On the 1st February 2016 Ronnie Cowan MP asked a written question in Parliament: ‘Department for Work and Pensions: Means-tested Benefits: Operating Costs: Commons25133: To ask the Secretary of State for Work and Pensions, what the administrative costs of delivering means-tested benefits were in each of the last three years.’ On the 8th February the question was answered by Justin Tomlinson MP, Under-secretary of State for Work and Pensions: ‘The information is not available’. . (Note: in 2011 figures were available in a National Audit office report)
On the 8th June Caroline Lucas MP tabled an Early Day Motion in the House of Commons: ‘That this House notes the growing crisis of low pay and precarity in a labour market increasingly characterised by casualised forms of employment, such as zero-hours contracts that offer little in the way of pay, predictable hours or long-term security; further notes the evident inability of our bureaucratic and costly social security system, with its dependence on means-testing and often arbitrary sanctions, to provide an adequate income floor; believes that a Universal Basic Income, an unconditional, non-withdrawable income paid to everyone has the potential to offer genuine social security to all while boosting entrepreneurialism and the creation of small businesses; welcomes the ongoing exploration of the concept of such a Basic Income by the think tank Compass, the Royal Society of the Arts, the Citizen’s Income Trust and others; further welcomes the planned practical experiments in Finland, the Netherlands and Canada; and calls on the Government to fund and commission further research into the possibilities offered by the various Basic Income models, their feasibility, their potential to guarantee additional help for those who need it most and how the complex economic and social challenges of introducing a Basic Income might be met.’
On Wednesday 14th September a Westminster Hall debate took place about a Universal Basic Income. The debate was fair and well-informed, with one or two exceptions: One Member of Parliament suggested that the Citizen’s Income Trust had said that an Income Tax rate of 48% would be required; and another suggested that the Citizen’s Income Trust had said that a Citizen’s Income scheme would generate considerable losses for low income families. Both of these statements relate to one of the schemes – scheme C – researched in Two feasible ways to implement a revenue neutral Citizen’s Income scheme (www.iser.essex.ac.uk/research/publications/working-papers/euromod/em6-15 ). The paper recognises that scheme C is infeasible, and also that a similar scheme, scheme A, would be infeasible as well, because that too would generate considerable losses. However, another scheme researched in that working paper, scheme B, would require only a small increase in Income Tax rates, would generate few losses, and would generate almost no losses among low income households. Research on scheme B has now been updated in An Evaluation of a Strictly Revenue Neutral Citizen’s Income Scheme, which shows that an increase in Income Tax rates of only 3% would be required for a Citizen’s Income of £60 per week, that such a scheme would generate almost no losses among low income households, and that the scheme would have a negative net cost. To watch the debate, click here: to see the written record, click here.
The OECD has published research on wage levels and income tax burdens in OECD countries. The data takes account of the withdrawal of in-work benefits, and the publication includes tables on the relationship between change in net income and change in gross income. Results for the UK are as follows: (OECD (2016) Taxing Wages 2014-2015 (OECD Publishing, Paris), p. 65 )
Research reported in the Journal of Social Policy shows that ‘attempts to expand labour force participation, without fundamental reforms to address the shortage of jobs and labour market inequalities, are irrational and iniquitous and therefore incompatible with the principles of liberal democracy …’ (Tania Raffass, ‘Work Enforcement in Liberal Democracies’, Journal of Social Policy, vol. 45, no. 3, 2016, pp. 417-34, p. 431).
