Who are the Libor losers?

Summary

More or Less – "Who are the Libor losers?"

Podcast by BBC Radio 4 | Host: Tim Harford | Date: July 14, 2012

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Episode Overview

This episode of More or Less digs into the numbers and scandals swirling around the manipulation of Libor, the London Interbank Offered Rate—a benchmark for millions of financial contracts and arguably "the most important number in the world." Host Tim Harford and guests explore how Libor is set, the scale of its influence, how individuals and institutions may have lost money, and whether the manipulation reached ordinary borrowers. The episode also debunks claims about a million starving children in Britain and examines the statistical underpinnings of such numbers. Additional features include a statistics challenge with Yan Wong and a behind-the-scenes look at the UK census.

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Main Theme: The Libor Scandal—Who Lost Out?

Central Question:
Who actually suffered as a result of banks' manipulation of Libor? Were ordinary people affected, or was it mainly banks picking each other's pockets?

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Key Discussion Points and Insights

1. What is Libor and Why is it Important?

• Libor stands for London Interbank Offered Rate, summarizing the interest banks pay to borrow money from each other.
• It's a critical benchmark, impacting everything from complex financial instruments to everyday loans and mortgages.
• “Barclays bank has been fiddling it and has been fined $450 million for doing so.” (Tim Harford, 00:39)

How Libor is Calculated

• 26 panel banks report hypothetical borrowing rates each morning.
• The highest and lowest quartiles are discarded, and the average is taken.
• "The thinking is that no one bank can put undue influence over the rate." (John Ewan, 05:10)
• Example: If a bank changes its quote from lowest to highest, it can influence which numbers are included in the average—even if its own quote is excluded. (05:22)

2. Can a Single Bank Influence Libor?

• Contrary to appearances, a single bank can nudge the average, especially if it moves its submission from one extreme to another.
• The real impact is likely very small—"measured in basis points, which are one-hundredth of a percentage point." (Tim Harford, 05:22)

Scale of Manipulation

• “They've really found evidence, in fact, of it moving by, you know, sort of half a basis point.”
  — Jonathan Rosenthal (Banking Editor, The Economist), 06:57

• "1/200th of a percent." (John Ewan, 07:06)

• The manipulation may seem trivial, but with trillions of dollars at stake, even tiny changes can matter.

3. Collusion and the Financial Crisis

• Some manipulations were traders acting independently for profit.
• During the crisis, a more systemic issue emerged: banks under-reporting borrowing costs to hide financial instability.
• “Many observers concluded that Libor had become detached from reality because banks didn't want to admit they were having trouble borrowing money.” (Tim Harford, 07:45)

Analogy

• "The first bout... was a bit like fixing a spot bet on a sporting match... but it usually won't affect the broader outcome very much...
  The second....was more like turning a real sport into a choreographed spectacle like professional wrestling."
  (Tim Harford, 07:45)

4. Who Lost Money?

Potential Libor "Losers"

• Large companies, individuals, pension funds, insurance companies, holders of complex instruments, and municipalities.
• "The City of Baltimore was on the wrong side of hundreds of millions of dollars of interest rate swaps and so has potentially suffered astronomical losses as a result..."
  (Leanne Craig, Hausfeld and Co., 09:53)
• For ordinary people, direct loss is less clear.

Mechanism of Loss

• Picture an insurance-like swap meant to protect you if interest rates rise.
• If market rates rise but Libor is kept artificially low, your “insurance” doesn’t pay out—so you lose.
• Proving actual losses is complex, involving "counterfactual" analysis—what would have happened if Libor hadn’t been manipulated?
  (Leanne Craig, 11:19)

Legal Response

• US class-action lawsuits are underway; UK cases are being considered.
• “We do believe that there will be a case to be brought in the High Court in London.” (Leanne Craig, 11:53)

5. Regulatory Oversight: What Went Wrong?

• The British Bankers Association (BBA), in charge of Libor, didn’t suspect trouble despite mounting signs.
• “We would never have expected there to be a problem.”
  — John Ewan, BBA, 12:54
• “Some of the names that you’re getting quotes from are banks that have been massively bailed out by the taxpayer.” (Tim Harford, 12:54)

