There’s not much that isn’t global now: companies, the internet, capital movement, and culture are all global to a large extent And where things are not global they are continental: tariff-free trade is developing as a continental phenomenon; people from one EU country can now in principle be employed in any other; and currencies are increasingly continental.
But tax and benefits are stuck in a nation-state time-warp. Although there are arguments for retaining nation-state responsibility for tax and benefits (such as a chancellor’s ability to use tax levels as fiscal instruments), the increasing mobility of labour and goods, and existing EU controls over VAT, suggest that tax and benefits should no longer be national concerns, but that the proper level of subsidiarity is the continental.
An obvious first step towards a European tax and benefits policy is a European Citizen’s Income, which could easily function alongside continuing national provision. Comment on this issue would be most welcome.
(The last few months have seen a plethora of important articles, reports and books, and we make no apology for the large number of book reviews in this edition of the newsletter).
by Anne Miller
Many individuals and groups have been trying to promote the idea of Basic Income in their communities, but the country that is furthest ahead in this ambition in Europe is the Republic of Ireland, with the publication of ‘Basic Income, A Green Paper’ by the Department of the Taoiseach (the Irish prime minister), in October 2002.
This enlightened state of affairs is due in large measure to the sustained efforts of two very dedicated workers, Seán Healy and Brigid Reynolds. For more than twenty years, Healy and Reynolds have worked for the Conference of Religious of Ireland (CORI – pronounced ‘COR-EYE’, not ‘Corry’), as co-directors of CORI’s Justice Office in Dublin.
In addition to their other duties, Healy and Reynolds together have written or edited on average one small book every year for the Justice Commission, and they have amassed an impressive joint publications list. Their initial work in the 1980s, always in the socio-economic arena, covered many topics including ‘work and unemployment’, ‘education’ and ‘health and healthcare’. In the late 1980s, they edited two books on ‘poverty and family income policy’ and ‘poverty and taxation policy’, and, since then, they have produced a whole series of books and papers in which Basic Income has been the central theme. A list of the key publications in this progression is given in the bibliography below.
In an inspiring talk to the delegates at the Basic Income European Network in Amsterdam in 1998, Seán Healy described his ‘road map’ for persuading the Irish people to change their perceptions. He said that a) one must show people what is wrong with their present society and policies; b) one must give them a vision of how their society could be, and c), one must show how to move from a) to b), filling in the details at each stage. Throughout his talk, and implicit in all their joint writings, was an emphasis on the values of compassion and justice that underlie their vision.
In an interview with Healy and Reynolds last Autumn, they shared with me some clues to the success of their campaign.
In addition to being clear as to the underlying values which inform their work, Healy and Reynolds also have a thorough grounding in the technical side of Basic Income, which, in spite of the simplicity of the basic idea, has ramifying effects on different aspects of the economy, depending on the other economic instruments with which it is combined.
They said that having a specific scheme to recommend, and with which to illustrate their ideas, was very important, although the actual figures changed over time as the economy grew. They have involved many people in different aspects of their program, and were gratified at the number who, when invited to be involved, were happy to give of their time and expertise willingly, contributing papers and carrying out analysis for them, or giving in other ways, thus demonstrating an enthusiasm for the concept. Professional economists have provided the technical analysis, always using official government figures, either published and in the public domain, or accessing other data from government departments where necessary. This was important to avoid any criticism of their analysis based on the accuracy of their figures.
Throughout the development of the work, Healy and Reynolds have responded to the current preoccupations of their society, whether it has been poverty, unemployment, widening inequality of income and wealth, social exclusion, or worries about pensions, in each case demonstrating how a basic income could help the situation.
Other groups of BI enthusiasts can take a leaf out of the Irish book, and adopt many of these ideas when educating their public and disseminating ideas, but there is one advantage that Healy and Reynolds have in Eire which we in the UK cannot emulate. The Irish Republic is a small country with a population of less than four million people, and it is far more feasible for two people such as Seán and Brigid to make an appointment to meet the Taoiseach or their Chancellor of the Exchequer, than for us to meet to discuss our ideas with Tony Blair or Gordon Brown..
In the rest of this article, I briefly trace the progress of the Irish basic income debate through their key publications.
