Editorial: Time for a debate
Some things do not change when governments change, and during the past few years we have seen some consistent themes in relation to income maintenance policy:
· Employment is the best route out of poverty, so the tax and benefits system must provide incentives to seek employment and then to stay in it
· The cost of the benefits system is too high, so people need to be taken off benefit where possible, and administrative costs need to be reduced
· There is too much fraud, and it needs to be reduced
· Poverty is the result of a variety of social exclusions, so ‘joined up thinking’ is required.
It is for these reasons that it is so important to promote debate on the feasibility of a Citizen’s Income: an unconditional, nonwithdrawable income for every citizen, which could be paid for by reducing tax allowances and means-tested and contributory benefits.
· Such an income, like Child Benefit, would not be withdrawn as other income rises and so would reduce the effects of the poverty and unemployment traps by reducing effective marginal rates of taxation, thus increasing the incentive to seek employment and to increase one’s earnings once in it
· Such a scheme would reduce many individuals’ and families’ dependence on means-tested benefits, thus reducing administrative costs and the likelihood of fraud
· And a Citizen’s Income would relate in predictable ways to every area of social policy and so would contribute to the joined-up policy-making which we need.
Every area of social policy has seen substantial reform during the past twenty years: health, education, housing, transport – except income maintenance policy, which arguably is the key to everything.
We have seen minor changes, such as the Fowler reviews of the mid-’80s, and now the trend towards tax credits; but we have seen no major review of the system as a whole since the 1940s.
It is time for such a review. The Labour Party’s Social Justice Commission (Social Justice: Strategies for National Renewal, the Report of the Commission on Social Justice, Vintage, 1994, pp.261ff) suggested that a Citizen’s Income might be the answer.
The Citizen’s Income Trust will be doing all it can to encourage the debate we now need.
We have suffered a great loss in the death last August of Evelyn McEwen, who had been the Chair of the Citizen’s Income Trust since early 1991. It was tragic that she was diagnosed with cancer only a few months after her retirement at the end of 1999 as Director of Policy and Information at Age Concern, a post which she had held with great distinction for many years. She had such great hopes of new activities she would be able to develop during her retirement as well as being able to have more opportunity to share in the lives of her family, to whom she was devoted. She did persuade her doctors to allow her to take two foreign holidays with them, but her health failed rapidly after her return from the second of these at the end of May.
Evelyn provided the Citizen’s Income Trust with inspired leadership throughout the period when a series of grants by the Joseph Rowntree Charitable Trust enabled us to do a lot to study and publicise the concept of a basic income. In her discussions with successive Directors and other staff, and with the trustees and secretariat of the Joseph Rowntree Charitable Trust, as well as in her conduct of trustees’ meetings, she was firm in maintaining clear objectives but responsive to others’ ideas about how these could be achieved. She was particularly concerned to see how basic income policies could help the elderly, in the light of her professional interest, and people with disabilities. She bore with fortitude the stress of her increasing immobility over many years before her final illness.
We recall with gratitude Evelyn’s wise guidance and energy in doing so much to advance our cause. We are sad that she is no longer with us to help us to progress further and feel the deepest sympathy with her family who have been so cruelly deprived of her companionship.
The Trade Unions, Tax-Benefit Reform and Basic Income: Stumbling towards a Policy?
by Rafael Ziegler and Bill Jordan
This article reports on a pilot study of UK trade union attitudes towards tax-benefit reforms (specifically, the introduction of tax credits and the prospect of tax-benefit integration), and – in the light of this – towards Basic Income. Since the formation of the Basic Income Research Group (the parent organisation of the Citizen’s Income Trust) in the early 1980s, the British trade unions have been rather unreceptive towards the proposal. Unlike other EU countries, where at least some unions (such as the Voedingsbond in the Netherlands and the Transport and General Workers in Ireland) have enthusiastically endorsed the principle, in the UK there has been no obvious source of support from the organised labour movement.
