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Basic Income - basic respect

Basic Income is not a panacea for our woeful economic structure but it could certainly be a big step forward.

Deborah Padfield
5 March 2015
BI.jpg

Flickr/ruSSeLL hiGGs

“Unconditional Basic Income (UBI) is an amount of money paid on a regular basis to each individual unconditionally and universally, high enough to ensure a material existence and participation in society”. Among the 'ten reasons to support' it are provision of a stronger safety net for everyone, giving more choice of paid and unpaid work and allowing unpaid work to be revalued. So says Basic Income UK.

Fundamentally, BI is about respecting people. Is it a good idea?

Three stories that signal 'yes'.

These are versions of situations I've met again and again. They are far from extreme.

Young woman - call her Tina. Earned full-time till her husband left. Her fixed-term contract wasn't renewed. Husband didn't pay towards the mortgage. There was a 13-week wait between signing on for Job-Seekers Allowance (JSA) and getting help with mortgage interest. Savings quickly dwindled. They were incomers to their village, with no local network. Tina's JSA claim ended because she didn't make it to the initial JobCentre Plus interview: no money for two buses each way. JCPlus would have refunded that travel cost (though not for regular signing-on) but she didn't have the cash up-front. She'd twice walked five miles each way to the supermarket to get cut-price food at the end of the day: tough in icy weather, returning to an unheated house. She lived on tea and bread for days. No food, no heat, debts rising, home at risk. In our prosperous, well-populated Home Counties, it's terrifying how isolated you can abruptly become. Once she ran out of money for her mobile, she'd be utterly cut off.

Gary, an accountant. Bi-Polar Disorder, not bad enough normally to prevent him working but work stress triggered an episode. He lost his job. Went on Employment & Support Allowance (ESA) then was found fit for work and moved to JSA.  After a couple of months his JobCentre Plus 'adviser' told him to apply for a job. He was offered it on condition he do it 'self-employed'. If he refused, his JSA would be stopped. So he took it though he dreaded the uncertainties. The work was intermittent; he made a mess of his paperwork; owed money on rent, council tax, income tax, working tax credit overpayment; lost the contract. Spiralling downwards.

Sue cares for her daughter Karen, diagnosed with fibromyalgia and borderline personality disorder. Karen's moods are erratic and she self-harms. Sue can't leave her alone for long. But Karen's conditions are hard to prove for disability benefits, and unless she has the right rate of Disability Living Allowance (or the new Personal Independence Payment) Sue can't get Carer's Allowance (£61.35pw, gateway to a small Income Support top-up). When Karen's DLA was reduced, Sue suddenly had no income.

Three possible fruits of Basic Income

Basic Income could assure these people sufficient income for food and warmth at very least, something our ruthlessly conditional benefits system denies.

It could give time to gather strength, look for a sustainable job rather than the first on offer, again something contrary to government's policy of forcing claimants back into work as quickly as possible.

And it could value unpaid work by enabling people to do what they need to do as carers, parents, children and neighbours, or choose to do as voluntary workers. All everyday freedoms for wealthier people. 

A trap?

It's alluring. Yet household incomes, whether from wages, benefits, tax credits or Basic Income (BI), can't alone deal with poverty or inequalities. Few supporters think it can. Unless it is considered as part of - and consequent upon - a major reorientation of our economy, BI is a straw man destined to go down in flames.

This is, I fear, a potential trap. Government has a highly effective tactic of using welfare spending as a distraction from fundamental political and economic questions. Focusing on BI with its obvious up-front costs and challenges could play into that, diverting attention from the restructuring on which it depends.

BI and the cost of living

A cost of living crisis is here. Not for everyone; with the fall in food and energy prices, emphasising averages makes it easy to contest the problem.

Nevertheless, many households on low and fluctuating incomes, and/or with high housing costs, cannot balance their budgets. Existing benefit levels, subject to a still-continuing playing-card-pack of cuts since 2010, are not enough. This isn't only unemployed people; with the growth of insecure, part-time and self-employment there's less and less of a hard distinction. Growing numbers of working households rely on benefits and tax credits. Though under the new Universal Credit (UC) seriously disabled people may gain, those less (or less provably) disabled and their parents or carers will lose.

A Basic Income would have to be well above existing benefit levels to achieve its goals. It would also need supplements for rent or mortgage, and for people long-term excluded from wage earning - disabled people and carers. Means-testing and some kind of eligibility test for disabled people look unavoidable. The Green Party suggests working towards integrating housing costs with BI; that implies either reintroducing means-testing to BI or making allowances according to household size and region rather than to individual circumstances. The existing Local Housing Allowance has such a regionally- and household-based cap for maximum Housing Benefit for private tenants, with disastrous effects for people in costlier sub-regions. 

No system of income subsidy can work until we tackle the housing crisis. The percentage of people in poverty roughly doubles after housing costs are taken into account; proportions for owner-occupiers stay about level. That's an average, concealing huge regional and individual differences. About a third of private tenants say they struggle to pay rent and about a quarter that they've cut back on food and heating to afford it.

Housing Benefit is the largest single welfare cost after retirement pensions. Then there are further payments (after a 13-week waiting period on means-tested benefits) for Support for Mortgage Interest. There is heavy political pressure to reduce the bill, yet costs continue to rise. We need more affordable homes.

