Below is the text of Mr Major’s written Parliamentary Answer on the Gross Domestic Product on 17th March 1988.
Mr. Barry Field To ask the Chancellor of the Exchequer when he last reviewed the allowance of 1.25 per cent. of the expenditure measure of gross domestic product to take account of(a) tax evasion and (b) self employment.
Mr. Major A “net allowance for evasion”, equal to 1.25 per cent. of the expenditure-based measure of gross domestic product (GDP) since 1981, is added to the income-based measure of GDP. This allowance represents the extent to which expenditures which are not concealed from statistical sources result in factor incomes (mainly of the self-employed) which are concealed. The allowance is necessary to ensure the conceptual equivalence of the two measures of GDP. The basis of the assessment, which is examined regularly, is described in “United Kingdom National Accounts: Sources and Methods” (paragraphs 3.32 to 3.36).