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A Basic Income Handbook E-Book

Annie Miller

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Herausgeber: Luath Press
Kategorie: Geisteswissenschaft
Sprache: Englisch

Beschreibung

In this informative book, Annie Miller does not only explore the idea of basic income: she exhaustively explains what it is and what it would mean to implement, using extensive economic data. Miller starts off from a broad, existential position, outlining why the current system is no longer suitable for the times and needs to change. Her proposed solution is a society with BI, which she first outlines abstractly before diving into its internal workings, explaining who would be eligible for BI, what would happen to the rest of the welfare system, and other crucial details. Miller backs up her statements with substantive economic research and analysis. She ends with a section on how to achieve a society with BI, giving examples of pilot schemes elsewhere and discussing the politics behind implementation. Thus she brings the reader full circle from aspiring to a BI society, to seeing what it would take to reach it.

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Leseprobe

ANNIE MILLER spent the major part of her working life in the Department of Economics at Heriot-Watt University in Edinburgh teaching mainly business economics, econometrics, mathematics and statistics for economists. In 1991, with her colleague Douglas Mair, she co-edited a book comparing different schools of economic thought in the late 20th century (Mair et al, 1991).

In 1984, Annie was a co-founder of the Basic Income Research Group (BIRG), which changed its name in 1993 to the Citizen’s Income Trust (CIT). She has been a trustee since 1989 and is currently its Chair. She contributes regularly to its Citizen’s Income Newsletter. She gives talks to groups around the UK, and has presented papers on BI at conferences here in the UK, on the continent and in North America.

In January 2014, her local MSP, Jim Eadie, hosted a seminar and round-table discussion on ‘Beyond Welfare Reform to a Citizen’s Income’ at the Scottish Parliament, at which Annie and the late Professor Ailsa McKay were keynote speakers. In her personal capacity, she presented written evidence to the Scottish Parliament’s Expert Working Group on Welfare (2013) and to the Smith Commission (2014). Since politics in Scotland is now different from elsewhere in the UK, her fellow trustees at CIT encouraged her to set up a sister organisation in Scotland, the Citizen’s Basic Income Network Scotland.

Annie became a member of the Religious Society of Friends (Quakers) in 1978. Her faith, her belief in ‘that of God in everyone’, and her commitment to the Quaker testimonies (values) of peace, equality, integrity and simplicity inspire all her work.

In this vital contribution to the debate about how we ground our welfare system more squarely on social justice, Annie Miller has done Scotland and the UK a service. It combines personal reflections with passion and technical adeptness, making the case for a Universal Basic Income powerfully in the process. Amongst many other achievements, this work presents the under-articulated feminist case for change – a vital component of the debate that should be more central. To be highly recommended.

ANTHONY PAINTER, Director of the Action and Research Centre, Royal Society for the Encouragement of Arts, Manufactures and Commerce

Annie’s book comes at the ideal moment in the Basic Income debate. With interest growing around the world, and progress taking place here in Scotland, the depth of economic knowledge that she brings to the debate will be invaluable in taking the idea forward.

JAMIE COOKE, Head of RSA Scotland

Annie has written not just a great introduction to the theory and background of Universal Basic Income, but a manual on the issues and opportunities for taking forward the practical implementation of basic income.

PAUL VAUGHAN, Head of Community and Corporate Development, Fife Council

At last! A book that helps us through the tangled dross to the pure gold of a Universal Basic Income.

JIM PYM, author of The Pure Principle

First published 2017

All royalties to be shared between

Citizen’s Basic Income Network Scotland, scio no. sc046356, www.cbin.scot and

Citizen’s Basic Income Trust, charity no 1171533, www.citizensincome.org

ISBN: 978-1-910745-78-6

The paper used in this book is recyclable. It is made from low chlorine pulps produced in a low energy, low emissions manner from renewable forests.

Printed and bound by

Bell & Bain Ltd., Glasgow

Typeset in 11 point Sabon by

3btype.com

The author’s right to be identified as author of this work under the Copyright,

Designs and Patents Acts 1988 has been asserted.

This book is dedicated to the memory of the late

Professor Ailsa McKay

1963–2014

List of Figures

List of Tables

List of Abbreviations

A note about terminology

Preface – how this book came to be written

The structure of the book

Acknowledgements

PART IPHILOSOPHICAL AND POLITICAL ARGUMENTS

CHAPTER 1 Introduction: How did we get from there to here?

Imagine…

Why we need a BI system to replace the current Social Security System

The post World War ii consensus welfare reforms – how did we get from there to here?

Why not just improve the current social securitysystem?

Our social security system is not fit for purpose – cut the Gordian knot

CHAPTER 2 Values and vision: the objectives

What sort of society?

