Wal-Mart Owned Asda Campaigns Against UK Tax

http://www.guardian.co.uk/business/2010/jan/17/asda-against-builders-tax-reform

Asda has joined a campaign to block the Treasury in its plans to stamp out the building industry practice of treating labourers as self-employed, which saves the companies tens of millions of pounds in costs.

The government launched a consultation on its plans last year. It said the use of false self-employed status in the building industry costs the Exchequer £350m a year.

Government insiders say the culture of self-employment has destroyed investment in training a new generation of skilled labour, leading to the influx of tens of thousands of eastern Europeans to work on British construction sites.

Asda, owned by the notoriously anti-union American retailer Wal-Mart, has now become the biggest firm to join the lobby group, Stop the Unfair Building Tax, which includes construction industry giants Barratt and Persimmon.

Asda believes the move would lead to a loss of jobs and add millions of pounds to its construction costs. The supermarket group declined to comment.

The stance has attracted fierce criticism from the builders' union, Ucatt. Its general secretary, Alan Ritchie said: "Asda is a multibillion-pound company and part of the world's biggest retailer. By opposing the government's reforms, which would place the taxation policy of the construction industry in line with all other industrial sectors, Asda is greedily protecting its vast profits, while denying workers the most basic employment rights, such as holiday pay."

Richie said giant construction firms are exaggerating the cost of the extra tax workers will pay if they go on the books. He suggested the campaign is more about building firms avoiding hundreds of millions of pounds in national insurance costs.

It is estimated there are 300,000 self-employed builders in Britain working more or less constantly for the same firm.

The Treasury has long been concerned that hundreds of thousands of building workers are falsely classed as self-employed even though they work permanently with a contractor or sub-contractor. It believes big building firms gain an unfair advantage over competitors that employ tradesmen directly.

Some building are refusing to back the anti-Treasury campaign. Garvis Snook, chief executive of quoted construction firm Rok employs much of his workforce directly. He said: "Industry leaders have come up with the most damaging wheeze: they encouraged the labour force to become self-employed, citing freedom and reduced taxation as inducements …

"The trouble is, the distance between the customer and the person who does the work has been widened by layers of contractors, their sub-contractors and so on. Is it any wonder so often a customer's dream becomes mired in poor quality, increased cost and late delivery."

But the Stop the Unfair Building tax insiders say the government proposals will fail to capture the intended extra tax, instead fuelling a surge in black market construction work, further reducing the tax take and risking a marked decrease in quality work. They also argue the government's official figure of how much tax revenue is being lost is not based on reality.

The campaigners also say reform would lead to a loss of jobs and production from the entire housing and construction industry.

But the Treasury said: "The government remains committed to addressing false self-employment in the construction industry, but recognises the pressures on the industry at this time. That is why the government has consulted with the industry to ensure legislation will be effective and targeted while retaining a flexible labour supply."