Retail Prices Index

Lord Howell of Guildford Excerpts

Wednesday 24th April 2013 Lords Chamber

[Lord Wallace of Saltaire]

My Lords, one of the best things done in this area by the previous Government was to establish the UK Statistics Authority as an independent body. The decision was criticised on all sides. Some noble Lords will remember the article in the Financial Times by Chris Giles which said that it was appalling not to have abolished the RPI and move all the way towards the CPI.

[Lord Howell of Guildford]

Did the Minister notice the other day that Sir Mervyn King, the outgoing Governor of the Bank of England, said that one of the main contributors to rising RPI and therefore rising inflation was higher energy taxes? Every time the RPI goes up, it generates a gigantic increase in public expenditure through indexed provisions in the public sector. Could he possibly advise his friends to think again about some of the higher taxes that are being piled onto our energy costs in industry and in the home?

[Lord Wallace of Saltaire]

My Lords, the noble Lord is quite right to say that the extent to which tax increases are factored into the calculation of inflation is one of the problems. If you are not careful, when inflation is rising, you get into a positive feedback as mortgage interest rates rise, and that increases the measurement of inflation.