By Aaron Barbour
The formation of a Hidden Economy Advisory Group was announced in last month’s pre-budget report, and now HMRC have released some more details.
Community Links accepted an invitation to be part of the group; we have lobbied for its creation for many years.
As a community organisation based in east London, we have provided support and advice to local people for over 30 years. We soon realised that many of the people accessing our services were working cash-in-hand, or informally, some while on benefits. We realised that most were doing so because the system was not supporting them sufficiently and they needed the money, not because they wanted to defraud the taxpayer. They told us how the benefit system and low-paid work often left them with little choice but to work informally, and how people are exploited as the cash-in-hand jobs available are usually low-paid and insecure. And we discovered that although the majority would have liked to formalise their work, there are innumerable barriers to doing so – low wages, inflexible rules, low benefit rates.
In the last 10 years we have conducted in-depth research into the issue, measuring its extent in boroughs across London, and latterly across the UK, as well as delving deeper into why people work cash-in-hand, how it impacts on them, and how they can formalise. We have built up a reputation as one of the few organisations in the UK with expertise in this area, and in the last two years our Need NOT Greed campaign has approached government, not being afraid to tell them what’s wrong, while offering sometimes radical solutions.
Throughout our work we are motivated by the desire to help people help themselves out of poverty. We believe that in the majority of cases cash-in-hand work keeps people poor, trapping them in low-paid and insecure work, and often shutting off the prospect of better jobs. And so we’re very keen to help shape measures that might allow people to formalise their work, or remove the need for people to work cash-in-hand in the first place. HMRC are motivated by the estimated £3bn in unpaid taxes by those working in the hidden economy, whereas we are motivated by the prospect of a better life for the people coming through our doors every day. In this instance we believe the two aims coincide – the best way to increase tax revenues is to remove the need for cash-in-hand work, and allow those working cash-in-hand to easily formalise.
I look forward to working closely with the group over the next few months. I want to ensure that we do not demonise those working informally but recognise the complex reasons behind their work, and that our practical and policy solutions reflect the lives of those working cash-in-hand across the country.
Our Social Change Series 3: the informal economy provides an overview of our research and recommendations to date.
