parliament for Leeds West

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Touchstone: False self-employment: The scandal hitting workers and taxpayers

Touchstone, Rachel Reeves and Chuka Umunna MP: http://touchstoneblog.org.uk/2012/12/false-self-employment-the-scandal-hitting-workers-and-taxpayers

Bogus self-employment is a scandal that continues to undermine employment rights and hit taxpayers’ pockets. There are too many cases of employees being classed as self-employed when in practice they work for a single company, meaning they can be sacked without warning, do not receive holiday or sick pay, have reduced benefit entitlements and are also denied access to employment tribunals. Often desperately searching for employment, workers are made to sign contracts with payroll companies which sign away their basic rights.

At the same time rogue companies are using bogus self employment to avoid paying National Insurance, whilst there are numerous reports of the status being used at the top end of the salary scale by individuals as means of avoiding tax.

We have recently launched an investigation into the problem as part of Labour’s policy review. This week, we have sent letters to key stakeholders asking for written evidence and we have opened the review on the Labour Party’s Your Britain page. We are eager to speak to employers, employees, trade unions and other organisations on what action we can take to stamp out false self employment for good.

This issue needs tackling urgently – the economy is flat lining and long-term unemployment is on the rise. We need to support people at work, not make it easier to fire them. And when UCATT has estimated it costs the Treasury £1.9 billion each year in the construction industry alone, we must look to find a solution to this problem for the good of the public finances. Families up and down the country are losing an average of £511 this year due to freezes and restrictions to benefits and tax credits and when police, health and school budgets are being squeezed, it is absolutely critical that everyone pays their fair share of tax.

We recognise that safeguards are crucial to ensure those who are genuinely self-employed, like many members of BECTU or the Musicians’ Union, are not unfairly penalised. But it is time that the scandal of false self-employment is solved. We urge organisations and individuals to come forward and help us find a solution.

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