YOUR reader C. Edwards of Bream Road, Lydney, makes some interesting points in contrasting the increase in State Pensions of 1.7 per cent this year with the massive increase in council tax.
From the minutes of the Monetary Policy Committee for April 2003, I was intrigued to see that the increase in council tax would: "fall out" of the inflation figures for 2003/04. This struck me as an odd expression worth pursuing because I have always suffered from the delusion that the only way to measure inflation is to compare prices, year by year, on an annual basis.
However, I was astounded to find out that comparisons are made, month by month, and the recent council tax increase will never appear.
For example, when preparing statistics on inflation, April 2003 is compared with April 2002; May 2003 is compared with May 2002, April 2004 will be compared with April 2003. The higher council tax will be in both figures and the actual increase will "drop out."
The beauty of the whole method is that it does not matter how much prices go up they will never appear in the statistics and pensioners will probably receive an increase of about 1.7 per cent next year. This is not an easy concept to grasp but one well worth studying.
It does not require a quantum leap of imagination to see that, as the purchasing power of pensions deteriorates steadily, more and more pensioners will have to apply for state benefit. At first sight this may appear a very elegant solution for governments, but what happens one day, when the social security system is so hopelessly overloaded that the whole structure collapses. – Mr F de la Bertauche, Honeybourne, Evesham.