Lag CPI for benefits correctly (#1228)

* Lag CPI for benefits correctly

* Fix typo

* Add 2010 onwards

* Update test

* Update basket of reforms

* Update tests

Author: nikhilwoodruff

changelog_entry.yaml

@@ -0,0 +1,4 @@
+- bump: patch
+  changes:
+    fixed:
+    - Lag CPI correctly for benefit uprating.

policyengine_uk/parameters/gov/benefit_uprating_cpi.yaml

@@ -4,4 +4,4 @@ values:
   2010-01-01: 114.48
 metadata:
   label: Benefit uprating index
-  uprating: gov.economic_assumptions.indices.obr.consumer_price_index
+  uprating: gov.economic_assumptions.indices.obr.lagged_cpi

policyengine_uk/parameters/gov/economic_assumptions/lag_cpi.py

@@ -0,0 +1,27 @@
+from policyengine_core.parameters import Parameter, ParameterNode
+
+
+def add_lagged_cpi(
+    parameters: ParameterNode,
+) -> ParameterNode:
+    """
+    Add lagged average earnings to the economic assumptions.
+    """
+    obr = parameters.gov.economic_assumptions.yoy_growth.obr
+    cpi = obr.consumer_price_index
+
+    lagged_cpi = Parameter(
+        "gov.economic_assumptions.yoy_growth.obr.lagged_cpi",
+        data={
+            "values": {
+                f"{year}-01-01": cpi(year - 1) for year in range(2010, 2030)
+            },
+        },
+    )
+
+    obr.add_child(
+        "lagged_cpi",
+        lagged_cpi,
+    )
+
+    return parameters

policyengine_uk/system.py

@@ -20,6 +20,9 @@
 from policyengine_uk.parameters.gov.economic_assumptions.lag_average_earnings import (
     add_lagged_earnings,
 )
+from policyengine_uk.parameters.gov.economic_assumptions.lag_cpi import (
+    add_lagged_cpi,
+)
 from policyengine_core.reforms import Reform
 from policyengine_uk.reforms import create_structural_reforms_from_parameters
 
@@ -65,6 +68,7 @@ def process_parameters(self, reform=None):
             self.apply_reform_set(reform)
         self.parameters = add_private_pension_uprating_factor(self.parameters)
         self.parameters = add_lagged_earnings(self.parameters)
+        self.parameters = add_lagged_cpi(self.parameters)
         self.parameters = add_triple_lock(self.parameters)
         self.parameters = create_economic_assumption_indices(self.parameters)
         self.parameters.add_child("baseline", self.parameters.clone())

policyengine_uk/tests/microsimulation/reforms_config.yaml

@@ -8,15 +8,15 @@ reforms:
   parameters:
     gov.hmrc.income_tax.rates.uk[1].rate: 0.42
 - name: Raise personal allowance by ~800GBP/year
-  expected_impact: 0.8
+  expected_impact: 0.7
   parameters:
     gov.hmrc.income_tax.allowances.personal_allowance.amount: 13000
 - name: Raise child benefit by 25GBP/week per additional child
-  expected_impact: -1.3
+  expected_impact: -1.2
   parameters:
     gov.hmrc.child_benefit.amount.additional: 25
 - name: Reduce Universal Credit taper rate to 20%
-  expected_impact: -38.3
+  expected_impact: -38.7
   parameters:
     gov.dwp.universal_credit.means_test.reduction_rate: 0.2
 - name: Raise Class 1 main employee NICs rate to 10%
@@ -28,6 +28,6 @@ reforms:
   parameters:
     gov.hmrc.vat.standard_rate: 0.22
 - name: Raise additional rate by 3pp
-  expected_impact: 4.4
+  expected_impact: 4.5
   parameters:
     gov.hmrc.income_tax.rates.uk[2].rate: 0.48

policyengine_uk/tests/policy/baseline/gov/dfe/extended_childcare_entitlement/extended_childcare_entitlement.yaml

@@ -10,7 +10,7 @@
         members: [child1]
         extended_childcare_entitlement_eligible: true
   output:
-    extended_childcare_entitlement: 6_917.185
+    extended_childcare_entitlement: 6857.356
 
 - name: Eligible for 15 hours - All first conditions met
   period: 2025
@@ -24,7 +24,7 @@
         members: [child1]
         extended_childcare_entitlement_eligible: true
   output:
-    extended_childcare_entitlement: 4_870.2627
+    extended_childcare_entitlement: 4828.138
 
 - name: Not eligible (one condition not met)
   period: 2025
@@ -54,7 +54,7 @@
         members: [child1, child2]
         extended_childcare_entitlement_eligible: true
   output:
-    extended_childcare_entitlement: 11_787.447
+    extended_childcare_entitlement: 11685.494
 
 - name: Not eligible - Family with multiple children but conditions not met
   period: 2025
@@ -89,7 +89,7 @@
         family_type: COUPLE_WITH_CHILDREN
         extended_childcare_entitlement_eligible: true
   output:
-    extended_childcare_entitlement: 18706.
+    extended_childcare_entitlement: 18542.85
 
 - name: No expenses for zero hours
   period: 2025
@@ -118,7 +118,7 @@
         members: [child1]
         extended_childcare_entitlement_eligible: true
   output:
-    extended_childcare_entitlement: 4_611.457  # 20 hours * 38 weeks * £6.07 per hour (2025 rate)
+    extended_childcare_entitlement: 4571.5703  # 20 hours * 38 weeks * £6.07 per hour (2025 rate)
 
 - name: Child using fewer hours than maximum entitlement - multiple children
   period: 2025
@@ -136,7 +136,7 @@
         members: [child1, child2]
         extended_childcare_entitlement_eligible: true
   output:
-    extended_childcare_entitlement: 6_705.434  # Updated to match actual calculation
+    extended_childcare_entitlement: 6647.4365
 
 - name: Benefit unit maximum hours cap applied
   period: 2025
@@ -155,7 +155,7 @@
         extended_childcare_entitlement_eligible: true
         maximum_extended_childcare_hours_usage: 40 
   output:
-    extended_childcare_entitlement: 13835.381
+    extended_childcare_entitlement: 13714.712
 
 
 - name: Benefit unit without maximum hours cap applied
@@ -172,7 +172,7 @@
         extended_childcare_entitlement_eligible: true
         maximum_extended_childcare_hours_usage: 10 
   output:
-    extended_childcare_entitlement: 2_306.6
+    extended_childcare_entitlement: 2285.7852
 
 
 - name: Benefit unit without maximum hours cap applied with 3 years old child
@@ -189,4 +189,4 @@
         extended_childcare_entitlement_eligible: true
         maximum_extended_childcare_hours_usage: 18 
   output:
-    extended_childcare_entitlement: 3_459.5
+    extended_childcare_entitlement: 3428.678