This was not entirely surprising. On the one hand, the unions had seldom been a leading influence on social policies in the UK, preferring to act very pragmatically, and react to specific proposals, rather than adopt long-term policy positions. In general, the National Insurance system reflected their interest in adequate replacement incomes for workers temporarily or permanently outside the labour market, provided (like occupational pensions) on the basis of their earnings when they are in work. Hence they had a stake in the postwar status quo, and were opposed to the many reforms undertaken by the Thatcher, Major and Blair governments. On the other, they were not involved in corporatist arrangements for deciding on and managing social policy initiatives, such as those in other EU states, including Ireland. Thus they were not directly involved in policy-making, only in reacting to new government reforms.
This study consisted of four interviews with policy spokespersons of the Trades Union Congress, the public service union Unison, the Public Commercial Services Union PCS (whose members handle tax and tax-credit administration), and the ISTC, representing mainly blue-collar workers in the steel industry. Thus it covered a cross-section of unions whose men and women members included both full- and part-time workers, in a range of professional, skilled and unskilled occupations, from the rather well-paid to those subsisting on the minimum wage. For Unison and the PCS in particular, the introduction of the Working Families Tax Credit, and the proposal for Employment Credit, raise significant issues.
In general terms, the unions seemed rather passively accepting, or mildly in favour, of the move towards tax credits, and the principle of fiscal subsidies for low-paid work, while retaining an unmodified ideal of decent wages and national insurance benefits as the best approach to income maintenance. They did not seem to anticipate that these reforms of the tax-benefit system might signal the phasing out or residualisation of the national insurance scheme, or (if they did) they did not see themselves as having enough influence on government social policy to change any such long-term plan. Hence they could simultaneously welcome some gains for members from WFTC, without necessarily accepting the idea of tax-benefit integration. If the latter were to become an explicit aim of policy, this might lead them to reappraise their (sceptical) attitude towards BI / CI. In the meantime, they saw it as too remote a possibility to be worth considering seriously.
As the Senior Policy Officer for Social Security and Welfare to Work, the TUC spokesperson reiterated that the unions’ best option remained ‘a better and more generous National Insurance’. Tax credits were therefore a second-best option, which provided improvements in labour incentives but also had some obvious shortcomings; going only to people in formal employment, they neglected those outside the labour market. In this connection, the Policy Officer for Unison (85 per cent of whose members are women) pointed to the rise in gender inequality: ‘there is some suggestion that women have given up work because of the Working Families Tax Credit (WFTC). … If you are living at the margin there is little difference whether you work or not, but the reality is that women make this decision, not men’. In her view, the WFTC has not overcome the poverty trap; there are incentives for those with heavy household and caring responsibilities to reduce their hours, as well as incentives for others to come from outside the labour market to take part-time work, and women are most responsive to both these factors.
All the unions remained opposed in principle to means-testing in the benefits system, but there were varying perceptions of tax credits in the light of this principle. The Director for Policy, Research and Information of the PCS (50 per cent women, 13 per cent part-time) said ‘I suspect that it is a creeping process – we have moved more and more to an acceptance of means-testing, by doing it through the tax-credit system rather than benefit payment’. But the Unison officer felt that WFTC was ‘good because it reduced stigma … there is better take-up … generally we are quite in favour’. For the representative of ISTC (10 per cent female members) means-testing is ‘not consistent with people’s dignity’ and ‘imposes great administrative costs’, but WFTC scarcely affected the union’s members. The overall position of the unions on the issue was captured by the Unison officer’s comment that, ‘Because means-testing is coming through the tax credit, we are open to what is happening, we are still examining the situation’.
On tax-benefit integration, there were also mixed responses. The TUC officer opposed it; Unison’s representative was ‘generally supportive … because we think that the tax system is generally more suitable’ – but did not want to undermine National Insurance. Neither of the other two officers had a position. Of concern to all, in different degrees, was the level of benefits to those in unpaid work, as carers, parents or in the community. The TUC officer was in favour of a participation income, giving access to tax credits or higher benefits, and higher benefits for pensioners and disabled people also. Unison’s officer wanted carers to be recognised, and better support for all these citizens.
