Time for a citizen’s income?

Anthony Painter and Karen Buck debate the merits of a basic income for all

Yes

Anthony Painter

Labour exists to empower working people. For the earlier part of its history, that was mainly about ensuring solidarity and legal support for workers against unscrupulous employers. That protection is vital and its form continuously changes. There are always new battles to fight such as against involuntary zero-hours contracts.

The battle against a coercive labour market was necessary but not sufficient. A proper welfare state was also needed to meet health, education, and income insurance needs. This came in the form of universal healthcare, education, and a blend of universal and contributory benefits. The party failed to spot how the state itself could, through its welfare institutions, become coercive in itself. Surely there is no better time than the present political maelstrom to step back and ask how the party of empowering working people became increasingly comfortable with intruding on their lives in new ways?

For those in insecure, ‘flexible’ (for the employers at least), or low-income self-employment their lives are riddled with short-termism. It is a constant battle between engaging with a sanctioning and intrusive state and unsatisfying and insecure work.

David Cameron identified insecurity as the basis for people becoming stuck in poverty. Yet, that is the situation that both main parties now support. Recent changes to universal credit have seen high marginal deduction rates (of up to 80 per cent or so) come in earlier, making a bad set of institutions worse.

And things can only get worse. Structural changes to the economy: the impact of automation, algorithmic artificial machine intelligence and rapidly expanding computing power put a greater number of jobs at risk. Casualisation of low-paid work will become casualisation of middle-class work in the next few years. On-demand platforms such as Handy, Deliveroo and Uber, for all the benefits they offer, will accelerate this process. Self-employment, much of it highly insecure, is very likely to surpass middle-class employment in a short space of time. We will not see mass unemployment, but mass under-employment is highly probable. The wages-to-skills ratio across a wide swath of the workforce could well dip.

If Labour can look at the current welfare institutions and the structural changes in the marketplace and think that tinkering with universal credit taper is enough then that is surely short-sighted. A universal basic income to replace the current tax and benefits system is a good starting point to address these issues. This is a payment made to every child and adult on a universal and individual basis (albeit at different rates depending on age). If set at the right rate, alongside a national living wage, it provides a foundation for individual freedom while encouraging work more than any other welfare system.

The RSA’s model of basic income protects the lowest-paid families compared with the current system. It enables people to navigate the labour market of the future and frees them from a coercive state. There are some cost implications but they are manageable and the politics are tough – as they have been with any major social justice intervention. So let’s address these issues in a problem-solving fashion rather than erecting imaginary insurmountable barriers. It is worth it – universal basic income is a foundational intervention that would retain Labour’s identity as the party to empower working people.

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Anthony Painter is author of the RSA report Creative Citizen, Creative State: the Principled and Pragmatic Case for a Universal Basic Income

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No

Karen Buck

If it looks too good to be true, it will be. Rarely does this simple maxim need trotting out more than in the area of social security. Periodically, politicians rediscover, with breathless excitement, an apparent ‘Get out of Jail Free’ card – an idea whose simplicity has been ignored by their predecessors for some unexplained reason. Step forward universal credit (streamlining most working age benefits into one), our old friend the contributory principle (you get out what you pay in), and now the basic citizen’s income.

For the avoidance of doubt, all these have things to commend them – simplicity and predictability above all. Tax and social security systems are notoriously complex and make it exceptionally hard for people to predict how they will be affected in future. Means-testing is unpopular and expensive to administer. The trouble is that we live in a complex world, in which those designing tax and security systems have to consider huge variations in costs, limited resources and behavioural impact.

The basic citizen’s income works by rolling most benefits, tax credits and so on into a flat-rate allowance, with an additional element for children. Advantages cited include reductions in administrative complexity and in means-testing and the ‘poverty trap’; and an end to sanctions, and greater flexibility in the labour market, as people will be more confident about transitions of various kinds. What is not to like?

First, the whole concept begs the question: can we do without ‘conditionality’ entirely? Conditionality has been given a bad name by the horrors of a punitive sanctions regime. Yet, as social policy commentator Declan Gaffney points out, ‘Single parents offer a test case, as up to 2008 they were effectively in receipt of something very like an UBI, when not in employment. They had no obligation to actively seek work while tax credits ensured that most would be significantly better off in work. Employment rates had increased since the 1990s in response to improved incentives but remained relatively low, and from 2008 obligations to look for work were imposed. By 2014 the employment rate outside London had risen from 57 per cent to 61 per cent. In London the increase was dramatic from a lower baseline: from 45 per cent to 57 per cent. The lesson is that incentives matter but in the absence of conditionality, some parents who would otherwise have been working remained out of the labour market’.

Second, two elements stand out as risks to the comfortable simplicity of a flat-rate basic income – housing and disability. Housing costs are such a large element of people’s subsistence needs, yet are so varied across the country, they could not realistically be included (It was precisely this problem that defeated Beveridge!). Similarly, it is hard to see how a flat-rate system can accommodate the needs of the longer-term sick and disabled. Varying basic income levels to deal with housing costs or disability reintroduces means-testing, taper rates, work capability assessments … bringing us full circle.