Justification for a social security system

What objectives and outcomes could an income maintenance system help to achieve?

The case for vertical redistribution of income

Who are the rich?

PART IITHEORY AND EVIDENCE

CHAPTER 3 The internal structure and design features of income maintenance systems

Townsend’s three principles

The design features of income maintenance systems

Comparison of some different income maintenance systems

Basic Incomes

CHAPTER 4 The effects of individual assessment on women’s lives: the unit for assessment and delivery of benefits – joint or individual?

The Marriage laws

Financial dependents

Household Economies of Scale – incentive to share accommodation

Effect of BI on women’s lives

INDIA 2011–13

CHAPTER 5 Migration – and giving a BI to rich people

Defining the population

Migration

Giving a BI to rich people to protect the poor: Eligibility – targeted or universal?

Why benefits should not be means-tested

ALASKA 1976 –

CHAPTER 6 When is discrimination justified? Entitlement: selective or non-selective benefits

Selectivity

Discrimination against couples

Can a case be made for selective benefits?

List of Figures

FIGURE 13.1 Basic Income schedules without an earnings disregard compared with 2017–18 UK income tax schedule

FIGURE 13.2 Basic Income schedules with and without an earnings disregard compared with 2017–18 UK income tax schedule

FIGURE B1 Illustration of Lorenz curves derived in Table B2 showing successive decreases in the Gini coefficient

List of Tables

TABLE 3.1 The internal structure of various income maintenance and income tax systems in the UK

TABLE 3.2 The structure of income maintenance systems

TABLE 3.3 How the structure of a Basic Income (BI) scheme helps to fulfil the Objectives

TABLE 9.1 Summary of some BI Pilot Experiments or Projects

TABLE 10.1 Measures of prosperity in UK and Scotland

TABLE 10.2EU official poverty benchmark: Income Before Housing Costs (BHC) and Income After Housing Costs (AHC) for 2014–15

TABLE 10.3 Five measures of Minimum Income Standards for 11 household types, 2016

TABLE 10.4a A floor and two poverty benchmarks for the same time period, 2014–15

TABLE 10.4b A floor and two poverty benchmarks available for a BI scheme for the fiscal year 2017–18, based on information available in 2016

TABLE 10.5 Comparison of mean and median figures for the UK, 2010 to 2014

TABLE 10.6 The proposed poverty benchmark for BI purposes

TABLE 11.1, Scot Population of Scotland, mid-year estimates for 2015

TABLE 11.1, UK Population of the UK, mid-year estimates for 2015

TABLE 11.2, Scot Costing a simple illustrative BI scheme for Scotland in 2017–18, in terms of £bn, based on data available in 2016

TABLE 11.2, UK Costing a simple illustrative BI scheme for the UK in 2017–18, in terms of £bn, based on data available in 2016

TABLE 11.3 Which of these main UK benefits should be replaced by BIs?

TABLE 11.4UK Social Security transfer payments, 2013, 2014 and 2015

TABLE 11.5 Components of an added margin

TABLE 12.1UK taxes and their yields, 2013, 2014 and 2015

TABLE 12.2 Estimated cost of the Principal Tax Expenditures and Structural Reliefs, 2013–14, 2014–15

TABLE 12.3 The value of the increase in Personal Allowance and changes to the threshold for the higher rate of income tax

TABLE 12.4 National Insurance and income tax due on additional rate payers.

TABLE 13.1, Scot Costing the same illustrative BI scheme for Scotland in 2017–18 in terms of a flat rate income tax, based on data available in 2016, as estimated in Table 11.2 Scot

TABLE 13.1, UK Costing the same illustrative BI scheme for the UK in 2017–18 in terms of a flat rate income tax, based on data available in 2016, as estimated in Table 11.2 UK

TABLE 13.2 Direct effects of illustrative changes in income tax rates

TABLE 13.3 Pros and cons of the structure of the income tax schedule

TABLE 14.1 Objectives and solutions for the design of the sample BI schemes

TABLE 14.2a Money values for BIs for entry-level BI schemes for 2017–18, and as proportions of Y-BAR for Scotland and the UK 2015

TABLE 14.2bBI sample schemes for Scotland and the UK, 2017–18, compared with the current means-tested benefit system

TABLE 14.3a Money values of BIs for EU benchmark schemes for 2017–18, and as proportions of Y-BAR for Scotland and the UK 2015.

