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Sent: Friday, July 16, 1999 11:15 AM
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Subject: More Misleading ONS Figures


     MORE MISLEADING ONS FIGURES; THREAT TO HOUSE OF COMMONS LIBRARY 
     PARLIAMENTARY CONSTITUENCY UNEMPLOYMENT RATES
     
     British official unemployment statistics continue to go from bad to 
     worse.  ONS has now started to publish, in Labour Market Trends and I 
     assume in NOMIS, what it untruthfully calls claimant unemployment 
     "rates" for parliamentary constituencies and for NUTS3 areas.  These 
     are compiled on the "workforce" basis already used for TTWAs and local 
     authorities, which grossly misrepresent unemployment in many areas.  A 
     "workforce" unemployment "rate" is the claimant unemployed resident in 
     the area divided by the sum of the number of people with a workplace 
     in the area plus the resident unemployed.  Areas with net incommuting 
     have their rate underestimated (denominator too big) while those with 
     net outcommuting have their rate overestimated (denominator too 
     small).  The figure is not a "rate" because many, and frequently most, 
     individuals appearing in the denominator are not at risk of appearing 
     in the numerator.  It is NOT the rate of unemployment among residents 
     of the area;  it is also NOT the rate of unemployment of those who 
     work in the area since if they become unemployed they will be ascribed 
     to their area of residence.  It is NOT the rate of unemployment for 
     any meaningful aggregate and to express unemployment as a percentage, 
     say, of the number of starlings nesting in the area would be just as 
     useful, and statistically valid.
     
     As explained below, this action by ONS has created a threat to the 
     survival of the truthful and very valuable parliamentary constituency 
     estimated unemployment rates (which really are rates) published by the 
     House of Commons Library.  I hope members of this list will take such 
     action as is open to them to help ensure the continuation of this 
     important House of Commons work.
     
     To illustrate how bad the new ONS figures are, we can compare them 
     with the House of Commons figures for the same date (May 1999).  The 
     worst affected are constituencies which happen to contain a city's 
     central business district (CBD).  Thus we have the following, with the 
     approximately true House of Commons figure shown first and the false 
     ONS figure second:  Birmingham Ladywood 17.7%, 3.7%;  Liverpool 
     Riverside 14.6%, 4.7%;  Manchester Central 13.9%, 3.1%;  Sheffield 
     Central 12.1%, 3.9%;  Leeds Central 11.1%, 2.4%;  Glasgow Kelvin 7.5%, 
     1.4%;  Edinburgh Central 5.4%, 2.0%;  Cardiff Central 5.5%, 2.5%; 
     Belfast North 11.3%, 4.8%;   and, in London, Cities of London & 
     Westminster 5.4%, 0.4%;  Bethnal Green & Bow 13.7%, 7.2%;  Hackney S. 
     & Shoreditch 14.5%, 8.4%;  Islington S. & Finsbury 10.1%, 3.5%; 
     Holborn & St Pancras 11.2%, 2.3%;  N.Southwark & Bermondsey 11.1%, 
     4.1%;  Vauxhall 11.2%, 6.6%.  These figures are grotesque.  They are 
     not telling you anything about unemployment, merely that these 
     constituencies coincide with the CBD.  
     
     The House of Commons Library states that 148 constituencies (out of 
     659) had ONS so-called "rates" differing by more than 2 percentage 
     points from the true rates in May 1999.  However even this understates 
     how disastrously misleading the figures are, since there is a 
     systematic bias.  It is mainly areas whose true unemployment is high 
     which have their unemployment badly underestimated  - in other words 
     those where it is most important to know the true rate.  Of the 25 
     constituencies with the highest true claimant rates at May 1999, 16 
     had their rate underestimated by more than 2 percentage points, with 5 
     actually overestimated by this amount and none correct even to within 
     a half percentage point;  of the 25 with the lowest true rates, none 
     had errors of this size and 6 were actually shown correctly to one 
     decimal place.
     
