A debate on Universal Basic Income

From one point of view, I ‘won’ a debate in the Chartered Institute of Housing’s conference on Tuesday, when I was sounding a sceptical note about the idea of Universal Basic Income.  After hearing the arguments, people were much more critical of the idea.  There’s a short (and not very balanced) report on a CIH blog here.   If you read it, you might get the impression I had swayed people with my fiery rhetoric and compelling oratorical powers.  But the truth is that the case was largely won for me before I opened my mouth.  At the outset the CIH Chair asked people to vote electronically.  The first question was whether or not people were generally in favour of the idea; 75%, of an audience of about 200 said they were.  Then he asked if they would still support it if they had to pay more in tax, and approval fell to 51%.   Laughter in the hall.  Job done.

Deciding the date for the referendum is not just a ‘game’

Theresa May has described the request for a referendum on Scotland before a final decision about Brexit as a ‘game’.  There’s rather more to it than that.  If Scotland votes for independence before the exit agreement is concluded it will materially affect the terms on which Scotland could become a member of the European Union.  It would make it possible for Scotland’s status to be negotiated as part of the exit agreement; the precedent is the division of Denmark from Greenland, where part of a country left and part continued within the EU.  That would also mean, under the terms of Article 50, that Scotland’s status was subject to majority voting rather than unanimous agreement within the Council.  (We’ve been hearing a lot about the need for the EU to get the consent of all member states to agreement on the UK’s departure; that’s not actually required by the Article 50 process.)  Delaying the timing of the referendum would have the effect of closing down both of those options, and while the situation could be resolved in other ways, a delay now could obstruct Scotland’s consideration for membership for several years.

The date is however a matter of politics, and if May wanted to scuttle Scottish independence, she has another option: which is, to offer an immediate referendum within the next two months, rather than one in 18 months to two years.  The precedent is the short period permitted for the Brexit referendum; the Government’s rationale would be that this would clear the ground before the exit negotiations, Brexit in 2019 and the 2020 General Election; but the political calculation would be that a short time span would make it very difficult for the Nationalists to build enough support to win.  The longer the delay, the more likely it becomes that the vote will be for independence.

Why I’ll be voting for independence this time

Nicola Sturgeon has announced that there will be a further referendum on Scottish independence.  I thought the arguments were finely balanced in 2014, and I did not vote in favour. The main positive arguments for independence seemed to me to be about

  • responsiveness to need
  • self-determination, and
  • solidarity.

The main positive arguments for the union were

  • social protection and security,
  • the increased capacity to act with common resources and
  • pragmatism.

The last of those arguments  has been exploded by recent events: sticking with the UK while it prepares to jump off a cliff is hardly a pragmatic choice. The other arguments for the union are still valid, though the first has been undermined to some extent by the erosion of public services and social protection under the mantle of ‘austerity’; and all of the arguments for union are as much arguments for union with Europe as they are for union with the UK.  The scales have tipped, and as they stand now I will vote in favour this time.

If Scotland is going to be serious about independence, however, some of the holes in the Scottish Government’s proposals have to be filled. Their initial  attempts to outline a constitutional settlement were led astray by the inclusion of specific policies (such as policies on defence) rather than constitutional powers.   I hope we won’t have a repetition of the disastrous White Paper, which presented a policy manifesto instead of an agenda for independence.  We do need to embark on a constitutional debate.

The future of the EU is not going to be for its citizens

The EU Commission’s White Paper on The Future of Europe  was published on 1st March.  It covers five scenarios:

  • carrying on as things are
  • nothing but the single market
  • allowing those who want to do more to develop initiatives
  • doing less
  • strengthening the EU on issues such as trade, foreign policy and defence

It’s striking what this is missing.  The problems faced by the EU are crisply stated:

many Europeans consider the Union as either too distant or too interfering in their day-to-day lives. Others question its added-value and ask how Europe improves their standard of living. And for
too many, the EU fell short of their expectations as it struggled with its worst financial, economic and social crisis in post-war history.

If the problem is that people think the EU is remote and irrelevant, then proposals to make it still more remote and less valuable to citizens make no sense at all.  In September Juncker was talking about developing a “European Pillar of Social Rights” – but there are only eighteen words about social rights in the White Paper, and those are confined to the world of work.  The idea that the EU should be there for its citizens seems to have been forgotten.

