Cash in hand 'morally wrong'

The Government loses about £2 billion each year to the black economy Photo: Eddie Keogh / Reuters

Exchequer Secretary David Gauke has said that home-owners who accept a discount and pay workers cash in hand, are guilty of helping them avoid tax and has called the practise "morally wrong."

The Treasury Minister claimed the Government loses about £2 billion each year to the black economy as tradesmen fail to pay VAT or income tax by not declaring payments and keeping them "off the books".

Our Political Correspondent Lucy Manning reports:

David Gauke's comments came as the Government launched a consultation paper on its planned reforms. It follows a wave of disclosures about the financial loopholes used by the rich and famous to legally side-step hefty tax bills.

Labour Leader Ed Miliband waded into the debate saying that ministers should be focusing on large-scale tax avoidance:

What I say is that the job of government is to pass the right laws to clamp down on tax avoidance - that's the most important thing of all.

What I will be saying to the Government is that they should be clamping down on the large-scale tax avoidance which has been revealed in the past few days and I think that's what people want to see from the Government.

– Labour Leader Ed Miliband

Deputy Prime Minister Nick Clegg was also quizzed on his attitude to paying cash in hand. He admitted to having "paid people in the past with cash" but emphasized that he had never done so with the intention of avoiding tax. Mr Clegg said that it was important for "everyone to pay their fair share".