Dr. Claire Keane:

Sure. As we discussed there, the one-off measures have actually been very successful in protecting incomes. They have very much supported incomes at the lower end of the income distribution and the big worry there is as to when they expire.

Something else which we have repeatedly talked about previously in this committee is indexation. Should we on an ad hocbasis add certain amounts to welfare rates, tax bands and tax credits?

If we do not index or increase in line with inflation the parameters of these taxes and benefits, then we will see that people will, just because of an average wage increase, experience higher taxation. That is something that could also be looked at. Should we be indexing the tax and welfare system to give people certainty, so that if they are in receipt of welfare, for example, then their income will grow in line with inflation? Then, of course, we have to tackle this very unusual situation. Usually, wages grow faster than price inflation and there is not as much of a worry there, but this is obviously a very extreme situation. It is worth noting that the one-off measures have been very successful, but we do need to think about whether something is needed this year. We know that in the budget last year, the tax and benefits parameters were not increased in line with inflation. Therefore, if it were not for those one-off measures, there would have been a regressive pattern seen in the impact on the income distribution.