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Why Labour should adopt ‘citizen’s income’

basic-incomeI’m all for nicking good policies, and one Labour and the labour movement should half-inch is the citizen’s income from the Green Party. Of course, the Greens don’t own it, it has been knocking about for a good many years. But they are the only ones pushing it as a key plank of their commitments. Here is the short section from their policy website, and is likely to have similar wording for the 2015 manifesto:

EC730 A Citizen’s Income sufficient to cover an individual’s basic needs will be introduced, which will replace tax-free allowances and most social security benefits (see EC711). A Citizen’s Income is an unconditional, non-withdrawable income payable to each individual as a right of citizenship. It will not be subject to means testing and there will be no requirement to be either working or actively seeking work.

EC731 The Citizens’ Income will eliminate the unemployment and poverty traps, as well as acting as a safety net to enable people to choose their own types and patterns of work (See EC400). The Citizens’ Income scheme will thus enable the welfare state to develop towards a welfare community, engaging people in personally satisfying and socially useful work.

EC732 When the Citizens’ Income is introduced it is intended that nobody will be in a position that they will receive less through the scheme than they were entitled to under the previous benefits system. Children will be entitled to a reduced amount which will be payable to a parent or legal guardian. People with disabilities or special needs, and single parents will receive a supplement.

EC733 Initially, the housing benefit system will remain in place alongside the Citizens’ Income and will be extended to cover contributions towards mortgage repayments (see HO602). This will subsequently be reviewed to establish how housing benefit could be incorporated into the Citizen’s Income, taking into account the differences in housing costs between different parts of the country and different types of housing.

At £3,692/year for everyone over 18, we’re hardly in the territory of a weekly lottery win for everyone. But it is not without cost. The Telegraph think it will cost between £240bn-£280bn/year. Where they get this figure from I don’t know. Providing an income for everyone over 18 would cost £185bn. That includes people currently in receipt of the basic state pension. Remove the 10.4m currently drawing one knocks off just over £38bn. The Greens favour funding it from a wealth tax and savings from a largely obsolescent welfare state. Extra payments for housing, the disabled, and some form of child benefit would remain.

It’s not beyond the realms of possibility. It can be done if the political will and popular support is there. Two possible objections come to mind first, however.

1. It undermines the incentive to work.
2. It would contribute toward inflation.

Let’s look at some evidence.

Between January 2008 and December 2009, a coalition of mainly-German aid organisations sponsored a basic income grant pilot in Otjivero-Omitara in Namibia, a small town of about a thousand people located 100km from Windhoek. Everyone under 60 was paid 100 Namibian dollars/month and the results were interesting. While the data was skewed by family members from elsewhere migrating into the town once the pilot was underway (making it look like household income actually fell for the duration), nevertheless poverty was reduced within a year from 76% to 37% of residents.

For those not homing migrants, it crashed to 16%. Within six months of its introduction, underweight children fell from 42% to 17%. School drop out rates fell from 40% to 0%, debt declined from N$1,215 to $772/per person, reported crime collapsed by 42%, and the number of adults involved in “income generating activities” increased from 44% to 55%. The pilot notes “the grant enabled recipients to increase their productive income earned, particularly through starting their own small business, including brick-making, baking of bread and dress-making. The BIG contributed to the creation of a local market by increasing households’ buying power.”

Very good work though five years after the pilot concluded the Namibian government have not implemented the policy. However, that’s Namibia, a country dominated by a huge desert, low population, and lop-sided economic development. In effect, one might argue that the period of the BIG pilot helped round out Otjivero-Omitara’s local economy. Is this of any use to wealthy, Western nations? A series of US and Canadian government pilots with Negative Income Tax delivered results that were repeated by the Namibian experience. These were slightly different in that a basic income was paid only to those who fell beneath a certain threshold – think of them as a form of today’s working tax credits.

The Namibian effect on schooling was presaged here: attendance and attainment up, drop out rates down. Low birth weights disappeared and, in the Canadian experience, falls in accidents, and physical and mental health problems pushed hospitalisation rated down by over eight per cent. Nor was there any evidence of recipients giving up work to live off the grant. Some secondary earners – mainly women – scaled back their work hours, and there was some evidence that if a primary earner lost their job they spent a few weeks looking for a suitable replacement (pp 9-10 here).

Still not convinced? Let’s take a trip to Alaska, home of the Klondike, Ice Road Truckers, and Sarah Palin. Since 1976 the state has taken a slice of oil revenues and invested the proceeds, building up a sovereign wealth fund worth around $50bn. Since 1982 the Alaska Permanent Fund Corporation has paid out a dividend to the 700,000 or so resident Alaskans of varying value.

As you can see, the value has been all over the place. I expect it will be a historic low this year, depending on the performance of its non-oil assets. While it is true prices in Alaskan shops are higher than the US heartland, this is because of import costs rather than any inflationary effects. Furthermore in November 2014 unemployment stood at 6.6% vs the national average of 5.8%. Evidence of bone idleness or the fluctuations in the oil economy? As the Department of Numbers site indicates, unemployment rates have been relatively stable since 1990.

These experiences who a citizen’s income can be done, but should it be done? Of course, and as a matter of urgency: it is a simple measure that can dramatically improve the living standards of millions and, as the evidence suggests, have very beneficial knock-ons in terms of education, health, crime, and community cohesion. That’s why the Greens and increasing numbers of Labour people endorse it. From a labour movement point of view, there’s another compelling reason.

For 35 years business as had the whip hand over the global economy. Capital freeboots its way across the planet subject to few checks, and playing one region off against another. David Harvey made the compelling case in his A Brief History of Neoliberalism that capital in its neoliberal phase is decadent and regressive. Profits have not come from the expansion of the productive forces, as Marxists would put it, but rather by an ‘accumulation by dispossession’. The forced enclosures of land, the selling off of publicly-owned assets, the export and deletion of jobs, the introduction of markets into public services, and the erosion of progressive income tax regimes has redistributed wealth from the poor to the rich. It’s a global power grab that’s only been possible because labour movements have been defeated in far too many countries far too many times.

From a British perspective, this has meant that many millions of people are not covered by trade union protections and are subject to overwork, pitiful pay rises, job insecurity. And that’s the full-time workers. As the government talks up the economic recovery and trumpets jobs growth, a simple look at the figures shows that 24 out of every 40 new jobs are full-time, yet in 2008 the F/T rate stood at 64%. And today? 62%.

We have a job market increasingly bent toward part-time working in which many people can’t make ends meet. With unemployment high and competition fierce for what full-time jobs there are, its bent far too much toward the purveyors of temporary working and zero hour contracts. A citizen’s income would change all this.

If people entering the job market know they have a regular weekly payment providing a little bit more security, the market incentivises good employers. No longer will workers have to cling to a low paid job with an awful boss. A basic income will keep the wolf from the door, changing entirely the balance between employers and employees, and offering new political opportunities our movement can capitalise on.

This is the other reason why I support the basic citizen’s income. It’s a bold step toward securing the interests of our people and changing society permanently for the better. We need to take it up, turn it into party policy, and win it.

This article first appeared at All that is Solid

Image credit: Basic Income UK

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