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RPI no longer fit for deciding rail fare rises | Letters

Man buying rail tickets
‘The annual rises in rail fares should be decoupled from the retail prices index,’ writes Hetan Shah. Photograph: Lauren Hurley/PA

The shadow transport secretary, Andy McDonald, is on the right tracks. The annual rises in rail fares should be decoupled from the retail prices index (RPI), as he argued in his Guardian article (This hefty train fare rise is yet another Tory betrayal of passengers, theguardian.com, 5 December).

The Royal Statistical Society (RSS) has long believed that the RPI should be declared redundant for such uprating purposes. Significantly, our view is shared by both the national statistician and the chair of the UK Statistics Authority, who told MPs, only last month, that he “deprecates” RPI being used in this way.

The RPI was a good measure of inflation for many years but developed various technical problems; legal and other constraints prevented them from being solved. This situation led to its loss of “national statistic” status as far back as 2013.

In these circumstances, it is indefensible that RPI is still used to set people’s rail fares and many of their other outgoings – from air passenger duty to interest on student loans. It is especially unjustifiable as the government uses the consumer prices index (CPI), which normally gives a lower estimate of inflation, when uprating many people’s incomes through state benefits or public sector pensions.

People’s incomes and outgoings should both be linked to a single index which commands “national statistic” status and is credible for uprating purposes. The CPI, while imperfect, meets these key criteria. The household costs index (HCI), currently being developed, may well do so in the future. Alas, the RPI now fails on each count. For uprating purposes, it is surely now reaching the end of the line.
Hetan Shah
Executive director, Royal Statistical Society

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This article titled "RPI no longer fit for deciding rail fare rises" was written by Letters, for The Guardian on Wednesday 6 December 2017 06.54pm

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