Wednesday, 8 April 2015

The case for a universal Basic Income

Basic Income is a Green Party proposal to pay every UK resident a modest income that is free of means testing. It’s been proposed many times, under various names. It’s in Fritz Schumacher’s book Small is Beautiful and our own Clive Lord has long advocated a Citizen’s Income. It’s even been implemented a few times.

There are four main reasons to introduce it now:
1.      So that we all share in our human heritage
2.      To end our punitive and uncivilised benefit system
3.      To abolish the poverty trap
4.      To reduce inequality

To share the common heritage
Our manufacturers and services do great things. They produce exciting products and deliver services that past kings could not dream of. But these products and services are not the result only of those who do today’s work; still less are the due solely to a few entrepreneurial geniuses. They are also due to work by millions of people over centuries that has created a legacy of technical knowledge and social order. That legacy is the common heritage of humanity and all should benefit – Basic Income is a practical way to deliver that benefit.

More concretely, much of the value in our economy is now delivered by machines – robots and websites. With less need for human labour it makes sense that some of the value of our heritage should be shared in a way independent of who does the labour.

But, you may say, doesn’t the benefits system already embody that principle?

Perhaps it did. It no longer does.

To end our punitive and uncivilised benefit system
Everyone who knows the system and the Job Centres has a fund of horror stories. Of demands that claimants apply for unsuitable jobs. Of disabled people deemed fit for work. Of instructions to improve a CV that has already been revised a dozen times. All these are within my personal knowledge or proved by official figures; or both.

And then there’s ‘sanctions’ – withdrawal of benefits for weeks or months – for trifling errors. JobCentre advisors – a title that’s surely in breach of the trade descriptions Act – have to meet targets for the sanctions they impose or themselves face sanctions from their management.

All this is to conceal the fact that the JobCentres have little to do with jobs any more.  They are systems of social control aimed at:
  • Reducing the benefit bill.
  • Undermining the confidence of the unemployed so that they will accept poverty wages and appalling conditions and NEVER think of criticising the system.
Basic Income addresses this simply by being an unconditional benefit. No-one need go to the JobCentre to get it!

To end the poverty trap
If you’re a worker on average pay and you get an extra £100 the state takes £32 in tax and NI – a marginal rate of 32%. You keep £68.

Now if you’re low-paid the state pays you benefits – and takes them back if you get paid more. So what do you keep if you are paid an extra £100?  In 2010 the Coalition said that UC would produce an effective marginal tax rate of 65% – so you’d keep £35.

But according to a recent article in the Telegraph you’ll get just £27. Actually this is optimistic since there are other benefits, eg Council Tax benefit, with their own independent clawbacks. For some people the claw-back rate could exceed 100%!

Now the most important shift is obviously from unemployment to employment. Suppose Jane Claimant of Enfield is lucky and gets a fulltime job at minimum wage on Oxford Street. She earns £45 a day – of which she’ll keep £12. But her tube fare will be £10 – leaving her with £2 per day for lunch. And no profit.

Not much of an inventive is it?

Basic Income addresses this because there is no claw-back. Jane Claimant will have to pay income tax and National Insurance just the same as anyone else. She’ll get £30 per day (though she’ll still need to pay for travel and lunch).

To reduce inequality
Inequality has been growing for the last 35 years having stayed low for the previous 35 years.

  • The poorest fifth of society have only 8% of the total income, whereas the top fifth have just less than half (41%).
  • The richest 10% of households hold 44% of all wealth.  The poorest 50% own just 9.5%. 
  • The bosses of the UK’s 100 biggest companies earn on average 143 times as much as their staff. [1]
  • 5 families in the UK are worth the same as 12 million UK citizens. [2]
  • Poverty and problem debt are increasing. Last year Trussell Trust foodbanks supplied three days’ emergency food to 913,000 people. That’s 14 times more than in 2010.
  • Inequality is especially bad in the UK. Out of a group of 30 OECD countries the UK is the fourth most unequal, and the most unequal in Europe. Those worse are Mexico, US and Israel. Those better include Denmark, Germany and Switzerland.
Inequality is bad for everyone. Many research studies have shown that more unequal societies have worse records on health, crime, social and political participation. Thus unequal societies have worse outcomes for:
  • physical and mental health, obesity and life expectancy
  • violent crime and robbery
  • participation and voter turnout
  • social mobility and education.
A single example: A reduction of inequality from Spanish to Canadian levels would reduce murder by 20% and robbery by 23%.

Many of our problems – teenage pregnancy and class differences in life expectancy for instance – cannot be solved unless we reduce inequality. Please note that it’s not just wild lefties who say this. An increasing number of establishment figures have drawn attention to it and it was the theme of this year’s Davos meeting.

And here we have some direct evidence. For five years the town of Dauphin, Manitoba, had a version of Basic Income. An evaluation of the period reveals:
  • More children graduated from high school
  • 8.5% fewer hospital visits; plus various other health benefits
  • Fewer work-related accidents.
So Basic Income would help reduce the crisis in A&E!

Some historians and commentators point out that when inequality reaches an extreme a revolution is likely – probably not the benevolent democratic event that my Marxist friends seem to believe in.

The Green Party believes that inequality is a problem we should solve. Of the national parties only the Green Party believes this.

Labour sees it as embarrassing, regrettable – but a bit like the weather. A condition to be endured not cured.

The Coalition seems to see it as just – and any policy that reverses it as literally unthinkable.

The Green Party would address inequality in three ways.
  1. We would introduce Citizens Income and the Living Wage to raise the incomes of the poor.
  2. We would reduce housing costs both by building more and by reducing demand.,
  3. We would use higher taxation and a crackdown on tax avoidance and evasion to limit the wealth of the rich.
The Basic Income will reduce inequality, ameliorate the poverty trap and humanise the benefit system. Its time has come.

[2] Oxfam via the Guardian:

No comments:

Post a Comment