Hence the unionists’ views on Basic Income were mixed, and a consequence of their stances on the government’s tax-benefit reforms; they were reacting to that agenda, rather than trying to set one of their own. First BI was seen as a more remote prospect than ever; in the ISTC officer’s view, ‘it has all been buried’ – to his relief, because ‘our members would not benefit [from it]’. For the TUC officer, it would be ‘very costly’. In an economy with high income inequality, such as the UK’s, ‘a mean-tested approach is almost inevitable’. But both the Unison and PCS officers were cautiously welcoming of the idea – ‘there is an open door to see where it goes’ (Unison), even though it might adversely affect their members as public servants (PCS).
These unionists were in many ways postponing their final decisions on strategy over tax-benefit integration and BI, until the government’s long-term plans are clearer. To our surprise, three of them had read the CIT’s Stumbling Towards Basic Income (Jordan, Agulnik, Burbidge and Duffin, 2000), and were aware of the possibility that tax credits could lead towards BI, even though the government’s original intention was quite the opposite, to make benefits more conditional. The TUC officer was in favour of extending the tax credit principle, to embrace single workers and absorb housing benefits, and in favour of eventually moving towards a participation income for unpaid work, but against tax-benefit integration. And he conceded that ‘surely if we were to have a choice of either extended means-testing or a participation income, we would be calling for a participation income, no doubt about this. If we were in a situation like the US, where it is tax-cuts versus something else, then a participating income or CI might come up our agenda quite rapidly.’
None of them considered that this point had been reached, though all recognised the signs that the government wanted to phase out National Insurance benefits, extend means testing and advantage those in paid work over those outside it. In this sense, they all acknowledged the basic analysis of Stumbling Towards Basic Income, but wanted further to delay their decisions on the fundamental issues at stake. Thus the BI/CI case is a good example of the relative neglect of long-term social policy issues by British trade unions mentioned above. As long as the government does not proclaim BI/CI as a long-term social policy goal and instead seems to see a strong moral objection to the unconditionality of BI / CI, they were not prepared to come out in favour of it – especially as it had some element of ‘something for nothing’ about it, which might jar with their own members’ values.
This seems to indicate that the trade unions remain an organised interest in UK society that cannot yet be relied upon to give support to the Basic Income principle, or to form part of a civil-society coalition for its introduction. To stand a chance of getting on the political agenda, BI / CI needs such a coalition, including organisations such as churches, claimants’ groups, the voluntary sector, social services, and public-sector professionals. Further, it would seem of great importance to win the interest of the government’s social policy strategists, as this would indirectly reinforce the case for CI/BI from the perspective of the trade unions. While the trade unions have championed more generous benefits for labour-market outsiders (partly to dampen competition from them for employment, which might drive down wages) they still see a possibility that these could take the form of work-related National Insurance entitlements. They play down the extent to which tax credits have already undermined their position, and introduced an element of selective wage subsidisation into the labour market, which reduces their negotiating power. For advocates of Basic Income, this indicates a long period of persuasion and negotiation with the trade unions ahead – and the need for more research on this topic.
‘Disability, Welfare, and Work: From Rhetoric to Rights?’
Thursday 17th January 2002, at Staffordshire University.
Speakers include Lorna Reith (Chief Executive, Disability Alliance), Martin Barnes (Director, Child Poverty Action Group), Keith Puttick (Staffordshire University Law School), and Catherine Casserley (Legal Officer, RNIB). Further details from Keith Puttick, Staffordshire University, Leek Road, Stoke-on-Trent, ST4 2DF, 01782 294000 x 4462, email: email@example.com.
