Basic Income

[Fez909]

The Newsnight interview by the Green's leader has sparked a bit of debate about basic income; most of it bad.

This Guardian article has the director of the Citizen's Income Trust saying it's fundamentally flawed and would make people poorer, no matter what level it was set at. I don't get why someone pro-BI would make such statements, and if he truly believes that, why is he still in that post?

His proposals could be explained much more easily by just saying, "unemployment benefit will now not be dependent on you looking for a job".

 

[DotCommunist]

I saw that interview, ken clarke looked like he had quietly crapped himself and as a posh voiced clearly corpulent trencher-hero was ill placed to say things. Dianne abbot was more cogent than him, and she is a fucking joke.

 

[ska invita]

The Newsnight interview by the Green's leader has sparked a bit of debate about basic income; most of it bad.

This Guardian article has the director of the Citizen's Income Trust saying it's fundamentally flawed and would make people poorer, no matter what level it was set at. I don't get why someone pro-BI would make such statements, and if he truly believes that, why is he still in that post?

His proposals could be explained much more easily by just saying, "unemployment benefit will now not be dependent on you looking for a job".

what the CIT man is saying is that it would be more expensive than the current system (by 24billlion was it?) to roll it out to everyone in the population without means testing , and it would also place an unfair burden of tax on the poorest to achieve it, unless the way tax is collected is changed + make basic income means tested so rich people don't automatically receive it....which without looking at the details sounds plausible.

It doesnt mean its a bad idea, nor do I think they've calculated the way that the Basic Income money would stimulate the economy (and increase tax takings). I haven't got time atm to scrutinise their latest figures...

(BTW Bennetts interview was on Sunday Politics and Ken Clarke was on Newnight)

 

[Fez909]

make basic income means tested so rich people don't automatically receive it....

No to this.

One of the fundamental aspects of a universal basic income is everybody gets it. It makes it easier to administer (therefore cheaper), and it increases support for it. By means testing you make it a welfare payment with all the baggage and resentment that comes with that term.

 

[ska invita]

No to this.

One of the fundamental aspects of a universal basic income is everybody gets it. It makes it easier to administer (therefore cheaper), and it increases support for it. By means testing you make it a welfare payment with all the baggage and resentment that comes with that term.

i follow the logic and it seems that this is what CIT previously costed, but it seems they now think it would be cheaper to means test it than go universal.
they also no longer think that £70 a week would replace all other 'benefits' and so the beurocracy would have to remain anyway to administer other money given out

in terms of the cost of administration i reckon you could make it simple and still cut off rich people, by making it so everyone is illegible, but in order to receive it you have to go to you local job center and tick a box on a computer screen there - a simple yes or no thing. Lots of snobs wouldnt bother. The principle of universality would remain....

 

[Fez909]

i follow the logic and it seems that this is what CIT previously costed, but it seems they now think it would be cheaper to means test it than go universal.
they also no longer think that £70 a week would replace all other 'benefits' and so the beurocracy would have to remain anyway to administer other money given out

in terms of the cost of administration i reckon you could make it simple and still cut off rich people, by making it so everyone is illegible, but in order to receive it you have to go to you local job center and tick a box on a computer screen there - a simple yes or no thing. Lots of snobs wouldnt bother. The principle of universality would remain....

It's not just about making a BI easy/cheap to administer, it's the replacing of all other benefits because they are no longer needed.

You were talking revolutionary changes to society a few pages back, and now it's just a handout to people who sign on at the job centre? What's changed?

 

[Fez909]

i follow the logic and it seems that this is what CIT previously costed, but it seems they now think it would be cheaper to means test it than go universal.
they also no longer think that £70 a week would replace all other 'benefits' and so the beurocracy would have to remain anyway to administer other money given out

in terms of the cost of administration i reckon you could make it simple and still cut off rich people, by making it so everyone is illegible, but in order to receive it you have to go to you local job center and tick a box on a computer screen there - a simple yes or no thing. Lots of snobs wouldnt bother. The principle of universality would remain....

It's not just about making a BI easy/cheap to administer, it's the replacing of all other benefits.

