1.46 An OpEx Escalator is applied to all Operating Expenditure, Lifecycle Costs and Third Party Income. The Spreadsheet enables Procuring Authorities to apply different escalators to salary and wage costs (through the OpEx (employment) Escalator) and to other running costs (through the OpEx (non employment) Escalator). In the Spreadsheet the OpEx (non-employment) Escalator should be equal to the current GDP Deflator 5.
1.47 The separation of these two indices in the Spreadsheet recognises that Procuring Authorities may wish to apply a different escalator to total wage and salary costs than the GDP Deflator value. A number of wage rate indices are in common use in both the public and private sectors. For example, the Office of National Statistics (ONS) provides, and updates monthly, its UK Average Earnings Index. The ONS breaks down the UK statistics into different categories and sub-categories, including the manufacturing, services and public sectors. Other more bespoke indices are available, often collated by relevant professional and trade associations. Procuring Authorities should apply such indices with some care as typically they reflect increases in wage rates, whilst the Spreadsheet seeks to index wage costs. In certain circumstances, Procuring Authorities may need to adjust the headline rates for expected efficiency or productivity gains.
5 The GDP Deflator can be found at http://www.hm-treasury.gov.uk/economic_data_and_tools/gdp_deflators/data_gdp_fig.cfm