On the 6th June the think tank Compass launched its report, Universal Basic Income: An idea whose time has come? ‘The introduction of a UBI would involve a major transformation in the nature of social protection, in the extent of redistribution, the character of the tax system and the pattern of work incentives. Certainly such a scheme would need to secure public support before it could be implemented, and overcome opposition in some quarters. But all ideas for radical change, from the introduction of the NHS and the social security system itself to the minimum wage, have had to confront initial scepticism. With the existing income support system increasingly ill-equipped to deal with the complexity of the modern labour market, and the impact of the technological revolution coming so fast down the track, the idea of a UBI has already been gathering growing support in the UK. It is now time for a campaign to promote a much wider debate among the public and decision makers.’ (p.23)
A series of articles in the July 2016 edition of Social Policy and Society (vol. 15, no. 3) study Conditional Cash Transfers: ‘Taking a huam approach to policy-making emphasises that the concern about the implications of policy interactions should go past the simple delivery of a service to include a concern for the perspectives, experiences and wellbeing of the recipient families. In the words of one participant of this research: ‘… It is not enough to send staff or to give money away, they need to look at the kind of treatment (provided) and the extortions that lie behind it’ (p. 461); ‘Social investment familialist welfare regimes, if they are in favour of women’s practical interests, do not broaden women’s labour-market participation or educational options and therefore do not improve women’s strategic interest’ (p. 490); ‘irrespective of the purposes of these social programmes, the design reflects certain values and normative beliefs related to the notion of market citizenship, which also seem to intersect with certain ideas about motherhood and the poor …’ (p. 495); ‘Conditionality is fundamental in these CCTs. … Conditions are conflictive features, particularly in the case of women living in poverty, who are less able than other groups to assert themselves politically, and therefore they must comply with whatever they are asked to do in order to get a little assistance’ (p. 505).
The Guardian marked the launch with an article: ‘Labour is considering backing the idea of a universal basic income – a radical transformation of the welfare state that would ditch means-tested benefits in favour of a flat-rate payment. John McDonnell, the shadow chancellor, who is keen to find policies to match his slogan of a “new economics,” will appear at the launch of a report on the proposal from the leftwing campaign group Compass in the House of Commons on Monday evening. McDonnell said the research “makes an interesting case for a universal and unconditional payment to all, which could prepare our country for any revolution in jobs and technology to come – it is an idea Labour will be closely looking at over the next few years”.’
– and also with an editorial: ‘The main proposals in this report represent evolution rather than revolution. Instead of a Swiss-style invitation to walk suddenly away from an unloved waitressing or factory job in order to take up, say, community gardening or some other unprofitable passion, the suggestion here is for a weekly payment of only about £50 or £60 for an adult. Alone, this would barely be enough to survive on, let alone live comfortably. But the guarantee that this sliver of income at least would be forthcoming might foster security and experimentation, while also establishing, perhaps, a bigger principle. Existing benefits that deal with housing, childcare and the rest of the messy realities that have to be dealt with are retained, sensibly sacrificing simplicity and intellectual elegance in order to protect the poor. Even this relatively modest scheme, however, involves jacking up the main tax rates by several points and withdrawing the personal allowance, no easy sell for Mr McDonnell or anyone else. Before it can be seriously considered for a manifesto, further cost-saving compromises – such as restrictions for citizens who already receive a state pension – may need to be considered. The trick, then, as so often in progressive politics, will be to dream big, and then proceed with care.’
On the 17th July, BBC Radio 4 broadcast ‘Money for Nothing’, featuring a range of voices speaking about Citizen’s Income.
A research project for Oxford City Council has provided evidence of the effects of reducing benefit levels: ‘conventional wisdom suggests that taking money off benefit claimants (e.g. by sanctions or cutting benefit rates) acts as a financial incentive to get a job. Our analysis says that the opposite is in fact true, at least for this project cohort. Higher benefit losses may correlate with higher rent and larger families, and financial hardship; as childcare and debt are established barriers to work, it is perhaps unsurprising that customers with higher benefit losses are less rather than more likely to get into or back into work. (p.51)
Research at the University of Oxford has shown that ‘fears of “welfare tourism” are unfounded since available data suggest that EI migrant citizens are less likely to receive benefits and more likely to be in employment than national citizens … the challenges often associated with intra-EU migration, therefore, appear primarily to be consequences of a combined lack of political will and state capacity to deal with the new complexities of the welfare state in a semi-sovereign world’ (Cecilia Bruzelius, Elaine Chase and Martin Seeleib-Kaiser, ‘Social Rights of EU Migrant Citizens: Britain and Germany Compared’, Social Policy and Society, vol. 15, no. 3, 2016, pp. 403-416, p. 414.
