Building workers' online permits will increase fraud, say unions

A new streamlined registration system for self-employed building workers will undermine security on key construction sites and lead to far higher levels of fraud, according to union leaders.

Under the new scheme, workers will be able to register online and will not be forced to carry a card with their photograph on it.

Alan Ritchie, general secretary of the construction union Ucatt, points out that only a limited number of applicants will be ordered to attend a tax office for verification purposes.

He said companies would not know whether the person who applied for so-called CIS4 registration was the same as the individual who turned up for work. Workers on the scheme are considered to be self-employed, and as such pay lower National Insurance contributions and enjoy more generous tax breaks than directly-employed workers.

Mr Ritchie said: "At a time when the government is insistent that national identity cards should be introduced, it seems perverse that they are making it more difficult to identify who is legally and illegally working on building sites."

The union believes that, even under the old system, the self-employed status of many cardholders was "bogus".

Mr Ritchie said: "Many of them have set hours, have to obey orders and are given regular work which they can't refuse and have materials and equipment provided for them. To all intents and purposes, therefore, they are employees."

Ucatt calculates that bogus self-employment is costing the Treasury £2.5bn a year.

Mr Ritchie believes that the identification problem is even greater for temporary members of the CIS4 scheme because they are allowed to register even if they do not have a National Insurance number.

"There is a growing problem of migrant labour being signed up to the CIS4 scheme on occasions even before they arrive in Britain.

"This leaves them open to exploitation and the new scheme is set to make this problem worse."

A spokesman for HM Revenue & Customs said it would be the responsibility of employers in future to ensure that individuals were legitimately regarded as self-employed. "Cards are there to make sure people pay their tax, not as a form of identification."

He said employers who failed to police the system properly could face fines.