TABLE 14.3, ScotBI sample schemes for Scotland, 2017–18, compared with the 2014–15 EU median income poverty benchmark (AHC)

TABLE 14.3, UKBI sample schemes for the UK, 2017–18, compared with the 2014–15 EU median income poverty benchmark (AHC)

TABLE 14.4 Comparison of sample BI schemes B(i), B(ii) and B(iii)

TABLE 14.5a Money values of BIs for MIS benchmark schemes for 2017–18, and as proportions of Y-BAR for Scotland and the UK 2015

TABLE 14.5bBI sample schemes for Scotland and the UK, 2017–18, compared with 2016 MIS benchmark

TABLE 14.6, Scot A summary of the eight sample BI schemes for Scotland 2017–18

TABLE 14.6, UK A summary of the eight sample BI schemes for the UK 2017–18

TABLE 15.1 The cost of Scheme A(i) for the UK in 2017–18

TABLEA1 Figures for the UK 2011–15

TABLEA2 Figures for Scotland 2012–15

TABLEB1 A hypothetical example of an international BI scheme, also showing how a BI reduces the Palma index and Gini coefficient

TABLEB2 Demonstration of the redistributive powers of a hypothecated flat rate income tax used to finance a BI scheme

TABLEB3 Summary of the results for the tables above

TABLEB4 Taxpayers and non-taxpayers in the UK, 2014–15

TABLEB5 Hypothetical examples to explore the outcomes of some progressive income tax schedules: the mean gross income of individuals, Y-BAR, is 20

TABLEC Excel template to design and cost your own preferred BI scheme

List of Abbreviations

AIDS Acquired immune deficiency syndrome

AHC After Housing Costs have been deducted

BHC Before Housing Costs have been deducted

BI Basic Income

BIEN Basic Income European/Earth Network

BIRG Basic Income Research Group

Blue BookUK National Accounts, the Blue Book, published each year.

CB Child Benefit

CBI Citizen’s Basic Income/Child Basic Income

CBINS Citizen’s Basic Income Network Scotland

CI Citizen’s Income

CIA Central Intelligence Agency (USA)

CIT Citizen’s Income Trust/Citizen’s Basic Income Trust

CTB/CTR Council Tax Benefit/Reduction

CTC Child Tax Credit

DWP Department of Work and Pensions

EDR Earnings Disregard

ESA Employment and Support Allowance

EU European Union

FBI Full Basic Income

FES Family economies of scale

GDP Gross Domestic Product

HB Housing Benefit

HBAI Households Below Average Income

HES Household economies of scale

HH Household

HIV Human immunodeficiency virus (infection)

HMRC Her Majesty’s Revenue and Customs

HMSO Her Majesty’s Stationary Office

HSHLD Household

IS Income Support

JSA Jobseeker’s Allowance

KELA Social Insurance Institution of Finland

LA Local Authority

LEL Lower Earnings Level (NI system)

MDR Marginal Deduction Rate

MIS Minimum Income Standards

MISUR Maternity, Invalidity, Sickness, Unemployment, Retirement (NI)

MP Member of Parliament (Westminster)

MSP Member of the Scottish Parliament.

MTB Means-tested benefit

NGO Non-Governmental Organisation

NHS National Health Service

NI/NIC National Insurance/National Insurance Contribution

NIT Negative Income Tax

NMW/NLW National Minimum Wage/National Living Wage

NPISH Non-Profit Institutions Serving Households

OECD The Organisation for Economic Co-operation and Development

ONS Office of National Statistics

PAYE Pay As You Earn

PBI Partial Basic Income

PI Participation Income

PT Primary Threshold, (NI system)

PWC Parent with care (primary care-giving parent)

S2P State Second Pension

SCIO Scottish Charitable Incorporated Organisation

SERPS State Earnings-Related Pension Scheme

SNAP Scottish National Accounts Project

STP Single Tier Pension

TC Tax Credit

UBI Universal or Unconditional Basic Income

UC Universal Credit

UEL Upper Earnings Level (NI system)

WTC Working Tax Credit

WWII World War Two

Y-BAR Mean gross income per head of man, woman and child

A note about terminology

A BASIC INCOME (BI) is a cash payment where assessment and delivery is based on the individual. It is universal for a defined population, is not means-tested, not selective except by age, and it is unconditional.

The concept has a fairly long history (see the Chronology in Appendix D), and during that time has had several different names, sometimes with extra conditions attached. In 1918, it was introduced as a ‘State Bonus’. The Social Credit Movement of the inter-war period called it a ‘National Dividend’. Milton Friedman, an American Nobel Prize-winning economist, introduced the concept as a ‘Negative Income Tax’ (NIT) in 1962. In its original incarnation, it was based on the household and had a 100 per cent withdrawal rate until the cash transfer had been paid off. Thus, originally a NIT was an income available only to poor people, rather than a BI paid to everyone, rich or poor. Its use in today’s debates is as a version of BI with an alternative method of administration, based on a fully integrated benefit and income tax system. This is discussed further in chapter 8.

