Dr. Claire Keane:

This is where we need to take a step back and say indexation is beneficial when we get to the starting point we want. When the grants, social welfare rates or other benefits are brought to an adequate level - there is an arbitrary decision to be made in this regard - indexation is beneficial. In many countries, the student grant rate is equal to that of unemployment benefits. In this regard, we need to examine our system and determine where we believe there should be increases. From then on, further increases could be made in line with inflation.

The downside of indexing the entire system is that it is costly. Dr. Doorley and I work on developing and maintaining the simulating welfare and income tax changes, SWITCH model. The SWITCH model is used in Departments as well as by the ESRI. It would give the advantage of being able to cost changes in advance, giving figures for what would occur if we just indexed social welfare, changed tax bands and credits or changed the system as a whole. That is where the political decisions come in. If it was going to cost too much, one could just decide to index certain aspects.

Internationally, that is done quite frequently. In some countries, only pensions are increased in line with inflation. In others, all welfare rates are increased while in yet others, there are increases to welfare bands or tax bands.