Basic citizen income—two examples of how it would work

, . Filed under Politics.

Now, we all know a basic citizen income will never happen in the UK, because of our punitive attitude to benefits. However, it’s interesting to look at how it would affect us if we actually created a system that supported people regardless of their circumstances. We can but dream.

The following scenarios and figures are based on Dr Malcolm Torry’s work for the Citizen’s Income Trust (see Appendix 16). He claims the proposals are revenue neutral.

The state would give every citizen a fixed income regardless of their salary, pension, investment income, age and marital status. Dr Torry proposes income levels based on current income support and pension credit rates:

Age Weekly rate
0–15 £56.25
16–24 £56.25
25–64 £71.00
65+ £142.70

Weekly basic citizen income amounts

Example 1

A and B are married and have two school aged children. A earns the national average wage of £26,500 a year. B hasn’t worked for four years in order to bring up the children. B would like to find a part–time job or course in order to begin a return to work.

The family collects £160 a month in child tax credits and £134 child benefit.

After tax and national insurance (NI) A takes home £1700 a month. This results in an total income of £1994 a month.

At the moment it’s next to impossible for B to find work or study, because they’ll lose their tax credits and have to start paying for pre and after school childcare, and any course costs.

Under a basic citizen income scheme A would pay more income tax because there’d be no tax allowance. Using the current tax rates, tax and NI add up to 32%, so A would take home £1502 a month.

Basic income is paid to all citizens regardless of age. Using Torry’s suggested rates, the family would receive £1103 citizen income a month. This results in a total income of £2605 a month, £611 more than the current amount.

How things would change

B could look for work without worrying about losing child tax credits. If the government also subsidised free childcare, it would be even more attractive. Study would be a realistic option.

There are also several indirect benefits. A currently pays £60 accident, sickness and unemployment insurance. They wouldn’t need to pay as much because redundancy wouldn’t be as ruinous as before (moving to part–time work would be a realistic option, for example).

A could change their work hours to share childcare duties. It might be possible to go part–time in order to improve B’s job and study prospects.

A citizen income would drastically improve financial security, work and study flexibility and the quality of A and B’s life (and their children’s).

Example 2

C brings up three children on their own. Their youngest child has turned 5, which means they have to move to Employment and Support Allowance (ESA) benefit of £71.70 a week.

After 13 weeks they’ll be put into a sinisterly named “work related activity group” and face sanctions if they don’t attend job interviews or do “work–related activity”. Work related activity is work for free (also known as workfare).

They currently claim £376.11 a month child tax credits and £204.10 child benefit. Total income is £890.91 a month.

C would like to either work part–time or, because they have no formal qualifications, begin an access course so they can train for a job.

C would lose their ESA under the current rules if they started a course.

Under the basic citizen income scheme, the family’s income would increase by a modest £148 a month to £1038.91. C wouldn’t have to start unpaid “work–related activity”, and they’d be free to either study or work part–time without losing any money.

How things would change

C wouldn’t have to worry about a change in circumstances affecting their children’s well–being. They could also concentrate on planning some sort of career, rather than how their income changes on a week to week basis, or working for free.

A common theme to these examples is education. Another indirect consequence of a basic income would be a better trained workforce.

Why it won’t happen

If Torry’s cost neutral claims are true, then it’s hard to argue against a basic citizen income. They serve the government’s aim of getting people back to work far better than the current means tested system.

If you’re of a neoliberal bent they also open up several interesting possibilities around ‘flexible’ labour laws. If unemployment isn’t entirely financially ruinous, then zero hour contracts and no quibble hiring and firing may seem a little fairer than they do at the moment. (Note – this isn’t my view!)

However, the main drawback is that an untested citizen income isn’t punitive. In real life, A is encouraged to feel that they’re paying for C to ‘do nothing’ while they struggle on a low income, instead of questioning why their salary is so inadequate. Benefits and work are an exercise in division and revenge.