In ‘The Future of Work: A Challenge to Society’, chapter 2 of their 1990 publication, Healy and Reynolds examine the possible causes of unemployment, and while acknowledging that standard economic and political theories contribute to our understanding of these causes, and that technological change has changed the nature of employment, they favour the viewpoint that society is changing drastically and that we are moving into a new historical era, in which there will not be full employment in conventional terms, that is, secure full-time highly-paid jobs for all those who want them. They look at possible policy responses to unemployment, and they recognise that something very different is required, rather than more of the current solutions. They note the ambivalent attitudes to work in our society, which is perceived both as privilege and as punishment, and look at the four functions of human work. They identify some changes in society’s values that will be necessary to accommodate the coming new era. Needless to say, one of those called for is the acceptance of the concept of a basic income.
‘Work, Jobs and Income: Towards a New Paradigm’, chapter 2 in their 1993 publication, develops the theme of the changing nature of work and society into a wider context.
Reynolds’ and Healy’s 1994 publication, Towards An Adequate Income for All, is their first one dedicated entirely to basic income. It “continues the format of its predecessors. It analyses the present situation, identifies underlying values, articulates options for the future and closely analyses what can concretely be done now” (p.7). Chapter One, by Donal de Buitleir (a member of the Government’s Expert Working Group on the Integration of the Tax and Social Welfare Systems and the Secretary of the Commission on Taxation established by the Irish Government during the 1980s), is entitled ‘Tax and Social Welfare: The Case for Change’. Chapter Two by Healy and Reynolds is entitled ‘Arguing for an Adequate Income Guarantee’. Chapter three is by three members of The Economic and Social Research Institute (ESRI), who evaluate Basic Income Options, based on the results of a study that they carried out in 1994. Finally, Seán Ward, an independent economist and public sector analyst, outlines what is possible in terms of introducing a partial BI scheme for Ireland, recommending the following rates:-
|Age||Irish punts per week|
|65 – 79||71.00|
|21 – 64||50.00|
|0 – 20||20.00|
This would be accompanied by a single tax rate of 50% on all personal income (other than the BI of course). Ward then proceeds to compare the net income for various household configurations. The level of basic income is that of a partial BI, rather than a full one, and Ward recognises the need for a residual Supplementary Welfare system or Social Solidarity Fund to help those on low incomes who would be worse off under the BI scheme.
The 1995 book, An Adequate Income Guarantee for All: Desirability, Viability and Impact, expands on the themes from the 1994 book. The first chapter, by Healy and Reynolds, compares four different proposals on Basic Income, and assesses them for their ability to fulfil eight guiding principles that any income maintenance programme should fulfil. The recommended rates have changed slightly to:
|Age||Irish punts per week|
|65 – 79||72.80|
|21 – 64||54.00|
|0 – 20||20.00|
The second chapter, entitled ‘The Costings of a Basic Income Scheme’, prepared by Francis O’Toole, another independent economist, examines the financial feasibility of the proposed basic income scheme described by Seán Ward (1994) (p.6), using data from official sources. Chapter 3, ‘Basic Income and the Irish Worker’, by Charles Clark and Catherine Kavanagh, economists, look at some labour market effects. At the end of the book, representatives of the six political parties represented in Ireland’s parliament comment on the proposals and the results of the analyses with a range of enthusiasm, from endorsement to cautious reservation.
The 1996 book, Progress, Values and Public Policy, is a set of four papers presented to a conference of the same name. This book questions the concepts of progress and prosperity, given that current indicators can be misleading, eg. fast increasing GDP can be accompanied by widespread and persistent poverty; it proposes alternative economic indicators and indices based on explicit core values. It looks at the role of Taxation Policy and Social Welfare Policy in contributing to progress and poverty. The book is prefaced by a message of encouragement to the conference from Mary Robinson, the then President of Ireland.
In 1996, CORI Justice Commission became one of the organisations which is now recognised as part of the newly created fourth partner (representing the voluntary and community sector) added to the partnership with employers, trade unions and farmers organisations with whom the Government has negotiated to develop three year national plans. CORI was successful in getting agreement from the other social partners to include a section on Basic Income in the programme called Partnership 2000 (covering 1997-2000). The section reads as follows:-
“Further independent appraisal of the concept of introducing a Basic income for all citizens will be undertaken, taking into account the work of the Economic and Social Research Institute, CORI and the Expert Group on the Integration of Tax and Social Welfare and international research. A broadly based steering group will oversee the study.”
CORI was part of the working group that was set up. The group’s studies were completed and its results were published by the Government. These studies found that a Basic Income system would have a substantial impact on the distribution of income in Ireland, compared with the present tax and welfare system, and these impacts would be achieved without any resources additional to those available to the ‘conventional options’.
