Guaranteed income: better than a second hand sandwich

The Ashdown Prize has shown there is a hunger in the Party for new policy and new radical and liberal solutions. A policy to make foodbanks more effective may address an immediate need, but why not instead make it our long-term policy to make them unnecessary?

As it stands, Britain has a system to pay people money if they lack an income. Unless they left their last job voluntarily. Or if they fail to jump through enough hoops to show that they’re looking for work in the DWP-approved manner. Or if they refuse to do unpaid demeaning labour for freeloading corporations. Or if they haven’t yet waited the statutory month of poverty after losing their job. Or if they have an illness that varies in severity, making it hard to assess. Or if they’re self-employed or otherwise on a variable income.

Enough is enough.

We have submitted a motion to FCC to consider for Autumn conference. In it we propose “an unconditional minimum level of income below which no-one is allowed to fall, guaranteed to all long-term UK residents”.

Let’s unpick that.

It’s unconditional. Yes, that means to the nasty undeserving poor that the Daily Express really doesn’t like. Yes, it means that poor people can turn down a job that’d be demeaning or bad for their career progression – just like richer people can do at the moment.

It’s a minimum not a maximum. Targetted payments such as housing benefit and additional expenses incurred by disabled people, would still be additional to this.

It’s guaranteed. It’s a proper safety net. One that’s actually safe, and not liable to be withdrawn because your bus to the JobCentrePlus was late and you missed your appointment. One that doesn’t rely on your intermittent medical condition being bad on the day that you’re booked for assessment.

It’s for all long-term UK residents. Not tied to citizenship. Not tied to people being judged to be “the right sort”. Part of our shared obligation to support everyone who is part of our community.

How might it work? Under one version, every eligible person gets a regular payment, with no strings attached on how they spend it. Tax rates are adjusted so that people who are richer are paying a little more overall to fund the payments; people in the middle stay roughly where they are as the tax rise is compensated by the payment; the poorest people, who are not paying much or any tax, simply gain extra income.

Other versions function more like an unconditional tax credit to top up incomes (or lack of income) to a guaranteed basic level.

We believe that this will make most people no less likely to seek paid work, both for the sake of the extra pay, and because of the desire to take part in society. And if it causes employers to pay more to incentivise people to do the most unpleasant jobs, we believe that this is no bad thing.

Perhaps some poorer people will make choices that were previously available only to richer people: to work part-time so as to study; to wait for the right job, not just the first job; to take the risk of starting their own business; to leave an abusive partner on whom one has been financially dependent. And again, is that such a bad thing?

The Welfare State came about, from the People’s Budget to the Beveridge Report, though great Liberal innovations, and in order to liberate people from toil and want. And we can keep renewing it. Britain is deeply broken at the moment and needs change. We can make that change for the better.

* Adam Bernard is a Lib Dem activist from Harrow. He works in the geekier sort of academia.

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  • I really hope this gets accepted for debate at conference. We need to have a proper debate in the party over the benefits of systems like Universal Basic Income or Negative Income Tax, rather than avoiding the question.

  • I would think it’s probably unlikely to be chosen and you shouldn’t be too disappointed if it’s not. Only last year they had the social security policy group report and they explicitly rejected the (many) calls for a UBI as part of that policy. But maybe opinion is changing so rapidly that they might slip it through, though I don’t detect that “out there” to be honest, not within the last twelve-month especially anyway.

  • Simon McGrath 12th Jul '18 - 12:25pm

    Can you share with us the costings please ?

  • The principle sounds great and should be supported – but has anybody produced an in depth study with detailed analysis and costings?

    Universal Credit was sold on the basis that it would be better + we know now it’s a shambles.

    Where’s the beef ?

  • James BLESSING 12th Jul '18 - 1:10pm

    Costs for this sort of thing really depend on where you the level of the minimum.

