Memorandum submitted by the Union of Construction
Allied Trades and Technicians (UCATT)
UCATT represents 125,000 members employed in
the construction industry throughout the United Kingdom and the
Republic of Ireland.
There are 2.2 million people working in the
construction industry.
The construction industry currently accounts
for approximately 9% of GDP.
EMPLOYMENT AND
PAYMENT PRACTICES
UCATT is extremely concerned about the ongoing
casualisation in the construction industry.
We believe that the improper use of the Construction
Industry Scheme (4), self-employment tax system, is rife and is
corrupting the industry.
UCATT estimates that almost 50% of all the two
million people employed in construction are bogusly self-employed
on CIS4 cards. In UCATT's opinion workers who have set hours,
have to obey orders, cannot refuse work and have their materials
and tools provided are directly employed and are not self-employed.
In 2001 work undertaken for UCATT by Dr Mark
Harvey Senior Research Fellow at the ESRC Centre for Innovation
and Competition at the University of Manchester, discovered that
bogus self-employment was costing the Treasury £1.5 billion
a year. After having consulted many construction experts and having
taken into consideration the rise in self-employment, the increased
activity in the construction industry and inflation, UCATT conservatively
estimates that the current cost of bogus self-employment to the
Treasury is £2.5 billion.
Under the CIS scheme workers have 20% of their
earnings deducted by the contractor, this money is then paid directly
to the Treasury. As they are self-employed their National Insurance
contributions are a fraction of those paid by people employed
on a PAYE basis. Workers registered, as CIS4 are entitled to make
a self-employed earnings declaration, from which they receive
substantial refunds "for legitimate expenses" they have
incurred.
The taxpayer experiences a treble whammy from
bogus self-employment not only is there £2.5 billion less
in treasury coffers but also as workers are falsely classified
as self employed they do not receive sick pay, holiday pay, or
save towards their pensions.
When they become ill or too old to work it is
the state that is forced to provide for them.
Companies have been allowed to favour bogus
self-employment due to lazy enforcement regimes and there is no
plausible evidence that this will change in the near future. UCATT
rejects claims made by the Treasury that changing the CIS scheme
to one based on online registration and abolishing the previous
photo card system will massively reduce the problem of bogus self-employment.
In fact UCATT believes that the changes to the
system will make the problems worse. It will be very difficult
for employers to actually discover if the individual presenting
himself or herself for work is the same as the person registered
for the CIS card. Our concerns about the reforms to the CIS scheme
are also shared by a number of major employer organisations. Several
senior accountants who are experts in construction tax issues
also share these views. Due to the Government's very poor record
of implementing major IT projects there is a growing fear in UCATT
that the recent change to the new online registration scheme will
be a recipe for fraud, confusion and lost payments.
It is UCATT's opinion that if the Government
acted to outlaw bogus self-employment in the construction industry
then many of the other problems, which currently afflict the industry,
would be wholly or partially resolved.
DELIVERY OF
THE GOVERNMENT'S
CAPITAL INVESTMENT
PROGRAMME
The Government's heavy investment in the nation's
infrastructure is welcomed by UCATT.
We are concerned that these major projects will
not be delivered on time and on budget if the wrong employment
model is adopted. UCATT believes that past errors in major projects
can be avoided if new contract compliance legislation is introduced.
Under contract compliance it would be entirely
within the Government's rights to insist that all contractors
bidding for Government contracts employed direct labour. Such
a decision would have an enormous affect on the construction industry.
The Government is by far the largest construction client in Britain.
By opting for the direct labour model in its construction projects,
the construction industry would be forced to reorganise itself
in order to place bids. It would also send an unequivocal message
to the construction industry, that the current trend towards casualisation
and bogus self-employment is not acceptable.
Under contract compliance UCATT believes the
following conditions should be adopted:
— direct employment and the implementation
of a maximum 48 hour week;
— adherence to the terms and conditions
of industry agreements;
— representation for trade unions
on the project including full time conveners;
— well financed welfare conditions;
— a high level commitment to safety
on the job;
— training for workers to achieve
CSCS accreditation of all site workers;
— language training for migrant
workers; and
— a framework to ensure apprentices
are trained on all government contracts.
LONG-TERM
CAPACITY FOR
THE DELIVERY
OF LARGE
INFRASTRUCTURE PROJECTS
ON TIME
AND TO
BUDGET, SUCH
AS THE
OLYMPICS
UCATT believe that there is currently a serious
question mark over whether the Olympics can be delivered on time
and on budget. This opinion has been formed from the union's experience
of other (similar) major infrastructure projects.
We believe that it is imperative that the Olympics
follows the employment model of Heathrow Terminal 5, which overwhelmingly
used direct labour and is scheduled to come in on time and on
budget.
The alternative is to use the models adopted
for the construction of Wembley stadium and the Scottish Parliament
building in Holyrood. Both of which were built by fragmented self-employed
labour and which were both beset by severe delays and spiralling
costs.
The failure of the British construction industry
to adequately invest in skills and training over the last 30 years
has created a severe construction skills shortage in Britain.
Due to indigenous skills shortages it will be necessary to use
foreign migrant labour to assist in the construction of the Olympic
venues. It is UCATT's belief that problems of exploitation and
social tensions can be minimised if the direct labour model is
adopted, thus guaranteeing wage rates and working conditions.
UK DEPENDENCE ON
IMPORTED LABOUR
AND EXPERTISE
Due to the severe skills shortages being experienced
in the British construction industry and the current boom in construction
projects there has been a need to recruit skilled migrant labour,
to Britain in recent years.
