Radical new report calls for a universal payment to end the current welfare trap
Reform Scotland, the independent non-party think tank, has proposed the replacement of the current work-related benefits system with a new Basic Income Guarantee (BIG). The think tank believes that there remains a disincentive to work (the ‘welfare trap’) caused by the high level of marginal taxes faced by those moving into work or increasing their hours.
Reform Scotland believes that the work-related benefits system should act as a ‘safety net’ to provide financial security for those out of work, and a ‘safety trampoline’ to encourage more people to rejoin the workforce.
To achieve this the think tank is proposing a Basic Income Guarantee (BIG) paid to all working-age adults and children whether in or out of work. All earnings would be taxed, but the basic income would never be withdrawn, meaning that work would always pay.
The report, written by former Scottish Green Party Head of Media James Mackenzie and former Scottish Liberal Democrat Policy Convener Siobhan Mathers in conjunction with Geoff Mawdsley and Alison Payne of Reform Scotland, seeks to promote informed debate of this idea by examining what the level of the basic income might be and how much implementing it would cost.
Although not endorsing its proposals, the report takes as a starting point the Scottish Green Party’s proposed levels for its Citizen’s Income since it is the only major party to adopt this policy. These are:
· £100 per week or £5,200 per annum for each adult
· £50 per week or £2,600 per annum for each child
The report has created a series of examples showing the effect of the introduction of the BIG on individuals and households.
Tables detailing the effect of the proposal can be seen in the Executive Summary here. The full report can be read here.
Reform Scotland’s report also calls for a single department to be responsible for welfare payments, ending the current split between HMRC and the DWP.
Commenting on the report, author James Mackenzie, former Scottish Green Party Head of Media, said:
“Basic income is one of those ideas that should appeal right across the political spectrum. When I was unemployed I remember having to think hard about whether to accept part time or short-term work because of the impact on my income. We should be making it easier for people to work who can and who want to, not penalising them. Basic income does just that, as well as helping those who have caring responsibilities, or who want to volunteer or study.
“There’s a resurgence of interest in the idea around the world, especially in Europe, with proposals being considered in Switzerland, Holland, France and elsewhere. The principle is the same everywhere, but policy makers need to know more about the practicalities. Now, for the first time, we are providing some detailed information about how it could work in Scotland, either after independence or after the devolution of the necessary powers.”
Co-author Siobhan Mathers, Reform Scotland advisory board member and former Scottish Liberal Democrat Policy Convener said:
“There is a great opportunity for Scotland to design a welfare system that best suits its needs in the 21st Century. We could leave behind the unnecessary complexity of the UK system and provide a fair Basic Income Guarantee for all. This would make any transitions in and out of work more manageable and provide a clear, fair safety net for all.”