Jobless figures challenged

City unemployment rates twice as high as claimed

David Walker
Monday August 5, 2002
The Guardian

Unemployment in Manchester, central Birmingham, and parts of inner London is twice as high as the government claims, according to an unpublished review by the office of national statistics of the way it has compiled jobless figures during the past five years.
The report said published city unemployment rates - for such places as Hull, Islington, north London, and Dundee - were "unsatisfactory", "badly misleading" and lacking in "geographical validity".

It concluded that they should be withdrawn, their "statistical limitations" having been demonstrated.

The ONS admitted that its reports of unemployment falling across the country were wrong. Areas have been stated as having the same low unemployment levels when in fact there exist "substantial differences" in local labour markets.

The problem arose because the official definition of local unemployment relies on "travel to work areas". For each city, ONS compared numbers of residents claiming benefits with the number of workplaces. In districts where large numbers of workers commute in, this has led to under-estimation of the number of jobless living locally.

The review concluded: "The workplace-based claimant count rates can be badly misleading as indicators of local labour market conditions."

Pressure from the Department of Work and Pensions appears to have stopped the ONS making the immediate changes it wants. The department wants to shed the best light on the new deal and other government schemes for cutting joblessness in urban areas.

Successive drafts of the ONS report are thought to have been watered down. Instead of withdrawing the figures at once, the report - seen in its final form by the Guardian - recommended "consultation" with ministers and MPs before action was taken.

ONS hesitation is all the more ironic since for the past three years the House of Commons library has offered calculations of local unemployment on the very basis the ONS now says should be the official method.

In a "review of the framework for labour market statistics", the ONS admits that unemployment in apparently prosperous Camden, north London, officially stated as 2.3%, is in fact at least 4.2%.

Applying the method, the ONS said it made unemployment in Manchester nearer 8%, far higher than the 4.4% officially recorded in January this year.

The ONS miscalculation does not affect the jobless total, which was 3.3% for Britain in January. But it does have dramatic consequences for a number of areas, which receive grants for health and councils on the basis of their jobless rate.

The error also overstates unemployment in areas such as Hartlepool, Sunderland, Greenwich and Lewisham, both in south-east London, where more people travel to work outside the boundaries.

Ivan Turok, an urban specialist at the University of Glasgow, said "millions of pounds" in European Union grants and regional assistance could had gone astray as a result, with some areas losing large sums to which they were entitled.

Among ministers whose constituencies will overnight cease to look so prosperous are Clare Short, the international development secretary, and Patricia Hewitt, the trade and industry secretary. Officially the Birmingham travel to work area unemployment rate is 5.6% but in Ms Short's Ladywood constituency unemployment is nearly 13%.

Officially Leicester unemployment is 4.6% but the reality in Ms Hewitt's Leicester West seat is 6.2%. If the ONS was to recalculate its figure for the city on the basis it now says it prefers, joblessness in the east Midlands city would be around 6.7%.