 

Reforming PIP

The Government’s proposals for the reform of PIP make for curious reading.  The DWP press release explains that the purpose of the proposals “is to restore the original intention of the benefit which has been expanded by the legal judgments.”  The fullest account of the rationale for the policy is however given in the Equality Analysis, which covers the detailed arguments without saying much about equalities.

The problem that the proposals are supposedly addressing is that a couple of legal decisions have accepted that people with a range of disabilities might reasonably be said to qualify for support under the rules as passed.  Those disabilities mainly relate to people who have to manage a medical condition or therapy, which is expressly provided for in they regulations, and people who suffer from mental disorders that interfere with their capacity to travel.   The responsible minister has explained that

The Government continually monitors the effectiveness of PIP to ensure it is delivering its original policy intent and supporting those who face the greatest barriers to leading independent lives. Two recent Upper Tribunal judgments have broadened the way the PIP assessment criteria should be interpreted, going beyond the original intention.

The Equality Analysis goes into more detail about the apparent intention.

PIP is a payment that is intended to be broadly proportionate to the overall need of a claimant. The greater someone’s need, all else being equal, the greater the cost they will face as they go about their daily lives.

The analysis argues that  the tribunals’ interpretations of the points schemes go further than the DWP intended.

There are three problems with this account.  The first is the question of what PIP is supposed to be about.  If PIP is really supposed to be an extra cost benefit, it makes little sense to offer it without reference to people’s ability to pay.  The truth is that when the non-means tested benefits were introduced, they had a very different objective.  The Disablement Income Group had been campaigning for a recognition that the incomes of people with disabilities were consistently lower than for others.  Alf Morris explained, in Parliament (10th and 15th Jul, 1970):

“It is not only a question of finance we are discussing, but also the dignity of disabled people. … This provision must be seen as only part – a very minor part – of an entirely new financial deal for the severely disabled. … This is only one stage towards improving the financial status, and therefore the dignity, of every one of our severely disabled fellow citizens.”

The point of the non-means tested benefits was to introduce a   general income supplement, recognising that the incomes of people with disabilities were consistently lower than for others.

The second problem lies in using an assessment of functional activity as the basis of an assessment of costs.  This makes no sense – and the Equality Analysis explicitly acknowledges that it doesn’t work.  Testing people’s activities is “a proxy for their overall need”, but then it goes to explain that assessing costs is not practical:  “it would not only lead to inconsistent outcomes but would also be expensive and difficult to administer.”  If there was a direct relationship between need and cost, this would not be true – and the outcomes wouldn’t be inconsistent.  As far as I can tell, there isn’t such a relationship, or at least not one at the level there would need to be to make it the basis of an individual assessment.

The third problem concerns the Government’s intention.  It’s clear that the Government thought that introducing PIP would save money, and that the benefit would be more restrictive than the Disability Living Allowance.  I challenged that assumption more than four years ago, when I wrote this:

the target is a reduction of 600,000 people taken off benefit by 2018. I am not sure how a cut in numbers of that size is supposed to be achieved, but it is most probably made up of three elements: people who will lose the lower rate for the care component, people who fail to turn up for assessment, and people whose conditions have improved sufficiently not to qualify. (There is a fourth element, which is the attempt to individualise assessments more closely – blind people, for example, will no longer qualify automatically for higher rate mobility – but that can work both ways.)

On general principles, I think the predictions are likely to be wrong. The common experience of selective benefits has been that when governments try to impose firmer boundaries, they are liable to discover that needs are deeper, more complex and more difficult to reject than they imagine. The distinction between the lower and middle care rates on DLA has always been confusing, and many people can argue persuasively for higher banding. There are new opportunities to include people with psychiatric disorders. And the PIP rules do not exclude the growing numbers of older people claiming DLA.  Short term reductions have to be offset against the general trend, and as time goes on, inexorably, there will be pressure to extend protection. That happened with Single Payments, it happened with Incapacity Benefit, it has happened with DLA, and it will probably happen here, too.

And so it has proved.

