Tax – the elephant in the Review

It sets out seven principles to address the challenges facing the UK labour market. The Review did not look at tax in much details, however. See here for a more in-depth look at the report.

The Government made a statement in the Commons on the Review after its publication.

Statement

Parliamentary Under-Secretary of State for BEIS Margot James said the UK economy’s continued success is built on the flexibility of its labour market, which benefits both workers and business.  She said the Taylor Review is a thorough and detailed piece of work, which has a ‘strong, overarching ambition that all work in the UK should be fair and decent, with realistic scope for fulfilment and progression’. “The best way to achieve better work is through good corporate governance, good management and strong employment relations. We accept that as a country we now need to focus as much on the quality of the working experience, especially for those in lower-paid roles, as on the number of jobs we create,” The recommendations will help to inform the development of the Tory industrial strategy this autumn. She made it clear that the Tories are not seeking to end zero-hours contracts.

Labour frontbench response

Rebecca Long Bailey, Shadow Secretary of State for BEIS, is concerned that the Government will interpret references to the so-called dependent contractor in such a way as to allow them to row back on recent court victories for workers such as Uber drivers and those who work for Pimlico Plumbers. Long Bailey is concerned about a lack of enforcement and regulation of online platform that insist on payment by piece rate. She bemoaned the lack of movement ‘at all’ on employment tribunal fees, which are a barrier to justice for many workers.

She urged the Government to take on Labour’s ‘simple measures’; giving all workers equal rights from day one; strengthening the enforcement of those rights by beefing up and better resourcing HMRC, rather than imposing pernicious cuts, and by allowing trade unions access to every workplace; abolishing employment tribunal fees; and fining employers who breach labour market rights and regulations.

Conservative questions and responses

Nigel Mills worried that there was a risk that introducing the term “dependent contractors” would fudge the issue of whether someone is really employed or self-employed. He thought we should focus on ensuring ‘that the line is drawn in the right place and that those who engage so-called ‘dependent contractors’ are paying employers’ national insurance, so that ‘our own tax regime does not distort the market’.  The minister replied that this is something the Government will consult on.

Andrew Selous said boosting the pay of lower-skilled workers by focusing on productivity is the way forward. Maria Miller was told by Margot James that work is ‘ongoing’ across Government to improve the opportunities for pregnant women in the workplace. She had asked about workers’ lack of rights to access antenatal care during the working day. Craig Tracey praised labour market flexibility, but Margot James replied that the Review suggested that in too many cases flexibility is a ‘one-way street’. Philip Hollobone said that once tax levels and tax credits are taken into account, average take-home pay for families with at least one member in full-time employment is higher in the UK than in any other G7 country. David Morris was the self-employment ambassador to David Cameron when PM and worked with Matthew Taylor on this report. He urged the Government to accept the proposed measures for the self-employed, especially the maternity and paternity benefits.

Other Labour questions and responses

Frank Field wanted an undertaking from the Government that they will always abide by the national minimum wage, even if that means a loss in flexibility. Margot James said there will be no trade-off when it comes to ensuring that everybody is paid at least the minimum wage. Rachel Reeves was told by Margot James that, on, national insurance class 4 contributions, ‘that matter is now settled, and will not be revisited’. Ruth George said fees for employment tribunals have led to a 70 per cent reduction in cases brought by single claimants, such as those working in the gig economy, against their employers.

Interestingly, when asked by Emma Lewell-Buck why Taylor did not look at tax policy, Margot James said that ’no bar was put in front of Matthew Taylor and that he was able to investigate as freely and as fairly as he saw fit. “It is up to the Treasury to assess the tax situation and any potential loss of revenue, which of course arises due to bogus self-employment”, she told the House. Teresa Pearce wants Uber to declare the payments it makes to drivers directly to HMRC and collect the national insurance numbers of drivers. This followed Taylor suggesting that traditional cash-economy workers such as window cleaners could use an app to collect money and declare directly. Jo Stevens was disappointed at the Government’s failure to prosecute a single employer in Wales last year for flouting the minimum wage rules.

SNP questions and responses

On the Review, Chris Stephens said it is a weak set of proposals that probably will not be implemented and a set of talking points that leaves the balance of power with employers and big business. He said that a ‘right to request’ is different to a fundamental right enshrined in law. Stephens said it is time for a fair rights at work Act to guarantee fundamental rights at work.  He asked what action the Government will take to enforce minimum wage payments when 200,000 workers in the UK are not paid the minimum wage. Margot James retorted that the Government has doubled the resources available to HMRC in the last two years to ensure enforcement. She accepted that “right to request” warrants further ‘careful consideration’.

Other questions and response

Lib Dem Jo Swinson was given assurance by Margot James that the Government will consult widely with industry, trade unions and members of the public, and across the House.

Plaid Cymru’s Jonathan Edwards said the Labour Welsh Government have failed to support the prohibition of zero-hours contracts in devolved areas on seven occasions.

The full debate can be read here.

By Hamant Verma