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The noble Earl said: From the Bill’s drafting, it is unclear to what extent it is intended that the code of practice will deal with the raw data from which statistics are derived. I could infer from our earlier debate on the amendment of my noble friend Lord Jenkin that the Government expect that the code will deal with that. Notwithstanding that, I would welcome clarification from the Minister. It will come as no surprise that I believe that the matter should be covered, not least because, as I indicated previously, the Bill envisages granting the Statistics Board access to broad swathes of administrative data that will qualify as sensitive and/or personal under the Data Protection Act. In those circumstances, it would be wholly appropriate for the code to be prepared and revised to reflect the expertise and advice offered by the Information Commissioner. I beg to move.

Baroness Noakes: My name is added to this amendment. It is curious that the Bill does not mention the Information Commissioner anywhere, yet there are some heavy-duty clauses later in the Bill dealing with information disclosure and information sharing. I am sure that the Minister will have read reports of the evidence given by the Information Commissioner to a committee in another place earlier this week. The commissioner drew attention to the fact that he does not at present have sufficient powers to protect the way in which information is shared and disclosed. My noble friend’s amendment is but one small step that we must consider taking to ensure that the Bill fully reflects the important role that the Information Commissioner can and should have in relation to the information provisions contained within it, as they affect the Statistics Board.

Lord Evans of Temple Guiting: This amendment, like the previous one, would require the board to consult the Information Commissioner when preparing or revising the code of practice. As I explained in relation to the proposal to add a requirement for the board to consult the Treasury and Cabinet Office during the preparation and revision of the code of practice, we fully expect, as we set out in the Explanatory Notes, that the board will consult widely across government, as well as with a wide range of other bodies with relevant experience and interest. Similarly,

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the Government fully expect the board to consult the Information Commissioner when drawing up the code. However, as I have said previously, we do not intend to stipulate specific organisations on the face of the legislation. At the risk of repeating myself, we think it best to leave it to the independent board, which is composed of those with a range of expertise and backgrounds to ensure that it conducts an effective consultation on the code. As with the Treasury and the Cabinet Office, I should say that it would be almost inconceivable for the code of practice to be drawn up without the Information Commissioner being consulted.

7 pm

The Earl of Northesk: I thank the Minister for that reply. I could also be slightly worried about the risk of repeating myself, because the sort of response that technically I should be obliged to give is pretty much the same as was given in response to the last amendment. An idle thought crosses my mind, particularly about the Bill and particularly given the recent evidence provided by the Information Commissioner to the Home Office. I wonder whether I might be tempted, in view of the Minister’s response, to compile a privacy impact assessment for the Bill. I am certainly not entirely happy with the situation that persists at the moment, but I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 63 and 64 not moved.]

Clause 10, as amended, agreed to.

[Amendments Nos. 65 and 66 not moved.]

Clause 11 [Pre-release access]:

[Amendment No. 67 not moved.]

Lord Desai: May I ask whether, in view of the earlier vote, Amendments Nos. 66 and 67 have actually been passed? I may be completely wrong, but I thought that they belonged to that group.

Baroness Noakes: A number of amendments in the previous group were quite similar. We moved formally Amendments Nos. 57, 57A and 58, which I think the noble Lord, Lord Desai, will find are similar but relate to a different place in the Bill to the one that he just queried.

Lord Desai: Thank you.

[Amendments Nos. 68 to 74 not moved.]

Lord Newby moved Amendment No. 75:

Clause 11, page 6, line 4, leave out “Treasury” and insert “Cabinet Office”

On Question, amendment agreed to.

[Amendments Nos. 76 and 77 not moved.]

Clause 11, as amended, negatived.

Clause 12 [Assessment]:

[Amendments Nos. 78 to 86 not moved.]

Clause 12 agreed to.

Clause 13 [Re-assessment]:

[Amendments Nos. 87 to 89 not moved.]

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Clause 13 agreed to.

Clauses 14 and 15 agreed to.

Clause 16 [List of National Statistics]:

[Amendments Nos. 90 to 92 not moved.]

Clause 16 agreed to.