In the build up to the 1997 Irish general election, CORI canvassed all political parties to include a commitment on Basic Income within their election manifestos. The incoming Government made a commitment to introduce a Green paper on Basic Income within two years. This was important as it ensured that work on Basic Income would be considered within the official policy-making process of Government, and the results would be made public.
In 1997, CORI published Pathways to a Basic Income, and Pathways to a Basic Income: A Summary by Charles Clark and John Healy, two economists commissioned by CORI. The “primary objective of the study was to devise a pathway through which a basic income system could be introduced with the minimum amount of disruption and without causing unnecessary hardship to anyone” (p.9).
The recommended rates are now:-
|Age||Irish punts per week|
|65 – 79||77|
|21 – 64||60|
|0 – 17||21|
During the course of the study, the happy discovery was made, and confirmed by the Irish Revenue Commissioners, that the CORI Basic Income proposal could be financed by a flat rate tax of 44%. Two modified schemes, based on a full basic income providing £70 per week for adults aged 21-64, were also considered.
They concluded that the introduction of a full BI system “would have positive effects on efficiency (the labour market issue) and on equity (the income distribution issue). A viable pathway for introducing such a basic income system over a three year period was identified and outlined” (p.11).
At about the same time, Healy and Reynolds prepared an A4 format booklet called Surfing the Income Net, introducing the idea of Basic Income in clear and simple question-and-answer terms, with cheerful cartoon illustrations.
The 1998 CORI publication Social Policy in Ireland: Principles, Practice and Problems contains a short paper by Seán Ward called Basic Income, which brings developments in Ireland up to date in 1998.
CORI’s Socio-Economic Review of 2001, Prosperity and Exclusion: Towards A New Social Contract, published in 2000, broadens the picture. The first part is about some of the main social problems in Ireland (and most Western countries), including poverty, unemployment, increasing inequality of income distribution, and social exclusion. Part 2 outlines their policy proposals in a range of key policy areas, such as work, accommodation, healthcare, education, culture, sustainability and the environment, with basic income as a core instrument for the change towards a just society.
Then, in October 2002, came the jewel in the crown. The Taoiseach’s Office produced their long awaited Green Paper on Basic Income. CORI arranged a press conference for the launch and several people from distant lands congregated for the event, including from Geneva, the UK and the USA. A presentation was given by Deaglan O’ Briain of the Department of the Taoiseach, and Seán Healy responded on behalf of CORI. The content of the Green Paper draws heavily on the work on BI already carried out by or for CORI, and this is acknowledged in its bibliography. The recommended rates are now expressed in euros per week. “The Government’s target is to achieve a rate of 150 euros per week (in 2002 terms) for the lowest rates of social welfare to be met by 2007” (p.5). That sum, 150 euros, is roughly equal to £100, depending on the exact exchange rate.
The press conference for the Green Paper was also the occasion for the launch of a new book by Professor Charles Clark, who has been the main economist collaborating with CORI on the basic income analysis. The basic income guarantee, ensuring progress and prosperity in the 21st century is an economics book, the meat of which examines “how a Basic Income system … will affect the competitiveness of the Irish economy, the labour market and the distribution of income and levels of poverty”.
It expands on his earlier work, and updates his data to 2001. What I find so refreshing in this economics book is that the values are made explicit and are compassionate and just. With so many mainline economics books one is fighting every step of the way to breathe humanity into them. This book has been written carefully so that even non-economists will be able to follow it. The BI rates recommended for the fiscal year 2001/2002 are as follows:-
|Age||Euros per week|
|65 – 79||135.86|
|18 – 64||109.20|
|0 – 17||43.17|
and the single tax rate to finance the system was calculated to be 47.14%
This then is the current state of the debate in Ireland. A Green paper is normally followed by a discussion, which, in turn, is followed by a White Paper outlining what the Government proposes to do, which then forms the basis for a bill, which goes before Parliament. We await the next stages with interest.
For further information about CORI, contact their website on www.cori.ie/justice. Alternatively, write to them at the Justice Office, Conference of Religious of Ireland (CORI), Tabor House, Milltown Park, Dublin 6, Ireland.
BIBLIOGRAPHY, in chronological order.
Unless otherwise indicated, all of these are published by THE JUSTICE COMMISSION, of the CONFERENCE OF RELIGIOUS OF IRELAND (CORI), DUBLIN.
Brigid Reynolds, S.M. and Seán Healy, S.M.A. (eds), 1988, Poverty and Family Income Policy.
Brigid Reynolds, S.M. and Seán Healy, S.M.A. (eds), 1989, Poverty and Taxation Policy.
