Ucatt is calling for a clampdown on builders falsely claiming to be self-employed, which it says costs the Treasury £2.5bn a year.

The construction union says more than 800,000 builders are claiming self-employment benefits while performing regular work forcontractors. It says the combined savings from eliminating this practice could pay for the 2012 Olympics.

Self-employed builders register for a CIS4 card, which entitles them to pay less tax and National Insurance. Many then work for contractors, who tolerate the abuse of the scheme because they don’t have to pay training costs, holidays and sick leave wages for the self-employed builders.

False self-employment is defined as declaring oneself as self-employed while obeying orders, having stated hours of work, carrying out regular work that cannot be refused and being provided with equipment.

Many migrant workers are given temporary CIS4 cards on arrival in Britain, which Ucatt says has contributed to an increase in the practice. Alan Ritchie, Ucatt’s general secretary, said: “Bogus self-employment is the scourge of the industry.”