The new organisation, which aims to represent the interests of independent licensees, wants the pub trade to take a lead on abandoning the Retail Price Index (RPI).

 

Nick Griffin, chief executive of the recently formed Licensees Association, says RPI has been "long discredited" pointing to comments made by Sir David Norgrove, chair of the UK Statistical Authority:

"We have been clear that the RPI is not a good measure, at times significantly overestimating inflation and at other times underestimating it, and have consistently urged all – in government and the private sector – to stop using it."

Earlier this month the Chancellor, Sajid Javid backed away from abolishing the index but has committed to a review after a public consultation

The Licensees Association wants to move to CPI – Consumer Price Index (for a brief explanation of the difference between the two, see below), which it says is lower than RPI.

"Our research shows that if you'd taken a lease at £35k per annum rent, by the end of the tenth year of indexed reviews you'd have paid over £20k more in rent than if CPI had been used over the past ten years based on June's Index," Nick said.

"That's inflation inflated! As an industry we should take a lead and do the right thing and consign this index to the bin."

The association has already written to the chief execs of three of the country's biggest pubcos - Simon Townsend of Ei Group, Lawson Mountstevens of Star Pubs & Bars, and Nick Mackenzie at Greene King, asking them to take "a proactive step in ensuring fairness within the pub sector."

 

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What's the difference between RPI and CPI? Here's how the Royal Statisical Society explains it:

Both RPI and CPI measure inflation. Both of them do it by taking a basket of goods – food, clothes, petrol - looking at what they cost last year, looking at what they cost now, and finding the proportional difference.


But the CPI leaves the costs of your home out of the basket – so rises in mortgage payments, rents, and council tax, which in real life you pay, don't get reflected in it. The RPI does take account of those costs.

There is a mathematical difference as well. The RPI calculates its 'proportional difference' using the arithmetical mean between the old price and the new, the CPI uses the geometric mean. The end result is that the RPI always gives a bigger figure for inflation than the CPI.

How much difference does that make in practice?

Each year the RPI rises on average 1.2 percentage points more than the CPI.