Retail Prices Index

Lord Elton Excerpts

Wednesday 14th November 2012 Lords Chamber

[Lord Gardiner of Kimble]

My Lords, I should emphasise that this exercise, on which I am endeavouring to answer, is a consultation process and that it is only at a latter stage and under very special circumstances that Ministers would become involved in it. If a recommendation were to be made by the statistics authority, the Bank of England would be consulted on whether any proposal would be a fundamental change to the basic calculation of the RPI that would be materially detrimental to the interests of holders of relevant index-linked gilts. It is only at that stage, if the Bank considered a proposed change to the RPI to be fundamental and materially detrimental, that the agreement of the Chancellor would be required. As I have said, I do not think that any of us should prejudge an independent consultation.

[Lord Elton]

My Lords, did I gather from my noble friend’s answer that the effect on gilts is the only consideration that the Government would have before they made up their mind on this?

[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.