UCATT is very concerned that the casualised
nature of the building industry means that migrant labour being
recruited is particularly vulnerable to exploitation.
Many migrant labourers are signed up to the
CIS scheme as soon as they arrive in Britain. There are documented
cases where migrant labour has been signed up to bogus self-employment
schemes, before they have departed their home country. Foreign
workers are often told that unless they sign up for self-employment
schemes they will not be hired.
By becoming self-employed migrant workers surrender
the most basic employment rights. Unscrupulous employers and agencies
use the self-employed status of migrant workers to pay them wages
below industry agreed minimums, undercutting the wages of existing
domestic labour. The undercutting of wage rates has caused substantial
social tensions in many communities.
In many cases migrant workers experience high
and unfair deductions being taken from their wages, often by employment
agencies. They are frequently overcharged for accommodation, which
is often overcrowded and of a substandard nature. Stories of hot
bedding and garden sheds being converted into accommodation blocks
are not uncommon. Unfair deductions relating to travel to and
from work, equipment and clothing, have also been recorded.
UCATT is not opposed to migrant labour. We are
opposed to the exploitation of migrant workers. Our opposition
is principally because all forms of exploitation is entirely unacceptable.
Secondarily because the effects that exploitation and undercutting
of wages has on the economy and its affect on the livelihoods
of other construction workers.
British unions have been increasingly working
with migrant workers to insure that they get paid fairly and that
other issues relating to employment rights and working conditions
are resolved. There have been some minor improvements in some
areas. What is clear is that far more needs to be done to inform
migrant workers of their rights; how they should ensure that they
avoid accidents at work and their legal entitlements. Unions and
other voluntary organisations can do some of this work but serious
attention needs to be given about how the Government could play
a more pro-active part in attempting to resolve these issues.
AVAILABILITY OF,
AND INVESTMENT
IN SKILLS
The under investment in training and skills
by the Government and the Construction industry for the last 30
years is having serious consequences for the industry.
Despite the chronic skills shortages, which
have been identified in a series of Government reports—most
notably the Leitch Report, not nearly enough is being done to
attempt to try to fill this gap.
Last year 50,000 young people applied to the
Construction Industry Board for construction apprenticeships.
However only 9,000 places for apprentices could be found. This
year it dropped to 7,000.
The Construction Skills Network in their recent
reports, have estimated that in the whole of the construction
industry there is a need for 87,000 new entrants a year, due to
additional demand and workers leaving the industry. In particular
there is a huge demand for wood trade operatives, due to the strength
of the housing sector (both new build and repair and maintenance)
it is estimated that there is a need for 11,000 new wood trade
operatives every year.
UCATT believes that high quality apprenticeships
will become an increasingly important part of the education system
in forthcoming years, in the light of the Government's decision
to extend the school leaving age to 18. The Department of Education
and Skills has made it clear that many children remaining in full-time
education/training post 16 will be studying on vocational courses.
UCATT's experience is that apprentices who are
based with an employer and granted day release to attend college,
gain a far better education and acquire more skills than students
who undertake college based courses. In general construction companies
prefer to recruit apprentices who have undertaken workplace schemes
rather than those who have attended college based courses.
It is vital that the construction industries
preferred training model is recognised at this stage. A large
increase in college based construction training will not overly
benefit the industry if construction companies do not believe
that the potential entrants have acquired the necessary skills
and training.
One of the reasons behind the lack of apprenticeships
is the issue of bogus self-employment. If a company uses bogus
self-employment it is highly unlikely to hire apprentices, or
provide additional skills training. Its fragmented workforce means
that there will be no one to train or oversee apprentices. Workers
who are self-employed are not willing to perform extra duties
without increased financial incentive and the nature of their
employment means they do not have a contract requiring them to
be involved in training apprentices.
REGULATORY MATTERS,
SUCH AS
HEALTH AND
SAFETY AND
THE BUILDING
REGULATIONS
Construction is the most dangerous industry
in Britain. Last year deaths on building sites rose by 30% with
77 people losing their lives.
UCATT is alarmed that the fragmentation and
casualisation of the industry is making it an increasingly dangerous
place to work. There is strong evidence that sites which employ
direct labour and which allow independent employee safety representatives,
are far safer and sustain fewer accidents and fatalities, than
those that do not.
The Corporate Manslaughter Bill, which is currently
in the process of completing its Parliamentary stages, is to be
welcomed as any strengthening of the current unsatisfactory legislation
must be accepted as an improvement. However UCATT is of the opinion
that deaths on construction sites will not substantially decrease
until an individual director is sent to prison for their involvement
in killing an employee. It is the union's belief that the levying
of fines, no matter how large, will never be a sufficient deterrent.
While far from a panacea UCATT has warmly welcomed
the new Construction, Design and Management Regulations, which
came into, affect on April 6 2007. The union hopes that the intent
of the new CDM regulations to reduce pointless paper exercise
and to force different agents working together on site, will be
effective in making construction sites safer.
One area in particular where UCATT has very
serious health and safety concerns is regarding the safe removal
of asbestos. The high level of deaths due to asbestos related
diseases is deeply worrying. From a construction viewpoint research
indicating that in future, primary exposure to asbestos will mainly
occur when buildings are repaired or refurbished, should be noted.
This makes joiners, plumbers, electricians and builders, all at
risk to exposure. It is vital that rules and regulations concerning
the removal of asbestos are not relaxed.
In the light of this UCATT is gravely disappointed
that the Health and Safety Executive have recently decided to
allow non-approved companies to remove textured coatings, such
as aertex, without a license. This will unnecessarily increase
the danger of exposure to asbestos for many workers.
2007
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