Labour has promised to take action against construction industry scourge bogus self-employment.

Shadow Treasury secretary Rachel Reeves said a Labour government would close a loophole that costs the Treasury £400 million a year by treating around 300,000 directly employed workers as self-employed, allowing employers to dodge their tax responsibilities.

Ms Reeves said the policy undermined "responsible employers" in the industry as other firms can undercut them.

"In tough times like these when there is less money around, we cannot afford to leave loopholes in the tax system that allow vital revenue to be lost," she said.

But construction union Ucatt general secretary Steve Murphy pointed out that the real cost of the employment swindle was to allow bosses to shirk workers' rights - including access to sick and holiday pay and pension contributions - and makes it easier to cut back on safety.

Mr Murphy said the principal beneficiaries of the loophole are employers who avoid paying National Insurance contributions of 13.8 per cent per worker.

It's also allowed bosses to get away with sacking workers at will for raising safety concerns, he pointed out.

Mr Murphy said: "I want to congratulate the shadow Treasury team for this pro-active policy, which will have a real impact on the lives of construction workers.

"False self-employment is corrupting the construction industry. It affects every aspect of the industry including safety and training.

"By reducing self-employment the industry will become safer, training will be improved and exploitation will be reduced."

And Unite assistant general secretary Gail Cartmail said the union was increasingly concerned about workers being coerced into bogus self-employment by payroll companies and agencies driving them away from direct jobs.

She said: "We are encouraged by Labour's pledge to close the loopholes that allow bogus self-employment.

"Too many Unite members and workers across the construction industry are being deprived of the correct rate for the job and the benefits of an employment relationship."

The union called for councils and government to use public procurement as a lever for direct employment in construction.