According to the Joseph Rowntree Foundation report, debt levels mean that people would rather work informally to get instant cash than work formally and risk waiting for bureaucrats to process payment.
Report author Aaron Barbour said of the problem: “People in deprived areas are resorting to informal paid work because they are trying to support, feed and clothe their families.”
Many of the people surveyed were on benefits, which they feared they might lose if they worked formally.
Many claimed to be struggling with bills, debts and loan sharks even with state assistance, which meant they turned to informal jobs to provide cash.
Claiming that it was “need not greed” that led to people working illegally, the Joseph Rowntree Foundation called on the government to re-think its anti-poverty programme to ensure people in debt do not resort to informal work.
Commenting, David Mond, chief executive of debt resolution company, ClearDebt, said: “Many people are afraid to seek the debt relief that insolvency procedures like IVAs and bankruptcy can provide – but, especially for those who are on benefits with no prospect of employment, bankruptcy could provide the opportunity of a fresh start.”