HC Deb 09 February 1984 vol 53 cc1012-3
11. Mr. Rooker

asked the Chancellor of the Exchequer what is his latest estimate of revenue lost as a result of the black economy.

Mr. Hayhoe

The nature of the black economy, in the United Kingdom as elsewhere, is such that it is not possible to make any firm estimate of the overall amount of tax lost through it.

Mr. Rooker

Is the Minister saying that he does not agree with the estimate, given to the Select Committee, of £4 billion-£6 billion? Moreover, given that the black economy will grow as we are in depression, are the Government ready to give an early reaction to the idea of increasing the powers of the Inland Revenue, as recommended by the Keith committee, which was not quite the reason for which the Government set it up in the first place?

Mr. Hayhoe

I made it clear that it is impossible to give a firm estimate. Of course I realise that the Inland Revenue made a broad extimate—possibly it would be better to describe it as a "guesstimate"—which indicated an income tax loss of £4 billion. Equally, Customs and Excise has indicated a loss of £250 million-£500 million. With regard to the Keith report, the hon. Gentleman will appreciate that the Government have entered a period of consultations on that report, and comments are coming in.

Sir Paul Bryan

Cannot my hon. Friend get some comfort from the fact that the so-called black economy is to a certain extent manned by the so-called unemployed?

Mr. Hayhoe

It is fallacious to assume that the black economy is all bad. It certainly contributes to growth within our society.

Mr. Maxton

In view of the amount of taxation that is lost because of the black economy, why do the Government not consider transferring some of the snoopers from the Department of Health and Social Security to the Inland Revenue, to ensure that proper taxes are paid?

Mr. Hayhoe

As I said, there are some aspects of the black economy that are not bad. I should have thought there was no difference between us in the House about the fact that fraud is fraud wherever it occurs, whether in the taxation system or in the DHSS. I should report to the House that a significant increase has taken place in the manpower deployed both by the Inland Revenue and by Customs and Excise in hunting down such fraud.

Mr. McCrindle

Is not the most effective way of discouraging people from entering the black economy to reduce taxes across the board? Is my hon. Friend sure that he has the support of Opposition Members in that endeavour?

Mr. Hayhoe

I would be more interested in what Opposition Members were saying if they were advocating the reductions in public expenditure that must precede reductions in taxation.