Tuesday, 20 August 2013

Why we need a Citizen's Income

To accompany the launch of Money for Everyone: Why we need a Citizen’s Income by the Policy Press on the 27th June, there is now a podcast on the Citizen’s Income Trust’s website.
It’s quite short. It tells how, while I was a curate at the Elephant and Castle, I was invited to the Department of Health and Social Security’s summer school. I had previously worked for the Department, and had realised how much better the unconditional and nonwithdrawable Child Benefit was than means-tested benefits: and at the summer school I found serious discussion taking place about the possibility of replacing adults’ means-tested benefits with universal ones. This was a cause worth pursuing.

The podcast describes a Citizen’s Income: It is an unconditional benefit – that is, everyone gets it; everyone of the same age gets the same amount – whatever our employment status, whatever our income, whatever our household structure, whatever our relationships … whatever. And it is nonwithdrawable – which means that if we earn additional income then the benefit isn’t taken away. If we are on means-tested benefits and we earn additional income then benefits are withdrawn, which means that there is little incentive to earn additional income. A Citizen’s Income would not be withdrawn, so there would be far more incentive to seek employment, or to seek new skills, or to seek a better paid job.

If we are earning an income then we have a tax allowance: an amount of earnings that is not taxed. The tax allowance has a value ( - the tax allowance multiplied by a tax rate). If instead of receiving a tax allowance we received a cash payment of the same value and we were then taxed on all of our earned income, then we would be in the same position as before, and we would have a Citizen’s Income. If we were on means-tested benefits and the earnings rules were removed then we would have a Citizen’s Income. So a Citizen’s Income can be described as two minor changes to our tax and benefits systems. It can also be described as a whole new way of distributing income in our society.

I’ve written Money for Everyone because it’s the right time for the book. During the past few years there have been books about aspects of a Citizen’s Income, but it is ten years since there has been anything like a wide-ranging discussion of the arguments for and against a Citizen’s Income from a variety of viewpoints. If someone asked me to recommend a book about Citizen’s Income, there really wasn’t anything to suggest. Now there is.

In the podcast I mention my experience of discussing a Citizen’s Income with groups of people. I explain how the tax system calculates how much the government should receive from us in relation to our income, and how a means-tested benefits system (which includes Tax Credits) calculates how much the government should pay to us in relation to our income, and that we are therefore doing the same job twice; I explain how means-tested benefits impose disincentives, how they stigmatise claimants, how the cohabitation rule means civil servants investigating people’s private lives - and how all of this is unnecessary and could easily be replaced by an unconditional and nonwithdrawable Citizen’s Income. I describe how I see the penny drop for members of the group. They see it. But for some people the penny never drops. At the end of the session they are still telling us that we need to means-test benefits because we mustn’t give people something for nothing. They haven’t noticed that that’s exactly what we are doing. We are already giving lots of people something for nothing, and we’re doing it badly, because the way we do it makes it really difficult for people to climb out of means-tested benefits. Those for whom the penny has dropped realise that with a Citizen’s Income it would be much easier for people to climb out of poverty than it is now.

In the podcast I mention a pilot project in Namibia. The income security that a small Citizen’s Income gave to every member of the community meant that people were able to start new businesses, and were in other ways able to improve their earned incomes, and that net incomes for the lowest paid increased by a staggering average of 200%. Similar pilot projects in India are now being evaluated. What we haven’t yet seen is a pilot project in a developed country such as the UK. Not only is it time for a book: it is time for a pilot project.

Malcolm Torry


Citizen's Income Trust

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