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Notable Quotes & Memorable Moments

• On the magnitude of Libor exposure:
  “Between $150 and $160 trillion...that’s a one followed by 12 zeros.”
  — John Ewan, 01:57

• On collusion:
  "In one... email, one of the traders says, let me tell you how you do this. You don't do it alone."
  — Jonathan Rosenthal, 07:07

• On trivial statistical shifts with huge stakes:
  “Libor might only rise or fall by a tiny amount and for a short time.”
  — Tim Harford, 07:45

• On potential losses:
  “It could range from big companies, in certain instances, individuals, pension funds, insurance companies... it really would depend on... whether the Libor rate was being manipulated upwards or downwards.”
  — Leanne Craig, 09:03

• On regulatory blindness:
  “We would never have expected there to be a problem.”
  — John Ewan, 12:54

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Timestamps for Key Segments

• 00:39: Setting up the Libor scandal—why it matters.
• 01:52: Discussion inside Thomson Reuters on how much is at stake.
• 05:00–05:22: Explanation of Libor averaging and exclusions.
• 06:42–07:45: Jonathan Rosenthal on the scale and mechanism of manipulation.
• 09:03–11:19: Leanne Craig on lawsuits, swap losses, and how to prove the damages.
• 12:54: Reflection on the BBA’s lack of action as crisis built.

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Secondary Segments

Debunking "1 Million Starving British Kids"

Context:
Dispute over claims in a press release—are a million children in Britain really starving?

Main Insights & Quotes:

• Claim is based on loose extrapolations and questionable definitions.
• “No one from Kids Company or Netmums wants to be interviewed, but their PR company has been carpet bombing me with information...” (Charlotte MacDonald, 19:39)
• The supposed "233% increase" is just one charity's local statistic, not a national figure. (20:20)
• "Fewer than 1.3% of children last year were classed as underweight, and a third... are actually overweight or obese." (Charlotte MacDonald, 21:58)
• Over the last 10 years, only 11 children have died in the UK from malnutrition as an underlying cause. (22:29)

Bottom Line:

• Yes, issues of child poverty and poor diet exist, but calling it "starvation" is a gross exaggeration unsupported by the best available data.

Other Features

Sharks vs Bees: What’s Deadlier? (14:33–17:59)

• Listener wonders: Is it really more likely to be killed by bees than sharks?
• Yan Wong investigates and confirms: “In 150 years [UK], no fatal [shark] attacks; four or five deaths a year from bee stings.” (15:07)
• “An hour spent at a picnic is about as likely to kill you as an hour spent in the water. From sharks and bees.” (Tim Harford and Yan Wong, 17:20–17:28)

Behind the Scenes: The Census (24:18–26:46)

• Deputy director Roma Chappell describes why it takes so long to process the census.
• "Once we were sure we had got all the data captured... we actually shredded and pulped all the forms." (Roma Chappell, 25:39)
• Census is vital for planning, policy, and research.

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Recap & Tone

The tone throughout is skeptical, investigative, humorous, and clear—typical of Tim Harford and the More or Less team. The episode delivers complex financial and statistical ideas in a lively, accessible way, often using analogies and gently mocking the misuse of numbers in public life.

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Summary

“Who are the Libor losers?” answers not only who might be harmed by financial shenanigans, but also why headline figures in the news deserve scrutiny. The answer to both: Follow the numbers, ask the awkward questions, and don’t take every dramatic claim at face value.

Transcript

[Tim Harford]

Hello and welcome to a new series of More or Less a Statistical Rainbow. Amidst a downpour of dubious numbers, this week, we'll set off in search of a million starving children, not in Chad, Mali or South Sudan, but says an influential charity here in Britain. And we'll introduce a new feature with TV's Yan Wong. But one number story has been dominating the dance floor of news this summer and it's still going strong.

[Yan Wong]

Libor. Libor.

[Jonathan Rosenthal]

Libor.