Clause 17 [Code: transitional]:

Baroness Noakes moved Amendment No. 93:

Clause 17, page 8, line 15, leave out subsection (4)

On Question, amendment agreed to.

Clause 17, as amended, agreed to.

Clause 18 [Production of statistics]:

[Amendments Nos. 94 to 99 not moved.]

Clause 18 agreed to.

Clause 19 [Retail prices index]:

[Amendments Nos. 100 to 102 not moved.]

Lord Howard of Rising moved Amendment No. 103:

Clause 19, page 9, line 4, at end insert—

“( ) If the Board is prevented from making a change to the Retail Price Index because the Chancellor of Exchequer has withheld his consent under subsection (3), it shall report that fact publicly.”

The noble Lord said: The amendment would open up some of the areas of obscurity covering the methods of calculating the retail prices index. The honourable John Healey laid out in Committee in another place the circumstances that justify the Chancellor continuing to have a veto over the changes to the calculation of the retail prices index. He explained that, given the right of holders of these gilts to sell them back to the Government at face value, if the RPI is to be changed to the holders’ material detriment, the potentially huge cost to the taxpayer makes it essential that there is provision for such a change to be prevented.

The amendment is not intended to reduce the Chancellor’s role, but if the Bill is to restore public trust in the production of statistics and the accuracy of the figures, it must above all be transparent. Even if there is a reason for the Executive’s continuing involvement in the methods used for calculating the RPI, the Government should ensure that it is obvious that there is complete transparency at every stage. As mentioned in another place, it was a lack of transparency and an unclear division of responsibility that led to the confusion and suspicion over the February 2004 changes incorporating hedonic regression methods, even though there was no evidence of political partiality. Although the Bill clearly improves matters, the amendment would go a little further and would be that much more useful for addressing public fears. I beg to move.

Lord Jenkin of Roding: When the issue arose in another place, as my noble friend has just described, I recognised that I was not familiar with “hedonic regression”. I therefore asked the Library here if it could make me a report, which it did. It was a good quarter of an inch thick and contained a huge

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amount of material, which sat on my desk for a number of weeks before I felt that I no longer had any room for it. It is a hugely complex concept that can affect the measurement of both the retail prices index and the consumer prices index, and I should think that it is one of those things that very few people, apart from the noble Lord, Lord Moser, and others who are and have been deeply involved in statistics, understand anything about. I must say that, despite the evidence that the Library was able to give me, I am still not much the wiser. However, I accept and reinforce the point that my noble friend Lord Howard of Rising has made that, if the Chancellor is going to withhold consent from a change that the board feels is necessary to measure the RPI, that should be transparent and should therefore be reported. I hope that the Government will see the sense of that and be able to accept the amendment.

Lord Lea of Crondall: I do not know how far my noble friend will have been briefed on the whole history of the RPI, but I was a member of the Retail Prices Index Advisory Committee for many years. There were frequent changes as new products came on the market—there were changes certainly every few meetings—and I do not recall the Treasury vetoing any of them. But what did happen—it was a memorable moment—was that when the RPI Advisory Committee had a debate about housing costs, we made a decision that mortgage interest rates should be retained within the RPI. The Treasury did not so much reject the advice—it was not in a position to do so—but decided to go in the direction of RPI minus X and sell that to the City of London. Will my noble friend take account of that variation on the theme? The downside is that it has led to a proliferation of indices. When we take the international dimension into account, there are now three indices when one counts RPI minus X, and the CPI, which is used internationally. I am a bit doubtful about whether the position is as simple as the Bill or the amendment implies.

Lord Desai: In the early 1960s, I was in probably the first batch of people to be subjected to a seminar on the hedonic prices index. It was an attempt to explain how the price of an automobile changes in terms of its various characteristics—its top speed, comfort and so forth—because there was no other way of explaining why the price of a car changes. It was agreed that it must be because the various components are valued differently by different people. That started the hedonic price statistics movement and made available a theoretical basis for why it makes sense in terms of economics. I shall spare noble Lords from listening to the detail.