Another Nobel Prize-winning economist, James Meade, used the term ‘Social Dividend’ from 1935, but implied different things at different times – sometimes as a needs-based system and sometimes as a payment to everyone with no differentiation. ‘Social Dividend’ was the term commonly used until the early 1980s. Since the 1980s, the term used in the English-speaking world has been ‘Basic Income’, although in the USA it is often referred to as a ‘Basic Income Guarantee’ (BIG). Some people dislike the term ‘Basic Income’, because it sounds too basic, and yet that is really what it is about. The Basic Income Research Group agreed to change its name to the Citizen’s Income Trust (CIT) in 1993. It is the only organisation that has consistently used the term ‘Citizen’s Income’ (CI), and this is recognised in the UK. Professor Ailsa McKay always referred to a ‘Citizen’s Basic Income’ (CBI), and the founding group of the new Scottish charity chose to use this term too, with its emphasis on citizenship. The terms CI, CBI and BI can be used interchangeably.

The term ‘Unconditional Basic Income’ (UBI) was adopted for the European Citizens’ Initiative (ECI on UBI) in 2013. Since then the abbreviation, UBI, has frequently been used, but has often been interpreted as ‘Universal Basic Income’. These terms are also interchangeable with ‘Basic Income’.

My own preferred term is ‘Basic Income’. It is shorter, to the point, and avoids the problem of the apostrophe. The presence and position of the apostrophe are crucial, since otherwise it changes the meaning. The apostrophe before the ‘s’ in Citizen’s Income emphasises that it must be paid on an individual basis.

Please note that neither a Participation Income, nor a Social Wage, nor a Minimum Income Guarantee (MIG) is a Basic Income. The first is similar to a Basic Income, but it is conditional on recipients participating in society (see chapter 7). The latter is a guaranteed minimum income that is targeted on people with insufficient income in order to raise them up to a given poverty threshold (Mestrum, 2017). A BI is paid unconditionally to everyone, rich and poor.

Preface

My story – or why it has taken me over 30 years to write this book

I THINK THAT I must have become a feminist at the age of about eight, when I realised that my mother did not have any money of her own, but had to ask my father for every penny – even to buy him a birthday present. He was kind and gentle, but inevitably he controlled the money. My next experience was in the mid 1960s, when, as a young, married, working woman, who believed that marriage was a way of proving how mature and responsible I was, I received my first tax return. This stated that if you were a married woman, you must pass the tax return to your husband for him to fill in on your behalf, (for which you would have to tell him any financial secrets that you may have had, and the reciprocal of which was not required). Of course, any tax rebates would be paid to him, and anyway, I was the one who carried out the financial administration for us both!

I assumed that, as a working married woman, in the period between jobs when I had no earnings, I would be eligible for Unemployment Benefit. However, I was rejected on the grounds that I had made myself unemployed by resigning from my school-teaching post at the end of the school year, which left a month before my next job started. I was told that it was up to my husband to keep me. I was incensed. I had not included the possibility of being a financial dependent into my vision of happy marriage. At that time a married woman could elect to have separate assessment for taxation on her earnings, but not on any other income. This remained the case until married couples became entitled to be taxed separately, starting in the fiscal year 1990–91. I did not think much of either the social security or income tax systems, especially for married women, and started thinking about alternatives. I remember talking about the concept of a ‘social dividend’ with a friend over breakfast one morning in 1970, who pointed me in the direction of Henry George’s Progress and Poverty (George, 1879, 2006).

In the mid 1970s, my husband and I separated. People asked why I had got married in the first place, since I knew what I would be letting myself in for? But, obviously, I was ignorant. So I wanted to explore where it said in the Marriage Laws that women have to be treated as second-class citizens. I bought a copy of the Marriage Act, which turned out to be a leaflet, merely stating who could marry whom, where and by whom. I noticed that it said ‘Chapter 15’ on the front, so I returned to HMSO and asked for the rest of it. The man laughed and explained that Chapter 15 referred to the fact that it was the 15th piece of legislation going through Parliament that year. So I asked how I could find out about how the Marriage Laws determined the role of women in marriage. He opened a very thick tome, which was an index of all the Acts of Parliament, and looked up ‘Marriage’. There followed several pages, each comprising three columns in small print, listing Acts that Marriage affected or was affected by. It seemed that the only way in which people could learn in advance about to what they were committing themselves, was to do a three-year PhD on the subject.

