A report by the House of Commons’ Public Accounts Committee has warned that the black economy is costing the Treasury £2bn a year in unpaid tax, National Insurance and VAT.

The construction sector is thought to account for a substantial part of that figure. The Federation of Master Builders puts the value of construction’s black economy at £4.5bn, and estimates that £780m is lost a year through VAT evasion.

Alan Ritchie, general secretary of construction union Ucatt, said: “Given the highly casualised nature of the industry, these findings are both unsurprising and conservative.”

He added: “The report does not take into account money lost through false self-employment – Ucatt places this figure at at least £1.7bn a year.”