Retail Price Index (Hansard, 27 November 1973)

§ 12. Mr. David Stoddart
asked the Secretary of State for Employment what changes he proposes to make in the compilation and weighting of the retail price index.

§ Mr. Maurice Macmillan
Each January the weights used in the index are revised, using the results of the Family Expenditure Survey. Additional items are included among the indicators when necessary. I have asked the Retail Prices Index Advisory Committee to reexamine the treatment of housing costs in the index. It will also consider both the possibility of rebasing it and certain technical points on the method used to construct the index. The Retail Prices Index Advisory Committee has in fact already met.

§ Mr. Stoddart
I am glad to hear that the Minister is considering this matter. Is he aware that a realistic retail price index is vital to his Department at present? Will he have a particular look at the question of housing? Did he read the Sunday Times last weekend, wherein it was made obvious that the 12½ per cent. weighting given at present is totally unrealistic, as the average salary that a person has to earn to be able to buy a £10,000 house is now over £4,300 and person has to pay more than 33⅓ per cent. of his income in mortgage charges?

§ Mr. Macmillan
There is a good deal of controversy about the weighting in the index. In a recent issue of the Economist, for example, the probable increase from that source was estimated at about ½ per cent. That is exactly what the advisory committee is examining.

§ Mr. Sydney Chapman
Has my right hon. Friend made any estimate of the effect on the retail price index of increased fuel costs? If there is a shortage of fuel this winter, ought not that commodity to be lightened on the average retail price index?

§ Mr. Macmillan
I do not think that the index can be altered frequently or from time to time on a very short range of matters. It is important, as has been suggested in a supplementary question, that we have the best index possible. That is why successive Governments have not sought to alter it without consulting the advisory committee, on which trade unionists, industrialists and others, including academics, are represented.