Professor John McHale:

The Deputy has raised a variety of issues which gives me a useful opportunity to clarify some points. First, the council absolutely accepts that legislation related to something like increasing social protection benefits is drafted at the time of the budget. However, one must distinguish between the point at which the policy decision is made and the process of forecasting. One must, as part of the planning process, have good forecasts for what will happen over the next number of years. If one has a set of forecasts based on the assumption that there will be no change in benefits at all or no wage increases post the Landsowne road agreement, then such forecasts will have very little value. Therefore, the idea is that one develops certain conventions, recognising that these are not policy commitments but outlining what it would cost to keep benefits constant in purchasing power terms. In other words, one outlines what it would cost to ensure that spending keeps up with demographics so that one maintains the same level of provision of public services. One makes those sorts of assumptions, recognising that the Government may do something different like, for example, increase benefits by more or even less than the rate of inflation or freeze them if it is dealing with difficult fiscal circumstances.

It is necessary, as part of the planning process, to produce good forecasts and these can be called no-policy-change forecasts. What we are saying is that informative no-policy-change forecasts would be developed on a stand still basis, outlining what it would cost to continue to do what is being done at present while completely distinguishing that from policy. We do not accept the criticism that until they are passed in the budget, one cannot talk about them because they are for two different purposes.

I agree with Deputy Doherty that there was some confusion about our estimates of fiscal space in advance of the election campaign.