Professor Tim Callan:

I will try to deal with as many of those points as I can. One question was whether public services are included. The answer is that, for the most part, they are not, and this is true internationally because it is a lot easier to analyse things that are measured and arrive in cash. Some parts of the work are being extended into non-cash areas, such as the ongoing new research on reform of the health system and medical cards, for example. A seminar next week will hear a person from the UK Treasury speaking about their approach to these matters. We are not unusual internationally in looking purely at the cash-led aspect, because that is the focus of the EU Survey on Income and Living Conditions, which focuses on cash income and benefits.

The figure of minus 20% in my submission is simply derived from two tables in the CSO's press release, which has been updated today. There is nothing very fancy about it, as it is what has been observed as happening in low-income groups. It is total income, so it is not the case that it is due to a reduction in transfers or welfare payments, because it is mostly due to loss of employment income and so on. We are digging further into that and we will produce more research later this year in order to explain why this is happening. It is not particularly to do with the transfer side of things.

The back to work dividend is a work in progress, along with medical cards and the housing assistance payment. Reforms in all those areas will certainly contribute to making work pay. As to exactly how much they will contribute, that is to be determined, and exactly how much people will respond remains to be known.

Deputy Cannon asked about an exemplar. I would not pin my colours to any single mast. However, in preparing this submission I noted that we tend to think of the Scandinavian countries as having arrived at a very equal distribution of income, because they have quite compressed wage distributions so the pre-transfer income is already quite equal. Looking at figures from the EU-SILC, it looks very much as though Denmark had quite high pre-transfer income and also the same configuration as ourselves. I flag this information because it is worth examining further.

On the question of whether there is a squeezed middle, there are two senses to that question, one being whether people in the middle are being squeezed. Definitely they are. Everybody is being squeezed when we see average incomes going down by 10% to 14%, and nobody is escaping. There is often an implication, in talking about a squeezed middle, that the middle is being squeezed by more than some other people, who can only be at the top or bottom of the distribution. That does not seem to be the case either in these figures or in the updated figures we arrived at after 11 a.m. today.