Seán J Healy and Brigid Reynolds, ‘The Future of Work: A Challenge to Society’, is chapter 2 in Brigid Reynolds, S.M. and Seán Healy, S.M.A. (eds), 1990, Work, Unemployment and Job-Creation Policy, pp.56-89.
Seán Healy and Brigid Reynolds, ‘Work, Jobs and Income: Towards a New Paradigm’, is chapter 2 in Brigid Reynolds, S.M. and Seán Healy, S.M.A. (eds), 1993, New Frontiers for Full Citizenship, pp. 41-83.
Brigid Reynolds, S.M. and Seán Healy, S.M.A. (eds), 1994, Towards an Adequate Income For All.
Brigid Reynolds, S.M. and Seán Healy, S.M.A. (eds), 1995. An Adequate Income Guarantee For All: Desirability, Viability, Impact.
Brigid Reynolds, S.M. and Seán Healy, S.M.A. (eds), 1996, Progress, Values and Public Policy.
Charles M.A. Clark & John Healy, 1997, Pathways to a Basic Income.
Charles M.A. Clark & John Healy, 1997, Pathways to a Basic Income: A Summary.
Seán Healy S.M.A. and Brigid Reynolds S.M. 1997, Surfing the Income Net.
Seán Ward, ‘Basic Income;’ is chapter 12 in Brigid Reynolds, S.M. and Seán Healy, S.M.A. (eds), 1998, Social Policy in Ireland: Principles, Practice and Problems.
2000, Prosperity and Exclusion: Towards a New Social Contract (CORI’s Socio-Economic Review 2001).
Department of the Taoiseach, 2002, Basic Income: A Green Paper.
Charles M.A.Clark, 2002, The basic income guarantee, ensuring progress and prosperity in the 21st century (The Liffey Press, in association with the CORI Justice Commission).
This article results from interviews with Seán Healy and Brigid Reynolds, and from correspondence with them (from which I have quoted extensively), and from the copies of the papers and books which they so kindly sent me. Their contribution is gratefully acknowledged. Any errors or misunderstandings contained herein are entirely mine.
By Philip Vince
Professor Steven Webb MP, the Liberal Democrat spokesman on Work and Pensions, published in November 2002 a statement, Priorities for Pensions, reiterating and updating the Party’s policies in the General Election campaign of 2001. The main feature is to increase the State retirement pension for single pensioners aged 65 to 74 by £5 per week, for those aged 75 to 79 by £10 per week and for those over 80 by £15 per week. Couples would qualify according to the age of the elder for increases of £8, £18 and £28 per week respectively.
This is intended to help older pensioners, who are more likely to be in poverty. However, anyone entitled to the Minimum Income Guarantee under Income Support who already claims it will be no better off, except in a few special cases where other income added to State pension is currently slightly below Guarantee level. The main beneficiaries will be those, estimated at about one third, who could claim the Minimum Income Guarantee but do not do so because of pride, ignorance or frustration with the bureaucracy of applying. The other beneficiaries will be richer pensioners who do not qualify for Income Support at all.
These increases are not enough to eliminate the need for means testing. It is proposed that they should be paid for by not implementing the Pension Credit to be introduced in October 2003, on the grounds that this extends means testing, and again only about two thirds of those entitled would claim it. This long overdue reform is essential because it abolishes the offsetting of an absurdly high notional income on capital over £6000 and effectively taxes pensioners’ income from other pensions and savings at only 60% instead of 100%. The Liberal Democrat Treasury team concede that the Pension Credit could not be abolished after people had begun to receive it, so the Party’s policy on the State pension will have to be completely rethought. A pensions policy group is being formed now to prepare an outline policy on the whole subject of pensions for consultation from September 2003 and final adoption in September 2004.
Steven Webb has also denounced the alleged injustice to married women who exercised their option in 1978 to continue National Insurance contributions at a reduced rate which did not entitle them to pensions in their own right and now of course find that they have none.The problem was not that these women were misled about their pension expectations but that their reduced contributions were for other benefits such as in unemployment or sickness whose contributory basis has since been largely eroded. However, the policy arising from this indignation is the reasonable one that all such women still below pension age should be told how much pension they can expect and be allowed to pay additional contributions in arrear.
The other main policy is to abolish all new entitlements to the State second pension and thereby scrap the whole bureaucracy of contracting out. Existing entitlements to SERPS and to the State second pension would be honoured and the extra benefits for low earners, carers and disabled people would be transferred to the basic State pension. Instead there would be a mandatory employer contribution to a second pension (occupational, stakeholder or personal) for everyone with earnings above a low threshold, with additional contributions by employees and the State.