[Tim Harford]

LibOR.

[Yan Wong]

Libor. Libor.

[Leanne Craig]

Libor.

[Jonathan Rosenthal]

Libor.

[Yan Wong]

Libor. Libor.

[Jonathan Rosenthal]

Libor.

[Yan Wong]

Libor.

[Tim Harford]

You probably know the following. Libor is a financial number, it's important, and Barclays bank has been fiddling it and has been fined $450 million for doing so. But judging from your emails, you want us to go a little deeper than that. And in fact, this isn't the first time that more or less has wrestled with the mighty Libor. Back in late 2008, as the world was still reeling from the collapse of Lehman Brothers, some people were calling Libor the most important number in the world. The Libor numbers, actually there are many of them in different currencies and for short, medium and long term loans, are benchmarks for all sorts of interest rates and other financial contracts. They were also a measure of how much trouble the banking system was in. And it was in this febrile atmosphere that more or less talked its way into the office in London's Canary Wharf, where Libor is calculated every morning. We were the first journalists to do so.

[John Ewan]

We've just walked into the Thomson Reuters offices, which is the front end of the operation that gathers the Libor numbers. Standing with us are Brian Martin of Thomson Reuters and John Ewan of the British Bankers association, which employs Thomson Reuters

[Tim Harford]

to collect these Libor figures. John, what's the value of these contracts

[John Ewan]

that are linked to Libor? Well, the contracts that are between banks and large financial institutions we think are worth Somewhere between 150 and $160 trillion. $150 or $160 trillion, that's right, yes. So that's a one followed by 12 zeros, which is why we take such a great deal of care in making sure that the figures are accurate every day.

[Tim Harford]

Let's just remind ourselves of the basics. LIBOR is not what bankers do at dinner parties, but the London Interbank offered rate. It's the benchmark figure intended to summarise how much interest banks have to pay when they borrow money from other banks. If the Libor people have their methodology right, Barclays shouldn't have been able to make much difference to Libor on its own. But maybe the methodology is flawed. Maybe Barclays acted in cahoots with other banks. Then again, maybe Barclays, despite the crooked intent of some of its traders, didn't actually influence Libor much at all. And there are two more questions which have been drowned out in all the excitement. First, did changes to Libor actually in the real world affect what we, the public, have been paying for our loans and mortgages? And second, how much damage did messing with Libor really do to the financial system? After all, most financial trades are two way bets. For every winner, there's a loser. Did the banks really pick our pockets as they manipulated Libor or were they just picking each other's pockets?

[John Ewan]

It's just coming up to 11 o', clock, so the banks have got a 10 minute window to contribute their Libor rates. Brian Martin is just dialing through to the remote office.

[Yan Wong]

Hello?

[John Ewan]

Hey guys, how's it going? You're now being taped. Okay, okay, Yep, Just got a microphone in front of the speakerphone connected to the treasury team, which is in a town about 150 miles away and we can't say where it is. Heather, your screen looks very similar. Are you all looking at the same numbers here or you trying to do different things?

[Charlotte MacDonald]

No, we're all looking at the same. There's 26 panel banks that we're looking for information from, so there's usually two

[Tim Harford]

of us monitoring it.

[John Ewan]

Presumably there are some people who would love to know ahead of time what this number actually is.

[Leanne Craig]

Yes, always.

[Roma Chappell]

All the rates that come in from the banks are private, so we don't give out any of that information.

[Tim Harford]

So if I was to run out

[John Ewan]

of the room now, having looked at these rates, I could make millions, right?

[Roma Chappell]

You wouldn't be allowed. Security would stop you.

[Tim Harford]

When we went to Thomson Reuters, they made quite a noise about their off site backups, anti terrorism contingencies, uninterruptible power supply and so on. But for all that fuss, the, the way all these Libor rates are calculated is pretty simple. At 11am, banks call the Libor office to report how much interest they'd have to pay if they were to borrow money that morning in several currencies and for different loan durations. It's hypothetical. You don't actually have to borrow money, you're reporting what those loans would cost you if you did. All those reported interest rates are then averaged, although, and this is important, the top and bottom quartiles are excluded.