BI and paid work

Income inequality is, at last, in the headlines. Our short-termist UK 'hour-glass' economy, based heavily on financial and other services, maximises profits for shareholders and senior executives while exploiting plentiful low-paid 'flexible' labour. High-skilled people have scarcity value; their ability to command high salaries helps maintain property prices and entrenches the gap between those who can save and invest and those who can't.

Most people have no such security. Many, like Gary, are self-employed because that is the only way to earn. Often they have few saleable skills and little knowledge of what's involved in self-employment. Small wonder that while unemployment's fallen, the income tax take has languished.

Where people have skills, they are often ones from which it's hard to progress to more pay and security: domestic work, gardening, hairdressing. Or they guarantee permanent insecurity given the oversupply of workers and lack of effective employment protection: caring, hospitality and now 'Uber' taxi driving. The benefit system feeds the imbalance between employer and workforce by penalising claimants who refuse such work. (13-week sanction for a first 'offence', 26 weeks for a second within a year.)

The main Parties see paid work as fundamental to the national economy and to individual responsibility and well-being. Aiming specifically to get people back into employment, Universal Credit intensifies conditionality. Tax Credits and Housing Benefit have no behavioural conditions; under UC, their equivalents will depend on the Claimant Commitment signed by all claimants and their partners.

Does intensifying conditionality increase financial independence? Questionable, as I've discussed in former articles. Forcing people to take jobs brings a continual churn in and out of work, on and off benefits: see Gary. It produces an 'off-flow' of people into a black hole of economic inactivity. Punitive rules, including sanctions, devastatingly increase insecurity, including the most basic access to food and warmth: see Tina. All this links clearly to food-bank dependence and homelessness.

A tragedy of the Work Programme - and it is tragic in its negative impacts and missed opportunities for positive impacts on people's lives - is its culture of confrontation. Employee productivity tends to benefit from respect, cooperation and trust between workforce and management. Welfare conditionality is supposed to support/build/rebuild claimants' employability, mimicking the responsibility that they will have at work. If so, Work Programme and JobCentre Plus 'advisers' should mimic the best of employment practice. A Work Programme genuinely supporting those most in need of guidance, rather than cherry-picking the most work-ready and dragooning the rest, would be a very different beast.

BI would remove conditionality altogether. In isolation, that looks liable to restoke resentment against 'skivers' who neither earn nor pay income tax, and migrant workers willing to fill the gap at cost of living in often-appalling conditions. It could fuel the UK slavery market.

Rebuilding skills

There is a desperate need for middle-skilled work that develops people's skills, giving them hope of sustained employment. And there's no inevitability about its demise, even in the face of technology.

But small and medium-sized enterprises have a hard time. Big differences divide them from publicly-listed national or transnational companies. Credit is hard to obtain; taxes fall relatively harder on small than large businesses; property prices are relentlessly high; big buyers squeeze smaller suppliers while other markets are stagnant or at risk.

Neo-liberal orthodoxy condemns 'industrial policy'. Government intervention, despite its historical and actual role in supporting favoured industries such as fossil fuels, and its inevitable role in shaping tax costs and incentives, is portrayed as ineffective or damaging. Nevertheless, strong economic voices are calling for governments to seize the moment for public investment alongside a long over-due overhaul of our tax and national insurance systems.

BI or Universal Credit could support a growth in employment-with-a-future if combined with accessible quality training. We need provision for unemployed and self-employed people and a culture of in-work progression amongst employers. Critics of the Work Programme have suggested that in-work progression should become a key aim in its next incarnation. 

BI and unpaid work

UC wholly ignores a central tenet of BI: it does not value unpaid work. Indeed, Gingerbread and the Children Society have listed the increased disadvantages single parents and parents of disabled children will face under UC. Carers remain both undervalued and, like Sue, permanently insecure. Voluntary work is outlawed if it inhibits possible earnings.

This, again, is a major structural question. Our political and economic systems depend on many economically unvalued inputs. Parents, carers and other unpaid labourers; water, air, soil: these are the most obvious. Current economic orthodoxies dismiss as unaffordable any significant revaluing of people and resources on which our lives depend. Yet a House of Lords library note (2014/007) of March 2014 tells us that 'In 2011, Carers UK calculated that the value of the annual contribution made by carers to the UK economy was £119 billion', and that 'In 2012, Volunteering England estimated that the value of volunteering to the UK economy was £40 billion, based on the average hourly wage for full-time employees and the number of hours volunteered each year.'   

Looking forward

We can continue down the road to a world where 'real people' live in gated communities while the remainder of us, expendable labourers and sub-species, live outside. A world where resources are channelled into protecting the few against the effects of climate change while the rest survive as best we can.

Alternatively, we can rethink how we value one another and our planet.

As Andrew Haldane of the Bank of England has said, 'Inequality and corporate governance are deep, structural issues... the stakes – a more stable, faster-growing, fairer society – could not be higher. There is a collective public policy interest in getting them right.'

What's meant by 'faster-growing' is a big question. But fairer: yes. Collectivity of our public interest: yes. That means respect for one another. It needs to be claimed and given shape.

 

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