Theresa May refuses to ban zero hour contracts

Theresa May refuses to ban zero hour contracts

A government report urged an end to cash-in-hand jobs today - saying it would help stop tax being dodged on £6billion worth of work every year.

A major review of employment laws called for a drive to a cashless society and said employees in the so-called 'gig' economy should get more protection.

But Theresa May said the findings from former Blair adviser Matthew Taylor showed Labour was wrong to demand an outright ban on zero hour contracts.

Mrs May sought to use the report - which also called for moves to end cash-in-hand jobs and a minimum pay rate for overtime - to relaunch her premiership after a dire election showing.

She insisted her 'defining beliefs remain' despite the Tories losing their overall majority, and said facing up to the changing world of work did not mean trying to 'stop the clock'.

Mr Taylor was commissioned by Mrs May to review employment laws as the economy evolves.

Internet-based firms such as Uber and Deliveroo pay people per job completed rather than as a salary - raising questions over rights to the minimum wage, sick pay and maternity leave.  

Theresa May (pictured launching the report in London today) said the changing nature of employment went to the heart of her Government's agenda

Matthew Taylor (pictured today launching his report) set out seven 'principles for fair and decent work', including a goal of 'good work for all'

Mrs May said it was important to ensure that zero-hours contracts do not allow employers to 'exploit' workers, but rejected Labour's call for them to be banned, warning that this would 'harm more people than it would help'. 

The report urged ministers to make it a requirement for certain self-employed workers to use digital payment methods - like apps or debit cards - in order to recoup some of the estimated £6.2 billion of tax lost each year through 'cash-in-hand' transactions.

Chancellor Philip Hammond should use his Budget in the autumn to announce measures on the 'hidden economy' which could gain the Treasury 'several billions in additional revenues', it said.

And Labou r leader Jeremy Corbyn agreed that it was 'obviously' wrong for cash payments to be used as a means of avoiding tax.

The Taylor Report cited HM Revenue and Customs figures suggesting that cash-in-hand payments to casual workers like gardeners, window cleaners or child-minders contribute to a hidden economy accounting for around 18% of the gap between amounts of tax due and the total actually paid.

While people hiring such workers may wish them to pay the appropriate tax, it is hard in practice for them to be sure that they do, said the report. As a result, 'many people inadvertently participate in the informal economy, something that is bad for taxpayers in general and unfair to the vast majority of self-employed people who pay their dues'.

The report said: 'The decision to become self-employed does not result in the individual opting out of wider society... It is important that self-e mployed people pay the right taxes so that the country can afford to fund the NHS, the police and other national services.'

A move towards digital transactions would create an audit trail to make it easier for tax liabilities to be pursued and would encourage a change of behaviour in those currently failing to pay the correct amounts.

'Government should consider accrediting a range of platforms designed to support the move towards more cashless transactions with a view to increasing transparency of payments, supporting individuals to pay the right tax,' Taylor recommended.

MAIN POINTS FROM TAYLOR REPORT 

People on z ero-hours contracts should be able to request a normal contract after a year

Reforms to provide for more 'cashless transactions' - pointing out it would help crackdown on tax avoidance fuelled by cash in hand jobs

Moves to ensure that workers do not get 'stuck' on the National Living Wage

A new minimum wage for overtime 

The government should avoid further increasing the the non-wage costs of employing people, such as the apprenticeship levy 

'This could include linking an individual's right to work to a certain payment mechanism. This would not only allow the Government to have some oversight of the work being undertaken by those working under visas in the UK, but also give confidence to consumers that the people they are paying are legally entitled to wo rk in the UK.'

Mrs May's speech called on opposition leader Jeremy Corbyn to 'contribute not criticise' as she urged Labour to take part in 'grown up politics'.

She said: 'When I commissioned this report I led a majority government in the House of Commons. The reality I now face as prime minister is rather different.

'In this new context, it will be even more important to make the case for our policies and our values, and to win the battle of ideas both in parliament as well as in the country.

'So I say to the other parties in the House of Commons … come forward with your own views and ideas about how we can tackle these challenges as a country.'

Mr Corbyn dismissed the plea out of hand yesterday and claimed it was proof the PM had 'run out of ideas'. 

