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The sex industry could be decriminalised under proposals to be discussed by the Liberal Democrats.

A 33-page policy consultation paper, which will go before the party’s autumn conference in Brighton this month, argues that the “criminalisation” of sex workers is drawing vulnerable people into the justice system and encouraging some to take greater risks by working alone.

The document also says there is little evidence the current approach discourages soliciting. While it is not illegal to buy or sell sex, there are offences of loitering, soliciting, keeping a brothel, kerb crawling, controlling prostitution, placing sex adverts in phone boxes and paying for the sexual services of a prostitute subjected to force.

The document, which is the early stage of policy-making and not a formal party proposal, says: “The evidence that we have received presents us with only one option — to advocate the decriminalisation of sex work.”

The paper also argues that many of the laws are now out of date due to the shift of the industry online. It asks whether “management” in the sex industry, which includes pimps and those who run brothels, should be decriminalised as well as other areas linked to the buying and selling of sex.

However, it stresses that “coercion” of sex workers should still be subject to the law through legislation to prevent human trafficking and stop people being forced to perform sex acts.

Almost 32,000 out of more than 72,000 sex workers in the UK are in the capital, according to official figures.

The paper highlighted that there was a wide range of incomes. “Estimates suggest that while a street worker outside London earns an average of £11,000 a year, a high-income female off-street worker based in London earns up to £264,000 a year,” it stated.

Sex work generates between £3.8 billion and £5 billion a year for the UK economy, it added, but a “significant proportion” of this is likely to be untaxed.

Eight out of 10 sex workers in London are believed to be migrants — higher than other regions, but a similar level to countries such as Italy and Spain.

About half of sex workers in Britain are women working “off-street” and earning a “middle income”, with the “street-based” proportion between five and eight per cent.

More than 150 sex workers have been murdered since 1990, according to the police.

A section on “free speech” in the document raises the question whether no limits should be placed on the sexual behaviour of consenting pornography actors when this does not result in “permanent harm”.