    Let’s assume that we are going to choose the current level of pension as the minimum level – £126/wk or £6552/yr

    Then let’s assume we remove the tax-free allowance and tax income from the first pound earnt, that reduces the amount by £2,370 taking us to £4,182

    Thre are currently 39 million working-age adults in the UK (19-64) according to ONS 2017 figures

    That gives us a cost of £163 billion

    How much would we reduce the benefits bill by? Currently, we spend around £80 billion on non-pension costs, not all of that will be accounted for by a UBI but it could reduce it by 2/3rd so let’s take our costs to £100 billion – not really something we can afford 🙁

    However, now let’s look at other numbers to base our calculation on… The Universal Credit base amount is set to just over £250/month for, under 25’s, let’s take that as our starting point…

    £3000 – £2370 = £630 (change personal allowance)
    £630 * 39 million = £25 billion

    JSA is £5 billion,
    50% of ESA would be replaced so saves another £5 billion,
    50% of PIP would be replaced £8 billion

    So that leaves a cost of about £6 billion to cover (relative easily from reduced operational costs and small tax rises)

  • Completely behind this and thank you James for the costings. Would like to know why the social security policy group threw it out, after all, my impression is that a lot of members are behind it and we are a democratic party. Perhaps they need to have another look.

  • Andrew Hinton 12th Jul '18 - 1:52pm

    The point with the Universal Credit nightmares is that as soon as you attach conditionality and bureaucracy to a system, it gets complicated and people fall through cracks. The advantage of a genuinely unconditional system is that nobody ends up without support for 6 weeks before their payments kick in, or getting different amounts to what they expected (etc), the payments are just *there*, constantly.

  • Beware back of an envelope calculations.

    The scheme needs some heavy weight research if the party is not to be a laughing stock.

  • There are currently 39 million working-age adults in the UK

    Plus another 12-odd million children, whose parents will presumably be getting extra, right? So you have to factor that in.

  • William Fowler 12th Jul '18 - 2:31pm

    Interesting cost breakdown, a bit more fiddling with the figures and simplifying other welfare payments and it could be cost neutral or even save money (which is going to be necessary post Brexit when govn revenues fall). Plus a minimum length of residence before people can get it. Simultaneously, now welfare is based on residence simplify what is left of the tax system by merging NI and income tax and having lower rates for those on under 20k with higher rates for those above to compensate, without going silly and lowering the take tax by having too high top rates.

    You could also link it to good citizenship so it would be lost for a period of time when people commit minor crimes such as littering and vandalism (or if their kids did it), more civilized than the Singapore model of caning people.

  • You could also link it to good citizenship so it would be lost for a period of time when people commit minor crimes such as littering and vandalism (or if their kids did it),

    Then it wouldn’t be ‘unconditional’, it would be ‘conditional on good behaviour’.

    However you raise an interesting point: do those in prison get this? How does that work?

  • ‘So that leaves a cost of about £6 billion to cover’
    Isn’t that roughly the cost of tuition fees per annum? 🙂

  • Phil Wainewright 12th Jul '18 - 3:35pm

    As others have pointed out, it’s not as costly as it looks once you offset baseline benefit payments and income tax thresholds against it. Various pilots have indicated that it generates value in other ways, too, such as improved health, education and social cohesion.

    Personally I would prefer to call it a ‘citizen’s dividend’ and position it as a payment that recognises the contribution that every individual makes to society. We are not talking about setting it at a level that is going to dis-incentivise people from earning an income – merely giving people more freedom to make choices in their lives. Especially important as we enter a period when many will have to re-skill as jobs are automated.

    I do hope this can be selected for debate and furthermore that it will become our most distinctive party policy – properly costed, thought through and argued for. You only have to look at what’s happened to the once-derided policy on legalization of cannabis to see how it’s possible to shift public opinion if you persist with a sensible policy and make a proper case for it.

  • William Fowler 12th Jul '18 - 3:54pm

    Be Free To do Your Own Thing, would be a good way of describing it.

