Retail Prices Index

Lord McFall of Alcluith Excerpts

Wednesday 14th November 2012 Lords Chamber

[Lord Gardiner of Kimble]

My Lords, this is a consultation about the statistical properties of the RPI and is being undertaken by the independent Office for National Statistics. The UK Statistics Authority is required by statute to promote and safeguard the quality of official statistics, and that is exactly what the Office for National Statistics is doing. I say to my noble friend that things have evolved since 1956, a time when the RPI included the rabbit and the mangle.

[Lord McFall of Alcluith]

My Lords, the Government will know that pension funds are major investors in government debt and that any changes to index-linked bonds will have far reaching implications. Two questions arise from that. First, how will the growth agenda, which is non-existent just now, prosper without pension funds, which the Government want to get involved in infrastructure? Secondly, with pensions being lessened even more as a result of being linked to CPI, the question arising from pensioners is, “Why are we disproportionately paying for the Government’s deficit reduction programme?”.

[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.