The European Commission has published a new evidence review, Creating More Equal Societies: What works? by Abigail McKnight, Magali Duque and Mark Rucci: ‘A Citizen’s Income is an unconditional, non-withdrawable income for every individual as a right of citizenship in a country … According to some researchers, it would deliver reduced marginal deduction rates and would increase employment incentives, offer greater social cohesion (Article 2 of the Treaty on European Union), eliminate the stigma generated by means-tested benefits, and substantially reduce fraud and error rates while being simpler to administer. In his most recent work on a Citizen’s Income for the United Kingdom ‘Two feasible ways to implement a revenue neutral Citizen’s Income scheme’, Torry (2015) presents clear and direct policy proposals which live up to the title of the work. He does so by advocating for an all-at-once approach and a phased approach. … Torry (2015) concludes his argument by stating that any proposed Citizen’s Income scheme should be comprised of three non-negotiables: it should be strictly revenue neutral, it should not propose large increases in Income Tax rates, and it should impose very few losses on low-income households … (pp. 67-8); ‘The within country across time evidence presented does not support the case that greater targeting is more effective at reducing poverty or inequality’ (p.80).
At its policy conference on the 11th July, Britain’s largest trade union, Unite, voted to support the exploration of Basic Income. The resolution was as follows: ‘Conference notes the growing crisis of low pay, in work poverty and precarity in a labour market increasingly characterised by casualised forms of employment that offer low pay, zero hours contracts and no long-term security. Conference further notes the evident inability of our bureaucratically costly social security system, with its dependence on means-testing and frequent arbitrary sanction, to provide an adequate income floor. Conference believes that a Basic Income, an unconditional, non-withdrawable income paid to everyone paid to everyone, has the potential to offer genuine social security to all while boosting the economy and creating jobs. Conference welcomes the ongoing exploration of the concept of a Basic Income by the think-tank Compass, the innovation charity Nesta, the Royal Society of Arts, and others; further welcomes the planned practical experiments in Finland and Utrecht, Netherlands. Conference calls upon the union to actively campaign for a Universal Basic Income and eradicate poverty for all.’
The United Nations Committee on Economic, Social and Cultural Rights has published a report on the UK’s recent record: ‘The Committee is deeply concerned about the various changes in the entitlements to, and cuts in, social benefits, introduced by the Welfare Reform Act 2012 and the Welfare Reform and Work Act of 2016, such as the reduction of the household benefit cap, the removal of the spare-room subsidy (bedroom tax), the four year freeze on certain benefits and the reduction in child tax credits. The Committee is particularly concerned about the adverse impact of these changes and cuts on the enjoyment of the rights to social security and to an adequate standard of living by disadvantaged and marginalized individuals and groups, including women, children, persons with disabilities, low-income families and families with two or more children. The Committee also is concerned about the extent to which the State party has made use of sanctions in relation to social security benefits and the absence of due process and access to justice for those affected by the use of sanctions (art. 9 and 11). The Committee calls upon the State party to: Review the entitlement conditions and reverse the cuts in social security benefits introduced by the Welfare Reform Act 2012 and the Welfare Reform and Work Act 2016; Restore the link between the rates of state benefits and the costs of living and guarantee that all social benefits provide a level of benefits sufficient to ensure an adequate standard of living, including access to health care, adequate housing and food; Review the use of sanctions in relation to social security benefits and ensure that they are used proportionately and are subject to prompt and independent dispute resolution mechanisms; and Provide in its next report, disaggregated data on the impact of the reforms to social security on women, children, persons with disabilities, low-income families and families with two or more children. The Committee draws the attention of the State party to its General Comment N°19 (2007) on the right to social security.’ (pp.7-8)
In an interview with the Huffington Post, Jeremy Corbyn, the Leader of the Labour Party, has agreed with John McDonnell’s suggestion that the party should study Citizen’s Income as an option for the reform of the benefits system: ‘I’m instinctively looking at it along with John. I am looking forward to discussing it with our colleagues from Norway because we have to think radically about how we bring about a more just and more equal society in Britain, how we develop policies that achieve that. Because what we are doing is heading in absolutely the wrong direction with a growing wealth inequality and an opportunity inequality for communities, as well as poorer families. It’s got to change and it will. I can see the headline attraction to it. I don’t want to commit to it until I’ve had a chance to look at it very seriously and very carefully because this would be a major, major change in social policy and it’s something I would invite the whole party and the whole movement to have a serious discussion about.’