    Would be interesting to know how much of the means tested benefits systems, inc tax credits, actually gets to the recipients and how much is blown in the cost of running this most intrusive system, although Corbyn and Co would argue for a vast bureaucracy to run welfare so there are an extra million well paid jobs on offer, with socialist tsars at the top with plenty of lovely tax free expenses to offset the ruinous income tax rates needed to fund it.

  • Graham Martin-Royle 12th Jul '18 - 4:32pm

    While there will undoubtedly be problems associated with this, I am in favour of it being put forward so that it can be discussed. This is the type of policy that we need to make people notice us again.

  • Nobody has answered the point about whether any really serious work has been done on this – just a lot of jumping about, hand clapping and general euphoria that the magic cure has been found for all the party’s ills and misfortunes. It should be run past the National Audit Office or a body of similar standing first.

    The Lib Dems in government ended up with egg on their faces with Universal Credit and Pip – do we really want a repeat?

    Oddly enough I remember a lot of folk on here ridiculed the Green Party when they proposed the same thing – and they mocked Natalie Bennett for trying to explain it.

    By all means explore the principle – but a serious competent political party would do in depth research and modelling first.

  • Caron Lindsay Caron Lindsay 12th Jul '18 - 5:47pm

    I absolutely want to see this debated at Conference although I am not sure that I would vote for it.

    Don’t get me wrong, I want to. I am old enough to remember the last time that this was party policy. My worry is that it might reinforce other types of discrimination – eg gender and disability. Ruth Lister, formerly of Child Poverty Action Group talked about that when the idea was discussed in the book The Alternative.

    But we should have the discussion even if it ends up getting referred back for more research to be done.

  • As a matter of fact the SNP government in Scotland is funding research into this and four local councils are considering trialling it.

    The Joseph Rowntree Foundation have an excellent paper on it with a somewhat cautious conclusion. A pity the Scottish Lib Dems can’t communicate with the SNP now that Scotland has welfare powers.

  • James Baillie 12th Jul '18 - 6:48pm

    Thanks to Adam for writing this – as the other main author of this motion it will come as no surprise to people that I’m in favour of it.

    There are a few points to make in the debate here. Firstly, that a range of possible models for how a minimum income should be implemented exist. Our motion is intentionally agnostic on which of them is used, because we believe that the core point to lay down is the party’s belief in a form of unconditional secure income – which, since we’re in favour of abolishing benefit sanctions, we’re effectively committed to anyway. Also note that the 2016 paper found that providing a minimum income *if restricted to 2014 spending levels* would be unaffordable. That is probably true – but we shouldn’t be trying to build a sensible 21st century social security system on bare-bones spending levels. It’s not viable and it doesn’t save money in the long run anyway. A proposal of this kind will at least initially cost money (though may well see significant longer-term payoffs economically), and we should be prepared to see tax rises to pay for it. Precisely how much money hugely depends on the system selected – an unconditional tax credit for those below a given income level for obvious reasons costs less “up front” than a payment made to everyone.

    We already, as a party, thus have a vague de facto position that there should be a level of income beneath which people can’t fall as a result of sanctions or similar: this motion is a natural progression moving from that position to a clearer statement of values and a game plan for moving towards implementation. It would in my view be perfectly reasonable for the party to go into the next election pledging to trial a range of systems including a broad-brush basic income, a negative income tax administered by HMRC, and perhaps a system constructed by reducing and removing conditionality from a beefed-up Universal Credit, with an automatic roll-out of the best performing option. This motion would certainly allow for that sort of evidence-based rollout, which would provide a stronger evidence base between the different possibilities than we could do by any sort of number-juggling in opposition. Except via trial evidence, no costings for a system of this kind can realistically be better than approximations to show (as one can, as we’ve seen) that the fundamentals of the idea are affordable.