Basic Income continued

It’s a problem with social media that there are so many ways to respond, so people following this blog won’t necessarily get to see the comments that people make on Twitter and in other ways.  Some of the criticisms that people made yesterday were directed at my Evil Assertion that the best way to deal with the loss of jobs was to make jobs.  Another  person challenged my argument that Basic Income wouldn’t leave poorer people better off if it got knocked off their benefits – we’ve seen this before, because it’s what used to happen to Child Benefit.  “I’d like to see Professor Spicker’s basic income proposals that leave poor people no better off, as I have seen none-such that do that.”  So here are a few.

Reed and Lansley, authors of the Compass schemes, do their best to hold losers to the minimum (7% of the second income decile for their Scheme 1, while about a third are no better off.) They explain:

“it is not possible to design a scheme that is revenue neutral, pays a decent sum and withdraws most means-tested benefits without significant numbers of losers.”

Malcolm Torry is Director of the Citizens Income Trust, and the author of a clutch of recent books on Basic Income.  He has produced three schemes for the CIT, labelled A, B and C. (The RSA scheme is also based on the CIT models.) He acknowledges that there will be losers:

“A feasible way to implement a Citizen’s Income showed that in 2012/13 a Citizen’s Income of £71 per week (with less for children and young people, and more for elderly people) could have been largely funded … but that at the point of implementation such a scheme would have imposed losses of over 10% of disposable income on 21.12% of low-income households (defined here as households in the lowest disposable income decile). … In relation to schemes A and C, while it is true that the high losses imposed on households at the point of implementation are the result of the complexity of the current tax and benefits scheme, and not of the Citizen’s Incomes, such losses would make the schemes impossible to implement.”

Scheme A would leave 28% of the lowest paid households worse off by more than 10% of current income, Scheme C would leave 29% worse off. Scheme B is the one that leaves existing benefits in place, and takes BI off them; while scheme B largely avoids losers, the poorest who currently receive benefits will remain in the means tested system.

That’s six schemes so far. Neither Reform Scotland nor the Green scheme do the same kind of modelling, but while they aim to be more generous, which is one of the ways of reducing dependence on means-testing, both abolish Tax Credits. There will be losers as well as gainers.

Some comments on Basic Income schemes; it’s not the answer to automation

A couple of days ago I spoke to Anas Hassan, a journalist for Common Weal, about Basic Income.  His article is on Common Space.  He recorded the conversation, and what’s presented, while it looks a bit like I’ve written a contribution, is actually a selection of the things I said over the phone.   Part of my comment, which is about the distributive problems of Basic Income, is stuff I’ve already covered in this blog, so I won’t repeat it now.  The other part is something I think I haven’t tackled elsewhere, which is about the idea that Basic Income can make up for the loss of jobs in an automated age.    What I told Anas, more or less, is this:

There are ways of absorbing the loss of jobs. As it happens, I think that there are lots of jobs that we ought to be providing and we ought to be doing. Many of those jobs are public in one sense or another – either they are paid for publicly or they are directly employed in the public sector.  Examples might be police, nurses, people involved in fire and rescue, gardeners. We need a massive number of carers both for older people and for younger people. We need more road menders [My correction: Anas has written ‘members’]. We need more people protecting the civic environment.  … We also have countries that simply employ more people doing things that are socially useful. My model for that would be some of the Nordic countries, but particularly Norway. And what we find is that the number of people who are involved in public service is directly associated and related to the amount of residual poverty that then remains in that economy, because what you are giving people is respected, worthwhile jobs. We could do that. Government has created many jobs. They are worthwhile jobs. They’re important jobs. And it could create an awful lot more if we had the will to do so.  That’s the answer to this question of what happens to people not having jobs.

The Maseres scheme for life annuities

I found a copy of Nicholls’ History of the English Poor Laws in a second hand shop, and it’s taken me a few months to get round to it.  My attention was caught by a couple of references to schemes for avoiding the Poor Law, which I hadn’t come across before.  One was Acland’s Universal Benefit Society, effectively a proposal in 1786 for  a scheme of National Insurance.  Another was proposed by Baron Maseres, who attempted in 1772 to create a universal savings plan which would deliver a lifetime annuity of between £5 and £20 a year for men over fifty, and women over 35.