The other proposals look likely to be accepted soon by all parties. They are to simplify the winding up of pension schemes so that more of the fund goes to members and less in fees, to require the same consultation of employees about changes in pension arrangements as in pay and other conditions, to scrap the requirement to buy an annuity by the age of 75 and to allow people drawing a pension from an employer to continue to work for that employer and not just only for others.
On the 6th April tax credits underwent some changes. The Child Tax Credit will replace the Children’s Tax Credit, and will be paid direct to the main carer for those who fulfil entitlement conditions, unlike the Children’s Tax Credit which was paid through the PAYE tax system. At the same time, the Working Tax Credit replaced the Working Families Tax Credit: the difference being that the Working Tax Credit is paid to families without children as well as to families with them, whereas the Working Families Tax Credit was only paid to families with children. One consequence of the new Child Credit will be that from later this year or early next year allowances for children will no longer be paid through Income Support, income-based Jobseekers’ Allowance, Minimum Income Guarantee, and some other benefits. Also later this year the Pension Credit will replace the Minimum Income Guarantee for pensioners, thus enabling pensioners to benefit to some extent from small amounts of savings, occupational pension or private pension. In most cases, the new tax credits will be paid into bank accounts (including the new Post Office card account). Information on these changes is available at www.inlandrevenue.gov.uk/taxcredits.
Other changes: On the 28th October 2002, Child Benefit became the first benefit which it is possible to claim online; and on the 1st April 2003, responsibility for Child Benefit passed to the Inland Revenue.
The Centre for Economic Performance, at the London School of Economics, has received the Queen’s Anniversary Prize for Higher and Further Education in recognition of “excellence in the application of economic theory and rigorous empirical analysis to issues of unemployment, productivity, education and international trade.” Particularly important pieces of research at the Centre during the past ten years have shown that a not too large National Minimum Wage would not reduce employment, and that reducing long-term unemployment does not increase inflation in the same way that some policies aimed at reducing short-term unemployment might do. Recent research has shown that the number of vacancies and the number of people unemployed are not necessarily inversely proportional: indeed, they tend to be proportional, rather suggesting that helping people into employment (for instance, by enabling older people to remain in employment) reduces unemployment and the number of vacancies, which helps to reduce inflation (because high vacancy levels contribute to inflation). Other recent research has shown that the labour market is not a classical market, that it exhibits many of the characteristics of ‘monopsony’ (i.e., a market in which there is only one purchaser), which suggests that there is scope for regulation (national minimum wage, working hours limits, etc.). Further details on the Centre’s research can be found atwww.centrepiece-magazine.com, and at www.lse.ac.uk.
There are two new reports on pensions. In November the Liberal Democrats published Priorities for Pensions, which argues for an enhanced basic state pension, the abolition of the second state pension, and the establishment of an Independent Pensions Authority. Also in November Help the Aged published A future we can trust: Pensions or pin money? which argues for a basic state pension at the level of the Minimum Income Guarantee, and also suggests an independent pensions authority to patrol the relationships between individual provision, state provision, and employer provision.
The first recommendation of a new report on debt by Church Action on Poverty is for “a flexible benefits system which will enable people to shift easily from benefits to work without risk of going further into debt.” For further details, see Church Action on Poverty’s website at www.church-poverty.org.uk, or write to: Church Action on Poverty, Central Buildings, Oldham Street, Manchester, M1 1JT.
We have received two interesting contributions to debate for which unfortunately there wasn’t space in this edition of the newsletter. Here we have included brief summaries. To read the entire contributions click on the titles.
The contribution from Tim Flynn emerges from the many-faceted debate on a Citizen’s Income within the Green Party. The scheme in question is a full Citizen’s Income of £500 per month, which of course isn’t the only Citizen’s Income Scheme on offer, but it raises some important issues: Is a CI affordable ? Would a CI be regarded by the World Trade Organisation as the kind of subsidisation of wages which calls in question the UK’s membership of the WTO ? Would a CI, by increasing people’s purchasing power, cause inflation?
José Luis Rey Pérez, from Spain, studies the connection between a Citizen’s Income and primary needs, and the connection between a Citizen’s Income and ‘radical’ needs (i.e. those needs we experience consequent upon choices we make about the lives we intend to lead), and concludes that, while a Citizen’s Income is not itself a human right, it is a good, and perhaps the best, guarantee of the right to subsistence and of the right to choose and develop different lifestyles.