HL Deb 13 July 1988 vol 499 c921WA
Baroness Jeger

asked Her Majesty's Government:

Whether in view of the increasing price of houses, they will consider the inclusion of capital repayment of mortgages in the retail prices index.

Lord Young of Graffham

The retail prices index (RPI) is designed to measure changes in the prices of consumption goods and services, and to take no account of payments which are in the nature of savings or investment. This is common international practice. The present treatment of owner-occupier housing costs in the index was recommended in 1974 by the RPI Advisory Committee, which took the view that, as house purchase represented acquisition of a substantial asset, the capital element of mortgage payments should be regarded as savings or investment and accordingly excluded from the index. The committee reaffirmed that view when the methodology was reconsidered in 1986 and the Government have no plans to raise the matter again. The increasing prices of houses are, however, reflected in the index through their impact on the interest element of mortgage payments (which are included).