You were talking revolutionary changes to society a few pages back, and now it's just a handout to people who sign on at the job centre?

 

[ska invita]

It's not just about making a BI easy/cheap to administer, it's the replacing of all other benefits because they are no longer needed.

Some people get more than £70 in benefits - a £70 Basic Income wouldnt cover that - what about housing benefit for example? what about childcare?

 

[Fez909]

Some people get more than £70 in benefits - a £70 Basic Income wouldnt cover that - what about housing benefit for example? what about childcare?

If a basic income wouldn't cover that then it needs to be higher.

 

[ska invita]

If a basic income wouldn't cover that then it needs to be higher.

yeah but Housing Benefit is hugely variable - hundreds of pounds a month for some.

 

[Fez909]

yeah but Housing Benefit is hugely variable - hundreds of pounds a month for some.

It's been discussed plenty of times already in this thread. Here's my last reply on it.

Also, the problem of housing costs differing have been discussed and the universal/same payment actually solves that problem by keeping money in areas with housing but no jobs and removing the economic incentive to migrate to cities and areas of high employment which inevitably means higher housing costs. By reversing this trend, perhaps the jobs would spread out too, so in time we'd have a more harmonious balance between different regions, instead of everything being concentrated in the South East.

 

[ska invita]

I will need to reread the thread and see what ive said so far
never fun reading old posts i find
ultimately i don't have the skills or energy to create a national spending plan so you have to give some trust to those who have gone away and done the sums - as the Greens have found out this isnt the safest thing to do and sums can be gotten seemingly very wrong!

 

[8ball]

No to this.

One of the fundamental aspects of a universal basic income is everybody gets it. It makes it easier to administer (therefore cheaper), and it increases support for it. By means testing you make it a welfare payment with all the baggage and resentment that comes with that term.

See threads on child benefit for further fleshing out of these arguments...

 

[Fez909]

ultimately i don't have the skills or energy to create a national spending plan

How about 'helping' to create one?

I think I want to have a go at this, and although it seems a massive task, it shouldn't be that difficult to get in the rough area. And I'm sure there'll be plenty of people willing to correct my figures/method as soon as I go wrong

So, here's v1.0 of the method:

1. Sum up all benefits, payments, grants, subsidies, that are paid out by the state to private individuals
2. Find out the total of all taxes currently collected by the state
3. Investigate the cost of administrating the benefits from point 1 and sum it
4. Look into the 'tax gap' - the difference between the amount of tax that should be collected but isn't, due to fraud, corruption, etc
5. Look at the previous studies on basic incomes and their effect on working hours, and therefore tax takings. Apply this reduction to our total from point 2
6. Look at previous studies on basic incomes and their effect on public service demands, such as hospital visits. Use these figures to look at our spending on public services and add the projected savings to the sum from point 1. (Not everything will be a saving - education will be in higher demand so there will be costs rather than savings here)
7. Try to find the highest possible amount of benefits somebody could be in receipt of (most expensive part of London, on HB, multiple kids, etc, etc) as well as the likelihood someone will be on this. Find the average amount of benefits received. Find the lowest. Graph it.
8. Use the graph from 7 to calculate how much the universal basic income would need to be set at to cover 90%, 95% and 99.5% of the population.
9. Use the calculations above to see what we could afford to pay using the current budget/tax regime. How far off is it from the numbers generated in point 8?

Those things are all fairly doable, even as an economic dunce, I reckon. Nothing in there is difficult to calculate, and there's not too many assumptions. The difficult bit will be point 7 I reckon, finding the average amount of benefits paid out.

Once you've calculated those, then we could play around with tax rates and see what that does to the figures, but then you're getting into much harder to predict territory.

Any glaring omissions/objections so far?

 

[DotCommunist]

Not sure about calculations based on point 7 I'd rather tie it to the average working wage then go from there
Because regional wage and housing vary so very wildly, you'd end up with people living like kings up north where a can of coke is still 50p and people in the cities just scraping by

that would not be right or fair

 

[Fez909]

Not sure about calculations based on point 7 I'd rather tie it to the average working wage then go from there
Because regional wage and housing vary so very wildly, you'd end up with people living like kings up north where a can of coke is still 50p and people in the cities just scraping by

that would not be right or fair

It's redistributive, so it's fair.