Thirty-five economists have written to The Guardian: ‘As the new chancellor looks to ‘reset’ economic policy, new ways of conducting monetary policy should be considered. Instead of policies designed to fuel asset price bubbles and increase household debt, the Treasury and the Bank should co-operate to directly stimulate aggregate demand in the real economy. A fiscal stimulus financed by central bank money creation could be used to fund essential investment in infrastructure projects – boosting the incomes of businesses and households, and increasing the public sector’s productive assets in the process. Alternatively, the money could be used to fund either a tax cut or direct cash transfers to households, resulting in an immediate increase of household disposable incomes.’
At its conference on the 11th to the 14th September 2016, the Trade Union Congress passed a composite resolution on In-work benefits and Universal Basic Income. The wording is as follows:
Congress recognises the need for a rebuilding of a modern social security system for men and women as part of tackling poverty and inequality. Congress believes that our social security system must work in tandem with our agenda for strong trade unions and employment rights and secure, decently and properly paid work.
Congress believes that, until all employers pay a real living wage, welfare payments will play a necessary role in ensuring that workers are able to make ends meet.
Congress recognises that until the housing crisis is resolved there would also be a need for supplementary benefits to support people on low incomes with high housing costs and that there will always be a need for supplementary benefits for disabled people.
Congress expresses its concerns over the Conservative government’s cuts to the welfare system. These cuts will cause increased levels of deprivation for many working families. The current system has been made increasingly punitive and has effectively been used to stigmatise benefit claimants. The operation of sanctions pushes people into destitution for trivial reasons. The Conservatives have frozen most working-age benefits, including working tax credits, over the next four years; costing the average family £260 per year. The value of such benefits has already been seriously diminished as a result of one per cent increases between 2011 and 2015.
Congress is also deeply concerned about the introduction of Universal Credit, with estimates that the policy will leave 2.5 million families worse off; some by more than £3,000 per year. While the Conservatives may have originally claimed that the introduction of Universal Credit was to encourage more people into work, it has become increasingly clear that this is a thinly veiled ideological drive to cut the support provided by the welfare state to low-paid workers. Universal Credit requires many claimants to commit to earning the equivalent of 35 hours’ worth of pay at the national living wage every week. If workers face a cut in hours, they will not only lose pay but will also face benefit sanctions.
Congress agrees the TUC will campaign to defend in-work benefits to ensure that workers have access to a proper welfare system that ensures those on low pay are free from poverty.
Congress notes the growing popularity of the idea of a ‘Universal Basic Income’ with a variety of models being discussed here and around the world.
Congress believes that the TUC should acknowledge Universal Basic Income and argue for a progressive system that would be easier to administer, easier for people to navigate, paid individually and that is complementary to comprehensive public services and childcare provision.
The transition from our current system to any new system that incorporates these principles should always leave people with lower incomes better off.
Seconder: Union of Shop, Distributive and Allied Workers
(TUC Congress 2016: GPC Report, Composite Motions, Emergency Motion, and General Council Statement: The 148th Annual Trades Union Congress, 11–14 September 2016, Brighton, published by Trades Union Congress, Congress House, Great Russell Street, London WC1B 3LS, tuc.org.uk, September 2016, pp. 27-8: www.tuc.org.uk/sites/default/files/Congress_2016_GPC_Report_Digital.pdf)
The motion was carried: https://www.tuc.org.uk/about-tuc/congress/congress-2016/key-documents/congress-decisions-2016