RPI to CPI Early Day Motion 1032

Goldwing1

Goldwing1 wrote: »

Ripoff,
Where can I find SN/BT/2117 that you referred to a while back please?

FOUND IT!

For some reason Google didn't find it first time.

I've had a reply from Steve Webb via Damian Green. My reply back to Mr Green is as follows;

Mr Green,
Thank you for your letter dated 3rd February 2011 and the enclosed letter from Mr Steve Webb regarding the CPI. I will answer Mr Webb’s comments below.

1. I acknowledge that the CPI is the headline measure of inflation in Great Britain. However at the end of August, the Royal Statistical Society (RSS) called for a “comprehensive review of issues relating to the measurement of inflation”. A letter to the UK Statistics Authority expressed its main concerns. One of these was that the CPI had become the “headline index” even though it was “not necessarily the best index for all purposes”. (Note 1)

2. I accept that it is a true statement that the CPI excludes mortgage interest payments. However it also excludes Council Tax, Vehicle Excise Duty and TV Licences. (Note 2). I again highlight the following comment from the House of Commons Library document;
“We continue to regard both the Consumer Prices Index (CPI) and the Retail Prices Index (RPI) as important measures of consumer price inflation. We believe that the CPI should become the primary measure of consumer price inflation but only when the inclusion in the index of owner occupiers' housing costs has been achieved. We note that the ONS has an active research and development programme for the CPI and the RPI, and are preparing for wider user engagement on a forward work programme, starting this autumn.” (Note 3). I have emphasised the key part of the paragraph in bold.

3. While I accept that people will tend to trade down to cheaper items where they have a choice, I would be interested to know how I can “trade down” my Council Tax, Vehicle Excise Duty and TV Licence (I have already purchased a smaller car).

4. Mr Webb claims “that the change only affects the requirement for statutory minimum increases to occupational pensions so schemes may continue to make more generous increases if they wish”. It has been widely reported in the press that many of these schemes have seized the opportunity to reduce their liabilities. Indeed, the BT Trustees (My pension providers) state that they have taken legal advice and that following that advice, they are powerless to do otherwise!

5. Mr Webb further states that the UK Statistics Authority have not said they are opposed to the use of CPI. Whilst he is correct in that they have not directly opposed it, the extract from them which is included in my point 3 above is hardly a ringing endorsement! I would ask you to consider the similarities of Early Day Motion 1032 and the wording by the UK Statistics Authority.

I would also draw your attention to a statement made on 19th August 2008 by the then Shadow Chancellor George Osborne, who said "pensioner inflation is now considerably higher than CPI inflation because pensioners spend a much higher percentage of their income on high-inflation goods, like heating, light and food." (From Conservative Party, ‘An Unfair Britain: Why Labour have failed on fairness’, 19th August 2008). Why the change of heart? (Note 4).

Again I would ask you to take the bold step of supporting EDM1032 in the interests of doing the right thing for your pensioners. EDM1032 states;
“That this House notes the Government's proposal to use the Consumer Price Index (CPI) rather than the Retail Price Index (RPI) for the price indexation of benefits, tax credits and public service pensions; further notes that the CPI is consistently lower than the RPI; expresses concern over the impact that this will have on the incomes of pensioners and other vulnerable groups; recognises the concerns held by the Royal Statistical Society and the UK Statistics Authority that CPI excludes many housing costs which are borne by the majority of pensioner households; and calls on the Government to take these concerns into account and postpone the change from RPI to CPI until the appropriateness of CPI as a measure of price increases borne by pensioner households can be fully evaluated.”
Yours sincerely.
Graham Bridge.

Notes.
Note 1 Extracted from the House of Commons Library document (Page 3).

Note 2 Extracted from the House of Commons Library document (Page 3).

Note 3 Extracted from the House of Commons Library document (Page 4).

Note 4 SN/BT/2117.

Sorry it's a long post.

Old_Slaphead

Haybob wrote: »

Bendix and Old Slaphead, you both refer to 'we are all in this together' etc.. I have never claimed that ridiculous sentiment. Allow me to make my position clear: I'm fighting purely for myself and with those with similar aims.

