Capital has £100m funding shortfall

London is facing a £100 million funding shortfall because of the flawed migration statistics used by the Government, council leaders warned today.

The London Councils group, which represents local authorities across the city, says the gap in income occurs because tens of thousands of migrants living in the capital are not included in official counts used to determine funding.

The "gaping hole" in the figures means some services are facing cuts, it says, while council tax bills are being pushed up unnecessarily.

The group's statement came only hours after the Government was forced to issue another correction to its figures on foreign workers. Ministers now say that 1.1 million of 2.1 million new jobs created since 1997 went to foreign nationals. Their original claim was that 800,000 out of 2.7 million new jobs went to migrants.

However, National Statistician Karen Dunnell says 1.5 million jobs have gone to foreign-born workers. The Department for Work and Pensions says the 400,000 difference is because the extra workers, while foreign born, were either orginally British citizens or have acquired UK nationality.

London Councils chairman Merrick Cockell said today: "The fact that the figures were so wrong for foreign workersblows a hole in the way the office for National Statistics and the Government calculate their figures.

"The figures used by the Government to decide council funding are quite simply not up to the job. The result is that we are not receiving the funding we should."

He said that although precise estimates of the number of migrants not counted in official figures for London were not available, the figure was likely to be at least 50,000 and probably well over 100,000.

He added: "The most stunning thing about the foreign workers figures was that they were calculated using the Labour Force Survey, the same method used for measuring migrant numbers.

"This takes a very small sample of 100 or so people then extrapolates out from that. Nobody believes the results, but that is what we get funded on."

He added that a London School of Economics study indicated that the gap in funding was around £100 million.

Several local authorities have conducted their own research. Westminster officials believe that the actual number of residents is 24,000 higher than the Government suggests - equivalent to one in 10 of the borough's population - because of uncounted migrants.

Brent believes that official estimates are 2,000 short. In Enfield the gap is thought to be 3,300. Newham calculates it has 750 more school-age children than the official totals.

And the head of the Government's statistics watchdog, Richard Aldritt of the Statistics Commission, said the Labour Force Survey, used to calculate the level of migration each year, was inadequate. He said he had been pressing ministers for years to spend "tens of millions" more to improve the data.

"It is a relatively small survey, it does not even cover all ports, there is no guarantee that those surveyed give accurate answers and the results have to be scaled up enormously," he said.

"The figures they produce are useful for a general debate about immigration, but they are not valuable in deciding how to set quotas or how resources should be allocated to local councils."