Social Security Benefits Up-rating Order 2011

Baroness Lister of Burtersett Excerpts

Monday 14th March 2011 Lords Chamber

Tonight’s debate has focused mostly on the two issues of the basic state pension and of CPI/RPI or any other form of index-linking. Contained within this order is a raft of changes to benefit levels that will have a significant effect on the lives of many. We are not able to support the order in its totality because of the long-term commitment that it presages to the switch to the CPI. On that, we must remain apart.

[Baroness Lister of Burtersett]

My Lords, I wish to speak particularly on the shift from the RPI to the CPI. The Minister in the other place acknowledged that no single index is perfect, and the noble Lord, Lord Freud, said something similar this evening. Given that, I argue that the criterion that we should use is which index best protects the living standards of some of the poorest members of our society. That is not the CPI. Typically, the CPI rises more slowly than the RPI—15 times in the past 20 years, according to the Minister in the other place—and, of course, that is why it represents a spending cut. We should not underestimate the significance of this shift, which is easy to do when we get caught up in technical jargon about geometric means and so forth. A 2008 Joseph Rowntree Foundation study concluded that uprating policies have big effects over time. This change will have a very damaging effect over time on the living standards of some of the poorest members of our society. As my noble friend Lord McKenzie has said, these are people for whom substitution is rather difficult because they have already substituted a lot in adapting to living on such low incomes.