  • James Baillie 12th Jul '18 - 6:53pm

    @Caron: could you expand on that comment? I don’t follow what you think the mechanism would be for that. I’ve seen e.g. critiques of the possibility of a minimum income resulting in cutbacks to targeted social security elements, I agree that would be bad and we’re not proposing that. My experience with seeing disabled friends in particular deal with the current system has convinced me significantly more that moving to an unconditional basic payment is something we need: providing people in that position with a secure income that didn’t involve hoops to jump through, especially for example whilst someone is being assessed for more targeted payments or support, would certainly have made a very large difference to the lives of some folk I know in recent years.

  • Caron Lindsay Caron Lindsay 12th Jul '18 - 7:14pm

    @james I can see the advantages in that, which is why I want to be in favour for the policy.

    However, the costs of maintaining a decent quality of life are much higher for disabled people so there would need to be some mechanism for a disability premium somewhere – one that bore absolutely no resemblance to the nightmare system that the Department for Work and Pensions operates at the moment.

  • James Baillie 12th Jul '18 - 7:29pm

    @Caron Absolutely agreed – the motion is explicitly worded to say that such a system “should replace most current basic forms of social security, with the exception of targeted payments such as those for housing and disabilities.” for precisely that reason.

  • John Chandler 12th Jul '18 - 8:11pm

    Absolutely in favour of a Universal Basic Income (or whatever you want to call it).

    As far as heavyweight research, there is plenty to support UBI. I was doubtful about it working until I started reading up on the various trials. Would be worth talking to BIEN (Basic Income Earth Network, as they’ve been involved with the UBI debate for over 30 years.

  • all long-term UK residents
    I see everyone is missing the elephant; just what defines a long-term resident?

    I suggest being a resident for 5-years or one term of government most certainly doesn’t qualify. I also suggest, given the referendum vote and associated opinion polls, that having no connecting with the country prior to 1997 and thus 20 years of residency, would not be acceptable to at least 1-in-3 voters. I also suggest that a threshold based on a specific number of years of residency would be open to question: why 18 years, why not 16 years… However, one based purely on generations would also have winners and losers: winners being those families where generational gaps are circa 20 years, losers being those with 30+ years, so I expect the only fair measure will be a combination of generations and years (based on the typical UK resident inter-generational gap).

  • @Joseph Bourke – Thanks, the CIT proposal does seem well considered both in terms of its breadth and in terms of verifying a person’s entitlement. Whether this would be acceptable to the group I referred to is another matter, although as it draws on existing residency criteria it is defendable.

  • Roland: “I suggest being a resident for 5-years or one term of government most certainly doesn’t qualify.”

    Why on Earth not? The way our immigration system currently works, certain people have “no recourse to public funds” (NRPF), and the rule for people granted Indefinite Leave to Remain with a Maintenance Undertaking is currently 5 years (as I understand it), which it became in 2012 as part of the “hostile environment”, having been 2 years previously.

    Frankly, I think 5 years is too long, but in any case, I don’t see why a guaranteed income system should be treated differently to the existing system for benefits like Jobseekers’ Allowance, etc. The fact that 1 in 3 voters would not be in favour of something should not be a reason for our party to consider it a non-starter – as a party, we have to accept that there are some people who just aren’t liberals, and if a liberal policy of ours is a red line for them, then they might not vote for us. So be it. Without a distinctive message and policy, nobody votes for us.

  • It doesn’t surprise me that someone has submitted a motion for conference on a Citizens Income under another name as it was two years ago that the working group on benefits rejected a Citizens Income. The reason I think it was rejected by the working group was that it is often funded by cutting other benefits.

    I note this article doesn’t tell us at what level this Guaranteed Income would be. I used to suggest about £48.08 per week – It also doesn’t suggest what exact tax changes would be necessary to fund it.

    @ James Blessing
    I think your figures are wrong.

    Here are the figures for 2016 –

    JSA only costs £2 billion. Only £20 billion are spent on family benefits excluding child benefit; £11 billion on child benefits; £25 billion on housing benefit and £44 billion on incapacity and disability benefits. Therefore your estimate of £100 billion of savings is over optimistic.