When men and women commit matrimony, they rarely know what the contract says. Not only that, but the small print can change over time, too. The key lies in the fact that the Marriage contract is not a contract between the husband and wife, as many assume. It is between the couple and the State, in which the couple agree to aliment, or maintain, each other, relieving the State from the responsibility of having to support the poorer partner. At the same time, this deprives the poorer partner from any state benefits, unless the other partner agrees to a joint application. In this condition lies the bane of married women. This is the reason why I think that the UK Marriage Laws are unethical, and I would like to see them changed, or at least this aspect of them. When I met my new partner, I declined his invitation to marry him, and we checked that our son would not lose out on his inheritance rights under the current laws. In 1986, The Scotsman printed my article, ‘The humiliation of an empty purse’, about financial dependence in marriage.

I read as much as I could find about Social Dividend and in 1983 I wrote a departmental working paper entitled ‘In Praise of Social Dividends’, copies of which I sent to people whom I thought might be interested. Later that year, I attended a one-day conference on income maintenance organised by the National Council for Voluntary Organisations (NCVO) in London. During the discussions in the afternoon, I heard other people say, ‘You would not have that problem with a Social Dividend’. We managed to identify each other and went off to the pub afterwards to get to know each other and agreed to keep in touch. They included Hermione (Mimi) Parker, Bill Jordan and Philip Vince. We met under the auspices of the NCVO for a few times over the next year and, out of that, the Basic Income Research Group (BIRG) was founded in 1984. I was surprised that, for a group who were in agreement over the concept, we argued fiercely about our individual ideas for Basic Income (BI) schemes. There was a learning process, too, to distinguish between whether we wanted a BI for its own sake, or for what it could achieve. It took quite a time to differentiate between instrument and objective, or means and ends. Also, we discussed whether we wanted a selective, needs-based benefit, or a Social Dividend that would be the same for everyone (of the same age).

The next major event was the conference in Louvain-la-Neuve in Belgium in September 1986, organised by the Collectif Charles Fourier, a small group all of whom had been, were, or were about to become, academics at the Université Catholique Louvain-la-Neuve. They were able to finance the conference from a prize for an essay about a Basic Income, and 60 people from across Europe were invited. The conference was a wonderful experience, had a friendly atmosphere and was extremely stimulating. It concluded by agreeing to set up the Basic Income European Network (BIEN) to keep a network of national organisations in touch with each other and organise a conference every two years. BIEN became the Basic Income Earth Network in 2004 because several national networks outwith Europe had become affiliated.

In 1989, BIRG became a charity, (number 328198). My own situation changed dramatically at this time, with a series of close bereavements including the death of my partner/husband after a short illness at the age of 50. Turning 40 with a new baby keeps one feeling young. Becoming the widowed mother of a ten year-old at 50 is quite different. In 1991 BIRG was granted generous funding by the Joseph Rowntree Charitable Trust to employ a part-time director and a part-time administrator. This was on condition that it changed from being BIRG to become the Citizen’s Income Trust (CIT), in order to ride on the crest of the wave of a topical debate about citizenship at the time. CIT hosted the fifth BIEN Congress in London in 1994.

CIT touched a low point in 2001, when our then director left, our Chair, Evelyn McEwen, died, and the ten years of generous funding came to an end. The trustees agreed to continue with private donations, volunteer administration and volunteer contributions to the Citizen’s Income Newsletter. Since then, we have operated on a shoestring, averaging about £3,000pa until recently. The Rev Dr Malcolm Torry volunteered to be the Director, giving an average of half a day per week (with the kind permission of the Bishop of Woolwich), and I agreed to take over as Chair. Since retiring in 2014, Malcolm has given more of his time to CIT. He and I have worked closely together since 2001, and I would like to take this opportunity to acknowledge the enormous contribution that he has made to CIT over these last years. It is probably 90 per cent due to his commitment, hard work, intellect and super efficient administration that CIT has provided such a firm foundation for the BI debate in the UK.

I started writing about BI seriously again in 2005. I had prepared a press release for CIT that ended with the claim that the UK could support a modest BI. It was quickly challenged by Samuel Brittan of the Financial Times asking for figures to back it up. An intense weekend followed in which I put all my back-of-envelope figures into context in an article, which Samuel Brittan acknowledged later (Brittan, 2006). Further stimulation came from the publication of the first Minimum Income Standards (MIS) data by the Centre for Research in Social Policy at Loughborough University in 2008 (Hirsch et al, 2014), which led to a further article. I explored whether a rule of thumb could be devised for the design of a CI scheme, for those over pension-entitlement age, working-age adults and dependent children that could meet the MIS criteria. I also explored how to cost an earnings/income disregard, where the initial tranche of gross earnings or income is tax-free.

