Government ripping us off – again

From The Times (pay wall). It’s going to make commuting by rail to Exeter from Axminster, Honiton, Feniton, Whimple and Cranbrook a very expensive way of getting there – so more cars will be clogging up more roads in “Greater Exeter”.

“Nobody likes being ripped off. And there is something particularly distasteful about being fleeced by your own government.

But that is precisely what is happening. Rail fares are set to rise at a much faster rate than employee earnings, with annual season tickets of over £5,000 an increasingly common sight. And interest charges on student loans in England will rise to 6.1 per cent from the autumn.

From students to commuters, the cost of living in the UK is on the rise. And some of the biggest cost increases are in areas where the government sets the terms.

Both rail fares and student loans are linked, under government policy, to the retail price index measure of inflation, long ago discarded by economists as a flawed measure of price growth. It is widely known that RPI consistently overstates inflation in the UK, and that the alternative measures of inflation, consumer prices index (CPI) and CPIH (which includes owner-occupiers’ housing costs) are a far better reflection of what is actually going on.

Indeed, in the June 2010 budget George Osborne announced that, partly for these reasons, the government would start using CPI for the uprating of benefits and public sector pensions. The same budget mentioned “reviewing how CPI can be used for the indexation of taxes and duties while protecting revenues”, yet there has been near-silence on this issue ever since.”

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