Retail Prices Index

Lord Naseby Excerpts

Wednesday 14th November 2012 Lords Chamber

Asked By

[Lord Naseby]

To ask Her Majesty’s Government why the Office for National Statistics is reviewing the methodology of calculating changes in prices for the purposes of the retail prices index.

[Lord Gardiner of Kimble]

My Lords, the decision to launch a consultation on options, which include amending the way that the RPI is calculated, was taken by the National Statistician after taking evidence on statistical best practice and discussion with the Consumer Prices Advisory Committee, which suggested that the use of one particular formula in the RPI should be reconsidered.

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[Lord Naseby]

Will my noble friend recognise that the RPI has been with us for 56 years and that millions of investors in gilt-edged securities, index-linked National Savings certificates, pensions and businesses have done their forward planning for years ahead on the basis that RPI will be there? Then along comes the ONS’s quiet-as-a-mouse consultation, rather like the cheque consultation that we managed to expose, and the only beneficiary seems to be the Chancellor. In relation to this long-term planning and the disadvantage that it will impose on millions of people, will my noble friend tell the ONS to put the four options away and just accept option No. 1, which is no change?

[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.

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[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.

[Lord Naseby]

My noble friend positions this as a mechanistic change, which is what the ONS suggests. Nevertheless, is it not true that one of the options is basically looking to a change which will be virtually 1% off RPI? That is hardly mechanistic. In terms of consultation, can we now hope that the ONS will have a full and open consultation and extend the date beyond 30 November so that people can respond?

[Lord Gardiner of Kimble]

My Lords, my noble friend is right that the consultation closes on 30 November. I actively suggest that, as the Office for National Statistics said, it wishes to hear from as many people as possible as to the opinions on the four options available.