The first congress of the United States Basic Income Guarantee Network:
‘Fundamental Insecurity or Basic Income Guarantee’
March 8-9, 2002
The conference organizers write:
“In the year 2001, toward the end of the longest period of uninterrupted economic growth in US history, millions of US workers remained in poverty. Apparently, even in the best of times, the market economy cannot eliminate poverty on its own without a change in policy. As the likelihood of a recession increases, millions of Americans can be expected to fall deeper into poverty. One policy – or perhaps the only policy – which could completely eliminate poverty is the Basic Income Guarantee (BIG). This policy is the assurance by the federal government that no citizen’s income will fall below a minimum level for any reason. The US Basic Income Guarantee Network (USBIG) is an organization dedicated to increasing public discussion of the Basic Income Guarantee. As part of this effort, USBIG will hold its first Congress on
March 8-9, 2002 at the CUNY Graduate Center (365 Fifth Avenue between 34th and
35th Streets in New York City). The Congress will be sponsored by the Center for Social Justice of the SUNY School of Social Welfare at Stony Brook and the Cultural Studies Department of the City University of New York. The purpose of the Congress is to bring together a wide group of academics, policy analysts, students, activists, and others interested in exploring the merits of BIG. It will consist of a series of panels, discussion groups, and speakers and it will include an organizational meeting for USBIG. We invite proposals for papers and panels on topics related to the Basic Income Guarantee, including but not limited to the following:
1. BIG history: the movement for a Negative Income Tax or a Guaranteed Income in the United States and lessons for the future
2. The ethics of BIG
3. The politics of BIG
4. The Alaskan dividend: the existing Basic Income Guarantee
5. The impact of a Basic Income Guarantee on civil society
6. The efficiency-equity tradeoff and the Basic Income Guarantee
7. The Basic Income Guarantee and the family: effects on marital status, domestic violence and child poverty
8. The Basic Income Guarantee outside the United States
9. The labor market effects of BIG
10. Funding a Basic Income Guarantee
11. Substitutes or complements? The relationship between the Basic Income Guarantee, government as employer of last resort, wage subsidies, and the living wage movement
12. The problem at hand: recent trends in poverty and child poverty in the U.S. and the possibility of increased employment insecurity in the next recession.
All discussion of BIG is welcome whether for or against. Papers that do not directly relate to BIG will only be accepted if they fit into topic 12, “the problem at hand.” Anyone interested in presenting a paper or organizing a session should submit a proposal. Paper proposals should include the following: 1. Name; 2. University/Organization; 3. Address; 4. City, State, Zip Code (Postal Code), and Country; 5. Telephone, fax; 6. Email Address; 7. Paper Title; 8. Abstract.
Proposals for panels should include all of the above information for each paper in the panel as well as the title for the panel itself. Electronic submissions are preferred and should be sent to Michael A. Lewis at: firstname.lastname@example.org. Submissions can also be made by regular mail to: Michael A. Lewis, Assistant Professor of Social Welfare, School of Social Welfare
Stony Brook University, Health Sciences Center, Level 2, Rm. 093, Stony Brook, NY 11794-8231.”
The Citizen’s Income Trust wishes this new initiative well, and would like to suggest that the first session should contain a discussion of definitions. The term ‘basic income guarantee’ can mean two things: a) an unconditional, nonwithdrawable income; b) a means-tested benefit to ensure that a person’s income reaches a particular level. These are very different concepts.
From the Church Times dated 1st November 1901:
The duty of the State has been once more put forward in proposals for State-aided Old-Age Pensions, which will come before the next meeting of the National Conference of Friendly Societies. The Rev’d J. Frome Wilkinson, President of the Conference, will move a resolution to the effect that a better provision should be made for old age in the case of persons who have shown habits of self-help and self-reliance; that it is the duty of the State to assist the aged of the industrial population in the attainment of such provision, by granting a fixed contribution to persons recommended by a local pension authority, who shall be able themselves to produce by insurance in a Friendly Society for a term of years, or by some other equivalent means, at least one-third of the total pension. The scheme has been sent out for free and open discussion. Use is to be made of parish and county councils and their urban equivalents, but the Poor Law and all its works are to be avoided. This appears to be a strong point, since there are in the air proposals for a sort of glorified outdoor relief. If pensions are to come at all, they should be of legal right, in recognition of citizenship, and not of grace to the unfortunate, with its accompanying dependence.
(Reprinted with permission from the Church Times, 2nd November 2001).