§ Mr. Stallardasked the Secretary of State for Social Services, further to his reply to the hon. Member for Welwyn and Hatfield (Mr. Murphy), Official Report, 17 January 1983, c. 51, what factors he took into account when deciding whether Age Concern's alternative index was an appropriate measurement of the impact of inflation on pensioners.
§ Mr. RossiThe principal weaknesses of the proposed alternative index are that:
- a. It covers only 32 per cent. of pensioners, fewer than either the RPI or the existing Pensioner Price Indices.
- b. The adjustments it assumes necessary for under recording of expenditure on alcohol, tobacco or confectionery are inappropriate to low income pensioners and, in the case of confectionery, excessive.
- c. The weights used involve a much higher degree of aggregation than the full RPI or pensioner indices, with resultant loss of accuracy.
- d. The index is of the 'fixed weight' type which is less sensitive to changes in patterns of household expenditure over time than the RPI.
- e. The proposed adjustment for housing costs does nothing to allow for the extra level of housing subsidy enjoyed by low income pensioner households and does not help to overcome the problems identified by the Retail Price Index Advisory Committee in properly providing for a measure of the housing costs of such households.