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The Basic Income Guarantee – James Mackenzie

A pair of ideas have orbited the further reaches of the political solar system over the last century. Both are ill-understood but have enthusiastic groups of supporters, backed in both cases by parts of the left and right. Both are simple but would have powerful consequences – and now the debate on both is bringing them closer to the light.

One is Land Value Tax, which Reform Scotland also supported last year as one of a range of ways local authorities should be able to fund their work. And the other is Basic Income, which is having a bit of a moment.

When something is supported by both the Adam Smith Institute and the Scottish Green Party it’s surely worth closer consideration, even if just to work out why. And the arguments are compelling.

We have a vexed relationship to work. In some cases people are lucky enough to be paid well to do something they love – but far more people are either unemployed or working simply to get by, while others live off unearned income. The bureaucratic infrastructure around work can also be complex and demoralising, whether that’s self-assessment, the policing of toilet breaks, or the increasingly incomprehensible and barbaric sanctions regime for those in receipt of social security payments.

The media demonise those who don’t work, even when it’s (to channel the Adam Smith Institutite) not rational for them to do so, given the cost of withdrawn social security payments. It’s even more rational when what’s offered is temporary work, and all those forms have to be filled in again from scratch soon: I know this from my own experience.

The left want power and money redistributed to the poorest in our society – and basic income does that. For their part, the sensible right want work to pay for all – and are increasingly seeing that basic income is the most efficient way to make that happen.

There’s other support out there too. On one hand many in the tech industry think it could cushion the blow of increased automation, although their version of it tends to come with a libertarian war on other parts of the state. Closer to home, the Sex Worker Open University argues that “if every person in the UK was entitled to a universal basic income, no one would be pushed by absolute poverty into selling sex.”

The model Siobhan and I have written up with Reform Scotland certainly doesn’t come with Silicon Valley’s libertarian agenda, although we can agree with them that the current social security system comes with a side order of intrusive and expensive state bureaucracy. Instead it unifies tax and social security within one department, and it uses progressive taxation to redistribute to those who need it, including to parents. It also merges National Insurance into income tax, removing some extraordinary kinks in that system – I admit I didn’t know that the NI rate falls to 2% on income over £42,385, for example. And then it makes a payment to everyone that isn’t withdrawn – while all income over it is taxed.

My favourite pair of charts from our report, based on work by the Citizens Income Trust, shows how arbitrary and counter-productive the current arrangements are. If you are unemployed and get offered up to 12 hours’ work a week at the current national minimum wage, you should rationally turn it down: you will be no better off. If you work 14 hours a week, you’re slightly better off but receive no government support, but at 16 hours a week, tax credits kick in. The chart below shows the impact of basic income. If you work two hours a week, you’re slightly better off – every hour you work increases your income by the same amount. It’s clear, it’s fair, and it helps people get back into work if they can, and if they want to.

 

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As a Green for whom this has long been one of my favourite policies, I personally hope basic income gets proper consideration amongst the other parties. I’m pleased to have worked with Siobhan on this, and I know there are many Lib Dems hoping it’ll appear in a future manifesto of theirs, as it did in 1992. Looking at the other parties, Labour’s Shadow Chancellor is a supporter, Conservative Home published a piece in favour, and a motion from Caroline Lucas MP on the subject is attracting SNP support right now. After all, why should ending the benefit trap and wanting work to pay be a partisan issue?

Personally I still wish we had voted for independence: then we would be taking the powers to deliver a basic income in just a few weeks. Perhaps there will be another referendum in the medium term, but in the short term I want to see a Scottish Government that makes the case for all work-related benefits to be devolved, so we don’t have to wait for independence before we start work on a basic income.

Maybe by then other countries will have schemes in operation we can learn from – there’s a lot happening elsewhere. If not, we should be the pioneers.

 

James Mackenzie is the commercial director at Cutbot and a former head of media for the Scottish Greens. He co-authored Reform Scotland’s report, The Basic Income Guarantee.