MIL-OSI UK: Retail Price Index must be fixed, says Lords Committee

Source: British Parliament News

17 January 2019
The Economic Affairs Committee publishes its report on ‘Measuring Inflation’. The report considers the future of the retail price index (RPI) and its use by the Government.

Key findings
The Committee finds that the UK Statistics Authority is at risk of being in breach of its statutory duties on the publication of statistics, by refusing to correct an error that it openly admits exists in the Retail Prices Index (RPI). This error, made in 2010 when the process for collecting price quotes for clothing was altered, has resulted in RPI being 0.3 percentage points higher since 2010. As a result, commuters and students pay more because rail fare increases and student loan interest rates are linked to RPI, and holders of index-linked gilts at the time received an unwarranted windfall. The UK Statistics Authority has a duty to “promote and safeguard the quality of official statistics”.
The Committee calls for the Authority to follow the procedure for correcting the error and, given that RPI remains in widespread use, resume a programme of regular methodological improvements. The Committee also recommends a single measure of general inflation for use by the Government. This is to prevent so-called ‘index-shopping’ by Government, where indices are chosen because of their impact on the public finances rather than their merits as measures of inflation.
Chairman’s comments
Lord Forsyth of Drumlean, Chairman of the Economic Affairs Committee, said:

“When the Government gives money to people it is generally opting to adjust payments for inflation using the Consumer Prices Index. But when it takes money from people, it is generally opting to use the Retail Prices Index, which has been around one per cent higher than CPI in recent years. This simply is not fair. Together with the UK Statistics Authority, it needs to agree upon a single measure of general inflation which is used for uprating purposes. In the interim the Government should desist from ‘index shopping’ by switching to CPI in all areas not governed by private contracts, including index-linked gilts. “The UK Statistics Authority’s refusal to fix the problems it admits RPI has is untenable. By continuing to publish an index which it admits is flawed, it is arguably in breach of its statutory duty to promote and safeguard official statistics. It should seek to resolve the problems with the index, consulting the Bank of England and the Chancellor of the Exchequer where necessary, and stop treating it as a ‘legacy measure’ when it remains in widespread use. “This is not just a technical debate. The Authority’s error created winners and losers. For example, commuters and students pay more because rail fare increases and student loan interest rates are linked to RPI.”

Key recommendations
The main problem with RPI is an unintended consequence of a routine methodological improvement by the UK Statistics Authority to the collection of price quotes for clothing. This has widened the difference (the ‘formula effect’) in the annual rate of change in RPI compared to the Consumer Prices Index (CPI). As a result of the clothing change, the ‘formula effect’ has increased from 0.5 per cent to 0.8 per cent.
The Authority’s error has created winners, such as holders of RPI-linked Government bonds, who have received around £1 billion more in interest payments every year, and losers, such as commuters and students with annual rail fare increases and the interest rate on student loans linked to RPI.
Correcting the error would require the Chancellor’s approval because it would cause “material detriment” to index-linked gilt holders. When asked, the UK Statistics Authority told us they had not asked the Chancellor because they expected he would say no. The Treasury said they could not act, because no such request had been submitted. The Committee concludes that such a request should be submitted, and the Chancellor should consent.
The gap between RPI and CPI has encouraged governments to ‘index shop’: benefits, tax thresholds and public sector and state pensions were all switched from being uprated by the higher RPI to the lower CPI in 2011.
To have credibility, a single general measure of inflation requires a satisfactory measure of owner-occupier housing costs. At present, there are critics of how the RPI and the Consumer Prices Index including owner-occupiers’ housing costs (CPIH) do this. The UK Statistics Authority should agree on a best measure of owner-occupier housing costs to be used in the new single general measure.
The Committee is unconvinced that the UK Statistics Authority should consider the interests of those materially affected by changes to statistical measures in making decisions about adjustments or corrections. UKSA has a statutory duty to promote and safeguard the quality of official statistics, which it may have neglected in the case of RPI. 
Further information
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MIL-OSI UK: Tenant Fees Bill: Lords third reading

Source: British Parliament News

14 January 2019
The Tenant Fees Bill has its third reading, a chance to ‘tidy up’ the bill and make changes, in the Lords on Tuesday 15 January.

Members are expected to discuss two amendments relating to interest payments owed by landlords or letting agents to enforcement authorities.
Lords report stage: Tuesday 11 December
Members discussed the acceptance of multiple holding deposits for the same property, the approval and designation of client money protection schemes and the requirement to belong to such a scheme.
Lords committee stage day two: Tuesday 20 November
Members discussed the early termination of tenancies and payments in respect of identity and immigration status checks.
Report stage, a further chance to examine the bill and make changes, is scheduled for 5 December.
Lords committee stage day one: Monday 5 November
The first day of committee stage of this bill took place in Grand Committee, a room outside the Lords chamber. In Grand Committee, any member can take part and decisions on amendments can be made, but no votes can take place.
Members discussed a range of subjects, including:
the government’s duty to provide tenants with guidance on the effects of this bill
the reimbursement of costs incurred by enforcement agencies in the exercise of their duties
the requirement of tenants to make payments to cover a landlord or agent’s loss due to a breach of the tenancy contract
Lords second reading: Wednesday 10 October
Members discussed unfair letting fees, compensation payments to tenants and home share schemes.
Lord Bourne of Aberystwyth (Conservative), parliamentary under-secretary in the Department for Housing, Communities and Local Government, responded on behalf of the government.
Tenant Fees Bill summary
This bill will aim to:
make renting fairer and more affordable for tenants by reducing the costs at the outset of a tenancy
improve transparency and competition in the private rental market
ban letting fees paid by tenants in England
improve fairness, competition and affordability in the lettings sector
Further information
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MIL-OSI UK: Lords examines Financial Services (Implementation of Legislation) Bill