I was attributing it to much of the thread sentiment and not to you personally - I apologise to you for not making that clear.

teacher_retired

I think we need to clarify who is concerned with this issue..

If you are in the public sector (and possibly some private firms) or are retired from it your pension is under threat with the proposed change from rpi to cpi. FOR YOU IT IS FAIR TO SAY WE ARE ALL IN THIS TOGETHER.

I regret the suffering of those who have lost jobs or pensions or in some cases tragically both and accept fully your argument that this current issue does not involve you.

Ripoff_2

Old_Slaphead wrote: »

I have no problem with that & I applaud you for your collective stand on this issue.

But drop all this "we're all in it together" and "the British people are being conned" propaganda.

Tell the truth - you're angry because you think you've been conned and the people being affected are those with the most generous, highly subsidised pensions ie the pension rich. Not the poor suckers who are having to provide for themselves.

Of those, the biggest sufferers will be those with the biggest pension (ie MPs, doctors, police inspectors, head teachers, senior civil servants etc etc) or with hugely favourable early retirement terms. Again those who've got the best deal.

The average punter will not notice much diffference (and anyway if they do, they'll be in their dotage and heavily reliant on the state health service).

Old Slaphead, you are assuming that we are ALL highly paid either public or private pensioners, that is so far from the truth. Yes, there are some who have really good pensions in both the private and public sector but that is not the majority.

Most are hardworking people who did the right thing, paid for their pensions as they were advised to do by successive governments, told they had RPI indexing and are now finding that the pension they paid for is being stolen from them. These are ordinary working people and they are being conned by this move, it is a stealth tax on them.

OK some better off pensioners may not feel the pain but there are far too many that will. If you want to clobber the higher paid pensioners more as you seem to want to do then you do it with tax, you don't hit the poorer pensioners as well, which this action does.

We are talking here about, the council worker, the fireman or police officer who may well have put his life on the line for you, we are talking about the ordinary BT worker or BA steward that are going to be hit very hard by this change.

So you see " We are all in this together as public and private pensioners" but it also shows that as a country "We are not all in this together" now that is propaganda. The rich as you point out will "Do alright" it's the rest of us that are paying for this and paying very hard for it, but you see the public and many private pensioners will be paying for it long after the rest have stopped paying for it. So they are being conned because this change is for LIFE!

JamesU

bendix wrote: »

OK . . Let's make this simple.
There are two very good reasons why I support the move from RPI to CPI.

1) Because the country is broke, and it's beholden upon EVERYONE to take a haircut in one way or another. I don't know if you've noticed but tax rates have gone up, VAT has gone up, benefits are being cut. A million private sector people have lost their jobs and now those being supported by the public sector are being asked to pay their part too. Is it fair? Is it reasonable? Frankly, yes. My tax bill has soared, but that's fine. I understand why. That is my contribution. Now it's your turn.

If cutbacks need to be made because pensions are unaffordable then that is fine. Public (and private) employees can either accept new T+Cs reflecting this or move on. But reneging on employee's previous contractual terms linked to RPI during employment already undertaken is a different matter entirely. That seems clearly wrong to me, nothing more than legislative theft.

bendix wrote: »

2) Because if CPI is used by governments and businesses as a guide to increasing benefits and salaries then - ipso facto - costs and prices will rise by only CPI going forward, meaning the whole debate is meaningless. It's Economics 101.

The inference above seems to be that if wages and benefits increase in line with CPI, then prices will rise by CPI because of this. But even as we speak the cost of goods and services are increasing due to various other factors irrespective of wage and benefit settlements (e.g. currency exchange rates and commodity prices). So the "Economics 101" logic duscussed above looks flawed to me.

bendix wrote: »

Explain to me how my point isn't right? If the government and business switches to increasing pensions / salaries by CPI instead of RPI, then future inflation will surely be CPI. Ergo, absolutely no impact in the real world. It's strikingly obvious.
Can you refute it?

It is not stikingly obvious to me, as discussed in para 2 above.

JamesU

Interested_Taxpayer

I've copied below the comment from an ex-serviceman on the proposal the Labour Party seem to have about separating Forces Pensions from Public Sector pensions.