     It is less easy to find the size of the errors in the NUTS3 figures 
     except where these correspond exactly to local authority areas. 
     However, these errors also will be large in many cases.  For instance, 
     the Glasgow NUTS3 area is the same as the current local authority area 
     and therefore the error is the same as for the "unitary authority 
     workforce rate" already published:  whereas ONS shows 6.5%, the true 
     rate is about 9.3%.  I have already posted details of these 
     corrections to this website.
     
     The threat to the House of Commons Library figures arises because the 
     Library itself appears to feel threatened by the ONS figures.  Its 
     research paper 99/62 carrying the May 1999 figures, available on the 
     website at www.parliament.uk, refers to the new ONS figures and states 
     that "For the time being, this research paper will continue to follow 
     the methodology used previously and will contain only the Library's 
     residence-based unemployment rates.  A decision on the longer-term 
     future of the methodology.....will be taken later in the year." 
     Regrettably, it goes on to understate its own case by saying "The 
     Library believes that for a minority of constituencies - where there 
     is a high level of net commuting - these residence-based unemployment 
     rates provide a more intuitive (sic) measure of the incidence of 
     unemployment."  The concept of "intuitiveness" is not relevant.  What 
     the Library's figures show, foursquare and honestly, is simply the 
     rate of unemployment among the residents of each constituency.  The 
     ONS figures do not show the rate of unemployment for the residents, or 
     for the workers, or for any other meaningful aggregate.
     
     Unfortunately, the Library also fails to challenge ONS's description 
     of its figures as "rates" and appears to concede that they might have 
     some valid purpose (while not saying what that might be).  It states 
     "The two sets of unemployment rates (sic) have different 
     interpretations.  If one is principally interested in the proportion 
     of residents in a constituency who are unemployed" (which one would 
     indeed think would be a Member of Parliament's interest) "then the 
     Library's residence-based unemployment rate is the most appropriate 
     measure.  If, however, one wants to express the number of unemployed 
     claimants as a percentage of the total number of jobs in a 
     constituency, then the ONS unemployment rate is the appropriate 
     measure."  Why would anyone want to express the number of unemployed 
     claimants as a percentage of the total number of jobs in a 
     constituency?  There is no proper purpose for which such a figure can 
     be used and I have never encountered anyone who was able to think of 
     one.  Incidentally, I am grateful to the Library for noting a point 
     which even I had not realised, that if a person has two part-time jobs 
     they get counted twice in the "workforce" by ONS!
     
     In the three years since ONS started publishing these dreadful figures 
     I have often wondered what could be the explanation for their 
     behaviour.  I believe that it is due to three factors:-
     
     1. Shortage of money.  The chairman of the ONS statistics users group 
     (a businessman) was recently reported in the FT as saying that it 
     would cost an extra ?50m per year to give the UK a good quality set of 
     labour market statistics. These new "workforce" rates use the database 
     already created for the obsolete TTWA rates, and can be produced at 
     minimal cost simply by relaxing the (already rudimentary) quality 
     controls in respect of commuting self-containment hitherto applied to 
     TTWAs.
     
     2. Commercialism.  Ray Thomas has commented on this list about the 
     shift of ONS away from a focus on effective public policymaking 
     towards a purely commercial approach.  ONS appears to be genuinely not 
     bothered about distorting the process of public policymaking as long 
     as "customers" are prepared to use its figures.  As a matter of fact 
     there always are "customers" who are too ignorant to know that the 
     figures are misleading (even the FT regularly uses the LA workforce 
     figures without qualification) and other "customers" who have an 
     interest in dishonestly claiming that their area has a relatively 
     worse (or, sometimes, better) relative unemployment rate than it 
     actually has. 
     
     3. Ignorance.  Some of those in ONS dealing with these figures do not 
     actually understand the problems with them, especially if they have 
     not come from a background in labour market statistics.  The proposal 
     to extend the TTWA "workforce" concept to other areas while dropping 
     the commuting self-containment quality controls came from the former 
     Department of Employment, not from the CSO or OPCS.  
     
     The views expressed above are my own, not necessarily those of Glasgow 
     City Council.  The Council has however formally objected to the 
     publication by ONS of "workforce" rates for Glasgow.
     
     David Webster - Glasgow City Housing       16 July 1999
     
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