[John Ewan]

Is Libor simply an average of the rates you receive or do you discard some of the data before you take the average? Yes, we do.

[Yan Wong]

We discard the upper and lower quartile.

[John Ewan]

What's the thinking behind that way of calculating it? The thinking is that there's no one bank can put an undue influence over the rate and you get a straight average.

[Tim Harford]

Let's stop the tape there. At first glance, you, you might think it's impossible for a single bank to influence Libor, because when Thomson Reuters ring around and get their quotes, they discard the highest and lowest ones. But when you think about it a bit more, you realise a single bank can move the rate. Just to keep it really simple, imagine there are four banks. Barclays quotes 1%, bank 2 quotes 2%, bank 3 quotes 3% and bank 4 quotes 4%. Now, the top and the bottom quotes will both be discarded. Libor will be the average of 2 and 3%. In other words, 2.5%. Now, let's say Barclays wants to get Libor up. Instead of quoting 1%, it quotes 5%. Assume all the other banks quote the same as before. Now Barclays quote will be discarded again. But by moving from being the lowest quote to the highest quote, Barclays influences which other numbers will count. Libor will be the average of 3% and 4%. And in other words, it's moved from 2.5% to 3.5%. In reality, what an individual bank can do is likely to have quite a subtle effect, measured in basis points, which are 100th of a percentage point. But with enough cash on the line, that's sufficient for a trader to make money. Here's Jonathan Rosenthal, banking editor of the Economist.

[Jonathan Rosenthal]

Up until the financial crisis, Libor actually moved in a really narrow range and all of the bids were in a pretty narrow range. So it would have been quite difficult to move Libor by very much. And one really does end up talking about, you know, potentially a basis point

[Yan Wong]

or so or even less.

[Jonathan Rosenthal]

And if one looks at what the FSA has accused Barclays of doing, they've really found evidence, in fact, of it moving it by, you know, sort of half a basis point.

[John Ewan]

1, 200 of a percent.

[Jonathan Rosenthal]

Yeah, so that's really small, small amounts. Where it becomes slightly more complex is we do know there were at least attempts by banks or traders at banks, I should say, to, to act together. So there have been emails between sort of a trader at Bank A to a trader at Bank B saying, can you also get your submitter to fiddle the rate? And in fact, in one of those emails, one of the traders says, let me tell you how you do this. You don't do it alone. So I suppose it becomes complicated once you have a few banks acting in concert, then the potential to move Libor by slightly larger amounts.

[Tim Harford]

So there are two distinct things going on. One was individual traders taking bets on what Libor would do and then leaning on their colleagues to oblige. Libor might only rise or fall by a tiny amount and for a short time. The second is the fact that during the financial crisis, many observers concluded that Libor had become detached from reality because banks didn't want to admit they were having trouble borrowing money. The first bout of Libor fixing was a bit like fixing a spot bet on a sporting match. That a particular point in a tennis match would be a double fault, for instance, or that a football match would have a certain number of throw ins. It's dishonest and it calls the integrity of the sport into question, but it usually won't affect the broader outcome very much. Now, the second bout during the financial crisis was more like turning a real sport into a choreographed spectacle like professional wrestling, which is no fun if you invested money and suddenly found that the banks were playing a different game. So who might actually have lost as a result of the Libor manipulation? I spoke to Leanne Craig, a partner in the law firm Hausfeld and Company. Hausfeld's U.S. sister company is taking a leading role in a class action lawsuit against the banks on behalf of companies, individuals and even municipalities such as the City of Baltimore who think they've lost money. Who better to state the case for the prosecution?

[Leanne Craig]

Well, the potential pool of losers is vast and as you say, it could range from big companies, in certain instances, individuals, pension funds, insurance companies, note holders, entities, and individuals like that. In terms of how it could affect you, it really would depend on what type of transaction you may have entered into and whether the Libor rate was being manipulated upwards or downwards.

