Clarke blocks improvements to unemployment statistics

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Planned improvements to the hugely discredited official unemployment figures have been blocked because the Office for National Statistics has been told there is no extra money due to the tight public spending round.

Academic and City users of official statistics are holding an emergency meeting shortly to discuss the implications of further cuts in the ONS's already shrinking budget.

Proposals to switch from the headline unemployment figures, which count the number of people claiming unemployment benefit, to a monthly labour force survey have the backing of Tim Holt, head of the Government's statistical service, and a wide range of independent experts. Most of the changes to eligibility for unemployment benefit since 1979 have reduced the published unemployment number, leading a report from MPs earlier this year to describe the figures as "fiddled on an orchestral scale".

The new survey method backed by Mr Holt would show unemployment to be around 100,000 higher than the official figure of 2,073,100.

However, the Chancellor Kenneth Clarke - who discussed the spending round with Treasury ministers and officials at Dorneywood, his country residence, on Friday - is believed to have told the ONS that the pounds 8m a year needed for upgrading the current quarterly survey to monthly will not be available.

Even a lower-cost half-way measure short of a full monthly survey, costing about pounds 1m a year, has been ruled out.

Ministers do not plan to make an announcement on the decision for several months. The ONS presented the recommendations of an independent working party it had set up to the Chancellor in April.

The ONS has already had to scale back plans to improve the collection of statistics on the service industries, which are only scantily covered by official figures despite making up two-thirds of the economy.

The department's budget is projected, in last year's published spending plans, to fall from pounds 105m in the current financial year to pounds 94m in 1998/99.