Letter:Statistical oversight by advisory committees

From Mr K. H. B. Frere Sir: The Retail Prices Index attempts to average out changes in the purchasing power of the household pound (my definition). Its function, its construction and its methodology could be varied to suit those with other objectives. One reason (but only one)

that the RPI continues to be trusted and widely used is that the Chancellor listens to his RPI Advisory Committee. (The other reasons include the substantial integrity of the Central Statistical office.)

The RPIAC is a mixture of academics, government statisticians, economists and lay representatives, appointed in a personal capacity by the Chancellor. I have been a nominee of the National Federation of Consumer Groups since 1986, and I consult my NFCG colleagues, but I am not their delegate. Within the RPIAC we debate, we listen and we try to reach a consensus. How the Chancellor responds to our advice is up to him.

Our most recent report (requested by the Chancellor) is about owner-occupiers' housing costs. There are academic difficulties about the inclusion of mortgage interest payments, which also produce volatility and unhelpful signals in the battle against inflation. Our report sets out fully our disagreements.

Only one member was unable to accept our final recommendations on mortgage interest. The Chancellor could accept his view - take mortgage interest payments out of the RPI, and abolish the RPIAC. On his first point, I suggest reading the full report. On the second point, not only my NFCG colleagues would be opposed. Perhaps what we need is an RFIAC-equivalent commenting from outside government on other sensitive statistical indices and reports.

Yours faithfully, K. H. B. FRERE National Federation of Consumer Groups Newcastle upon Tyne 20 December