[Tim Harford]

To return to our spot fixing analogy, if you'd bet on a match and some of the details of the match were rigged, you'd feel disgusted. But whether you were actually out of pocket though, would depend on the details of your bet and the nature of the corruption. The City of Baltimore is at the vanguard of this class action suit. So what did they do? Why did the libel manipulation hurt them?

[Leanne Craig]

Essentially, the City of Baltimore was on the wrong side of hundreds of millions of dollars of interest rate swaps and so has potentially suffered astronomical losses as a result of the downward manipulation of Libor. By the banks. What the resulting damage then is as a result of a manipulation of Libor, that remains to be ascertained.

[Tim Harford]

If you're wondering why anyone sensible might be trading these obscure sounding financial instruments, it's pretty simple. Imagine trying to protect yourself against rising interest rates. Instead of getting a fixed rate mortgage, you strike a deal with a bank where they pay you if general interest rates rise and you pay them if general interest rates fall. But instead of general interest rates, which is a vague term, the deal will connect all these payments to a Libor rate. When the financial crisis strikes, you might have to pay more money for a loan, but never fear, you've got this special deal which is supposed to pay you if Libor rises as a kind of insurance. The trouble is, if Libor is manipulated, real interest rates might rise, so you might have to pay more for a loan, but the benchmark Libor rate is artificially being suppressed. You won't receive your insurance payout. Of course, this all depends on whether Libor actually did move much. I asked Leanne how they proposed to figure out what their clients were supposed to have lost.

[Leanne Craig]

We are just beginning to look at possibilities with market experts and economists. But in essence what we would anticipate doing would be to look at a counterfactual. So what would have been happening had Libor not been manipulated? Or had the bank or banks not been submitting lower or higher rates on any given day and then looking to see what the impact would be on Libor?

[Tim Harford]

And you're based in the uk. Are you talking to potential clients with regard to suing the banks here in the uk?

[Leanne Craig]

Yes, we've been aware of what's been going on in terms of regulatory investigations for some time and obviously our colleagues in this state launched the clas action on behalf of the City of Baltimore and related class as early as last April. We do believe that there will be a case to be brought in the High Court in London. We are speaking to potential clients about that. It's early days and we anticipate speaking to more potential clients over the coming months.

[Tim Harford]

Leanne Craig of Hausfeld and company back in 2008, when more or less visited the Libor offices, it was already suspected by many people that the Libor numbers were a bit iffy. So here's one final question you might like to think. Why didn't the British Bankers association, which manages Libor, act? The answer, it seems, is that unlike many observers, they didn't suspect there was a problem. Here's me in 2008 in the Libor offices with John Ewan from the British Bankers Association.

[John Ewan]

If I was a bank and people decided they didn't want to lend me any money at any price because they were worried about my balance sheet, why would I tell Thomson Reuters the truth about my cost of funds? We try very hard when we are sorting out the banks that contribute to. To the fixing process to make sure that we have the biggest, best capitalized, most liquid banks. So that hasn't actually been a problem for us ever. You're sure? Some of the names that you're getting quotes from our banks that have been massively bailed out by the taxpayer, we would never have expected there to be a problem. But there has been a problem this summer. Well, that's true, but all of these banks are, as far as I am aware, still able to fund themselves in the markets as well as some of the banks, you're right, have been recapitalised by the government.

[Charlotte MacDonald]

You've reached the More or Less office. We're away for a while, so please leave a message after the tone.

[Yan Wong]

Hello, this is your Yan Wong. I present Bango's the Theory on the television. Well, I reckon I'm pretty good with numbers and I'd really like a spot on the show. What do you think it'll be? Sorry, got cut off. It's Yan Wong again. I'm on the one from the telly. I'm a big fan of More or Less Any ch. Hi, Jan here again. Listen, I'd love to be on More or Less. Did I mention I'm on the tell

[Tim Harford]

on More or Less? We're used to other BBC presenters trying to muscle in, but Yan Wong is a proper scientist and. And he made us a pretty good offer.

[Yan Wong]

Listen, if you let me on, I tell you what, I'll answer any question that your listeners can throw at me. Actually, I did something like that.

