Flawed data robbed Britain's poorest regions of EU aid
Copyright 2000 Copyright 2000 Times Newspapers Limited
The Times (London)
June 26, 2000, Monday
Lea Paterson, Economics Correspondent
ERRORS by government statisticians may have cost Britain's poorest regions in excess of Pounds 1 billion in EU assistance, according to fresh research.
West Wales and the Valleys, which recently qualified for EU aid for 2000-06, could have received more than Pounds 100 million of EU funds a year during the 1990s had it not been for serious flaws in official data, the researchers claim.
West Wales, together with other relatively poor regions in Britain, may have also lost out during the 1980s because of mistakes in the way government statisticians have measured the regional divide.
A study to be published in this month's issue of the Economic Journal looks at deficiencies in official regional accounts data used to determine whether an area is sufficiently poor to qualify for European Union Structural Funds. The authors of the research, John Muellbauer and Gavin Cameron, of Oxford University, argue that systematic failings by the Inland Revenue and the Office for National Statistics during the 1980s and early 1990s led to underestimation of income levels in the South East and overestimation of income levels elsewhere.
This overestimation of regional income levels - which was at its most marked during the 1980s - may have wrongly pushed national income per head in the poorest regions of Britain above 75 per cent of the European average, the threshold used to determine whether a region qualifies for EU funding under Objective I status.
The authors identify the newly constituted region of West Wales and the Valleys as the region most likely to have lost out, although it is conceivable that other areas may have also been cheated out of EU funds. Income levels during the 1980s were used to determine allocation of aid in the EU funding rounds of 1989-93 and 1994-99. If regional income had been correctly measured, West Wales and the Valleys might have qualified for assistance in both periods.
The authors emphasise that it is virtually impossible to quantify precisely the potential loss to Wales, although figures from other regions suggest that this could have exceeded Pounds 100 million a year.
The statistical failings were gradually ironed out during the early 1990s and no longer affect the data.
You can email me at Gavin.Cameron@economics.ox.ac.uk
Last updated: 9 November 2003.