In the meantime, I attended one of the organising meetings for the European Citizens’ Initiative on Unconditional Basic Income (ECI on UBI) in Brussels in April 2012, and listened to the discussions about the definition of, and objectives for, Basic Income schemes. Even after all this time, every time I hear such a discussion, I learn something new. Their emphasis on universal, individual, unconditional and high enough for the individual to live a life of dignity with the opportunity to participate in public life is an excellent definition of a full Basic Income. It was disappointing that the ECI on UBI failed to reach the required number of signatures during 2013, but it managed to make 285,000 people around the EU aware of the concept.

An important landmark for me occurred when my local Member of the Scottish Parliament (MSP), Jim Eadie, offered to host a seminar and roundtable discussion entitled Beyond Welfare Reform to a Citizen’s Income: the desirability and feasibility of a ci in the Scottish Parliament. It took place on 15 January 2014 and was attended by 60 people. Professor Ailsa McKay, of Glasgow Caledonian University, was the principal speaker. Although terminally ill, she presented the case for what she always referred to as a ‘Citizen’s Basic Income’ (CBI) with passion and wit, while I followed on with some relevant facts and figures about its economic viability. Sadly, Ailsa, who had been the voice of CBI in Scotland for many years, died seven weeks later. This book is dedicated to her memory.

The year 2014 continued to be very stimulating in Scotland, as the Scottish people asked themselves fundamental questions during the Independence Referendum debates, such as: ‘What sort of society do we wish to create for ourselves and future generations?’ The population in Scotland has become politicised like no other part of the UK, and my fellow trustees at CIT encouraged me to set up a sister organisation in Scotland. During the autumn of 2015, a group of us drew up a constitution for a Scottish Charitable Incorporated Organisation, a trust with limited liability, and the Citizen’s Basic Income Network Scotland (CBINS) was accepted as a charity (no. SC046356) in February 2016.

Following on from the event in the Scottish Parliament, Willie Sullivan (a friend of Ailsa’s) and I approached the Steering Committee of the Scottish Campaign on Welfare Reform proposing that we meet with a dozen or so members to try to devise a set of BI schemes for Scotland. A group of people from voluntary sector organisations in central Scotland met six times between July 2014 and March 2015 to take the idea forward. Faced with a choice of the interchangeable terms, ‘Citizen’s Income’, ‘Citizen’s Basic Income’ or ‘Basic Income’, the last was preferred. Thus they were, briefly, the Scottish Basic Income Group, with the objective of trying to devise a set of BI schemes that could be implemented by an independent or fully fiscally-devolved Holyrood Parliament.

Three sets of sample schemes were devised:

• minimal entry-level ones with BI levels at least as great as those of the current main means-tested benefits, which thus act as a floor, and demonstrate that even minimal level BIs can offer advantages;

• utopian schemes, where no-one is in poverty at even the highest benchmark, whose reference is the MIS; and thirdly,

• economically viable ones that aim to match up with the official European Union poverty benchmark of ‘0.6 of median equivalised household income’.

I prepared briefing papers for our meetings, that the group gently but firmly dismantled, which, though painful, was an excellent learning experience. I was given the task of writing up a report of our work together, which I thought would extend to about 10,000 words. After 25,000 words, I realised that it had turned itself into a book. This book is the outcome of those meetings. It attempts to structure the multitudinous facts accumulated during my immersion in the BI debate over more than 30 years, and I could not have written it in its present form without all of those learning experiences right up to the present time.

The structure of the book

THIS BOOK IS intended to fulfil several objectives.

• to demonstrate that a BI would be preferable to the current social security system, although some would be satisfied with a few changes at the margins of the latter;

• to provide the illustrative sample schemes and show that they are economically viable, even if some people do not consider the method of funding proposed here to be politically feasible at the present time;

• to enable those interested to be able to experiment, design and cost their own BI schemes, by demonstrating the process to follow and showing where to access sources of official data;

• to prove useful as a reference work to help to inform the public about BI, and

• to offer some suggestions as to what grassroots advocates could do to share their enthusiasm.

I have tried to write the book so that it can be read on different levels. It is primarily aimed at the general reader, but it must also be accurate and comprehensive enough to satisfy a range of interests including academic economists, social policy experts, civil servants and politicians.

It is ironic that, although the concept is simple, the subject matter relating to a BI is complex. This is for several reasons:

• one is trying to disentangle the unnecessary and avoidable complications of the current social security system when replacing it, to ensure that their current functions are covered by the new system;

• the internal structure of an income maintenance (social security) system and its immediate outcomes are summarised in Tables 3.2 and 3.3 and reveal how interrelated they are. This leads to some repetition in the text;

• the definition of a BI by itself does not provide enough information to enable someone to devise a particular system. An infinite number of schemes is possible. Each is subjective in the sense that it is the outcome of the prioritised objectives, assumptions and constraints of those who devise it. The design and implementation of any one scheme can quickly become complex and technical.

