Rail passengers and students are losing out due to an error in calculating a measure of inflation, peers have been told.

Tory former Cabinet minister Lord Forsyth of Drumlean said the error in calculating the Retail Price Index (RPI) had created "real-life winners and losers".

Lord Forsyth said those who "won" were holders of index-linked gilts, who had gained an "undeserved windfall".

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He said those who "lost," included commuters and students, whose rail fare increases and loan payments were linked to RPI.

Lord Forsyth, chairman of the Lords economic affairs committee, was opening a debate on its report on measuring inflation.

The committee found the UK Statistics Authority knew of the error in calculating the RPI but had refused to correct it.

The error typically made the RPI measure of inflation about 0.5% to 0.8% higher than for the Consumer Price Index (CPI), widely used by ministers for benefits and pension upratings.

Lord Forsyth said the committee's inquiry had revealed a tale of how "complacency on behalf of the statistics authorities and opportunism on the part of governments has led to a situation where the use of inflation statistics is leaving many people worse off".

The UK Statistics Authority had "refused to correct the error despite admitting it had made a mistake" and was now "at risk of failing in its statutory duties".

In future there should be one measure of general inflation used by the Government to prevent it "index shopping" between the two, he said.

Labour former chancellor Lord Darling of Roulanish called on the statistics authority to reconsider its position and act in the public interest, insisting the rate of RPI mattered for millions.

Lord Darling said the RPI was "flawed, yet apparently nothing is going to be done about it," adding: "At a time when it has become fashionable to denigrate experts and trash institutions, to find an institution like this, inflicting self-harm on itself, I find deeply depressing.

"The only way this authority will command respect is if it recognises a mistake has been made, or there is a flaw in the statistics, and does something to put it right."

Former Treasury permanent secretary and independent crossbencher Lord Macpherson of Earl's Court said that in economic statistics, measuring the rate of inflation was perhaps the most important statistic of all.

He said it was "no longer credible for the UK Statistics Authority to hide behind the Government" and it needed to be clear what was the best measure of inflation and move the RPI into line with that measure..

Urging the authority and the Treasury to act, Lord Macpherson warned that maintaining the status quo was increasingly untenable.

Responding for the Government, Tory frontbencher Lord Young of Cookham said: "We recognise that there are flaws in the way that RPI is measured and as a result, its rate of inflation is higher than other measures."

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Describing it as an "intractable issue", Lord Young said: "It has not been clear in recent years which measure of inflation it would be appropriate to use although that picture is now getting clearer.

"Given the extensive use of RPI in the economy, the complex nature of some of those uses and their interactions, and most importantly the effect on people and the economy, the Government believes it is necessary to take time to consider the committee's report carefully before responding.

"The Government recognises that RPI is a flawed statistic and stresses that it has not avoided acting on the issue.

"It recognises that further work must be done and notes that further moves away from the RPI are complex."

Lord Young promised to convey to the Treasury "the sense of frustration" felt at the delay in the Government responding to the report.