Citizen’s Income News: May 2016

The National reports that the Scottish National Party conference has

backed calls for a flagship policy giving all adults in an independent Scotland a “citizen’s income” to lift people out of poverty and create a better welfare system. Members of the Cumbernauld branch submitted a motion underlining that Finland will introduce the policy as a pilot from next year and called for the work there to be monitored.

“Conference deplores the UK Government’s assault on our welfare state, which is causing hardship and suffering to some of the most-vulnerable people in society,” it said.

“Conference believes that a basic or universal income can potentially provide a foundation to eradicate poverty, make work pay and ensure all our citizens can live in dignity.”

It called for the impact of the basic income in Finland, and other countries, to be examined and “to consider successful models when designing a welfare system for an independent Scotland”.

A citizen’s income gives every person a basic income regardless of whether they are in or out of work, but they cannot claim any additional social security benefits.

The suggested levels vary, but would be around £51.85 a week for young people up to 24 years old, £65.45 for those aged between 25 to 64, and £132.69 for over-65s.

Supporters say it would save on administration costs involved in running the existing complex welfare system, stop benefit fraud and ensure everyone receives the money they are entitled to.

Inverclyde SNP MP Ronnie Cowan urged the audience not to vote against the move because critics suggested it would be “difficult”. He told delegates the current welfare system was so flawed a completely different system should be designed.

“It can be the flagship policy for a socially just independent country.”

Earlier this year, Caroline Lucas, the Green Party’s MP, called for David Cameron to consider the policy.

Supporters say the citizen’s income would also help those who work part-time, carers and those who want to change careers.

 

Citizen’s Advice has published the results of research into Council Tax Support (CTS), the localised successor to Council Tax Benefit (CTB): ‘Universal Credit (UC) was originally intended to incorporate CTB, but does not incorporate CTS. Nor is it obvious how it would do so. Administration is the primary issue: UC is a national system, CTS a set of local ones. The technicalities of integration would be substantial. The systems’ aims are also very different. UC is about simplification and standardisation; CTS is about local choice. UC is about improving work incentives – making sure that work pays; CTS often weakens work incentives as claimants who move into work lose the benefit. None of the literature this study reviewed was able to square these circles … … There is no central guidance on how to integrate CTS, though it may be forthcoming later this year.’ (Tom MacInnes and Theo Barry-Born, ‘The Shifting Challenges of Council Tax Support’, The Adviser, no. 171, September/October 2015, pp. 56-8, p. 57.)

 

In an open letter to the Chancellor of the Exchequer, Baroness Stroud, the Director of the Centre for Social Justice, asks him to ‘eradicate the couple penalty: There is a disincentive in the welfare system for couples to build long term stable families. The Government’s Universal Credit reforms have already gone a long way to eliminating the couple penalty but some working couples can still receive more living apart than living together. This is particularly concerning where children are involved, given the importance of long term family stability for the wellbeing and life chances of children.’

 

On the 11th February in The New Statesman Helen Lewis wrote about the proposal to cut Child Benefit for the offspring living abroad of EU citizens resident in the UK down to the level that they would receive in their countries of origin. ‘What a waste of time. At the moment, only £30m in child benefit is sent out of the country each year: quite a large sum if you’re doing a whip round for a retirement gift for a colleague, but basically a rounding error in the Department for Work and Pensions budget. Only 20,000 workers, and 34,000 children, are involved.  And yet, apparently, this makes it worth introducing 28 different rates of child benefit to be administered by the DWP. We are given to understand that Iain Duncan Smith thinks this is barmy – and this is a man optimistic enough about his department’s computer systems to predict in 2013 that 4.46 million people would be claiming Universal Credit by now.’

 

On the Social Europe blog, Larry Summers writes: ‘I am increasingly convinced that “no free lunch” oversimplifies matters and makes economics too dismal a science. … recent experience suggests that by improving incentives or making strategic investments, we can achieve apparently conflicting objectives to a greater extent than conventional wisdom would suggest. … Trade-offs should be seen not as constraints but challenges. There are plenty of very cheap lunches out there for those with the will to find them. Economics has much to contribute and much to gain from this search as well. It can become a cheerful science.’

 

The Joseph Rowntree Foundation has published a report, Households Below a Minimum Income Standard, 2008-9 – 2013-14: ‘The proportion of people in households with incomes below MIS increased by a third between 2008/09 and 2013/14, from 21 to nearly 28 per cent, although the rate of increase has slowed. Since 2010/11, families with children have seen the greatest increase in their risk of low income. The proportion below MIS continued rising in 2013/14, to 40 per cent. For households without children, the risk of being below MIS shows some signs of falling. Working families with children have faced a growing risk of low income; 41 per cent of lone parents working full time had incomes below MIS, up from 26 per cent in 2008/09; for families with both parents working full time, the risk rose from 5 to 12 per cent. In couples with a single breadwinner, the risk rose from 38 to 51 per cent. Older singles (over 35) living alone and working full-time have a growing risk of inadequate income. Their risk of being below MIS increased from 7 to 14 per cent between 2008/09 and 2013/14.’