• Although the concept of a BI is fairly simple, it would lead to such a fundamentally different system that its influence would ramify throughout society and affect many aspects of life, which have to be anticipated and assessed.

A further difficulty for the reader arises where the discussion involves some economic analysis. Few of the concepts are difficult. Where some background in economics or social policy would be helpful, this is flagged up and references are given so that those who wish to learn more are able to follow up particular issues.

Some readers have a blind spot where numbers are concerned. Much of Part III of the book is presented in terms of tables of figures, based on data mainly from official sources, so that the case for economic viability is credible. Readers to whom such numbers and tables are anathema should feel entitled to skip chapters 10 to 13, but are encouraged to persevere with chapter 14, where the deliberations in earlier chapters are used to devise and present the illustrative sample schemes.

The book is in four parts. Part I introduces the philosophical and political arguments about why we need change, and poses the question ‘what sort of society do we wish to create?’ It suggests that the four values (wisdom, justice, compassion, integrity) inscribed on the mace in the Scottish Parliament would be a good starting place.

Part II examines theory and evidence, beginning with the internal structure of income maintenance systems, noting that it comprises four design features that offer choices: the unit for assessment and delivery of a benefit, eligibility, selectivity and contingency. The current system is based on one set of choices and causes problems for benefit recipients. A BI scheme is defined by an alternative set, creating a very different type of society. The relationships between the design features and their outcomes or objectives are summarised in Tables 3.2 and 3.3, which represent the subject matter of Part II. Each design feature is examined in turn in chapters 4 to 7 and its influence on the outcomes is traced. Each of these chapters concludes with a case study of a BI (or a guaranteed minimum income) that has been implemented or piloted. Part II concludes with other evidence from elsewhere in the world, where a scheme has been implemented, piloted or mooted.

Part III demonstrates the economic viability of BI schemes by examining facts and figures. It asks what level of BI would be sufficient, and looks at two different poverty benchmarks against which BI schemes can be matched. It then proposes an alternative benchmark for BI purposes. It shows how to calculate the gross cost of a scheme, and discusses some alternative methods of financing them. I come to the conclusion that a restructured, fairer income tax system would be the best source for the more generous schemes, while recognising that any one scheme could be financed from more than one source. Three sets of increasingly generous, illustrative sample schemes for both Scotland and the UK are presented and costed in chapter 14. A method of costing the schemes is put forward, based on a flat rate tax in the proposed restructured income tax system. This is merely to be able to cost and compare the different schemes using a single figure, and in no way suggests that this is the only, or best, way to finance the BI schemes. The information provided in Part III could guide those interested in designing their own schemes, and in this sense Part III may be regarded as a ‘do-it-yourself manual’.

Part IV ties up loose ends and addresses practical matters. How would a BI scheme be implemented in practice? What is the political process? How would the actual scheme to be implemented be chosen? How do we get from here to there? Chapter 16 concludes by summarising some of the main points from the book.

Appendix A provides a summary of figures for the UK for 2011–15 and for Scotland 2012–15, for easy reference. They include some population figures, Gross Domestic Product and GDP per capita, total personal income and mean income per capita, for both Scotland and the UK. For the UK only, it continues with expenditure on Social Security transfers, revenue raised by different taxes, the cost of Tax Expenditures, the rates for means-tested and other benefits, income tax and employees’ National Insurance thresholds and rates, and numbers of taxpayers by age.

Appendix B provides a hypothetical example of an international BI scheme, and some examples to demonstrate measures of inequality. It also provides other hypothetical examples to demonstrate the redistributive powers of a flat rate income tax that is hypothecated and used only for a BI scheme. It also explores the outcomes of some progressive income tax schedules.

Appendix C lays out the template for an Excel program to work out the cost of your own BI scheme financed by a restructured income tax. Appendix D gives a chronology of BI with respect to the UK. Readers may notice that I like lists.

Acknowledgements

I acknowledge with thanks the dismantling of my misconceptions offered by the members of the Scottish Basic Income Group, their contributions to the debate, and their being instrumental in devising the schemes for Scotland presented here. I am particularly indebted to Jon Shaw for invaluable advice about the current Social Security system. A condensed version of Part II of this book appears as a chapter in a new textbook (Campbell et al, 2016), and its excellent editing has also benefited this book, for which I thank Jim Campbell and Morag Gillespie of Glasgow Caledonian University. I am deeply indebted to Morag Gillespie for editing this book very thoroughly on her formal retirement from GCU. I also thank those who have read all or part of the manuscript and offered comments, including my fellow or former trustees in the Citizen’s Basic Income Network Scotland, Prof Mike Danson, Maddy Halliday, Jon Shaw, Dr Ben Simmons and Willie Sullivan, together with Gareth Morgan of CIT, Sue Robertson and Jim Pym. Any remaining errors are mine alone.