    Also you are taxing the benefit which reduces it to about £39 per week. So to ensure no one loses out the savings would be less than £1 billion on JSA and less than £2 billion from ESA and others disability benefits. So even if your 39 million is correct and everyone gets only £39 a week the extra cost is £22 billion.

    I would rather we used this money to increase all adult benefits to the poverty level rate:

    Family type £ per week, equivalised,

    2015/16 prices

    Couple with no children 248
    Single with no children 144
    Couple with two children aged 5 and 14 401
    Single with two children aged 5 and 14 297

  • Good to get some real figures from Michael BG.

    As for the glib headline “better than a second hand sandwich” is concerned it reveals a complete lack of knowledge of what food banks actually do in terms of support and assistance for their clients and undermines the message it purports to advance.

  • Peter Martin 13th Jul '18 - 7:21am

    @ Adam Bernard,

    “It’s unconditional. Yes, that means to the nasty undeserving poor……”

    I’m not sure it’s a good idea to use the latter term, even if it is meant somewhat tongue in cheek.

    But the big problem, electorally if nothing else, is the ‘unconditionality’ which means payments to genuinely ‘nasty undeserving’ types who may not be at all poor. Criminals, who don’t even pay any income tax, for example.

    So, instead, why not guarantee everyone an amount of decently paid work, tailored to an individual’s capability, to anyone who needs it?

    That way, those who don’t need it won’t bother to do it and so wont qualify for the pay that goes with it.

  • @Andy Hinton – The reason why I originally raised an objection to the 5-year term, was because as I said being a resident for 5-years hardly qualifies to be described as “long-term”. However, Joseph’s reference to the CIT proposal, from which I assume this FCC motion draws from, is for a citizen/residents income – where the definition of a citizen/resident omits the words “long-term”.
    Hence in answer to my original question, the words “long-term” seem to be unnecessary and should be deleted to avoid unnecessary debate.

  • It’s unconditional.
    Should it be totally unconditional?
    Whilst I get the monetary aspect of this, I wonder if perhaps we should place a social obligation/expectation on it. Not sure how this might work, but in many voluntary organisations there is an expectation that people will help out, if and when asked.

  • It’s a delicate balancing act between ensuring everyone has sufficient and allowing people to live on handouts. Community involvement in return for a minimum payment makes some sense. How would it be different from community service as a punishment for a crime? It’s the availability and suitability of paid work that is what matters so just as with housing there is always something available that allows a person to feel they are pulling their weight with opportunity for progressing.

  • James Baillie 13th Jul '18 - 11:08am

    Roland: our core point here is that yes, it should be unconditional, because a) having difficulty fulfilling obligations to society shouldn’t void your right to a dignified existence and b) we should (as liberals) be seeking to maximise the freedom of those out of work to retrain, or volunteer, or spend time as carers if necessary, or start businesses of their own, as personal circumstances dictate. The “big brother knows what’s best and you can stay alive so long as you toe that line” attitude to social security is something the effects of which I’ve seen far too much of to ever feel that conditionality for basic living standards can be justified.

    Michael BG: Thanks or the figures, and I think you’re correct that we shouldn’t be over-optimistic about doing this “on the cheap” as it were. See my post regarding tax and spending around this: the motion does *not* necessarily propose a flat-rate UBI, it rather proposes that future social security policy should be based around the principle of an unconditional minimum income floor, with a variety of possible implementations which it would then be up to FPC among other bodies to consider based on the available evidence and upon trials. This motion does not aim to fulfil the functions of a full FPC working group; rather, it recognises the importance of unconditionality in social security as a Liberal Democrat principle (as already to some extent laid down in 2017) and thus provides a framework and options for how we move forwards from that.

  • Peter Martin 13th Jul '18 - 11:55am

    @ David Page,

    “a proposal which sounds suspiciously close to workfare”

    Do you mean this?

    “So, instead, why not guarantee everyone an amount of decently paid work, tailored to an individual’s capability, to anyone who needs it?”

