§ Mr. Ralph Howellasked the Chancellor of the Exchequer what would be the effect on the principal indicators of economic performance if the black economy were known to amount to (a) £10 billion and (b) £20 billion.
§ Mr. Peter ReesAn allowance of about £4 billion a year for the black economy is currently incorporated in national accounts statistics. If the true values of the black economy were (a) £10 billion and (b) £20 billion the estimated levels of gross domestic product at current market prices would be raised by about 2½ per cent. and 7 per cent. respectively. Assessments of movements in the economy would not be affected unless the black economy was growing appreciably faster than the rest of the economy.
§ Mr. Ralph Howellasked the Chancellor of the Exchequer whether the evidence available to him suggests that the size of the black economy has been growing in recent years; and if so, by how much he considers that the official figures for the growth in national income have been underestimates of the true growth.
§ Mr. Peter ReesI have no firm evidence to show that incomes from the black economy have been growing appreciably faster than other incomes. Thus although the levels of incomes from the black economy may be underestimated in official statistics I have no reason to believe that growth in national income has been appreciably underestimated on this account.
§ Mr. Ralph Howellasked the Chancellor of the Exchequer what is his estimate of the loss of Exchequer revenue that would result from a black economy amounting to 7½ per cent. of gross domestic product.
§ Mr. Peter ReesNo firm estimate is possible, but on the basis of the figure quoted by my hon. Friend the loss might be about £3 billion to £3½ billion currently.
§ Mr. Ralph Howellasked the Chancellor of the Exchequer whether he will initiate a comprehensive investigation into the loss of potential tax revenue resulting from the black economy, with the aim of identifying those areas where a concerted attack might be expected to produce results commensurate with the investigative resources employed.
§ Mr. Peter ReesThe boards of both Revenue departments already have the problem of tax evasion under190W continuous review and are aware of the need to deploy their available resources in the most cost-effective manner.