§ Mr. Tim SmithTo ask the Chancellor of the Exchequer why no account is to be taken of transitional relief when the community charge is introduced into the retail prices index in April.
§ Mr. LilleyFor purposes of the retail price index transitional relief will not be treated as reducing the prices charged. This conforms to a general principle governing the treatment of subsidies and discounts, which was laid down by the retail price index advisory committee in a report submitted to and accepted by Ministers in 1986 (Cmnd 9848). The principle is that reductions in the amount charged are treated as price effects if they are equally available to all consumers facing the charge in question or if they are financed by the supplier of the goods or services concerned. Transitional relief does not qualify on either ground as it is available only to consumers fulfilling certain criteria and is funded not by the local authority making the charge but by a transfer from central Government. The community charges taken for the retail price index will be those made by authorities after allowing for the "safety net" since this affects all charge payers in any one area.