At company X, 20 employees identify as LGBT according to their figures. This is our of 1000 employees. So 2% of the workforce. There's a slight under representation of LGBT employees compared to the general population.
However because there's no breakdown in the data between lesbians, gay men and transwomen you don't see that there's no lesbians and 17 gay men and 3 transwomen. This means there is actually an over representation of both male groups and an under representation of lesbians. In fact it looks possible that the company looks actively a hostile workplace for lesbians. They either don't work there or they don't feel comfortable to be out of the closet. Company X is actually a deeply sexist environment to work in.
But the all male LGBT representative panel can argue that they need to employ more gay men or transwomen because LGBT people are under represented in the company. This is the premise of Invisible Women mentioned above - when you go gender neutral and talk about people rather than males and females, this tends to disadvantage women because they become invisible and in becoming invisible any way of being able to see bias or disadvantage disappears with it. Far from increasing diversity, it actually works to decrease it.
Company X on seeing the data could then invite Stonewall to do the whole diversity programme thus making it more hostile to lesbians (with the whole TWAW and can be lesbians bullshit) because of the premise of under representation of the LGBT community. Except gay men and transwomen are actually already over represented and the problem is actually lesbian visibility and lesbian employment. Which Stonewall is institutional and politically tone deaf to.
The inward systematic looking in on the perceived problem rather than actually correctly identifying the actual problem in the first place due to missing important data, leads to the situation becoming worse rather than improving for the under represented group in something of a vicious circle.
This is why sex matters in the details on representation. A sex blind data set has the danger of misrepresenting what's actually happening.
The company has no way of seeing the invisible lesbian issue, much less addressing it without it.
I hope this illustrates the point in a way that's understandable.
The ONS's flawed data on gender in areas of high levels of low literacy will inevitably cause a similar problem to the one at Company X as money is invested in a none existent trans community. Money given to this folly is taken away from the vulnerable groups that are most in need of that cash for actual real world problems instead. There is likely to be a heavier pushing for unisex facilities in the area, when this is culturally highly inappropriate. It's more likely to result in the disappearance of Muslim women from the public sphere back into homes, and this in turn reduces their opportunities to improve their independence and literacy levels. It makes them more vulnerable to things like domestic abuse. All because some jumped up privileged pricks can't comprehend why simple English and simple concept that are universally understood should only be on the census.
It highlights well why the argument that transwomen are the most marginalised in society, simply can't be true. Their need to be identified and recognised is institutionalised into the ONS and political parties whilst the needs and visibility of people who don't speak or read English are completely forgotten about.
I have little faith that this finding will be taken on board by councils or anyone in planning unfortunately, so there will be ramifications for years and other surveys / institutions will continue to overlook the importance of simple English (hello NHS) particularly to the detriment of women.