[Tim Harford]

So, Jan, your first challenge. We have an email from a loyal listener here. It says, I'm terrified of sharks. People tell me I'm more likely to be killed by bees than I am to be eaten by a shark. I'm not convinced. My thinking is that considerably more people come into contact with bees than they do with sharks. Of these, the bee encounter must be less likely to end in death. Please help. I haven't entered the sea for about five years.

[Yan Wong]

Oh, well, I do hope this person will enter the sea after this. I'm not sure. The nice thing about this is that there's loads of data on the Internet nowadays and so there's a thing called the International Shark Attack File, which is great, brilliant. And so you can get the bear reported figures. And there's no contest if you just look at the figures. So from bee or wasp stings that cause anaphylactic shock in the UK, about four or five per year deaths from sharks in the 150 years we have records, no fatal attacks.

[Tim Harford]

Okay, so should we then conclude that the probability of being killed by a shark in the UK is zero?

[Yan Wong]

Well, it really depends on how you frame the question. So, for example, if you want to survive a single unprotected encounter, then I'd prefer to meet a bee than a great white. I think what you're really asking is if I'm at the seaside, am I more likely to die going into the water and being attacked by a shark or staying outside and being attacked by a bee?

[Tim Harford]

The irony, I'm scared of sharks and I'm killed by a bee while eating an ice cream on the beach. I guess you still have this fundamental problem that the denominator, or is it the numerator, I always forget, is zero. We don't have any shark attacks.

[Yan Wong]

And that's really interesting. Doing this sort of guessing from really rare events is the sort of thing that you need to do. For example, a plan for terrorist attacks or nuclear meltdowns or planes falling out of the sky. It's pretty difficult to do. There are techniques to do it. What we do have to go on is there were two in 150 years, there were two attacks by sharks, neither of them fatal, in UK waters. And you can sort of extrapolate that out to about 0.00025 shark attacks per year in the UK.

[Tim Harford]

So if you wait long enough, there might eventually be a deadly shark attack in the uk.

[Yan Wong]

Eventually.

[Tim Harford]

There are many deadly bee episodes over the decades. So I guess the question is how much more exposed to bees than to sharks are people?

[Yan Wong]

Exactly. So there may be tens of thousands more bee deaths than shark deaths. My back of the envelope calculations suggest that people are in the water exposed to sharks sort of 1 10,000th of the time, or approximately that, than they are in the countryside exposed to bees.

[Roma Chappell]

So.

[Yan Wong]

So it's about equal in the uk, give or take in order of magnitude.

[Tim Harford]

An hour spent at a picnic is about as likely to kill you as an hour spent in the water.

[Yan Wong]

From sharks and bees.

[Tim Harford]

From sharks and bees.

[Yan Wong]

But if you go for sort of a shark infested place like Florida, then the numbers are rather different.

[Tim Harford]

To summarise, our listener may suffer this existential dread when he stares out at the ocean. But in fact, he's not gonna get killed by a shark and he's not gonna get killed by a bee.

[Yan Wong]

The figures are utterly minuscule. I mean, to cheer him up. He's much more like to drown at sea than be attacked by a shark. Throwing the shark into the mix really makes no difference at all.

[Tim Harford]

Right, that really is a very cheering thought.

[Yan Wong]

Yeah. And actually, on the bright side, if he does die of a shark attack in the uk, he'll be famous for centuries.

[Tim Harford]

Well, there we go. That's brilliant. So my challenge to anybody listening to the program, Yan Wong is here. He is at your service. He will not sleep until he has solved the most interesting of the problems you send in. So please drop us an email more or lessbc.co.uk with your challenges for Yan Wong. We and Jan will pick the ones we think are most interesting. And Jan, you'll be back.

[Yan Wong]

I will be back.

[Tim Harford]

Yan Wong, never wrong. You're listening to More or Less, in association with the Open University and I'm Tim Harford. Last week we heard that 1 million children are starving in the United Kingdom. The figure came from a press release issued by the charity Kids Company and the online forum netmums. The Today programme's Sarah Montague challenged Siobhan Freegard from netmums about these claims.