He said: 'Let's face it, the Gove rnment has run out of steam and at a pivotal moment in our country and the world, amid uncertainty over Brexit, conflict in the Gulf states, nuclear sabre-rattling over North Korea, refugees continuing to flee war and destruction, ongoing pandemics, cross-border terrorism, poverty and inequality, and the impact of climate change are the core global challenges of our time.' 

In his report, former Blair adviser Mr Taylor said the UK's performance on the quantity of work was strong, adding that now was the time to create better jobs.

'The review calls on the Government to adopt the ambition that all work should be fair and decent with scope for fulfilment and development.

'Despite the impact of the National Living Wage and tax credits, there will always be people who are in work but finding it hard to make ends meet.

'Our social contract with those people should include dignity at work and the realistic scope to progress in the labour market.

'Bad work - insecure, exploitative, controlling - is bad for health and wellbeing, something that generates cost for vulnerable individuals, but also for wider society.

'Improving the quality of work should be an important part of our productivity strategy,' he said.

Mr Taylor called for a change in the law to create a new status of 'dependant contractors' working flexibly for new firms.  

Instead, the probe by a former adviser to Tony Blair is thought to urge greater rights for those working at firms such as Uber and Deliveroo in the so-called gig economy

Theresa May (pictured today leaving No 10) commissioned the review of employment laws in light of the changing economy 

Mr Taylor set out seven 'principles for fair and decent work', including a goal of 'good work for all', additional protections for workers suffering unfair, one-sided flexibility, stronger incentives for firms to treat workers fairly, and a more proactive approach to workplace health.

The review rejects Labour's call for zero-hours contracts to be scrapped.

TORY MPS URGE MAY TO STICK TO DEFICIT REDUCTION TASK 

Tory MPs urged Theresa May to stick to fiscal di scipline today. 

The show of unity came in a Westminster Hall debate on balancing the public finances, brought by former Tory chief whip Mark Harper.

Mr Harper urged MPs to back the Chancellor in making his 'balanced budget judgement'.

He said: 'What we can't do is each week have a particular story that's running around, we then decide that happens to be the flavour of the month and then when we get to the Budget, we discover we've run out of money. That's not the right way to run a sensible Government.

'Any Government worth its salt needs to stick with sound public finances. That's how you get the growth and the jobs and the investment in our public services that we all depend on.

'There are always more pressures than can be paid for, for public spending, it's a difficult job for the Chancellor to balance all of those things and what we need to do as Conservative colleagues is to give him the space, listen to all of that input, we can make those bids to him privately and then he needs to balance all of those things, taking it all into account, come up with that balanced budget judgement in the autumn.

'We need to back the Chancellor and that means we will then be backing our country, backing its growth prospects and backing the prospects for jobs, growth and prosperity for all of our constituents.'

Instead, it urges greater rights for those working at firms such as Uber and Deliveroo in the so-called gig economy.

The report called for people on zero-hours contracts to be able to request a normal contract after a year. 

Mr Taylor, chief executive of the Royal Society for the Encouragement of Arts, Manufactures and Commerce, says un paid internships should be axed.

He also wants firms to show that staff can earn at least 1.2 times the minimum wage overall.

His review calls for a new form of employment status between traditional employment and self-employment, suggesting so-called 'dependent contractors' should be eligible for rights such as sick leave and paid holidays.

It adds: 'Workers should be treated like human beings, not cogs in a machine.'

Other changes recommended by the report include encouraging reforms to provide for more 'cashless transactions' - pointing out it would help crackdown on tax avoidance fuelled by cash in hand transactions. 

HMRC estimate the 'hidden economy' is worth around £6.2billion - a gap which would be closed by using digital transactions.  

Mr Taylor says ministers had created an 'employment wedge' between traditional firms and those whose workers were self-employed. He suggests that introducing more red tape will encourage bosses to take the route pioneered by firms such as Uber.

The report says the Government should 'help firms make the right choices', adding: 'Although there are things that can be done to improve working practices for employees, the 'employment wedge' (additional, largely non-wage costs associated with taking someone on as an employee) is already high, and we should avoid increasing it further.'

Sir Vince Cable, the likely next Lib Dem leader and former business secretary, said the proposals were 'broadly sensible'.

He said: 'We now need to stamp out abuse of zero hours contracts by giving people the right to request fixed hours, a proposal the Conservatives opposed during the coalition.'   

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Mrs May, who commissioned the report, welcomed its findings last night, but acknowledged the need to back employers who offer decent jobs by not making things unnecessarily hard for them