Howard Reed and Stewart Lansley have prepared a new report on Basic Income, for Compass. The options they examine go some way to crystallize the disquiet I sometimes feel about Basic Income. They write:
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.
Basic Income would probably leave some very poor people worse off. It would be necessary to retain a raft of existing benefits, which tends to undermine the beguiling simplicity of many Basic Income schemes. That is not a fatal objection, because (as Child Benefit does) a partial Basic Income could at least help to offer some security and stability of income; but it falls some way short of what the most passionate advocates of Basic Income would like to believe about the scheme.
Once we accept that Basic Income is going to be partial, we then have the question of what kind of partial scheme would be best. We could improve the Basic Income scheme relating to children, fairly simply, by doubling Child Benefit: it would cost £12bn. We could extend a Citizens Income to all Pensioners at relatively low cost. We need then to consider what priority to attach to the extension to people of working age, at what level such a benefit could be introduced, and how it could be financed.
The abolition of the personal tax allowance implies a level of intrusion and penalties for people working in marginal employment. But it doesn’t all have to be done by Income Tax – it’s not the only option that governments have to raise money. Other options include, for example, purchase taxes, property taxes and public income generation. I’ve suggested before a way of combining a contributory element into a scheme for Citizens Income. Currently the National Insurance Fund pulls in £113bn p.a. If we upped NI contributions to 20% and removed the upper limits, that could go some considerable way towards funding a benefit based on a combination of solidarity and work record.