[Roma Chappell]

Siobhan Freegard, the press release that you've issued with this campaign talks about feeding

[Tim Harford]

1 million starving British kids, which sounds.

[Roma Chappell]

Whatever the problem is that sounds like,

[Tim Harford]

must be an exaggeration.

[Roma Chappell]

It really isn't an exaggeration. In fact, it's ever so slightly underplaying. It's somewhere between.

[Charlotte MacDonald]

It's very hard to get significant figures

[Roma Chappell]

on this because there actually hasn't been any proper research done. And this is what's quite frightening.

[Tim Harford]

Well, I share Sarah's skepticism. Starving isn't really the same as underfed or hungry. Starvation is what happens to kids in countries blighted by famine. It's pretty hard to believe that a million British children are suffering in that way.

[Yan Wong]

So.

[Tim Harford]

So we put Charlotte MacDonald on the case. Charlotte?

[Charlotte MacDonald]

Well, the title of the press release does tempt you to think in terms of famine. This isn't the Third World, it's your world. First ever campaign launched to feed 1 million starving British kids. They say research reveals that two kids in every class go hungry and that in the last year there's been a 233% increase in the number of children relying on charity to be fed. The problem is that trying to find their evidence for these claims has been quite frustrating. No one from Kids Company or Netmums wants to be interviewed, but their PR company has been carpet bombing me with information which they say supports their numbers.

[Tim Harford]

So have you worked out where the numbers are from?

[Charlotte MacDonald]

Well, the easiest was the Last 1, the 233% increase in children relying on charity to be fed. That turns out to be the increase experienced by Kids Company in London. They now feed 2,000 children each week.

[Tim Harford]

OK, so that's the experience of just one charity, although 2,000 Children is a lot of children and it suggests there are some real problems. Have you managed to pin down this 1 million figure?

[Charlotte MacDonald]

Well, the footnotes are pretty vague, but we think they're basing their claim on a survey carried out for the Prince's Trust.

[Tim Harford]

And have they fairly summarised that research?

[Charlotte MacDonald]

Well, you be the judge. In a nutshell, one of the things the Prince's Trust did was to count secondary school teachers in England who had seen pupils suffering from malnutrition or showing signs of not eating enough at least once every school term. Kids Company and Netmums seem to have assumed that when they saw pupils, that meant four and that each of them was starving. And they've also extrapolated to the UK as a whole and to primary schools.

[Tim Harford]

Are you sure that's what they did? I mean, it sounds like utter rubbish. Apart from anything else, the kids may have appeared not to have eaten enough once a term. That's just not really the same as starving children.

[Charlotte MacDonald]

Well, I can't be completely sure, but it's fair to say they haven't been able to substantiate their claim. I think, in fairness to Kids Company and Netmums, they were, for perfectly good reasons, just trying to call attention to something we should all be concerned about, that there are children who are not getting all the food they need. And Kids Company is a pretty small organisation which probably can't generate much in the way of its own original research. But I also think it's a bit self defeating to exaggerate, as I'm sure they have done.

[Tim Harford]

Well, has anybody done any real research?

[Charlotte MacDonald]

Well, one place to look is the National Child Measurement Programme, which attempts to weigh every pupil in the first and last years of primary school in England. Now, if children in Britain are starving in a Third World sense, then you would expect there to be lots of underweight children. But in fact, fewer than 1.3% of children last year were classed as underweight and a third of the pupils in their final year of primary school are actually overweight or obese.

[Tim Harford]

So that suggests there is a problem with poor diet, but it's not starvation.

[Charlotte MacDonald]

Yes. And over the last 10 years, and I'm sorry to be macabre here, 11 children have died in the UK from malnutrition as an underlying cause. Even then, the Office for National Statistics think that many of those children have been misclassified in the records. That does suggest that there are not a million starving kids in Britain.

[Tim Harford]

Just put the starvation thing to one side, because it's clearly nonsense. Can we get any kind of handle on how many children are not getting a decent diet at least? There are probably quite a lot of those. Does the government try to count them?

