§ Mr. Ralph Howellasked the Chancellor of the Exchequer, further to his reply to the hon. Member for Norfolk, North [Official Report, 11 June 1979, Vol. 968, c. 134], whether it is possible to measure the extent or growth of the hidden economy using national income or other statistics.
§ Mr. Peter Rees,pursuant to his reply [Official Report, 9 July 1979; Vol. 970, c. 33], gave the following answer:
By its very nature the hidden economy cannot be measured through regular statistical sources. 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 of this adjustment is based on the long-term mismatch between basic data on incomes and expenditure. This adjustment reflects some unknown part of income generated by the hidden economy but it cannot be taken to be an assessment of its actual size or of its growth.
It has been suggested that movements in certain other statistics, such as notes and coin in circulation, may be associated in some way with movements in the hidden economy. Even if there is such an association these statistics cannot provide a reliable basis of measurement.
It is possible that some information about the hidden economy might be derived from specially designed surveys. But in relation to the results likely to be achieved the cost of such surveys by government would be excessive in terms 158W of public expenditure and the form-filling burden on businesses and households.