from Alan ikooney In a letter to The Times, published on June 24, John Hughes effectively demolished the myth of Labour's generosity to the pens*oners: "In reporting the Government's proposals for increased state benefits (June 22) you'state that Ministers were arguing that the increases "more than counteract the rise in the cost of living since pensions were last increased in March, 1965". "Their argument is that the pension of a single person will rise 10s. whereas 'on the basis of the index of retail prices’ only an extra 6s,1ld. would be needed to counteract the price rise since the last pension increase. This is a false argument, and the Ministers who used it were either displaying surprising naivety on the subject of measurement of the cost of living, or were creating a misleading impression. "The case has long been argued for the publication of a separate 'pensioner }-useholds! cost of living index, because of the entire unsuitability of tre Retail Price Index for measuring the effect of price changes on such households, Their expenditure pattern is quite different from the 'weights' used. in calculating the official index. (Thus in 1966 the official index used a 'weight' of 83/1,000 for expenditure on motoring; the Family Expenditure Survey for that year shows that an appropriate 'weight' for pensioner households' expenditure on motoring wculd be 3/1,000). It is beyond the. bounds of possibility that the Ministry of Social Security does not know this, and does not calculate for itself a 'shadow' (but unpublished) pensioner index,
"Using th. expenditure pattern fcr pensioner households revealed by the latest Family Expenditure Survey, my own calculation is that the cost of living of pensioner households rose more rapidly than the official Retail Price Index would suggest. This is not surprising; it has been notoriously true for more than a decade. Approximately, the cost of living rise from March, 1965, to April, 1967, is just under 10 per cent for pensioners - or a little less than 8s, on the £4 benefit of a single person, if I may adopt the Ministerial style of calculation. "However, the benefit increase is not to operate till the end of October, On the average over the past three years the official Retail Price Index has risen by 2 per cent from April to November, If this occurs again the purchasing power of the increased pension will from the outset hecin more than restored to its March, 1965, level; by this time next year it would be surprising if it had not begun to fall below the March, 1965, level Thus Ministerial suggestions of generosity ap; ear to be misplaced,"
NOTE: In the same announcement on pensions, “rs, Herbison, Minister of
Social Security, made clear that the Lubour Government will
certainly be adding to the cost of living in the autum when
insurance stamps per worker increase by 2s. a week.