Retail Prices Index

Baroness Hayter of Kentish Town Excerpts

Wednesday 14th November 2012 Lords Chamber

[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%.

[Baroness Hayter of Kentish Town]

My Lords, it is a shame that the noble Lord did not answer the question just put to him. Given that the Government changed from RPI to CPI on a permanent basis, despite the fact that we hope that the deficit is only a short-term one, it will cost people for many years to come. Will that be reviewed? Is this review of RPI really just statistical or is it a way of disguising cost of living increases caused by fuel and VAT?

[Lord Gardiner of Kimble]

My Lords, I have to return to why this is happening. It is happening because of the National Statistician and under statute. Having looked at previous Questions when the noble Baroness’s party was in office, precisely these things happened then, too: there were these reviews. This was about an independent inquiry. I hope that I tried to answer the last question, which is why I discussed the Carli index—a key part of RPI. In many countries it has been rejected as the sensible way of dealing with things such as cost of living increases.