ESRC: Research into Informal Economic Activities

HL Deb 02 February 1998 vol 585 cc86-7WA

Lord Kennet

asked Her Majesty's Government:

Whether the Economic and Social Research Council is to fund a five-year programme to study the "structure and dynamics of irregular activities such as tax evasion, fraud, drug peddling and prostitution and other informal economic activities including work carried out in the household …and voluntary work"; and, if so, why it is thought that "work carried out in the household … and voluntary work" can appropriately be studied along with criminal activities.[HL40]

The Minister of State, Department of Trade and Industry (Lord Clinton-Davis)

The Economic and Social Research Council (ESRC) is funding a four-year programme of research into Informal Economic Activities commencing in October 1998. The principal focus of the programme is the measurement and better understanding of the extent and nature of such activities. It does not seek to equate legal and illegal activities within the informal sector, but to understand the dynamics and relationships involved in all such informal economic activities.

There are many forms of production and exchange that are either not recorded or recorded only indirectly. Informal activities such as housework, childcare, barter and exchange of goods and services are difficult to measure because they are not regulated by government. Other activities such as prostitution, drug peddling and cash transactions designed to avoid tax, are deliberately concealed from government. In all these cases the cash transfer will eventually be recorded in national economic activity when it is spent. This will result in discrepancies between income and expenditure measures of economic activity.

The research programme intends to look at issues such as the extent of informal activity, and how requirements and aspirations are satisfied by such means. Other parts of the study will look at how transactions divide between market, barter, and internal supply, and how human production activity divides into paid work, self-employment and unpaid work. Of particular interest are activities that straddle the formal and informal sectors or move from one to the other.