In the light of what my noble friend Lord Lea said, what concerns me is that the reason for including or not including something may be technical, and perhaps sensitive. By making these issues public, we may create interruptions in the market because of a problem so technical that most people do not understand it. However, they will say, “If the Chancellor has forbidden it, he must be hiding something”. It is quite possible that the Chancellor had taken the view that a certain issue was not yet settled. He would not be ready to judge whether

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a particular item should be incorporated into the index. I understand that someone should have oversight in this area and I would like to find a way for the board to deal with such matters, but not so as to cause unnecessary fluctuations in the market for, say, gilts. Those things affect people’s livelihoods. I do not want our universal suspicion of the Chancellor and the thought that he or she is up to no good to be incorporated into the Bill, because that may cause problems later on.

Lord Northbrook: I support the amendment. Clause 19 refers solely to the retail prices index. Am I getting hold of the wrong end of the stick or do we need to have a similar form of protection for the consumer prices index if the board is prevented from making a change to that index because the Chancellor has withheld his consent under subsection (3)? Should the amendment be extended to cover that circumstance?

Lord Oakeshott of Seagrove Bay: The RPI is the measurement that really matters. To be honest, I found the arguments put by the noble Lord, Lord Desai, rather difficult to follow. If the independent Statistics Board wants to change the basis of the RPI—changes are made from time to time—and if the Chancellor of the Exchequer prevents it doing so, that is a very material and public thing to know and is not something that affects only the holders of index-linked gilts. Given that there is an obligation to raise pensions by 2.5 per cent a year and similarly to increase public sector pensions, it would affect virtually every pensioner in the country. At the very least, the pensions of millions of people would be affected. I would have thought it a matter of perfectly legitimate public concern to know if the Chancellor of the Exchequer wants to stop the independent Statistics Board doing this.

7.15 pm

Lord Davies of Oldham: 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 trigger the clause in relation to gilt-edged securities. Should

2 May 2007 : Column 1118

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.

Lord Howard of Rising: I am grateful to the Minister, and I agree with him and with the noble Lord, Lord Desai, that nothing should be done in a way that upsets or disturbs markets unnecessarily. But it would be much worse not to make changes, and I include in that negative changes in the form of preventing an element going into the RPI because it suited the Government not to include it. That would be considerably worse than any damage that could be caused by announcing them. Not announcing changes would be much worse because markets are quite capable of working these things out. Markets are extremely sophisticated. They can work out the elements which go into the RPI—the changes that may or may not be necessary. All we ask is that if the Chancellor of the Exchequer withholds his consent, it should be made public.

Lord Desai: Before the noble Lord withdraws the amendment, let me say one thing. If it is to be reported, that should be done in camera or in a confidential way. Parliament ought to know it, but I am not sure that the whole world needs to know. There is no true measure of inflation anywhere in the world. The best experts can take a view on it; other experts can take a different view. In cases where there are problems, the Statistics Board should report them. I do not want it to keep it secret, but I want that reported in such a way that Parliament can know about it but can restrict the release of that information.

All kinds of negative interpretations can be put on matters which are completely technical, and that will cause problems. The market can know something but it knows it eventually rather than immediately, so you will cause fluctuations.

Lord Howard of Rising: I agree with the noble Lord that all inflation is subjective. However, I still think that problems become considerably worse by keeping

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knowledge from people rather than letting them have it. His faith that if Parliament were given this information it would not get out is very touching. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 19 agreed to.

Clause 20 [Statistical services]:

[Amendment No. 104 not moved.]

The Earl of Northesk moved Amendment No. 105:

Clause 20, page 9, line 25, leave out “, adapting and developing”

The noble Earl said: Manifestly, in seeking to delete the words “adapting and developing”, the amendment is probing in character. It may be of assistance to the Minister if I intimate to him and to the Committee that the principal thrust of all my remaining amendments is to try to ascertain the extent to which, if at all, the Government envisage that the Statistics Board could or should perform a function as a repository for raw data which could then be disseminated more widely throughout government. Indeed, if he could offer me assurances on that point, much of the sting of my later amendments would be drawn.

As I argued at Second Reading, I believe that it would be a mistake if, in seeking to make our statistical service more independent, we were to create a different but no less powerful reason for the public to distrust the work of the board. Use of it as a conduit for widespread sharing of information or data rather than just statistics would be just such a reason.

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