Uncovering our £200bn 'cash in hand' culture

By [bbanks]

SMUGGLING, drug-dealing and rustling are all going on in Lincolnshire behind the facade of legitimate business.

And these black market practices, which are carried out alongside the unassuming daily running of firms, are thought to contribute to 12 per cent of the UK's economic output.

The true extent of the dark underbelly of entrepreneurship – which adds up to almost £200bn, according to 2008 UK figures – is now being investigated by Dr Gerard McElwee, reader in rural enterprise at the University of Lincoln.

From tax avoidance to prostitution, he is looking to lift the lid on the reality of how some entrepreneurs operate, something he calls the 'informal economy.'

"There are lots of illicit activities that take place in rural areas from subsidy fraud, environmental crime and the illegal sale of livestock through to drug-dealing, prostitution and poaching," said Dr McElwee.

"It is not simply people who might be regarded as Arthur Daley-type characters or hardened criminals who are engaged in it – many people are involved."

"Entrepreneurs are seen as these wholesome characters who do wonderful things for the economy but what's clear is there is a number that are operating illicitly when opportunities arise from things like tax and VAT avoidance," he said.

"It's an issue in rural areas because they are harder to police and it's also difficult to access people.

"In terms of the economic downturn, it leads to an increase in illicit activity and clearly there's a lot more going on in rural areas like Lincolnshire," said Dr McElwee.

"And these people know their markets just like they do in legitimate business. For example, drug smugglers know know who is going to buy, they are aware of prices and there are strategies they use."

He said cattle rustling had become a major problem in Lincolnshire.

For more on the local black market, see Thursday's Echo.