by Duncan BurbidgeProsperity, June 2000

A Citizen’s Income scheme (sometimes called Basic Income or Universal Benefit) is intended to overcome the failings of the present welfare state. It would be simple in application, increase economic efficiency, help prevent poverty and unite our society.

The first part of this article explains the Theory behind a CI and the reasons why it is needed; the second stage details the Practice and in particular, the setting-up of the cross-party group, Citizenship, Income, Economy and Society in the Scottish Parliament.

THE THEORY
How is Citizen’s Income defined?
Citizen’s Income is an income paid by the state to every man, woman and child as a right of citizenship. It could be financed by a tax on all (or almost all) other income, but other ways of financing it are possible.

Receipt of a CI would be conditional on legal residence and it would be age-related. More would be given to elderly people than to adults of working age and more for adults than children. There would also be supplements for disability. There would not be differences on account of income or wealth, work status, gender or marital status.

How would such an income be paid for?
There are different ways this could be done. One possibility would be through a new income tax which would combine existing income tax and National Insurance contributions. In principle all income in excess of the CI payment would be taxable, although in practice the first slice of earned income (about £20 a week) would probably be tax free. The present system of income tax allowances and reliefs benefit the better off more than the less well off.

Research work being undertaken by the Citizen’s Income Study Centre (CISC) in association with the Council of Religions in Ireland (CORI) shows that a tax rate of around 40% (with NI and Income Tax combined) would be sufficient to provide an income per person of around £55 per week. Since this income would be guaranteed, and thus available for long-term financial commitments such as loans, the benefit would be greater than the current (conditional and subject to review) benefit system.

Do we have anything like a Citizen’s Income already?
Yes. Child benefit, paid on behalf of every child regardless of the income or work status of the parents, is virtually a Citizen’s Income for children.

What is wrong with the current welfare state?
The gathering momentum for reform is given impetus with each new welfare patch. To most observers it is clear that as soon as one gap is plugged, or one problem addressed, a new group suffers. This is the classic symptom of a system that has outstayed its welcome, something that is hardly surprising when one considers that the existing benefit system is still founded on the institutions and assumptions of the 1942 Beveridge Report. Although the basic principles of the Beveridge Report are still very relevant today — the right of every citizen to a minimum level of subsistence and the need to preserve incentive, opportunity and responsibility — the disappearance of full employment and other more complex social changes have seen the benefit system deteriorate into a complicated morass of constantly changing social security and tax legislation, much of which is counter-productive.

Administration costs alone put nearly 2p on income tax. Despite the large amount of annual expenditure on social security there has been a steady growth in the numbers of those in poverty.

Three important areas need to be tackled:

The Unemployment Trap — most claimants would like to work but they are the victims of a system which has undermined the financial rewards that used to make work worthwhile. Income tax, council tax and National Insurance contributions are charged on earnings below out-of-work benefit entitlements. Many unemployed claimants, especially lone mothers and people with disabilities, find it difficult and often impossible to earn enough to offset loss of their dole money and pay their taxes, fares to work and child-care costs;

The Poverty Trap — working families with children can claim means-tested family credit, but this replaces the unemployment trap with the poverty trap. By the time they have paid their taxes, some families get only three pence out of each extra pound earned. The balance is skimmed off by the Inland Revenue and the DSS.

Pensioners — many pensioners (mostly women) are still not entitled to a full basic pension because they have not been in full-time work for long enough, if at all, usually because they are looking after others. Instead, they are expected to claim means-tested benefits. Other pensioners, who have worked and saved all their lives, find themselves no better off, sometimes worse off, than if they had not saved at all. They find that their savings or their small inadequate pensions disqualify them from income support and housing benefit.

So how would a Citizen’s Income change things?
Citizen’s Income has the same objectives as the Beveridge Report but uses different and potentially more effective methods to achieve them. Contribution records, means testing and income tax allowances would be dispensed with and a Citizen’s Income payment introduced based on legal residence. Out go benefit ‘dependency additions’ (for spouses and children) — and in come individually assessed Citizen’s Income payments for each man, woman and child. Out go availability-to-work tests — and in comes the freedom to take whatever jobs are available without fear of prosecution.

THE PRACTICE
Citizen’s Income Study Centre
Set up in 1984 as the Basic Income Research Group, the Unit, based at the London School of Economics and Political Science (LSE) has evolved into the Citizen’s Income Study Centre, headed by Stuart Duffin. Currently, the Centre has four permanent employees and four research associates.

The priority for the next three years is to keep alive a focus for informed debate. We will function as a centre of excellence in the field of dissemination about Social and Economic Participation Income — (SEPI). In the following five years, we will lead a practical approach towards the implementation of such a policy.

Social protection is a state’s responsibility. The basic aim of the Centre is to develop strategies and tactics to alleviate poverty and spread the risks amongst citizens over their life spans. There are no easy solutions; all solutions contain risk. We need to balance and minimise that risk. Therefore, the Centre’s area of work focuses on the development and implementation of a Social and Economic Participation Income. A SEPI policy must adjust to an environment containing:
– New technologies;
– Economic globalisation;
– New family and labour market structures; and
– An increasingly aware and critical public.

The political economy of social security is dynamic. There are continuing changes in employment patterns, which are revealing the necessity for a tax and benefits framework along similar lines to a working families tax credit. Also, it is recognised the joint CISC/CORI research will influence the direction of the SEPI debate. This research, financially supported by the Rowntree Charitable Trust, reviews and evaluates welfare strategies and tactics between Eire and the UK. It also puts forward a strategy for implementing a reformation in social protection for the UK through the dynamics of tax/benefit integration.

CISC will provide a national and regional forum for interaction between advocacy agencies, administrators, opinion formers, researchers, community agencies and professional bodies in the welfare sector: such that a co-operative strategy for education, skill development, research and policy can be achieved. CISC will serve as a link between individuals and groups committed to, or interested in, the social dimensions of economic policy, and to foster informed discussion on this topic throughout the UK and beyond.

The Scottish Parliamentary Cross-party Group will play a key role in breaking down the barriers and build on discussions, so that long term policy and practice in the field of social protection and enterprise flourishes and, in turn, helps to relieve people in poverty.

The Citizen’s Income Trust’s new address is: Citizen’s Income Trust, PO Box 26586, London SE3 7WY, tel. +44 (0)20 8305 1222, fax. +44 (0)20 8305 1802.
www.citizensincome.org


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Essential Further Reading:
PROSPERITY: Freedom from Debt Slavery
is a 4-page quarterly Journal which campaigns for publicly-created debt-free money.PROSPERITY is edited and published by Alistair McConnachie and a 4-issue subscription is available for £10 payable to PROSPERITY at 268 Bath Street, Glasgow, Scotland, UK, G2 4JR. Tel: 0141 332 2214; Fax: 0141 353 6900, Email: contactus AT ProsperityUK DOT com  http://www.ProsperityUK.com All back-issues are still available. The 40-page Report,Clarifying our Money Reform Proposals, launched at the 2006 Bromsgrove Conference, is available for £10 payable to PROSPERITY and is essential reading for beginners.

The Grip of Death: A study of modern money, debt slavery and destructive economics by Michael Rowbotham, [Jon Carpenter Publishing, 1998] and Goodbye America! Globalisation, debt and the dollar empire by Michael Rowbotham, [Jon Carpenter Publishing, 2000] and Creating New Money: A monetary reform for the information age by Joseph Huber and James Robertson [New Economics Foundation, 2000] are all available fromPROSPERITY.

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