PROSTITUTION IN the UK is worth more than pounds 770m a year, and the Government could raise tax revenues of pounds 250m if it were legalised, according to research due to be presented at the Royal Economic Society's annual conference this week.
The research, by academics at the universities of East Anglia and Manchester, examined the cost of heterosexual encounters between consenting adults, which is considered a relatively small part of the total sex industry.
The researchers, Peter Moffat and Simon Peters, said: "The Government may be interested in the extent of income flow from what is primarily a black-market service."
Prostitution is part of the UK's growing shadow economy, estimated by the International Monetary Fund to be worth 13 per cent of gross domestic product, or about one pound in every eight.
Having an estimate of prostitution figures will allow campaigners for legalisation to make a much stronger case, they argue.
However, it is not easy to collect data - prostitutes suspect that anybody asking them about their work is from either a police force or the Inland Revenue, while their clients are hardly going to report their expenditure to anybody collecting official statistics.
For the purposes of the research, the economists therefore used the prices reported to an internet site, PunterNet.com, which collects reports from clients detailing the price paid, duration of visit, location and some other characteristics. The site restricts itself to reports on legal, adult heterosexual encounters and weeds out any that are clearly bogus.
Despite the limitations of the data, the research shows that the typical price paid by customers per encounter is pounds 50. Almost all encounters cost less than pounds 100 and few above pounds 200 were reported.
Two key determinants of price are duration, with each extra minute adding pounds 1, and location. Inner London is 35 per …