[Charlotte MacDonald]

There doesn't seem to be any good government research. The National Family and Children Survey used to ask families about food. In 2005, they asked parents if they could afford good quality brand name foods most days, and about 10% of them said they couldn't, which meant that it affected about 1.3 million children. There are lots of reports on broader subjects, such as child poverty. For instance, Save the Children recently published a report that estimates there are 1.6 million children in severe poverty that's characterised by not affording things like school trips, hobbies, while parents don't have enough money for things like household contents, insurance, preparing a broken refrigerator or washing machine, amongst other things.

[Tim Harford]

So there is some missing information here. Perhaps there should be a question about food put back into the Family and Children Survey.

[Charlotte MacDonald]

Might be a good idea.

[Tim Harford]

Well, thank you, Charlotte. Late last March, you may remember filling in a form for the 2011 census and whatever happened to all that? The results are coming out next week at least. Both the census for England and Wales and that for Northern Ireland will be publishing preliminary data. Data for Scotland isn't due out until December. We asked Roma Chappell, deputy Director of the Census team at the Office for National Statistics, to come in and to tell us all about it.

[Roma Chappell]

Well, the census is unique. It goes to everyone, it counts everyone, and it will provide you information about rare groups in the population which you simply can't get from surveys. So it's a rich source. And all that information we collected on the form, you know, eventually you will get a database with that information in, so you will understand how those different attributes and characteristics relate to each other.

[Tim Harford]

Now, people filled in their forms last March, so it's been well over a year.

[Roma Chappell]

Yes.

[Tim Harford]

Why does it take so long?

[Roma Chappell]

Yeah, so the simple answer is it takes that long because there's a Lot to do. So if I break that down, down a little bit, straight after the census we actually do a follow up survey to check on the coverage and how well we've counted people.

[Tim Harford]

So there's a census about the census?

[Roma Chappell]

Yes, it is. It's a follow up survey.

[Tim Harford]

I have to ask, is there a survey that follows up with no, okay, fine.

[Roma Chappell]

And then we process all the forms so we estimate for the number of people who didn't fill in a form, who didn't return a form to us. And so the results you get when are for 100% of the population.

[Tim Harford]

You know the, the end of the film Raiders of the Lost Ark with the gigantic warehouse. I mean, is there some warehouse somewhere with all of these forms in case we need to go back and check anything?

[Roma Chappell]

There was a warehouse up in Manchester where all the data capture, the scanning and processing was done, but that work's finished. So once we were sure we had got all the data captured and backed up and microfilmed, once we were absolutely certain we'd got the database, then we actually shredded and pulped all the form. Huge, huge job to do that, if you can imagine, over 20 million forms.

[Tim Harford]

Feels a bit bold.

[Roma Chappell]

Yeah, it was very bold.

[Tim Harford]

I think it was.

[Roma Chappell]

Luckily I didn't have to make that decision. It was a decision that my boss made. But yes, I mean we have all that information backed up. It will be there for our descendants in a hundred years time and remind

[Tim Harford]

us what all this is going to be used for. Why do we need a census?

[Roma Chappell]

It gives us a snapshot of the population in 2011. So it tells us what age we are, it tells us how many schools that we need, it tells us about the health of people. So it's used by businesses and it's used by the general public, it's used by academics for research purposes. It has an enormous wealth of uses.

[Tim Harford]

Roma, Chapel of the Ons. And that's all we have time for this week, but we're looking forward to a long hot summer of statistical detective work. Or perhaps a cold wet summer. We'll see. Do please send in your comments and your questions via more or lessbc.co.uk. our website is, as always, BBC.co.uk more or less and do please have a look because we've just revamped it and in my humble opinion, it's improved a lot. It's the place to read our best stories in print or to subscribe to our chart topping podcast and never miss another programme. More or Less was presented by me, Tim Harford, the undercover economist at the Financial Times. The producer was Richard Knight and the editor, Richard Varden. We'll be back next week. Until then, goodbye.