1. Speaking as an ex-serviceman, and I think you have got this badly wrong.
   Fairness is what you want, and so do we all. You don’t get that by accepting a general unfairness - the cowardly attack on all public service pensioners – by saying it OK, I just want one exception. Save the Forces Pensioners by saving all public service pensioners, them included, from the unfairness you accurately describe. I’ve tried Cameron, Clegg, Duncan-Smith, Webb, with the idea of restoration in 2014 – nary a reply.
   I too, as an ex-serviceman, want all the wounded, the seriously injured, to be well looked after. As well as their full, RPI protected pensions, they should have further fully adequate special provisions specific to their circumstance. They are owed both.
   But do bear in mind, in making your special case, what we ex-servicemen know, what everybody except maybe a tabloid editors remembers, front-line combatants are a minority of servicemen. Most servicemen do less exposed, less dramatic public sector work, quite like other public service jobs, on a day to day basis. And remember even of active combatants, the wounded are a minority again. Your whole argument seems coloured by melodramatic exceptionalism and inappropriate special pleading, hopelessly simplistic.
   If ‘decoupling’ is, as you imply, the Labour Party position, it is a derogation of oppositional responsibility, mere populist opportunism. The Party should get off that pathetic stance asap and take the part of all 8 million PS pensioner voters, Forces included. Labour MPs really must work for universal rightness and fairness, not follow the tabloids.
   Yes, I am an ex-serviceman. As a child in WW2 I was bombed. When I left the service, I became a teacher. I’m 76, my pension dependency, and my likely widow’s, is mostly by far on a Teacher’s Pension. This ex-serviceman, wants remembering and properly looking after, but with no special measures, no special pleading, just the public servant’s pension he paid for, protected by RPI as agreed when he took it out. Most people don’t fit into neat single categories, and many an ex-soldier is like me – something else as well, and not sentimentality.
   The modest, simple demand of EDM1032 would do the job for the Forces Pensioner Society by doing the job for all public sector pensions. You really should drop your very difficult (as you recognise) arcane, complex, obscure proposal whose exceptionalism defies rational defence. Get justice for us ex-soldiers. us ex-teachers, all public sector pensioners, by getting behind the rational, reasoned, EDM1032.
   By James Alexander | February 3, 2011
2. Says it all for me. :T All Public Servants and those in the private sector who are affected by this outrage are in this fight together. Come on, get your MP to sign up for EDM 1032 if they haven't already done so. Get to the Torys and the Lib Dems. There is enough detail on this thread now to shame them big time.
   

Ripoff_2

This is really worth listening to from Steve Webb, it's very interesting http://news.bbc.co.uk/1/hi/england/9278466.stm from the money box programme

Old_Slaphead

Ripoff wrote: »

Old Slaphead, you are assuming that we are ALL highly paid either public or private pensioners

Do you have a shread of evidence to support this statement or is it yet more hyperbole ?

"We are all in this together as public and private pensioners"

By that you presumably mean those private pensioners with taxpayer underwritten guarantees ie ex nationalised industries still benefiting from the effect of those begone decades of poor management & abject inefficiency ie BT, BA and Royal Mail

Aberdeenangarse

teacher_retired wrote: »

If you are in the public sector (and possibly some private firms) or are retired from it your pension is under threat with the proposed change from rpi to cpi. FOR YOU IT IS FAIR TO SAY WE ARE ALL IN THIS TOGETHER.

What a load of cobblers!

When I first started work, some 20+ years ago it was generally accepted that, as the Private sector earned more than the Public sector, the payoff was that Public sector had 'Gold plated' Pensions. Fair enough at the time, but time changes. Now we find that the Public sector earn more than the Private. Great!

Figures published by the Office for National Statistics (ONS) show that average annual earnings of public sector workers rose to £22,405 last year — compared with £20,988 paid to the average private sector worker.

So now they start bleating about their Pensions being linked to CPI instead of RPI. I bet many in the Private sector would only dream they'd be able to do this with their (now) Money purchase Pensions. In reality many Private sector will be working until they're 70, whilst many in the Public sector will be retiring at 60 with Index linked Pensions albeit at CPI. Well all I can say is tough !!!!!!!

teacher_retired

Let us go back to that previous time when public wages were low would you deny those pensioners their rpi link?