A slump, yes, but '30s it isn't

Officially, the north is a depressed area. Nearly 1 in 10 persons is unemployed. Sixty percent have no cars. In Britain, only in Northern Ireland are there fewer homes with refrigerators. Nowhere else in the United Kingdom are there fewer telephones per household.

But the visitor expecting a rerun of the 1930s is surprised, for this is a surprisingly affluent area. There are, to be sure, some boarded-up shops and gutted warehouses. And after diligent searching among the clean, treeless blocks of traditionally impoverished Wallsend, this correspondent stumbled upon something faintly reminiscent of Harlem or South Side Chicago: No. 2 Atkinson Terrace, a doorless brick row house with a burst bag of hardened cement on the entryway floor, crowned by the carcass of a radio and a fender from a coal stove. Nobody, however, lived there, and the houses next door, while hardly posh, were tight, neat, and solid.

A more surprising sign is the Eldon Square shopping center in downtown Newcastle, a 10-acre indoor mall with five department stores, 104 smaller shops, and one of the only recreation centers in the country that makes money. The shops are crowded, the buying brisk -- hardly a picture of depression.

Where does such a statistically poor area get its visible riches? Some point to the Norwegians, who ferry across the 400 miles of North Sea for a day's shopping at comparatively low prices. Their presence is welcome: The menu at the massively Victorian Royal Station Hotel is in English, French, and Norwegian. But their numbers are not large.

Others, seeing Newcastle as a regional center, mention the well-to-do Northumbrian County farmers -- an important but minority group. Still others recall that, while many are out of work, wages are nevertheless high. But even at an average male manual-worker's wage of L84.8 ($187) per week (L4 above the average for England and Wales), milk still costs L1.20 ($2.64) per imperial gallon, and inflation is over 17 percent. Why the affluence?

The central reason (often ignored because impossible to quantify) may be the so- called "black economy" -- the staggering amount of money earned by moonlighters. Paid only in cash, it is never reported as taxable income to the government statisticians.Consider the following:

* Brian, a comprehensive-school teacher, rides a moped. When it broke down recently, he took it to a local garage. Stopping by in the evening, he was told by the young mechanic that the job would cost L3 -- cash. Short of bank notes, Brian offered to pay by check -- only to be told by the disappointed young man that in that case the bill would be L5.50.

The check (since it could be traced by taxmen) would have had to go into the till. Cash could go straight into the pocket.

* Jerry, a business executive, is restoring an old country house. His "contractors" are moonlighters: Carpenters and masons by night and weekend, they are chemical-plant workers by day. All transactions are strictly cash, which Jerry takes out of the bank in large-denomination notes before the weekend. One indication that such "fiddle jobs" are increasing: the recent upswing in the demand for large bank notes.

* Peter is a young carpenter. He takes home, on average, L70 a week ($154) from his secure job maintaining local-government- owned "council houses." He more than doubles his income working evenings and weekends (some days from 8 a.m. to 10 p.m.), doing everything from hanging doors to building

4,000 ($8,800) additions for which a contractor would charge L7,000 ($15,400 ). Because he is to be married in March, he recently began saving for a down payment on a house. So far he has salted away L2,000 ($4,400) with his local building society -- all of it in cash. He earns more than most American college professors.

Peter, who talked frankly with this correspondent, claims such fiddle jobs are standard practice here. Of the 20 carpenters in his group, 18 regularly earn unreported income.

If he depended on wages alone, he says, "we'd be living right on the breadline." There is, he says, a "10 million to 1" chance of getting caught -- although one of his "mates," did get "chopped" recently by a woman who thought he had overcharged her. His only penalty: paying the tax he would have paid had he reported his extra income -- and only for the particular job on which he was caught. No one could prove he had done any previous fiddle jobs.

Peter entertains no moral scruples. He pays too much tax already, he says. If his moonlighting were taxed, he would lose some 35 percent of it. Besides, he says, going straight "would be difficult for me, because I'm hopeless at paper work." And he feels he is doing good work for people who otherwise could not afford it.

His advertising is all word-of-mouth, another powerful reason that locals, plying private trades this way, will not move out of their community even if their regular jobs dry up. When he himself wants something done -- auto work, radio repairs -- he rarely turns to a service professional. There's always a friend.

For most northerners, such double-work is an accepted fact of life, hardly even a moral issue. Some, however, feel that the taxmen should be tougher, along the lines of America's much-respected, penalty- wielding Internal Revenue Service. Many feel the taxes should be reduced to woo fiddlers back to legality , since "inside every moonlighter," as one Member of Parliament put it, "there is a small-business man trying to break out."

And some, like Jimmy Fawcett, a taxi driver and North Tyneside disrict councilor, think the government should not tax overtime wages at all. His argument: It costs the government no more (in insurance, pensions, and so forth) for a man who works 60 hours than for one who works 40. Tax only the basic 40 hours, he says, and Britain's productivity would soar. The shipyard fitter could then earn more by staying at the factory than by furtively becoming a nighttime plumber.

Whatever the answer, the fact remains that the north's personal wealth and the government's official economic portrait of the region appear to be poles apart.