Britain's system of social security, complex and widely misunderstood, is in crisis. It is failing to fulfil its primary function – to provide a guaranteed and secure income in times of need. It is ill-equipped for dealing with the surge in inequality caused by the increasing fragility of the labour market and the growing insecurity and ill-paid nature of work.
In search of reform, a growing number of researchers and campaigners have argued the case for replacing the existing model with a Citizen's Income (CI), a guaranteed, unconditional and non-contributory basic weekly income paid to every individual as of right. One of the most tireless of these campaigners has been Malcolm Torry, Director of the Citizen's Income Trust. In this book Torry makes a compelling, non-technical case for such a scheme.
As Torry shows, a CI would reduce reliance on means-testing, soften the poverty trap and mitigate the threat to jobs of accelerated automation. It would cut administration costs, provide greater choice between work and leisure and encourage voluntary work. The book, admirably short and one in a new series published by Policy Press, outlines 101 reasons for Citizen's Income, though ‘in the cause of balance’, he adds nine and a half reasons against: that, for example, it would go to people who did not need it and that it would discourage work, reasons that he first sets out and then promptly rejects.
The idea of a citizen's income has a long pedigree. It has been promoted over time by a great diversity of prominent British, American and European thinkers from Thomas Paine and Bertrand Russell to J. K. Galbraith and Martin Luther King.
Significantly, a CI has gained support from Right and Left, from conservatives and pro-marketeers as well as social democrats, though for very different reasons. The Left has seen such a scheme as a way of tackling poverty and of securing a robust income floor but also as a means of promoting equal citizenship and of encouraging a more equal distribution of income. For them, it is a recognition that all citizens have the right to some minimal claim on national income. The Right, on the other hand, have favoured CI as a way of minimising state action in other areas, of offering both a safety net and continued freedom of choice.
Such a scheme would offer a number of improvements over the existing, heavily means-tested and increasingly punitive model of social security, including its increasing inability to provide a decent minimum income floor. But just how feasible is a CI? Such a scheme would involve a profound revolution in the way we organise income support. If operated in full, it would bring an end to the current system of social insurance, one based on the sharing of risk, shifting instead to a system of guaranteed income for every individual as of right.
Before it could be implemented, it would need to overcome a range of obstacles, mentioned but perhaps underplayed in the book. A CI would lead to losers as well as winners and would require big shifts in the structure of taxation to make it work. There is the question of whether the payment could be set at a level that provides enough for an acceptable basic standard of living? Or would it only be able to meet a portion of basic living costs, as with child benefit at the moment?
The central issue with a generous CI is that the gross cost would be high – between 10 and 13 per cent of GDP, roughly equivalent to the total social security budget. This is because it involves a payment going to every citizen. Against this, there would be substantial offsetting savings, as the payments would aim to replace a range of existing means-tested and contributory benefits (as well as existing personal tax allowances).
Simulations of its impact, some by Torry, show that to minimize the number of losers amongst lower income groups would require substantial additional funding on top of a higher basic marginal rate of tax (Torry, Reference Torry2015). This is because the current benefits system, in part because of its complexity and reliance on means-testing, is able to pay large sums to some groups. A simpler, flat-rate CI scheme cannot compensate for the withdrawal of both personal tax allowances and most means-tested benefits without becoming expensive.
Such a scheme would involve a major transformation in the approach to social protection, in the pattern of redistribution, in the nature of the tax system and in the pattern of work incentives. For this reason it would require a major shift in current social and cultural attitudes and in the embedded political mindset. No scheme could be introduced until the public is made aware of the trade-offs involved and could be persuaded of its benefits. Nevertheless, there is growing interest in the idea. Both Finland and the Netherlands are seriously considering the adoption of pilot schemes while, in 2016, Switzerland is to conduct a referendum on its implementation.
In the UK, the debate about the potential for such a scheme is largely confined to think tanks, policy researchers and commentators. Before serious debate can begin it needs to enter the public arena. It is to be hoped that Malcolm Torry's short, clear and highly readable book helps to promote that much-needed wider debate.