And people would follow the money so services would be eased in the South East and eventually costs would equalise between the regions. Or tend towards equalization, at least.

 

[BigTom]

How about 'helping' to create one?

I think I want to have a go at this, and although it seems a massive task, it shouldn't be that difficult to get in the rough area. And I'm sure there'll be plenty of people willing to correct my figures/method as soon as I go wrong

So, here's v1.0 of the method:

1. Sum up all benefits, payments, grants, subsidies, that are paid out by the state to private individuals
2. Find out the total of all taxes currently collected by the state
3. Investigate the cost of administrating the benefits from point 1 and sum it
4. Look into the 'tax gap' - the difference between the amount of tax that should be collected but isn't, due to fraud, corruption, etc
5. Look at the previous studies on basic incomes and their effect on working hours, and therefore tax takings. Apply this reduction to our total from point 2
6. Look at previous studies on basic incomes and their effect on public service demands, such as hospital visits. Use these figures to look at our spending on public services and add the projected savings to the sum from point 1. (Not everything will be a saving - education will be in higher demand so there will be costs rather than savings here)
7. Try to find the highest possible amount of benefits somebody could be in receipt of (most expensive part of London, on HB, multiple kids, etc, etc) as well as the likelihood someone will be on this. Find the average amount of benefits received. Find the lowest. Graph it.
8. Use the graph from 7 to calculate how much the universal basic income would need to be set at to cover 90%, 95% and 99.5% of the population.
9. Use the calculations above to see what we could afford to pay using the current budget/tax regime. How far off is it from the numbers generated in point 8?

Those things are all fairly doable, even as an economic dunce, I reckon. Nothing in there is difficult to calculate, and there's not too many assumptions. The difficult bit will be point 7 I reckon, finding the average amount of benefits paid out.

Once you've calculated those, then we could play around with tax rates and see what that does to the figures, but then you're getting into much harder to predict territory.

Any glaring omissions/objections so far?

7 would be easy, as all benefit payments are recorded, so the data you need exists, you just have to get it
4 and 6 on the other hand will just be guesses, for tax avoidance that's how much it is, how much you can reclaim and how much it'll cost to reclaim it. For cost/benefit to other services you're really in unknown territory - how many BI schemes have existed and how similar are/were the countries/communities they ran in? I think it'll be very, very sketchy here and may be better to ignore this factor entirely.

 

[ska invita]

Any glaring omissions/objections so far?

go for it fez!

Paul mason scribbled some numbers down on the back of an envelope this week : http://www.theguardian.com/commenti...ic-income-would-kill-off-low-paid-menial-jobs worth a glance

This is the trickiest one i think:
5. Look at the previous studies on basic incomes and their effect on working hours, and therefore tax takings. Apply this reduction to our total from point 2

No other country has implemented Basic Income on such a scale, and the UK is a very complex test case

unknowables include:
what would happen to inflation?
do people work less or the same? Ive heard claims for both yes and no
do menial jobs become better paid?
what happens to migration? can someone from Spain come to the UK and immediately get Basic Income?

4. Look into the 'tax gap' - the difference between the amount of tax that should be collected but isn't, due to fraud, corruption, etc

Tax throws up lots of issues
...is VAT fair? Do we want it?
Should personal allowances continue to rise? If your first 10k isnt taxed and you get 6k for BI should the personal allowance come down to 4k?
If you increase the top rate of tax does it really work in collection tax revenues?
Most tax avoidance is legal - closing those loopholes is pure politics. Lets say you can close the loopholes, that doesnt mean you would get all the tax expected, as many of the biggest companies would continue to tax dodge elsewhere


Not trying to put you off - I still think its a useful exercise to try and cost it, but its a much harder thing to pin down the revenue needed to pay for it, or to account for potential inflation.

 

[Fez909]

go for it fez!

