27 January 2006
The Office of the Deputy Prime Minister is refusing to compensate councils for lost grant, even though the government's own statisticians have admitted the data used to calculate it is flawed.
The department this week vowed to continue using the mid-year population estimates, compiled by the Office for National Statistics, to calculate each council's share of the formula grant.
This is despite the statistical agency warning the ODPM in a letter of the 'limitations' of its data and calling for a review of its use in calculating local government grant.
An ODPM spokesman told Public Finance: 'When calculating formula grant allocations, we use the best and most up-to-date data that are available on a consistent basis across all authorities.
'In the case of the population estimates, these are the mid-2004 registrar general's population estimates produced by the ONS.'
But, following lobbying led by Slough Borough Council and involving 21 others, the ONS has been forced to concede that there may be inaccuracies in the population of authorities with high proportions of ethnic minority residents.
The authorities are now demanding that the government either provides additional short-term funding
or undertakes to give a retrospective adjustment in funding.
ONS statisticians have acknowledged that the current methodology for measuring levels of migration is flawed because the data sources used, such as GP registrations, are not precise enough to capture accurately the population flows between local authority areas.
The ONS has agreed to launch a 'major new programme' of work, the improving migration and population statistics project, to overhaul the methodology.
But its letter to the ODPM, obtained by PF, says that in the meantime the department 'may wish to consider how the estimates and projections are used and whether there is any scope for recognising the particular uncertainty for those parts of the country that are affected by relatively high levels of migration'.
Slough's director of finance, Andrew Blake-Herbert, told PF his authority had gone from having the thirteenth fastest growing population in the country, at 120,600, in the 2001 census, to the fourth fastest declining, in the 2004 mid-year estimates, at 117,600.
But Blake-Herbert said its own data sources, including the electoral register and school rolls, suggested its population was still growing strongly. Consequently, Slough was losing money it was entitled to and the consequences would be severe.
'We stand to lose £9m by 2008 – £1.2m represents about 3% on our council tax, so we are looking at an impact of more than 20% on council tax over that period.'
PFjan2006
