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Clarke refuses cash to update job figures

The Chancellor is refusing to provide extra funds to implement improvements to the discredited claimant count method of producing the unemployment figures.

A monthly labour force survey covering 60,000 people has received top- level backing as an alternative. But to provide the new figures would add pounds 8m to the cost of collecting the unemployment statistics. Kenneth Clarke is believed to have told official statisticians that they can only start to collect the more realistic figures if the cost can be saved from elsewhere in their budget.

The Office for National Statistics is due to announce its decision within the next two weeks. Officials suggest that the most likely choice is a cheaper half-way measure between the current figures and the preferred alternative of a full monthly survey of the labour market.

Tim Holt, director of the ONS, has always made it clear he shares the general view that the monthly claimant count measure of unemployment has been discredited by the number of changes made to the unemployment benefit system since 1979. Most of the changes, restricting the availability of benefit, have reduced the headline total.

A working party Dr Holt set up last summer recommended conducting the more reliable quarterly survey measure of unemployment every month, to provide a trustworthy alternative. Government statisticians believe the move will be essential to restore public confidence in the unemployment numbers.

Other supporters of a monthly survey include the Royal Statistical Society and the House of Commons Employment Select Committee. Both have concluded that the monthly claimant count is not widely trusted.

Even ministers acknowledge that there have been nine changes in definition which have affected the headline total, all except one reducing it.

The ONS has recently had to scale back planned improvements to its collection of figures on the service industries, which are only scantily covered by official statistics despite accounting for two-thirds of the economy, due to budget stringencies.

Insiders are convinced that if money is running short for such an important project, it will not be available for upgrading the quarterly unemployment measure to monthly.

Instead, monthly unemployment numbers could be calculated based on a small-scale survey to update the existing quarterly figures. This option would cost about pounds 1m.

The scene was set for an announcement that would disappoint statistics- users in the latest edition of the ONS publication, Labour Market Trends. A special article described improvements in the geographical coverage of the unemployment claimant count which, it said, would make that measure "an even more useful data set".

Whatever its limitations, the claimant count is timely, frequent, precise and instantly available, the article points out.