Retail Prices Index

Baroness Sherlock Excerpts

Wednesday 14th November 2012 Lords Chamber

[Lord Gardiner of Kimble]

It is obviously one of the considerations, but there will clearly be a number of considerations. There are effects in terms both of the liabilities for index-linked gilts as well as the assets. However, the point that I wish to make is that there is a process by which all these considerations are made and there are regular reviews of the RPI.

[Baroness Sherlock]

My Lords, in their first Budget, the Government sneaked through a decision to link future benefit increases to CPI rather than RPI, a move which the IFS said would save about £5.8 billion by 2014-15, taking that money out of the pockets of the poorest. If RPI does change, will the Government revisit that decision?

[Lord Gardiner of Kimble]

My Lords, again, I return to why we are where we are with this consultation. Among the key indexes that I have learnt about that I did not know much about is the Carli index. This index has now been discontinued by every other large advanced economy. The IMF has concluded that Carli, which is a major part of the RPI, is not an appropriate formula for inflation measures. On the point about pensions, this is a Government who have made the largest ever cash increase to pensions, to £107.45 a week. Of course, the Government’s triple guarantee means that the basic state pension will increase by the highest of growth in average earnings, the CPI or 2.5%.