If it looks too good to be true, it will be. And rarely does this simple maxim need trotting out than in the area of social security/welfare. Periodically, think tanks and politicians rediscover, with breathless excitement, an apparent ‘Get out of Jail Free’ card- an idea whose simplicity has been ignored by their predecessors for some perverse, unexplained reason. Step forward Universal Credit (streamlining most working age benefits into one), our old friend, the Contributory Principle (you get out what you pay in), and now, the Basic Citizen’s Income.
Now, for the avoidance of doubt, all of these have things to comment them- simplicity above all. The tax and social security systems are notoriously complex and make it exceptionally hard to people to predict how they will be affected in future- going into work, taking a pay raise. Means testing within the social security system is unpopular and expensive to administer. There is nothing wrong with seeking simplification and predictability. The trouble is, we live in a complex world, in which those designing tax and security systems have to consider huge variations in costs, limited resources and the behavioural impact everything has on us imperfect human beings. So, let’s take a look at what this means for the Basic Income.
The idea of a Basic Citizen’s Income is not, of course, new- and it has had advocates across the political spectrum, since aspects of the scheme contain and appeal to left and to right. The scheme works by scrapping benefits and tax credits/allowances so everyone receives a flat-rate allowance, with an additional element for children. Amongst the advantages cited are huge reductions in administrative complexity; a reduction in mean’s testing and the ‘poverty trap’; an end to sanctions and greater flexibility in the labour market, since people will be more confident about transitions of various kinds. What’s not to like?
Well, here a few things.
Firstly, the Basic Income begs the question, can we do without ‘conditionality’ entirely? Conditionality has been given a bad name by the horrors of a punitive sanctions regime and the inflexibility too often pressed upon Job Centres. Yes as social policy commentator Declan Gaffney has pointed out:
“Single parents in the UK offer a test case, as up to 2008 they were effectively in receipt of something very like an UBI, when not in employment. They had no obligation to actively seek work while tax credits ensured that most would be significantly better off in work. Employment rates had increased since the 1990s in response to improved incentives but remained relatively low, and from 2008 obligations to look for work were imposed. By 2014 the employment rate outside London had risen from 57% to 61%. In London the increase was dramatic from a lower baseline: from 45% to 57%. The lesson is that incentives matter”
Second, two elements stand out as risks to the comfortable simplicity of a flat-rate Basic Income- housing, and disability. Housing costs are such a large element of people’s subsistence needs, yet are so varied across the country, they could not realistically be included. (Incidentally, it was precisely this problem that defeated Beveridge!). Similarly, it is hard to see how a flat-rate system can accommodate the needs of the longer term sick and disabled, for whom costs (and, traditionally, benefits, have been higher than for others.
Yet paying a higher rate of Basic Income to people with higher housing costs, or to those who can’t work because of disability, re-introduces means-testing, taper rates, work capability assessments…bringing us full circle.
The ‘Get out of Jail Free’ policy card doesn’t exist. But that doesn’t mean we can’t learn from the aspirations behind the Basic Income. There’s lots that can be done to make both our tax and social security systems fairer, more efficient and more humane- and that includes seeing both in a wider social policy context that embraces health, education and housing. There may not be one mega-solution, but everything is connected.
If it looks too good to be true, it will be. And rarely does this simple maxim need trotting out than in the area of social security/welfare. Periodically, think...