Professor Alan Barrett:

To be honest this is a good example of positive interactions across a number of Departments. For a very long time the primary funder of the switch model was the Department of Social Protection which did not go near things like medical cards and so forth. Now that more Departments are getting involved, those sorts of issues are being included. The other thing that switch was previously not very good at was capturing issues around indirect taxes. This is very important because we know from research that I and others have done that indirect taxes are typically more regressive than direct taxes. Therefore, when we were doing the analyses but not picking up the indirect elements, there was an omission. That said, these are weaknesses that can be plugged and there is a very active programme of work under way to make sure that they are plugged.

There is a bigger criticism that can be made. The critical thing that switch tries to get a handle on is distributional impact and whether budgets are regressive or progressive. One could make a budget look very progressive by introducing, say, a 98% tax rate at the higher end and increasing all welfare payments by 100%. That would be a very progressive budget ---