Community Links’ approach to undeclared work UK
The UK charity Community Links has developed a research-based approach to the issue of undeclared work that is founded on the idea that it is ‘need not greed’ that motivates many informal workers. This approach has had a high level of success in influencing and reforming public policy strategies regarding undeclared work. Its supportive policy differs significantly from the punitive approach taken previously by the UK public authorities on the topic.
Community Links is a charity running community-based projects in east London, which aim to tackle the causes and consequences of social exclusion and poverty. Founded in 1977, Community Links now delivers 60 projects each year, most of which are based in Newham in east London, one of the poorest boroughs in Europe. The organisation also engages in substantial research, and uses this knowledge as a basis for consultancy.
One of the topics in which it has engaged in considerable research-based activity is undeclared work. Since 2000, Community Links has taken a particular interest in the informal economic activity of small companies, self-employed persons and employees as a result of the organisation’s perception that informal working is related to social exclusion and poverty.
On the basis of this research, it has developed a view of undeclared work in relation to poverty as stemming from ‘need not greed’, and advocates a supportive, preventive and educative rather than punitive approach to public policy on the topic (Katungi, D., Neale, E. and Barbour, A., 2006). In light of this view, the organisation has developed its ‘need not greed’ approach to undeclared work and has attempted to reform UK public policy on the issue.
The main actors involved in the initiative are Community Links, the Department for Work and Pensions (DWP), the Department for Business, Enterprise and Regulatory Reform (BERR), the Cabinet Office, Her Majesty’s Revenue and Customs (HMRC), local government authorities, the Trades Union Congress (TUC), Oxfam, the UK Coalition Against Poverty and the National Audit Office (NAO).
The primary aims of the project are the following, namely to:
- advance an evidence-based view of undeclared work that primarily focuses on the idea that undeclared workers who are poor and live in conditions of social deprivation largely engage in undeclared work due to ‘need’ rather than ‘greed’;
- work with the UK public authorities to develop policy on undeclared work that is founded on this understanding;
- reduce the prevalence of undeclared work in the UK through the development of local and national policies that take a supportive, preventive and educative approach to the problem.
Community Links has developed a significant evidence base (www.neednotgreed.org.uk) through conducting qualitative and quantitative research into various aspects of undeclared work. In addition, the charity convenes a national campaign coalition of about 70 organisations that is instituted around its ‘need not greed’ agenda and that campaigns for policy change.
Community Links offers a consultancy service to local authorities and Regional Development Associations (RDAs) in order to aid their policy on undeclared work. This consultancy is based on a methodology developed by the charity to measure the prevalence of undeclared work in localities.
Furthermore, Community Links has been involved in policy development at local and national level with a variety of organisations and has integrated its ‘need not greed’ message on undeclared work into public policy. The organisations involved include DWP, the UK Social Security Advisory Committee (SSAC), NAO and a range of local authorities in London.
Evaluation and outcome
Achievement of objectives
As a result of working with Community Links, the HMRC central compliance team formed a new informal economy unit that was based on the results of its work with the charity. The HMRC strategy and approach to undeclared workers has since changed as a result of this development.
HMRC achieved an overall return of about GBP 4.50 (€5 as at 12 February 2009) for every pound (€1.11) of the GBP 41 million (€45.85 million) that it spent on its ‘hidden economy’ work in 2006–2007. This was partly due to the input of Community Links (National Audit Office, 2008). Some of the HMRC approaches yielded even higher returns. For example, educative advertising campaigns advocated by Community Links resulted in some 8,300 persons registering to pay tax who might otherwise have taken up or remained in informal work. HMRC estimates that these workers will pay tax of about GBP 38 million (€42.50 million) over three years, providing a return of 19:1 on HMRC’s expenditure of GBP 2 million (€2.23 million).
Moreover, local government authorities have changed their economic development strategies and plan to address undeclared work as a result of their involvement with Community Links.
Obstacles and problems
A key dilemma concerning public action on undeclared work is the issue of whether the UK public authorities can be seen to engage with the problem of undeclared work without explicitly condoning it. However, the approach of Community Links is that engagement with undeclared work is necessary given the social and economic dividends that it may bring.
In the view of Community Links, negative social attitudes to undeclared work are prevalent in the UK. In its opinion, this mindset acts as a barrier to positive change for undeclared workers.
Community Links has learned that the approach of considering undeclared work as an opportunity to harness is more effective than viewing it as a problem to tackle. According to the charity, the effective management of undeclared work can lead to increased entrepreneurship and greater skills.
In addition, the organisation has learned to communicate discreetly to target individuals and organisations rather than engage with the UK national press. This is due to the perceived negative viewpoint of undeclared workers in the media.
Community Links has also learned that it takes many years to bring about change on the topic of undeclared work.
The revenue returns achieved by HMRC on policies influenced by Community Links are one indicator of impact. Furthermore, Community Links has been informed by several organisations in the UK public sector that the charity’s influence has led to new approaches to the problem of undeclared work.
Although founded on local experience, the Community Links ‘need not greed’ approach to public policy on undeclared work aims to target all aspects of UK policy in this regard. Therefore, it is most transferable in the UK context and in other European economies where similar benefit and tax systems, as well as companies and employment laws and policies, are resulting in increasing rates of undeclared work.
The Community Links promotion of its ‘need not greed’ approach is remarkable for a variety of reasons. First, its status as a charity and its ‘bottom-up’ research-driven approach to the topic of undeclared work differs from more traditional strategies in this area. A growing trend is emerging for charitable bodies and other ‘third sector’ organisations – that is, charities, voluntary groups, not for profit organisations and non-governmental organisations (NGOs) – to become involved in public policy activities. Therefore, the participation of organisations such as Community Links in public policy on undeclared work may become more common in the future across European countries.
Secondly, the Community Links ‘need not greed’ approach to undeclared work differs significantly from the punitive approach taken previously by the UK public authorities on the topic. It is possible that such an approach may become increasingly popular as more evidence of its impact is accumulated.
Aaron Barbour, UK Research and Policy Manager, Community Links
Katungi, D., Neale, E. and Barbour, A., People in low-paid informal work: Need not greed, Joseph Rowntree Foundation and the Policy Press, 2006.
National Audit Office, Tackling the hidden economy, London, 2008.
Thomas Prosser, University of Warwick