A quarter of people working in Britain’s fast-growing gig economy are being paid below the national minimum wage, government research has revealed.

An estimated 700,000 people are earning less than the mandatory £7.50 per hour working as couriers, taxi drivers and in other self-employed work, according to the first research of its kind for the Department for Business, Energy and Industrial Strategy.

NatCen Social Research carried out the study before long-awaited labour market reforms were announced by the government on Wednesday, which were widely criticised for failing to provide new protections for gig workers and promising only consultation on law changes. The national minimum wage does not apply to self-employed workers.

About 2.8 million people worked in the gig economy in the 12 months to August 2017, including freelancers and one-person businesses, the research estimated. Most used it to supplement other work. It found that 42% had worked for courier firms, 37% on apps or websites such as Task Rabbit and 28% for minicab apps such as Uber. Takeaway delivery gig workers accounted for 21%.

The chairman of the Commons work and pensions select committee, Frank Field, said the figures showed gig work was now “the single biggest force in the British economy undermining the national living wage”.

He wants the minimum wage extended “to the small army of workers who are exposed to poverty pay because they are forced into forms of self-employment that are unrecognisable to most people”.

The extent of low pay in the gig economy came amid growing concern at the government’s ability to tackle the negative consequences of a sector that has boomed following the advent of phone apps such as Uber and Deliveroo.

The business secretary, Greg Clark, admitted on Wednesday that the death of a diabetic gig courier for DPD, Don Lane, was a “terrible tragedy” and faced claims that none of the long-awaited labour market reforms the government announced would have saved him.



Lane, 53, collapsed and died from diabetes after being fined £150 by the courier company DPD for attending a hospital appointment to treat his disease. On Monday the Guardian revealed he had missed three other hospital appointments to treat kidney damage, partly because he was afraid of being fined. He collapsed at the wheel of his van while on deliveries a few months later before dying in January.

Amid widespread anger at his treatment, the shadow business secretary, Rebecca Long-Bailey, told the House of Commons: “The tragic case of Don Lane, DPD gig worker, epitomised the precarious and unstable working life many people face and the failure of the government to protect workers.”

She said: “They needed to do something bold today but it appears they are simply papering over these bleak realities with rhetoric. Launching four consultations, merely considering proposals and tweaking the law here and there is not good enough. How would any of this have actually helped Don Lane? It simply wouldn’t, that’s the fact of the matter.”

The business minister Andrew Griffiths replied that the government was “acting to ensure good work for all” and said “millions of workers will get greater rights and the access to more protection”.

He said: “The house should be clear. We are consulting in order to act.”

Lane was treated by DPD as self-employed and there was anger from similar gig economy workers on Wednesday at the government’s planned labour market reforms.

Clark said Lane’s death was “a terrible tragedy” and added: “Anyone who is performing work should be clear in a way that too often they are not at the moment whether they are an employee, whether they are a contractor, in which case they are entitled to sick pay. And if they are self-employed then the contractual terms that they operate under must not be so onerous that they should be abusive.”

He added: “If they are self-employed then it is very important that those conditions should not be so onerous as to be unreasonable for example for a person who is sick to be able to take an appointment.”

In a statement DPD said Lane should not have been fined but denied not accommodating his health needs.

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Employment lawyers on Wednesday called the government’s response to the review by Matthew Taylor of modern working practices “underwhelming” and “feeble”, amid widespread fears that significant reform could be slow in coming.

The chief executive of the employment lawyer Thompsons, Stephen Cavalier, said: “It is a limp response to a limp report, which offers nothing but vague platitudes which don’t get to the heart of the issue. On the fundamental issue of defining whether someone is an employee, a worker or self-employed, all that is proposed in the report is yet more consultation.”

Susannah Kintish at Mishcon de Reya , who is representing Pimlico Plumbers in a supreme court case about the employment status of its plumbers, said: “The proposals seem underwhelming. There seems to be a focus on transparency rather than any fundamental changes to the law on employment status.”

A spokesperson for the business department said the Taylor review showed the majority of people in the gig economy enjoy the independence and flexibility of their work. “But we recognise that this is not always the case which is why we will be making it easier for all workers to understand their rights and have them enforced, as part of our major workplace reforms.”