 

Civitas has published a report, Fixing Broken Britain? An audit of working-age welfare reform since 2010, by Frank Field MP and Andrew Forsey: ‘It is unacceptable, not only for this government but for its predecessor and those who will follow, to take away benefit from a mass of people each year and not trouble themselves with how this army of people survive. For that is what is happening under the government’s sanctions policy … Welfare Reform Mark One has largely succeeded in moving into work substantial numbers of people previously drawing out-of-work benefit. Welfare Reform Mark Two must widen this route where possible to the least advantaged claimants, namely those with disabilities and those aged over 50. In order to enshrine work as the best route out of poverty, Welfare Reform Mark Three must build upon the National Living Wage to deliver the higher productivity that can sustain rising real incomes across the board. Universal Credit alone will not fulfil this task and, judging by the government’s constant chipping away at its generosity for lower-paid workers, strivers with children who claim Universal Credit will be worse off next year by up to £2,629. The prospect of Universal Credit being rolled out in full by the end of this parliament looks increasingly doubtful, and its potential to fix ‘broken Britain’ has been diminished beyond recognition.’ (pp. 122-3)

 

‘Joint study by the Foundation for European Progressive Studies (FEPS) and UNI Europa, carried out by the University of Hertfordshire and Ipsos MORI reveals, for the first time, the true size of the UK’s ‘gig economy’. In the online survey of 2,238 UK adults aged 16-75, 21% say they have tried to find work managed via so-called ‘sharing economy’ platforms such as Upwork, Uber or Handy during the past year, equivalent to around 9 million people – almost one fifth of the adult population. Around 1 in 10 (11%) of respondents said they had succeeded in doing so, equivalent to around 4.9 million people. Almost a quarter (24%) of UK women responding to the survey claim to have sought work via online platforms, and one third (33%) of 25-34 year olds. 3% of respondents claim to find paid work via online platforms at least once a week, equivalent to around 1.3 million adults, with 4%, or around 1.8 million finding work at least once a month.’

 

The Institute for Fiscal Studies and the Institute of Chartered Accountants for England and Wales have published The IFS Green Budget. Chapter 10 is on ‘the (changing) effects of Universal Credit’: ‘Universal credit will look significantly different when it is finally fully introduced compared with the original plans. In particular, reductions in the planned levels of work allowances – the amount claimants can earn before benefit entitlements start to be reduced – mean that it reduces rather than increases the total level of support for working households. The way in which the planned levels of work allowances have been repeatedly trimmed back does not give the impression that this has been the result of a carefully-thought-through plan for the shape of the future benefits system. Rather, it appears as though cutting work allowances has been seen as a convenient way of reducing planned social security spending by making changes to a benefit that has not yet been introduced. Despite the overall reduction in in-work support, there are groups that will benefit directly from UC’s introduction. Those in rented accommodation and single-earner couples with children will see their benefit entitlements increase under UC on average. This will strengthen the financial incentive for couples with children to have one person in work rather than none. On the other hand, this does weaken the incentive for both members of a couple with children to work rather than just one, as two-earner couples with children see a reduction in their benefit entitlements on average under UC. While the winners and losers from UC, and its impacts on financial work incentives, have been affected significantly by the changes made to it since it was first mooted, the main potential benefits of the structural changes that UC will bring remain intact. It will be a welcome simplification of the benefits system, and will still strengthen work incentives for those who face the weakest incentives under the legacy system. On the other hand, it also remains the case that these benefits are being undermined to some extent by the decision to leave support for council tax as a separate system designed by local authorities. This complicates the overall system and potentially reintroduces some of the very high benefit withdrawal rates that UC would otherwise have abolished entirely. If UC is to significantly increase the amounts of paid work that people do, it seems likely that this would be more the result of non-financial changes – such as increasing the conditionality requirements on benefit claimants and the increased level of integration and simplicity that UC will bring to the system – rather than because people face stronger financial incentives to do paid work. Indeed, early evidence has shown that UC has led to increased labour market participation among a group for whom it does not strengthen financial work incentives on average. The success of UC as a whole may also depend on how smoothly other non-financial changes work, such as the fact that payments will be made monthly and only to one member of a couple and that there will be no direct payments to landlords.’ (pp. 258-9).

 

Co-operatives UK has published a report, Not Alone: Trade union and co-operative solutions for self-employed workers. The ‘precariat index’ developed in the report combines indicators that measure levels of self-employment and of privately rented housing. ‘Five in 10 new jobs are created by those going into business for themselves. The number of the self-employed has risen by 732,000 since 2008. … In the first quarter of 2014 the number of the self-employed rose by 180,000. … Self-employment among those aged 65 and over has doubled from 241,000 in 2009 to 428,000 in 2014. … self-employment, as a proportion of employment in the UK, increased from 11.6 per cent in 1985 to 15 per cent in 2015. The number of households in private rented accommodation grew from nine per cent to 22 per cent during the same period. While there have been one-off dips in the number of people living in private rental accommodation (in the late 1980s) and in self-employment (around the year 2000), together the index suggests that precariousness in work and housing has increased consistently and nearly doubled over the last 30 years. … Many EU countries are looking at a Universal Basic Income as an alternative to means-tested models like Universal Credit. Trials in some EU countries are planned including Finland. Professor Guy Standing is an advocate of Universal Basic Income as a core solution to the problems faced by the precariat. The RSA has been working with the Citizen’s Income Trust to examine what this would look like in the UK in their Power to Create report. In relation to the Co-operatives UK analysis of the precariat index, this is relevant and worthy of further exploration, as they propose a Basic Income to replace Universal Credit and an additional Basic Rental Income to replace housing benefit. Further work on the model by Citizens Income Trust will be forthcoming in 2016.’ (pp. 11, 20-22)

 

Jules Birch has written an article in The Guardian that tackles the thorny issue of the relationship between Citizen’s Income and housing costs: ‘Is Universal Basic Income too simplistic to meet housing costs?’ Readers might also like to see Jake Eliot’s article, ‘Where does housing fit in?

Footnotes

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