Lord HAWKEasked Her Majesty's Government:
What weight government statistics give to the large and increasing exchange of goods and services which is conducted for cash and does not figure in any tax returns when producing figures for gross national product, consumer expenditure and the like.
§ Lord COCKFIELDTransactions in cash are included in national accounts statistics along with transactions through other media of exchange. Certain cash transactions may generate incomes which are not declared for taxation purposes and which form part of the so-called "hidden economy". By their very nature incomes generated by the hidden economy cannot be measured through regular statistical sources. However, some part, and probably a substantial part, of the expenditure generating such incomes is measured through regular statistical sources through it cannot be separately distinguished. In compiling estimates of gross domestic product the Central Statistical Office makes a positive adjustment to the data on incomes derived from regular statistical sources. The size 69WA of this adjustment is based on the longterm mismatch between basic data on incomes and expenditure. The adjustment therefore reflects some unknown part of incomes generated by the hidden economy.