Paul mason scribbled some numbers down on the back of an envelope this week : http://www.theguardian.com/commenti...ic-income-would-kill-off-low-paid-menial-jobs worth a glance

This is the trickiest one i think:
5. Look at the previous studies on basic incomes and their effect on working hours, and therefore tax takings. Apply this reduction to our total from point 2

No other country has implemented Basic Income on such a scale, and the UK is a very complex test case

unknowables include:
what would happen to inflation?
do people work less or the same? Ive hard claims for both yes and no
do menial jobs become better paid?
what happens to migration? can someone from Spain come to the UK and immediately get Basic Income?

4. Look into the 'tax gap' - the difference between the amount of tax that should be collected but isn't, due to fraud, corruption, etc

Tax throws up lots of issues
...is VAT fair? Do we want it?
Should personal allowances continue to rise? If your first 10k isnt taxed and you get 6k for BI should the personal allowance come down to 4k?
If you increase the top rate of tax does it really work in collection tax revenues?
Most tax avoidance is legal - closing those loopholes is pure politics. Lets say you can close the loopholes, that doesnt mean you would get all the tax expected, as many of the biggest companies would continue to tax dodge elsewhere


Not trying to put you off - I still think its a useful exercise to try and cost it, but its a much harder thing to pin down the revenue needed to pay for it, or to account for potential inflation.

Cheers, will take a look at that article.

At work so can't respond properly to this, but just on the 'tax gap' - HMRC say that it was £34bn in the year ending April 2013. Crucially, this doesn't include the legal avoidance you mention, and is easily recoverable with 1) enough tax inspectors and 2) a government that wants to collect such tax.

 

[Fez909]

And Richard Murphy of Tax Research puts the tax gap including agressive avoidance and evasion at £119.4bn (pdf) in 2013/14.

 

[8ball]

It's redistributive, so it's fair.

 

[ska invita]

Cheers, will take a look at that article.

here it is to save a click:
"If you do a fag-packet calulation, you can see why in the long-run the only form the basic income could take is that of a radical challenge to market economics. (I stress what follows is conjecture, and not an attempt to number crunch today’s party-political proposals).

If you paid every adult in Britain – including pensioners – say, £6,000 a year, with no requirement to seek work and no means test, it would cost around £290bn a year.

You would abolish the basic state pension (currently around £6,000) and basic unemployment benefits, keeping only benefits targeted to extra needs such as child support or disability, which come to around £30bn now, so the overall cost might come to £320bn a year.
That is a huge amount of money. The current welfare bill in Britain is £167bn – of which two- thirds goes to pensioners. Its eats around 23% of government spending. A true, subsistence level basic income would close to double that. But it is imaginable, in the short to medium term, if you factor in the benefits.

The first would be to eradicate low-paid menial work. Why slave 10 hours a day with mop and bucket for £12k when you get £6k for free? Corporations would rebalance their business models towards a high pay, stable consumption, low-ish profit world, and the tax take would rise as a result. All tax relief for the poor would end.

The second benefit, though less tangible, would come to the spiralling healthcare budgets of western societies. Drugs are dear, collaborative networks of peer educators and self-help groups come for free, at least in theory, once everyone is being paid simply to exist, and has the time and freedom to contribute. This is the view taken by the prophets of peer-to-peer economics, who envisage a new, collaborative production sector. My fag-packet logic tells me it would mean tens of billions in lower healthcare costs, and savings in other areas too.
The rest of the fiscal gap would be closed through raising tax – so this is not a cheap or easy solution. It would be a pathway to a different kind of economy. But for both left and right it would challenge the last vestiges of what Gorz called “the utopia based on work” which has sustained us for two centuries, but may no longer.

 

[8ball]

I'd agree that it could only exist (as a liveable allowance) in the form of a radical challenge to (our current form of "sort-of") market economics.

 

[Argonia]

Just want to express full support for it. In future it may seem self evident to people that a society with a basic income is a fundamentally civilise one and one without isn't.

 

[Treacle Toes]

Welcome!

