You do have to laugh at this:
The loans are offered to students on the basis that interest is added in line with inflation and therefore they are in effect interest-free. In 2003, the Government changed the official measure of inflation from the Retail Price Index (RPI), to the Consumer Price Index (CPI), which does not include housing costs or council tax.
Since then, RPI has risen at a far higher rate – it is currently at 4.8 per cent, with CPI at 2.3 per cent. The Government is still using RPI to calculate the interest on student loans.
Small print buried in the Budget shows that ministers expect that the RPI will continue to be far higher than the CPI – giving the Treasury an additional £483 million a year in interest repayments.
Not, however a funny haha laugh, more an astonished giggle at the sheer mendacity on display.
All of the goverment\’s outgoings are inflation updated using the CPI. But it appears that this isn\’t good enough for the government collections.
As ever, you can tell what people really think by watching what they do. So the government really thinks that the true inflation rate is the RPI.