02 July 2004
Council budgets for 2005/06 will be thrown into turmoil next week when the Office for National Statistics finally accepts that its 2001 Census was flawed.
The statistics body will be forced into a humiliating climbdown on July 8 when it publishes the final results of data-matching exercises conducted with Westminster and Manchester councils.
Public Finance understands that these will confirm the authorities' claims that the census significantly underestimated their populations, costing them millions of pounds in lost government grant.
Population studies for a further nine local authorities with concerns about their figures, including Bradford, Derby, Middlesbrough and Wandsworth, will be published on the same day, and some are expected to yield similar results.
This latest statistical fiasco, one of several to have embarrassed ONS head Len Cook, has ramifications for the whole of local government.
ONS mid-year population estimates based on the census are used to work out each council's share of the revenue support grant, meaning that the finance settlements for 2003/04 and 2004/05 will now have to be recalculated retrospectively.
Some authorities are certain to be told that they have received too much grant, but ministers are adamant that they will not find any new money to pay for the ONS's mistakes. As a result, these councils will have to pay back the excess from their 2005/06 settlement, due out in the autumn, raising the spectre of big hikes in council tax or cuts to services next year.
A spokeswoman for the Office of the Deputy Prime Minister confirmed the government would not write off the incorrect payments. 'There are inaccuracies that have occurred as a result of the ONS and the government has made a commitment that these inaccuracies will be amended,' she added.
Sarah Wood, director of economic and environmental policy at the Local Government Association, told PF it was unclear at this stage how many authorities would be affected or how drastic their budget shortfalls would be.
But she warned that clawing back money that had already been spent would squeeze town hall budgets even tighter. 'This is another pressure that local authorities could do without. Government departments making mistakes of significant magnitude is not helpful at all.'
Next week's announcement will be the culmination of a two-year campaign fought by several councils to force the ONS to admit its census figures for their localities were wrong.
The ONS has always insisted its census figures were 'robust', but a notice tucked away on its website last week paved the way for the U-turn by announcing that it was postponing publication of other population data to take account of the revised figures.
'In view of the need to make further revisions to the 2001 and 2002 population estimates, it has been decided to postpone release of the revised historic population estimates for 1992 to 2000,' it said.
An ONS spokesman later confirmed that revisions were 'likely'.
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