According to the Guardian, Euromod reports that the Green Party’s Citizens’ Income scheme would make many low income families worse off. This is true, but easily dealt with.
At the time of writing the Green Party has just been raked with a bombardment from everybody who sees us as a threat. This may account for the strange timing of this news item. Gordon Brown introduced Working Tax Credits way back in 2002. Tax Credits were a surreptitious tinkering with means tested benefits. Although a step in the right direction, sort of, it was obvious to me they would make it more difficult to introduce a comprehensive scheme. The possibility of the ‘Tax Credit’ effect was discussed at a Green Party Fringe in 2009 (Blackpool Conference). I confess I had forgotten this when I read the Citizens’ Income Trust figures, published in 2013, which apparently missed seeing Tax Credits as a complication. They are responsible for the facts which Euromod, a computer which has access to detailed demographic information, has discovered.
The root problem is that the withdrawal of means tested benefits is a gross injustice. It has the effect, from the individual’s point of view, of a massive tax on the lowest part of your income. Iain Duncan Smith and I are certainly not on the same side, but we agree on one thing: means tested benefits are wrong. He is removing them by benefit sanctions, the bedroom tax, workfare and finding disabled people fit for work. The Green Party will – if it has the courage of its convictions – give a Citizens’, Universal Income to everyone, and recover it through the tax system, so that poor people are on the same level playing field as the rich.
I make frequent references to ‘Dynamic Benefits: towards Welfare that works’ (Publications Sept 2009). Some people have difficulty in grasping the concept that benefit withdrawal is exactly the same as a tax for the person losing it. ‘Dynamic’, prepared for IDS, and the basis for his vile regime, actually sets out with graphs showing, for different family configurations, how benefit withdrawal acts as a massive tax on the first part of anyone’s income. I use these graphs with an opposite solution from the government’s in mind. ‘Dynamic’ recommended the Universal Credit, which would have been a mean spirited partial Universal Income with the unnecessary cattle prod of a work requirement, but that has not happened.
A correspondent has sent me four links, which I copy here, pointing out what I knew (but had forgotten), to whit that due to Tax Credits, it is not accurate to say people are better off on benefits than working. He thought he had found a serious flaw in the case for the Citizens’ Income. On the contrary, I agree with almost every word, especially the myths being peddled about social security. None of these linked texts are arguments against the Citizens’, Basic Universal Income. I could lift the passionate ‘Red Pepper’ article word for word in favour. In particular, it comes out expressly in favour of the ‘Universal principle’, but only in defence of Child Benefit, not arguing for anything more.
‘Dynamic Benefits’ does cite evidence that people are better off on benefits. A few are, in spite of TaxCredits, but what really troubles me is that Red Pepper, and the Rowntree Trust of all people are defending the indefensible status quo. It reminds me of the family who when told they were not fit to live with pigs, retorted that they were. Tax Credits existed when the graphs in Dynamic Benefits were produced. These anti-poverty campaigners don’t mean to be in favour of means testing, but they are in effect. Means testing is wrong in principle. It is grossly unfair on those in or near the benefits trap. But because it is also a work disincentive, and could in theory make all the myths about scroungers true, Iain Duncan Smith has been allowed to get away with claiming that they are. There are enough individuals who take the system at its word to make the myths stick. I can only assume that it is this failure to recognize just how malign means testing is, accounts for even Rachel Reeves and Ed Miliband accepting the government’s scrounger-bashing agenda.
So I am grateful to the Guardian for raising the profile of this discussion. At the time of writing, I understand the Green Party has beaten a hasty retreat, but that is not necessary. The scheme should go ahead as planned, with a proviso that anyone disadvantaged because of the help they receive from Tax Credits, would be left as they are for a period of at least a year, or longer if discussion shows that to be advisable. This will be messier than envisaged, thank you Gordon Brown, but it is not a reason to retain means testing. Tax credits involve some arbitrary rules, such as working at least 30 hours, or 16 if you are a single parent. Work patterns must conform to this. With a Citizens’ Income there would be complete flexibility, so any immediate disadvantage would mostly be temporary. With the CI, everyone is always better off working more hours than before. Certainly everyone unemployed will be better off.
Whilst this should be sufficient to keep the policy on course, what must emerge from this election campaign is that the general public understands the Universal principle, and how a failure to understand the effect of means testing has caused even the Labour party to fall for the government’s anti-scrounger rhetoric.
For 42 years I have passionately argued for a Citizens’ Basic Universal Income, for three reasons: It will ameliorate any recession, and make what enemies will call a recession feasible when necessary to preserve the planet’s life support systems; it will facilitate a rapprochement between workers and bosses (clue: Zero hours contracts make sense with a Basic Income).
But the immediate need is to get rid of this evil Department of Work and Pensions regime. I think the Rowntree Trust and Red Pepper would agree with that.