Mr. Sebastian Barnes:

The main advantage is that it would avoid the procyclicality that we have seen in the past. If there is a temporary boom where the economy bounces back very strongly, it would be a mistake to spend or build spending plans around that money. That is the main advantage. There are lots of other advantages to good planning. It also means that Departments, rather than chasing after more money, may, in some areas, think harder about how they can make more of the existing money or will at least know how much they have and can plan around that. There are many advantages to a more medium-term approach.

In terms of temporary tax measures, it is very hard in general for governments to be credible around these kind of temporary measures. There is a much better chance of being able to do that if there is a generally credible framework around public finances. For example, one issue we had is that investment is running at very fast levels. We do not have a very clear sense of the long-term gain. Is it a catch-up period of investment? It will probably go to a higher permanent level of investment, but what will that be? Some of these dynamics could be built into a medium-term plan. We do not really see that at the moment because it is not well articulated.