Source: British Parliament News

07 January 2019
The Financial Services (Implementation of Legislation) Bill will have its committee stage, the first chance for line-by-line scrutiny, in the Lords on Tuesday 8 January.

Members are expected to discuss a range of subjects, including:
limiting the new regulations to ensure there are no changes in government policy other than to reflect the UK’s status as a non-EU member
ensuring the competitiveness of UK financial markets is not affected by EU withdrawal
requiring HM Treasury to begin reporting on the use of its powers by October 2019 and every six months thereafter.
Baroness McDonagh (Labour) has laid a motion against the debate, recommending that committee stage of the bill be postponed until after the scheduled date for the Lords committee stage of the Trade Bill has been published in the House of Lords Business Paper.
Lords second reading: Tuesday 4 December
Members discussed a range of issues raised by the bill, including restrictions within the EU (Withdrawal) Act 2018 on the use of delegated legislation, the accurate number of ‘in flight’ pieces of EU legislation and shortening the bill’s regulatory period following a ‘no deal’ scenario down from the current twelve-month proposal.
Lord Bates (Conservative), minister of state in the Department for International Development, responded on behalf of the government.
Financial Services (Implementation of Legislation) Bill summary
This bill will aim to provide the government with powers to implement and make changes to ‘in flight’ files of EU financial services legislation. The powers will last for two years after UK withdrawal from the EU, in the event of a ‘no-deal’ scenario.
‘In flight’ refers to pieces of EU legislation that:
have been adopted by the EU but not yet enacted, and so would not apply under the European Union (Withdrawal) Act 2018
are currently in negotiation and may be adopted up to two years following EU withdrawal
Further information
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MIL-OSI UK: Lords debates challenges facing young people

Source: British Parliament News

12 December 2018
Members of the Lords, including a former lecturer in youth and community work at Sunderland Polytechnic and a former health education advisor for the Inner London Education Authority, will debate the challenges facing young people, in the House of Lords on Thursday 13 December.

This is a general debate. They normally take place on a Thursday in the chamber. During debates, members are able to put their experience to good use, discussing current issues and drawing the government’s attention to concerns.
The debate was proposed by Baroness Armstrong of Hill Top (Labour), former lecturer in youth and community work at Sunderland Polytechnic.
Members expected to take part include:
Earl of Listowel (Crossbench), board member and trustee of the Child and Family Practice Charitable Foundation
Baroness Massey of Darwen (Labour), former health education advisor for the Inner London Education Authority
Lord Norton of Louth (Conservative), ambassador for the Albert Kennedy Trust support organisation for homeless LGBT+ young people
Lord Storey (Liberal Democrat), former primary school head teacher and co-chair of the Liberal Democrat PPC on Education, Families and Young People
Lord Agnew of Oulton (Conservative), parliamentary under-secretary in the Department for Education, will respond on behalf of the government.
Further information
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MIL-OSI UK: Lords examines Tenant Fees Bill

Source: British Parliament News

10 December 2018
The Tenant Fees Bill has its report stage, a further chance to examine the bill and make changes, in the Lords on Tuesday 11 December.

Members are expected to discuss the transfer of deposits to a second landlord or agent, the approval and designation of  client money protection schemes and the requirement to belong to such a scheme.
Lords committee stage day two: Tuesday 20 November
Members discussed the early termination of tenancies and payments in respect of identity and immigration status checks.
Report stage, a further chance to examine the bill and make changes, is scheduled for 5 December.
Lords committee stage day one: Monday 5 November
The first day of committee stage of this bill took place in Grand Committee, a room outside the Lords chamber. In Grand Committee, any member can take part and decisions on amendments can be made, but no votes can take place.
Members discussed a range of subjects, including:
the government’s duty to provide tenants with guidance on the effects of this bill
the reimbursement of costs incurred by enforcement agencies in the exercise of their duties
the requirement of tenants to make payments to cover a landlord or agent’s loss due to a breach of the tenancy contract
Lords second reading: Wednesday 10 October
Members discussed unfair letting fees, compensation payments to tenants and home share schemes.
Lord Bourne of Aberystwyth (Conservative), parliamentary under-secretary in the Department for Housing, Communities and Local Government, responded on behalf of the government.
Tenant Fees Bill summary
This bill will aim to:
make renting fairer and more affordable for tenants by reducing the costs at the outset of a tenancy
improve transparency and competition in the private rental market
ban letting fees paid by tenants in England
improve fairness, competition and affordability in the lettings sector
Further information
Image: iStockphoto

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