National Insurance and tax changes introduced in last week’s Budget will encourage bogus self-employment and the black economy, the Construction Confederation said this week.

Deputy chairman Peter Elston said proposed changes to VAT for businesses with a turnover of less than £100,000 needed to be reviewed, as they would give subcontractors a financial incentive to say their workers were self-employed.

Elston said the decision to introduce the VAT plan was surprising, as the confederation had been pleading with the government to help stamp out the black economy.

Confederation officials also met construction minister Brian Wilson last week to express their disappointment over other Budget measures.

The increase in National Insurance contributions is very disappointing

Peter Elston, Construction Confederation

They warned Wilson that the increase in NI contributions would drive up employer costs.

Elston said: “The increase in NI contributions is very disappointing for the construction industry. It will drive up employer costs and provide an extra burden for a sector with traditionally low margins.”

A spokesperson for the confederation said members would be consulted informally over the effects of the Budget measures.