The ‘Get out of Jail Free’ policy card does not exist. But that does not mean we cannot learn from the aspirations behind the basic income. Much can be done to improve our tax and social security systems – and that includes seeing both in a wider social policy context embracing health, education and housing. There is no one mega-solution, but everything is connected. 

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Karen Buck MP is a member of the work and pensions select committee

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Photo: TaxBrackets.org

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Comments: 6...

  1. On February 11, 2016 at 9:22 pm John responded with... #

    Karen Buck clearly hasn’t read (or hasn’t digested) Anthony Painter’s carefully argued articles on the RSA website and the ’employment’ increase quotes sound as if they were uttered by Corporal Smith himself as justification for continued micromanagement of everyone’s lives. Nor has she considered the work of Frances Coppola which I commend to her.

    No-one suggests that the amounts will be sufficient for the life of Riley and of course there will be continued need for some sort of housing support and special cases for severely disabled people. But it can be done within the present budget when you consider the abolition of tax allowances, transfer of child benefit, state pension and the merging of tax and national insurance which is long overdue.

    But there is one overriding reason for UBI – get the state off peoples’ backs. It is a fundamentally humanising proposal which the Peoples’ Party really should embrace. After 6 years of a brutalising DWP regime (for both staff and clients) which is no longer fit for purpose, the complete failure of Universal Credit with it’s vicious taper, and the sanctioning of some half a million people off the unemployment count, we really owe it to the people of this nation to help the poor back into a life, let alone a job. Long term unemployment is debilitating but when the state treats claimants in the way it has since 2010, that is turned into depression and sadly suicide.

    In the future where there may well be no work available for many because of increased automation – even drivers will no longer be required. So we have to prepare people for a different environment. UBI is the clear tool for this and the longer we continue with the present hotch-potch of a system, the longer we put off the preparations.

    This country has been so badly managed for so many years. Let some new ideas breathe and put clear water between Labour and Tory. Not for nothing are many other countries toying with UBI. The UK, the first in many good social policy areas that are now being destroyed, should stand up and be counted, not whinge on about the complexity of a system which will never match the needs and aspirations of the people. If it’s that bad, scrap it and start again.

  2. On February 12, 2016 at 8:59 am Martinay responded with... #

    It’s good to see a Yes/No debate in Progress.

    We need more. But debates involve a “to and fro”. We need Round Two of the Painter/Buck debate.

    I admire Painter’s vision and I respect Buck’s pragmatic fears of free-riding.

    But the crisis of the welfare state created by the Coalition and the Tories actually calls for a more wide-ranging set of initiatives than UBI.

    The welfare state, conceived as ‘social security’ by the Liberal Beveridge sought to end the five Giant Evils of Want, Disease, Ignorance, Squalor and Idleness.

    How successful have we been? Poverty is climbing. Primary disease prevention is so poorly funded (~0.01% of the health budget) that the leading causes of death in 1948 are still the leading causes of death. The period of compulsory education has increased, thankfully, but the national reading age is terrible and extending compulsory education above 18 has been made harder by loans. The failure of the so-called housing market (it is not a market since homes are not consumables) is increasing levels of squalor and homelessness. Full employment is fake: it was set at 1.8% in the 50’s and is now set at about triple that.

    What we really need is a reboot of the Welfare State starting with the same blank piece of paper that William Beveridge dared to start with.

    Question One: what are today’s Five Giant Evils?

    • On February 12, 2016 at 9:39 am anthonypainter responded with... #

      I agree that there should be a much wider ranging set of reforms to the social contract. For me, UBI is simply a foundation stone. In fact, our report was originally going to argue that but then we ended up getting in so deep on UBI that we paused the other elements. To be revisited…..

      By the way, if people want to read more on our work, this is a good start and has all the relevant links:

      https://www.thersa.org/discover/publications-and-articles/rsa-blogs/2015/12/in-support-of-a-universal-basic-income–introducing-the-rsa-basic-income-model/

      I’d be up for a follow up in the next edition of Progress if Karen was too. (Sorry Adam Harrison to steal precious editorial space….)

    • On February 12, 2016 at 3:49 pm John responded with... #

      I would suggest that all 5 Evils in Beveridge’s listicle remain in some form. But we can add to them. Top of the list I would put Greed. From this springs selfishness and a zero-sum game attitude. I would also add Misery and Despair – it is no longer a relatively happy and considerate place to live. All that went out of the window in the 1980s and really hasn’t returned.

  3. On February 17, 2016 at 8:25 pm Malcolm Torry responded with... #

    Karen Buck’s anxieties about the implementation of a Citizen’s Income scheme are entirely understandable. It was to respond to some of these issues that one of the Citizen’s Income schemes researched for an Institute for Social and Economic Research working paper last April left in place the whole of the current benefits system, implemented a genuine Citizen’s Income, and then recalculated everyone’s means-tested benefits (including tax credits) downwards. Household losses at the point of implementation are almost entirely eliminated, and all of the benefits of a genuine Citizen’s Income would be delivered. The details can be found under scheme B in the paper: https://www.iser.essex.ac.uk/research/publications/working-papers/euromod/em6-15

  4. On March 12, 2016 at 2:18 pm Jack responded with... #

    No no no. Massive waste of money, disincentives work.

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