Select Committee on European Scrutiny Thirty-Third Report

43 Undeclared work



Draft Council Resolution on transforming undeclared work into regular employment.

Legal base
Document originated3 September 2003
Deposited in Parliament9 September 2003
DepartmentInland Revenue
Basis of considerationEM of 1 October 2003
Previous Committee ReportNone; but see (19065) 7663/98: HC 155-xxx (1997-98), paragraph 19 (10 June 1998)
To be discussed in Council20 October 2003
Committee's assessmentPolitically important
Committee's decisionCleared


43.1 In June 1998 our predecessors reported their clearance of a Commission Communication on undeclared work[86] which was intended to promote a debate on the causes of undeclared work and on the policy options for combating it.

The document

43.2 This draft Resolution is the latest move at European Union level to address the problem of undeclared work, both in relation to tax evasion, benefit fraud and illegal immigration and to encouraging regular employment. It is intended to reinforce the political message that effective action against undeclared work is required in all Member States, and to encourage Member States to take positive action on undeclared work in the context of the European Employment Strategy. The draft is built around the existing Employment Guideline 9, which deals with undeclared work, in National Action Plans drawn up under the Employment Strategy. It encourages action on undeclared work in Member States rather than imposing any new obligations.

The Government's view

43.3 The Chief Secretary to the Treasury (Paul Boateng) tells us that the draft deposited has already been modified in working group negotiations. He says, basing himself on the revised text:

    "There are a number of strands to the actions that the Resolution calls upon Member States to undertake. None have any direct policy implications.

    "The first strand …. is specifically to take account of actions to combat undeclared work in compiling future National Action Plans as part of the European Employment Strategy. Member States, including the UK, have already signed up to do this and in particular Guideline 9 in the National Action Plans is specifically about the fight against undeclared work.

    "The second is to co-operate with other Member States in considering any common features of undeclared work that might best be approached by a common approach…. This work would be purely exploratory and there is no commitment to implement any common approach.

    "The third …. is to develop a comprehensive approach to tackling undeclared work within the European employment strategy. A number of measures that could be included in such an approach are listed. The UK, following on from the findings of Lord Grabiner in his Report on the Informal Economy in March 2000, already has in place a comprehensive package of measures featuring many of the ideas listed in the draft resolution.

    "The final strand is to endeavour to improve the understanding of the extent of the problem of undeclared work — an area by definition extremely hard to measure…. It is clear that the intention is that Member States should make better use of existing data in order to do this — there is no suggestion that any costs should be incurred in new data-gathering exercises.

    "The final sections of the draft Resolution …. simply call upon social partners to support the fight against undeclared work and invite the Commission to study the issue further at EU level.

    "While some of the language of the revised draft needs to be tightened, for example to ensure that references to EU process reflect current arrangements, the broad thrust of the Resolution is consistent with the Government's overall approach to undeclared work."


43.4 This draft Resolution addresses an important but difficult problem. We are content to clear the document.

86   See headnote. Back

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Prepared 30 October 2003