    Why is this ‘workfare’? For example if we decide that the minimum wage should be £10 ph we pay £10ph to those who need it.

    This sets the base rate for everyone else in the economy who can’t get away with paying less. Or even paying the same if the conditions on offer are substantially worse!

  • Peter Watson 13th Jul '18 - 12:43pm

    @Peter Hirst “Community involvement in return for a minimum payment makes some sense. How would it be different from community service as a punishment for a crime?”
    I expect that it would be very important to ensure it looked nothing like “community service as a punishment for a crime”!

  • Peter Martin,

    the Citizens Income trust has drafted a skeleton bill for a Fair Allowance (Citizens Income) that includes the following clauses:
    3. Entitlement
    (1) Fair Allowance shall be paid to an individual if the individual meets the basic conditions.
    4. Basic conditions
    (1) For the purposes of section 3, a person meets the basic conditions who –
    (a) is at least 16 years old,
    (b) is in Great Britain,
    (c) is not a person for whom Child Benefit is in payment.
    (2) Regulations may provide for exceptions to the requirement to meet any of the basic
    (3) For the basic condition in subsection (1)(b) regulations may –
    (a) specify circumstances in which a person is to be treated as being or not being in Great Britain;
    (b) specify circumstances in which temporary absence from Great Britain is disregarded.
    (4) Except to the extent that regulations provide otherwise, no amount in respect of Fair Allowance is payable in respect of a person for a period during which the person is
    undergoing imprisonment or detention in legal custody.

    A job guarantee scheme for long term unemployed should be in place on top of the basic income to ensure both that involuntary unemployment is addressed and as part of a full employment fiscal and monetary policy. The Basic income (paid as a tax credit through the PAYE system) replaces the tax allowance that would otherwise be available against earnings from employment.

  • Peter Martin 13th Jul '18 - 1:40pm

    @ JoeB,

    “The Basic income (paid as a tax credit through the PAYE system) replaces the tax allowance that would otherwise be available against earnings from employment.”

    But it can’t replace it in equal measure because there the same amount of money would need to be shared out with more people! Quite a lot more people , if we hand out a UBI to all those who aren’t in the formal economy, all the partners of those who choose not to work etc.

  • @Jams Baillie – I think where I’m coming from is slightly different than the one you indicate. I think by paying an income we are to some extent recognise and formalise the social contract between the government and residents. So what I’m looking at is more of a social expectation/behaviours setting than a formal contract with financial penalties etc.; although for those who found to have acted against our society, forfeiture of income may be part of their penalty.

  • Won’t this encourage people to become dependant on the state?

    Won’t it increase state paternalism, to have the state literally giving people ‘pocket money’ that they haven’t earned?

    Won’t it increase people’s feelings of entitlement; if you tell them they are entitled to money just by virtue of living in the country, what else will they start deciding they are entitled to?

  • Okay, but surely the ideal position for an adult is to be financially independent, so as not to be a burden on anybody, either any individual or on the taxpayer?

    And by having the state effectively giving them pocket money, aren’t you discouraging people from trying to achieve such independence, thus depriving them of the opportunity of achieving full adulthood and keeping them, effectively, in a state of permanent childhood vis-a-vis the state?

  • We’re told typically family has one earner on £ 20,000 and pays £ 120 in rent. Nowhere do we get any mention of regional differences. How many people pay £ 120 per week in London?

  • David Raw,

    The CIT illustration on page 11 is immediately followed by a note on Housing Costs:

    The Citizen’s Basic Income (CBI) scheme outlined here does not pretend to solve the housing crisis, which is why Housing Benefit is retained in its current form. Citizen’s Basic Income would neither solve nor exacerbate the housing problem. Housing provision and housing-related benefits need to be reformed, and they need to be tackled as a separate issue. Another reason for keeping the issues separate is that housing benefits are usually paid to households whereas it is fundamental to a CBI that it is paid to individuals. Similarly, Council Tax Support is retained. This is now locally regulated as well as locally administered.

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