HC Deb 10 December 1998 vol 322 cc303-4W
Mr. Cousins

To ask the Chancellor of the Exchequer what estimate he has made of the size as a proportion of gross domestic product of the informal economy(a) in the United Kingdom, (b) in each region and (c) in each nation; and what assessment he has made of trends in the size of the informal economy. [62906]

Ms Hewitt

The information requested falls within the responsibility of the Director of the Office for National Statistics. I have asked him to reply.

Letter from Tim Holt to Mr. Jim Cousins, dated 10 December 1998: As Director of the Office for National Statistics (ONS), I have been asked to reply to your recent parliamentary question on the informal economy. Definitions of what is included in the informal economy are not entirely clear, and therefore no official estimates are available for the UK. However, the ONS has done work based on the following three definitions: The UN System of National Accounts 1993 (SNA93) defines the informal sector as comprising own-account enterprises (household enterprises owned and operated by own-account workers, which may employ contributing family workers and employees on an occasional basis) and enterprises of informal employers (who operate below a certain size or are unregistered). The SNA says that the concept of informal sector activities should be distinguished from the concept of activities of the hidden or underground economy. In the context of household satellite accounts, 'movement between the formal and informal economy' is movement between the economy measured by GDP and unpaid household production. Illegal economic activities are also sometimes described as 'informal'. The activity of informal own-account enterprises, who are registered with the Inland Revenue, are included in National Accounts estimates of mixed income. Adjustments are made in the National Accounts to allow for the incomes of those who are not registered for income tax. However, this evasion adjustment does not claim to measure the total size of the 'hidden economy'. Section 14.20–24 from the 1998 National Accounts Concepts, Sources and Methods describes these adjustments, and I enclose a copy of this. Estimates for the value of household production were published in October 1997, based on Time Use data from 1995—a copy of the article is enclosed. The results of some research into the illegal economy were published in Economic Trends in July 1998—a copy of that article is also enclosed. There is no regional or sub-national breakdown for any of these data. Because much of the work is developmental, there are no time series, so it is not possible to assess the rate and direction of any change.