Statistics and Registration Service Bill

I hope that I will not have to engage with my noble friends Lord Lea and Lord Desai on the broader issues of the RPI, and not even with the noble Lord, Lord Oakeshott, because things are difficult enough on the narrow focus I have before me, as the noble Lord, Lord Jenkin, indicated. The intention behind this provision is to deal with a highly specific circumstance, one that can be justified on the basis that it relates to the UK debt market and certain holdings of gilts. The holders have the right to redeem their gilts if the RPI changes in certain circumstances. If it did so when these gilts were below par, the implications for the nation’s finances would be very considerable. We are talking about significant sums of money which relate to what are fortunately time-limited gilts, so I can say that this applies only to the year 2030 so far as this provision is concerned. However, we are reflecting here a highly sensitive change in the RPI which would trigger certain market consequences. What is being sought, therefore, is that the consent of the Chancellor would be required only under these narrow and specifically defined circumstances. It will be required when the Bank has determined that the proposed changes to the RPI are likely to triggerthe clause in relation to gilt-edged securities. Should the Bank determine that the change is not both fundamental and materially detrimental to the holders of index-linked gilts, the Chancellor will play no part in the proposed change. It is very restricted and is set against the background of the nation’s financial needs—not just potential costs on the financial markets, but real fiscal costs because it is likely that the new gilts would need to be issued at higher yields if those they were replacing were redeemed at high yields. That could lead to substantial additional fiscal costs. We do not expect the Chancellor’s role to be triggered very often. Since 1997, the Bank of England has not assessed any of the changes as being both fundamental and materially detrimental to the holders of the relevant index-linked gilts. Accordingly, if this provision had been in place over the past decade, the Chancellor’s role under this clause would never have been activated. While of course I respect the well motivated representations on transparency and openness made by noble Lords, as well as a certain anxiety about the role of the Chancellor in this sensitive area, I assure them that this provision is narrowly defined, highly specific and in the national interest. That is why we have included it in the Bill.