Maseres worked out the costs scrupulously on the basis of actuarial tables of life expectancy.  He argued that

 The design of this bill was to encourage the lower rank of people to industry and frugality, by laying before them a safe and easy method of employing some part of the money they could save out of their wages, or daily earnings, in a manner that would be most strikingly for their benefit. …  if they saw an easy method of employing the money they could spare in such a manner as would procure them a considerable income in return for it in some future period of their lives, without any such hazard of losing it by another man’s folly or misfortune, it was probable they would frequently embrace it: and thus a diminution of the poor’s rate on the estates of the rich, an increase of present industry and sobriety in the poor, and a more independant and comfortable support of them in their old age than they can otherwise expect, would be the happy consequences of such an establishment.

The measure, watered down to allow for reluctant parishes to opt out,  passed the House of Commons,  but it was blocked in the Lords.  It’s not a Citizens Income scheme, but it has some of the characteristics and aspirations of a partial basic income, nearly twenty years before Thom Paine’s more radical and more universal approach.

Additional note:  I’ve appended an extract from Maseres’ text, where he explains the scheme,  in PDF form here.  

A dispiriting review of sanctions

David Webster’s 13th briefing on sanctions makes for disturbing reading.  The figures from DWP have consistently and substantially underestimated the numbers of people undergoing sanctions; the effect of taking account of the high rate of sanctions for Universal Credit claimants is almost to double the reported figures.  Key issues, such as suspension of Housing Benefit, have been misreported to Parliament.  Although the rate of sanctions has slowed, sanctions have by now been imposed on most longer term claimants of JSA, and 85% of those unemployed for more than three years.

0-3 months 3-6 months 6 months-1 year 1-2 years 2-3 years 3-4 years 4-5 years
% of individual claimants
36 19 20 15 6 3 1
% of these claimants sanctioned 6 15 24 37 49 85 n.a.

The long-awaited report from the Public Accounts Committee does not address these issues.  Their strongest criticism is that the DWP seem not to know what the effects of sanctions are.  They are attracted by the idea of a warning system, which has been trialled and, David argues, has already been shown not to work.    They call for greater evidence for consistency between offices – in other words, for targets.

Blair on Europe – almost right, but not quite

Tony Blair’s speech on Europe seemed to me to confuse two quite separate issues.  The first issue, on which he is absolutely right, is that  “the people voted without knowledge of the terms of Brexit”, and that “The road we’re going down is not simply Hard Brexit. It is Brexit At Any Cost.”  Accepting the (questionable) legitimacy of the Brexit vote is not equivalent to accepting the Government’s recipe for implementation.  The second issue, on which he is not right, is to assume that the alternative is to vote again and this time to vote the other way.   The main alternative is surely to address the terms of exit differently, including the extension of rights to EU nationals in Britain, membership of the EEA, and – probably most important – democratic deliberation at every stage of the process.   As Blair himself says,

it isn’t a question of just ‘getting on with it’. This is not a decision that once made is then a mere matter of mechanics to implement. It is a decision which then begets many other decisions. Every part of this negotiation from money to access to post Brexit arrangements is itself an immense decision with consequence.

There are however points on which I would part company from Blair altogether. One is his acceptance of the view that “Immigration is the issue. ”  It is for Theresa May, but this wasn’t a vote on immigration – it was only a vote where that played a part.  The other is his dismissal of the relevance of the ECJ, where he says:  “I would defy anyone to be able to recall any decisions which they might have heard of. ”    Try  Rüffert v Niedersachsen, 2008 C‑346/06, where the ECJ judged that national governments could not use contracts to  enforce collective wage agreements; or  Bundesdruckerei v Stadt Dortmund 2014 C549/13, which stopped German authorities from insisting that the minimum wage should be paid.  These decisions were appalling – quite as bad as the Lochner v New York in the USA, where dissenting judge Justice Holmes was moved to comment that the Constitution of the United States “does not enact Mr. Herbert Spencer’s Social Statics.” I wouldn’t expect most critics of the EU to be able to cite the specifics either, but they understand the general tenor.  The ECJ has been part of the neo-liberal domination of the EU, that has done so much to undermine the European ideal.