Annie Miller, A Basic Income Handbook

Annie Miller, A Basic Income Handbook, Luath Press, 2017, 303 pp, 1 910 745786, pbk £12.99

Annie Miller’s Basic Income Handbook is an ambitious book which aims to provide nothing less than a complete rationale, justification and blueprint for the introduction of a Basic Income (BI) in the UK (with specific calculations also provided for Scotland by itself, which should prove particularly useful in the event of a second independence referendum being won). Such a wide breadth of focus is unusual in the BI literature; most publications on BI tend either to concern themselves with the broad-brush arguments for a Basic Income (e.g. Malcolm Torry’s Money for Everyone: Why We Need a Citizens Income) or detailed examples of how a BI scheme might be structured (e.g. my report for Compass with Stewart Lansley Universal Basic Income: An Idea Whose Time Has Come?). Annie Miller’s book covers both of these areas and more; the final part of the book discusses the practicalities of building political support across the UK for the introduction of a BI scheme. Annie Miller should be commended for attempting such an all-encompassing approach. The rest of this review discusses whether the content of A Basic Income Handbook lives up to the ambitions the author has set for it; in general, it certainly does, albeit with a few riders and qualifications.

The book is divided into four main sections: firstly, the philosophical and political arguments for a UBI; secondly, theory and evidence on basic income systems (incorporating evidence from a number of jurisdictions where UBI schemes have been introduced or trialled); thirdly, economic modelling of the implementation of a proposed UBI scheme for the UK (and a Scotland-only version); and finally, the practical challenges of securing political support and consensus for the introduction of BI. Sections 1 and 2 are very strong and clear, covering a lot of ground in a coherent fashion. Miller accurately describes the problems with the current social security system, in particular its complexity and the cruel and callous system of sanctions which leaves many claimants and their families falling through what is in any case an inadequate safety net. Miller is successful in making a strong case for BI as an alternative to the current system.  Chapter 2, on “Values and Vision”, is a good philosophical framework for evaluating social security systems in general (not just UBI). I was particularly impressed by the way in which evidence from other countries was integrated into the main argument via case studies. Emancipation of the individual (discussed in chapter 4 of the book) is a particularly powerful argument for a basic income scheme, and one which Annie Miller expresses very well. And it is welcome that the treatment of migration status for UBI purposes is included in the discussion (Chapter 5) as it is a difficult topic. The final section of the book on the political process of securing a BI is an excellent treatment of an often overlooked aspect of the campaigning process, bridging the gap between an abstract theoretical specification of an ideal BI scheme and the political realities of introduction.

Section 3, which discusses the economic viability of a BI scheme and includes calculations of the costs of a number of sample BI schemes, is the most technically complex part of the book, and contains the crucial economic modelling results. Although the results presented are very interesting, this was the most problematic section of the book for me, for three reasons.

Firstly, there are some questionable assumptions underpinning the economic analysis. The maximum income per head available for a UBI is defined as “y-bar” which is defined as “the gross personal income that passes through wallets and purses of UK inhabitants each year” – about 74 per cent of UK GDP – divided by the UK population. This is a somewhat strange definition as it excludes taxes on production but not taxes on consumption (such as VAT) or taxes on personal incomes (such as income tax or National Insurance Contributions), a somewhat arbitrary distinction. Furthermore, using a gross income measure is inappropriate for this purpose as it ignores the fact that approximately 40% of UK GDP is already spent on public services – some of this is social security spending, much of which could be replaced by a Basic Income, but most of it isn’t, and unless we want to find ourselves without publicly funded healthcare, schools, police and so on, this funding isn’t available for a BI. A better measure of ‘maximum citizens income payment’ is the mean disposable income per person in the UK as this is net of all taxes but includes money redistributed from taxation to households through the current social security system.

Secondly, the decisions over which funding mechanisms to look at in order to fund a BI scheme looks somewhat arbitrary. Annie Miller only considers income tax, arguing that other funding mechanisms – for example, wealth taxes, indirect taxes or social wealth funds – are outside the scope of the book. The option of funding a BI through income tax is analysed in detail, but the failure to examine other options, even in outline, mean that the book falls short of a truly comprehensive treatment of BI. The decision to hypothecate income tax revenue to paying for a BI, while expenditure taxes fund other public spending, also looks arbitrary, and has no obvious economic justification. Annie Miller admits on p170 that “it would be possible and viable to finance a BI scheme from a combination of taxes, including wealth taxes, but it loses the discipline of paying for the cash transfer programme out of Income Tax revenue.” This ‘discipline’ is an artificial construct with no grounding in economic theory – there is no reason whatsoever why transfer payments have to be paid solely out of direct tax revenues, and it would have been good for the book to take a more holistic view of the tax system than this. On the positive side, the discussion on p174 of the costs of the reliefs and allowances in the current tax system, many of which could be eliminated to help fund a BI scheme, is very welcome.

Finally, the book presents detailed costings of illustrative BI schemes in the UK and Scotland, but is noticeably light on distributional analysis of the impacts of the schemes. This is because Annie Miller did not have access to a tax-benefit microsimulation model of the type used in previous research on the impacts of example BI schemes in papers by Malcolm Torry (who used Euromod) and Stewart Lansley and myself (who used the Landman Economics Tax-Transfer Model). Without a microsimulation model it is impossible to discuss the distributional impacts of a BI scheme (alongside the taxation or other funding mechanisms used to pay for it) by household decile, family type or other variables. It is also difficult to discuss the impact on summary distributional measures such as inequality and relative poverty. Without a full distributional analysis, the empirical part of the book feels incomplete.

Yet despite some shortcomings and omissions in Section 3, overall I would still argue that the Basic Income Handbook is a very powerful and welcome contribution to the debate over BI.  I can warmly recommend this book for both newcomers and seasoned veterans of the Basic Income movement.

Howard Reed, Landman Economics