 

[smokedout]

The current welfare bill in Britain is £167bn – of which two- thirds goes to pensioners. Its eats around 23% of government spending. A true, subsistence level basic income would close to double that. But it is imaginable, in the short to medium term, if you factor in the benefits.

he seems to be ignoring tax credits and child benefit with that figure, the true cost is closer to £200bn. Housing is where it falls down and just saying but it's redistributive isn;t very helpful if it would immediately make everyone poor in the south east homeless, that is not a viable transition. A Basic Income has to come with a guarantee of housing, which would mean a perfectly achievable mass house building project which promised a house on social rent, or an interest free cost of build and service/maintenance charge - that could be revenue neutral and is worth fighting for on its own. I'd also argue things like Disability Living Allowance and Child Benefit be kept as they are, no need for tinkering there, it could also come with an out of work sickness/disability premium, assessed as it was before, by doctors signing people off sick - at current rates this would only be about 30 quid a week more than the basic income so less contentious. Instead of means testing it goes to everyone and gets clawed back through higher rates tax payers and getting rid of the minimum income tax threshold.

thats the framework, its viable, just depends how much you can get away with taking from the rich balanced against how much you set the minimum at, just a question of setting up a simple model that lets you input figures eg basic income rate, basic income tax rate, top/mid tax rates - its got to be more than £70 a week otherwise as has been pointed out, all youre really arguing for is the dole, as it was back in the day when they left you alone.

but that is a fight that has to be won first, scrapping conditionality for benefits, along with housing for everyone who needs it are both necessary for a basic income to function and are both demands that are building, so rather than getting lost in utopia if you want this I'd start there

 

[SpookyFrank]

I'd also argue things like Disability Living Allowance be kept as they are, no need for tinkering there

DLA is already gone is it not?

But semantics aside, I do think any kind of universal basic income would need to be augmented with means tested benefits in certain cases, disability and illness being the most obvious ones.

I also think simply scrapping conditionality for JSA would be a step in the right direction. No government would do it in the present climate because nobody wants to be 'soft on welfare' (or as we used to call it, nice to the poor) but it probably wouldn't even cost that much. Get rid of all the useless and expensive welfare-to-work programs and all the huge bouns payments to contractors that they entail, remove a whole swathe of admin, replace the current jobcentre bullies with people whose sole job is to provide support with job hunting to those who actually want or need it.

And quite apart from the immediate costs, there would be savings and general improvements to society elsewhere. Homelessness services, mental health services, the criminal justice system; these would all see a drop in their workloads. With the state no longer able to force people into zero-hour jobs or joke apprenticeships, employers would have to raise their game in terms of the conditions they offer their staff. What we currently have is a situation where employers are actively encouraged to discard staff at a regular basis because short-term staff have fewer entitlements, but the people being discarded are the ones who are blamed for this situation and, in effect, punished for it. So universal jobseekers allowance for anyone out of work, and universal in-work entitlements regardless of whether you've been there a week or a lifetime. Simple. Even if the frontline cost is higher the benefits to the economy as a whole would dwarf those costs.

Why is the labour party not willing to make these sorts of arguments? Maybe in the present climate you can't win an election with a generous welfare policy, but that's because nobody is putting in the legwork making these arguments to the public and trying to change public understanding of how welfare is actually good for the general public and not just a drain on resources that exists only for sentimental reasons. And the reason they wont make the arguments is that they don't believe in them, because they're all just Thatcher-lites. And they've got the fucking cheek to call themselves the Labour party.

That turned into a bit of a rant didn't it? It all just makes me so cross though

 

[8ball]

... scrapping conditionality for benefits, along with housing for everyone who needs it are both necessary for a basic income to function and are both demands that are building...

Really? I'm not seeing anything like this.

A few mumblings and a few Mums who have managed to delay the machinations of the market is all I've seen on the basic income and housing front. And conditionality for benefits seems to be rapidly going in the wrong direction.

 

[8ball]

That turned into a bit of a rant didn't it? It all just makes me so cross though

Agree with all that. RIP any accurately-named Labour party (which, tbf, is going back quite some way).

 

[SpookyFrank]

When you see those government spending pie charts with a section for 'JSA' I wonder if that section includes only the actual money given to actual claimants or if it includes all the welfare-to-work shite, including kickbacks, admin costs and all that?