Sajid Javid has been accused of “kicking cans down roads” with his decision to delay plans to scrap or reform the Retail Price Index (RPI).
The chancellor confirmed he would not consult on reforming or ditching the inflation measure until January 2020, and that any changes were unlikely to be made until 2025 at the earliest.
RPI, the measure pegged to phone bills, train fares and some government debt, has attracted widespread criticism and lost its status as a national statistic in 2013. Campaigners have long argued that the Consumer Price Index (CPI), which is typically lower than RPI, should be used as the reference index.
The chair of the UK Statistics Authority (UKSA), Sir David Norgrove, wrote to the chancellor in March to ask whether he would consider making changes to RPI or abolish it all together.
In his response, released today, Javid replied: “I recognise that there are flaws in RPI and that maintaining public trust in official statistics is important.
“But RPI is used widely across the economy. UKSA’s first proposal to end the publication of RPI would potentially be highly disruptive for the wide range of users of RPI. In turn, this could be damaging to the economy and the public finances.”
RPI is the only statistic which cannot be changed without the consultation of the Bank of England the chancellor.
However, the requirement for the UKSA to seek the chancellor’s consent to change or abolish it expires in 2030.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Kicking cans down roads looks set to replace football as the UK’s most popular sport. Sajid Javid has joined in today, putting off even thinking about RPI for the next few months, and delaying any plans to ditch or reform it for up to 11 years.
“Commuters and students will be smarting from the decision. Despite RPI being ditched as an official inflation statistic, loan interest and regulated rail fare rises still remain resolutely strapped to this outdated measure – which usually comes in about 1 per cent higher than the official measure of CPI. If RPI was ditched outright, it would give them hope that rises would be less painful in future.”
She added: “The eventual death of RPI in its current form is inevitable, but there’s every chance it will stagger on for more than a decade, bringing down students and commuters at every turn.”