More Universal Credit woes: Amelia, do something!

Yet another chapter in the dreadful UC saga, but what distresses me most is the failure of Greens to mention the basic income.

Benefit sanctions should have been out of the question as long as any vestige of means testing remained. The successful  ‘Lynton Crosby’ narrative starts from the true fact that means testing creates a massive disguised tax trap as benefits are lost as (low) income rises. In fact, over the years surprisingly few have taken advantage of this obvious logic, but Crosby maliciously assumes that all claimants do respond rationally to means testing. Therefore they can be demonized as scroungers, and benefit sanctions are necessary to end this scandal. As the Guardian points out, UC has, after 8 years. only reached 10% of its target beneficiaries. This week the Guardian has also published a damning editorial on the continuing story.

Paradoxically, when (if) the Universal Credit reaches the remaining 90%, it will (would) reduce (not remove) the disguised taxation effect of benefit withdrawal from between 80% and 100% tax equivalent of extremely low incomes to 63%, but this would rise back to over 70% as National Insurance was included.

If Caroline Lucas has said any of this in Parliament I owe her an apology. But I am fairly certain that she has never linked the UC fiasco to the unconditional basic (citizens’) income (UBI).

The original case for the Universal Credit was set out in Dynamic Benefits: towards Welfare that works. That report shows the effect of benefit withdrawal on the same graphs as taxes, because for the person losing income, the effect is identical. But one graph you might expect to see is missing: the actual effect of the Universal Credit, merely reducing the high tax equivalent rates still being inflicted on the 90% not yet on Universal Credit, to just over 70%.

The reason for this omission is that the whole UC scheme was a penny-pinching exercise designed to reduce the means testing poverty trap, but without affecting taxpayers. (Though as quoted in the Guardian Link, the UC has already cost the taxpayer £2Bn.)

But Dynamic Benefits could have been better used to ask “what would it cost the taxpayer to put everyone on the same basis?” – give everyone a UBI, but recover the cost from taxation in some shape or form. There are all sorts of variations on this theme which could be offered. Land Value Tax rather than more personal income tax; allowing a choice of remaining in the present system for those who thought they would be better off (this would reduce the apparent cost to the taxpayer). In conjunction with this last possibility, recipients of the UBI could be required to do some unpaid work. This is contrary to the whole ethos of the UBI (persuasion is better than force), but some believe that purely as a transitional measure, it would ameliorate opposition by those who wrongly thought of the UBI as giving scroungers something for nothing.

The amount of the UBI could be varied. The ideal UBI would cover basic needs, but only just.  But as a publicity point, introduction could be suggested at current benefit levels, merely scrapping benefit sanctions.

I am aware that graphs put most people off, and it may be that Caroline Lucas’s judgment is that the above reasoning is too difficult to explain to the general public. But Amelia Womack once described herself to me as ‘a graph type of person’. Perhaps she too has either come to the same conclusion, or been persuaded by others that that is the case.

It would still be nice to know that I have been taken seriously. If there are flaws in my reasoning, will someone explain please? Because if not, why is the Green Party not using Dynamic Benefits to attack the Universal Credit which it proposed, and put everyone on the same fair basis?

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