Harnessing the hidden enterprise culture

Last week the RSA published its Untapped Enterprise report, which calls for a new approach to addressing the UK's informal economy. Here, Colin C Williams FRSA, Professor of Public Policy at The University of Sheffield, offers his reflections on our research findings. Colin has published numerous articles on the nature and prevalence of undeclared work across the world and is the Editor of two journals, including the International Journal of Sociology and Social Policy.

The RSA report “Untapped enterprise” addresses an important issue for governments and the business community. Most business ventures do not just start-up overnight. People do not have an idea for a business one day and start-up a wholly legitimate enterprise the next day. Instead, people generally have an idea, proceed to test it out to see if there is a market and then, once they see that there is a demand, decide to slowly but surely take some steps towards formalising their business and making it a legitimate concern. The result is that many businesses start-up engaging in off-the-books transactions in the first instance and only later, once the entrepreneur sees that there is a demand and an opportunity to grow the business, do they consider trying to formalise the venture.

It is this lived practice of how a business starts-up that this report addresses. Conventionally, governments have viewed those businesses operating in the hidden economy to be something to eradicate and repress. To apply this in a blanket manner, however, would result in governments repressing with one hand precisely the enterprise and entrepreneurship that with another hand it is so desperate to nurture.

In recent years, therefore, there have been widespread calls to shift away from a repressive approach towards this hidden enterprise culture. Instead, it has been argued that there is a real and pressing need to actively enable these off-the-books enterprises to make the transition to legitimacy. It is precisely this issue of how to help off-the-books businesses to formalise their operations that this report addresses.

It displays that there is no one simple quick fix solution. Instead, it shows the need for a multi-agency joined-up approach. Indeed, this is nothing new. During the early years of the millennium, there was a cross-government Informal Economy Strategy Group that brought together senior civil servants from across those government departments with a stake in tackling the hidden economy. This sought to try to join-up policies in order to tackle this hidden enterprise culture. For some years now, however, this has ceased to operate and government departments have returned to their ‘silos’. The outcome has been little joined-up thought about how to tackle this multi-faceted problem that requires cross-government action.

This report displays the desperate need for those interested in tackling this problem to start talking again and to develop a coordinated approach when seeking to address it. It also shows that it is not just government that has an interest in tackling this phenomenon but also employer and employee organisations as well as many third sector organisations.

The wealth of best practice policy measures it highlights that have been pursued around the world and might well be transferable to the UK certainly provide much food for thought. The first step, however, is surely to start by bringing all those interested in tackling this issue together so that a multi-pronged multi-agency approach can start to be pursued. If this report therefore provides further fuel to facilitate the establishment of a Hidden Economy Expert Group, composed of government departments (e.g., HMRC, DWP, DCLG and BIS), employer and employee representative organisations, third sector partners and academics, which will work towards developing a joined-up strategy for addressing the hidden economy in the UK, it will have done its job.

What is certain, however, is that doing nothing is not an option. In these times of financial and economic crisis, UK PLC has to do all it can to encourage the growth and development of new enterprises and to help dynamic entrepreneurs thrive. Surely helping to legitimise those already displaying entrepreneurial attributes and tendencies is a good place to start. I wholeheartedly welcome this report and hope that those in government and beyond not only take its messages seriously but decide to act in a concerted and coordinated manner to help this hidden enterprise culture come out of the shadows.