Gig Economy Companies Taking a Free Ride On The Taxpayer

Leanne Wood leader of Plaid Cymru.

Companies are free-riding on the welfare state by using workers who are classed as self-employed as “cheap labour,” a cross-party group of MPs has warned.

The Work and Pensions committee has today put the spotlight on the rise of the “gig economy” and has sounded the alarm bell about exploitation of workers.

The MPs want people to be classified as workers rather than as self-employed by default.

Dr. Victoria Winckler of the Bevan Foundation, a leading Welsh think tank, described the gig economy as a “triple rip-off” which is hurting workers, driving up the benefits bill and depriving the state of tax revenues.

Image: Dr Victoria Winckler

She said: “The report confirms that the so-called gig economy is a triple rip-off. It deprives ‘workers’ of decent terms and conditions, deprives the state of revenue and increases the benefit bill as the state tops-up low incomes.

“The idea of shifting the default status to ‘worker’ seems a good one, and I hope that whoever forms the next UK Government will press ahead with it... It’s a shame that the proliferation of these working practices is potentially damaging real self-employment, which can provide a good living and great prospects for thousands of people in Wales.”

You don't have to be self-employed to work flexibly

Today’s report attacks the idea that workers must be self-employed to enjoy flexible working.

It states: “Companies relying on self-employed workforces frequently promote the idea that flexible employment is contingent on self-employed status. But this is a fiction...

“Profit, not flexibility, is the motive for using self-employed labour in these cases... It is incumbent on government to close loopholes that incentivise exploitative behaviour by a minority of companies, not least because bogus self-employment passes the burden of safety net support to the welfare state at the same time as reducing tax revenue...

“The apparent freedom companies enjoy denying workers the rights that come with employee or worker status fails to protect workers from exploitation and poor working conditions. It also leads to substantial tax losses to the public purse, and potentially increases the.”

Former welfare reform minister says, 'ordinary tax-payers pick up the tab'

Frank Field has attacked 'bogus' self-employment practices.

Image: Frank Field MP Chair DWP Select Committee

Frank Field, the Labour chair of the committee, said: “Companies in the gig economy are free-riding on the welfare state, avoiding all their responsibilities to profit from this bogus ‘self-employed’ designation while ordinary tax-payers pick up the tab... It is up to Government to close the loopholes that are currently being exploited by these companies, as part of a necessary and wide ranging reform to the regulation of corporate behaviour.”

Leanne Wood warns of return to 'dark Dickensian days'

Today, Plaid Cymru leader Leanne Wood will today mark International Workers’ Day with a pledge to defend employment rights.

Image: Plaid Cymru leader Leanne Wood

She said: “While the Tories seem hellbent on driving down wages and living standards while dragging workers’ rights back to dark Dickensian days, Labour are quite happy to sit on their hands rather than stop them. Wages in Wales lag behind the rest of the UK while unemployment has yet again started creeping up.

“Thousands of workers are trapped in a low-wage economy... As the UK prepares to leave the European Union, it is vital that the many workers’ rights guaranteed by the UK’s membership are not lost.”

The report says some companies are increasingly using self-employment to escape:

• Responsibilities towards their workers;
• Substantial National Insurance liabilities;
• Pension auto-enrolment responsibilities;
• The Apprenticeship Levy.

They fear this leads to:

• Poor working conditions;
• Substantial tax losses to the public purse;
• Strain on the welfare state.