Retail Prices Index (Error)

Part of the debate – in the House of Commons at 10:48 am on 18th December 1987.

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Photo of Mr Nicholas Scott Mr Nicholas Scott , Chelsea 10:48 am, 18th December 1987

My right hon. Friend the Secretary of State for Employment made a statement which clearly set out the background to how the error occurred. He gave an undertaking that the retail prices index computer programme was being reviewed by the head of the Government's statistical service to ensure that the error could not happen in the future.

As I said in my statement, my hon. Friend the Paymaster General is making known in a written answer this morning the position of public service pensioners, pointing out in particular: The rates of pension received by retired public servants vary very widely according to their length of service and final salary when in employment. Flat rate compensation for the index error would be inappropriate. Precise compensation would have administrative costs out of proportion to the sums concerned. I believe that that is right. I want to reflect that point in what I shall say about the number of detailed points put to me by the hon. Gentleman.

The Government have no legal obligation to come to the House today to announce our intention to make these payments. I believe, however, that we have a moral obligation in this matter. That is why we are announcing that £109 million will be available. If we were to compensate every individual who has lost any amount, however trivial, as a result of this error, the administrative costs would be out of all proportion to the benefit gained.

The Rossi index will be affected in the same way as the RPI. It will be corrected in April 1989. Of course, from April 1989 the uprating will be made on precisely the basis that the hon. Gentleman suggested.