The Basic Income European/Earth Network (BIEN) has provided many friendships along the way including, among others, Jan Otto Andersson, Jurgen De Wispelaere, Louise Haagh, Seán Healy, Barb Jacobson, Brigid Reynolds, Guy Standing, Philippe Van Parijs, Walter Van Trier, and Karl Widerquist.

I thank the trustees of the Citizen’s Income Trust (Citizen’s Basic Income Trust (CBIT) as from the end of May 2017) for many hours of stimulating discussion and for their permission to quote from the Citizen’s Income Newsletter and CIT’s other publications. The views in this book are not necessarily those of either CIT or the Citizen’s Basic Income Network Scotland.

Lastly I thank my family for their forbearance over the years, particularly Jim who has been very patient and helpful while I have been writing this book.

PART I

Philosophical and Political Arguments

CHAPTER 1 Introduction:How did we get from there to here?

Imagine…

IMAGINE A SOCIETY where every adult receives a regular, unconditional, cash payment on an individual basis that is delivered automatically to one’s personal account. This Basic Income (BI) is enough to live on modestly, but with dignity, enabling one to participate in public life. There is no compulsion to work, but most people want to work-for-pay to top up their incomes, to meet other people, for job satisfaction and to be recognised as someone who contributes to society. Some prefer to work long hours on a high salary; others prefer part-time work which fits in better with their work-life balance. Others take time out of paid work in order to care for children and elders, or other family members and friends with disabilities. Although automation has replaced many jobs, there is still demand for highly qualified workers in the new industries, in addition to demand for paid carers, those in the personal services and the creative arts.

Taxes on scarce resources ensure that it is non-material economic activity that continues to grow. There is a buzz in society as many people use their creative abilities to design new products, to make things, and invent new processes. Education is a growth sector, not just for training people for work, but because learning can be enjoyable and satisfying for its own sake. Leisure is another growth industry. Many take up hobbies such as handcrafts, gardening, and rambling. The Arts in many forms take off, both for participant and spectator. Increased financial security has led to a reduction in both the incidence and depth of poverty. The fear, stress and anxiety have lifted and there is a general improvement in health. There is also a reduction in crime. Although one is not protected against the ordinary sorrows of life, optimism is in the air, accompanied by a palpable feeling of good will to and from those around them. People co-operate on local ventures.

Some societies appear to operate on the basis of fear and despair. BI provides a basis of compassion, justice, trust and hope. Let us work together to turn this dream into reality.

Why we need a BI system to replace the current Social Security system

The current social security system was set up immediately after World War II to meet the needs of an economy and society that were very different then.

The economy has changed in many ways over the last seven decades. Manufacturing has declined and given way to services, which is now the largest sector. Full male employment on good wages is no longer the norm. Workers change jobs more frequently than before. Many people are now on low wages, in part-time work, on zero or small hours contracts, in temporary work or insecure jobs. Women comprise a greater proportion of the labour force now. Automation has led to a loss of jobs, initially in middle-income employment, but also among unskilled workers, and eventually it is likely to encroach on the professions (Miller, 2016: 167–8). In the 19th and early 20th centuries, technological change was associated with a change from one type of technology to another, such as from a gas-based to electricity-based technology, or from horse-drawn transport to the steam revolution and to the combustion engine. It led to new jobs replacing the old. However, the scale of the computer revolution with its capacity for information storage, computation, word-processing and communications has led to the automation of many jobs, without the usual replacement by even more employment in the new technology. It is not clear yet whether this trend will continue, or if sufficient jobs to fulfil people’s aspirations will transpire. There will always be a role for employment that needs the personal touch, such as care work, personal services, catering, and the creative arts. A reformed social security system should be such that it is able to cope with any outcome of the automation revolution.

Society has also changed markedly since the end of World War II. Beveridge’s social security system reflected the needs of the time, but has failed to meet those of a gradually changing society. For example, most lone parents were widows then, but now are single or separated. Although many women had been employed during the war, it was felt that the returning war heroes should have first refusal on post-war employment, and many women were persuaded to return to their former roles as wives and mothers first and foremost. In 1948, ‘full employment’ was based on male full time work. It was assumed that a man could earn enough to keep himself with his wife at home and at least one child.

Education for both young men and women has been extended, and now there is a higher proportion of women in the workforce than in the immediate post war era. Many women combine paid work with unpaid caring roles and domestic work in the home. The significance and value of women’s unpaid work in the home and caring for children and elders that underpins the monetary economy is still unacknowledged. The average age of women at which they have their first child has risen. Marriage breakdown occurs more frequently, more couples cohabit without being married, there are more lone parent families (Donabie et al