First of all, consistent policies based on our established and unchanging values. We seek a fair, free and open society balancing liberty, equality and community, in which every citizen is valued.
We have an economic vision rooted in our Liberal vision, based on being pro-EU and protecting the environment, emphasising green growth. We should be pro-growth, which requires there to be businesses and wealth creation. We are committed to ending deep poverty and promoting public services and local communities.
WE SHOULD WANT
- to change the power structures of our society to make them more liberal
- to raise the standard of living for everyone, promoting growth by government investment in infrastructure and giving the required assistance to SMEs
- a fair deal for immigrants settled in this country, but to stop irregular migration by giving safe and legal routes on the Continent, with the chance to apply for asylum there
- to combat the ill effects of climate change by supporting major home insulation upgrades, the widespread deployment of heat pumps accelerating the transition to electric rather than gas power, with expanded charging infrastructure for electric vehicles
- to end the economic insecurity of too-high energy costs alongside promoting further inland and tidal wind and solar power and reforming the National Grid
- to tackle the housing crisis by building 380,000 new homes per year of which 150,000 should be social homes including council houses, encouraging factory-built modular housing and backing major Council housing developments
- to have an inclusive way of skilling people up including using AI and provide incentives for employers to employ disabled people
- to ensure employees have a stake in the businesses they are employed in.
WE SHOULD DEMAND
- the correct conditions for growth including everyone having a stake in the country, reduction in inequalities, taxing wealth more and that all government policies have to be assessed to discover their effect on SMEs.
WE SHOULD ASSERT
- that the government has a role in increasing economic growth by increasing public investment and spending on infrastructure, and in controlling inflation, rather than leaving that to the Bank of England. The Bank of England should have an objective of maintaining economic growth which has the same importance as their inflation objective.
WE CARE ABOUT
- the welfare of all our citizens, and want to devolve power closer to all our communities.
* Michael Berwick-Gooding is a Liberal Democrat member in Basingstoke and has held various party positions at local, regional and English Party level. Katharine Pindar is a long-standing member of the Cumberland Lib Dems.
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150 Comments
We need to emphasise our commitment to Federalism. The UK is quite unique in being a voluntary union of previously independent countries and Federalism is our way of allowing countries to work together on common interests while allowing each to make it owns decisions on its own affairs.
Much of this is social democracy, and I support that fully.
I would suggest one change:
replace “skilling people up including using AI”
with “skilling people up to use current technology”
as the so-called AI term is marketing fashion.
People should have access to life-long learning
and be able to re-skill at any age.
The general direction, running the country for
the people, not visiting capital, is good.
In terms of general principles, I think this is a very good vision. However I would say some of the details need work. Particular quibbles I would have:
1. On transport, promotion of electric cars is not really good enough by itself: We need a transport system that is based more on buses/trains/walking/cycling so that people don’t need to use cars as much in the first place.
2. On energy, I’m not convinced heat pump technology is yet mature enough for mass roll-outs. To tackle climate change, we need nuclear as well as renewables. And reducing energy costs is a noble aim, but there’s no indication in the article of how that can be achieved. It’s not something where you can just wave a magic wand to make prices come down.
3. It’s fantasy to imagine that setting up safe routes on the continent will end irregular migration. We’d only be able to accept a small fraction of those who apply through safe routes (because the numbers applying would be so huge) – and what do you imagine many of the people we reject are going to do, with the people traffickers on hand to tempt them….?
But if we can iron out issues like that, the article does present a good set of principles.
Simon R., thank you for your qualified approval. But on your no. 1, getting people to use their cars less, I always feel that this general principle doesn’t work well for many elderly rural folk; if there even are local buses, waiting for them and fitting in with their time-tables and circuitous routes isn’t as easy as climbing into a (possibly shared, probably old) car to get the shopping or for meeting up, while taxis and trains are costly.
I agree with you on the continuing need to have some nuclear as well as renewable energy, but disagree about safe routes, which should be worked out with European partners, while accepting that there are no easy answers to the pull factor of Britain. Thanks to Brenda and Peter also for your early comments.
Brenda Wills,
While we are committed to federalism, we don’t envision an England government because it would have such a huge population compared to Wales, Northern Ireland and Scotland. We support regional government for England. With the expansion of combined authority mayors and unitary councils we need to revisit our regional policy.
Peter Chambers,
This article sets out social liberalism. There is lots of agreement between social liberalism and social democracy. We agree that people should have life-long learning and to be able to re-skill at any age.
There are always journeys for which a car would be the best option. Equally, there are many which could perfectly well be cycled or on public transport. The Dutch have around a 50% modal share for cycling with similar weather and people; the UK only manages less than 4%.
Also, we need to replace most short haul flights with trains, rather than building more aviation infrastructure (runways, terminals etc). That would mean taking the climate impact of flying seriously.
Electricity supply is going to need several nuclear generators. Two to replace our 4Gw or so of aging nuclear generators, one to replace Drax . Burning trees still puts CO2 in the air. And at least 2 more to replace the gas fired generators. If you want to switch to heat pump s and electric cars, some of that can come from more renewables, but it still probably needs a near doubling in total generation capacity, so I would go for 2 or3 more. That makes a fleet of about 8.
@ Jenny Barnes. I seem to remember, Jenny, that Holland has a great deal more flat territory than England. We have an ageing population, and living longer people sadly develop more minor health problems; elderly, infirm or unwell people cannot resort to cycling unless they have always cycled, and in towns I gather cyclists can have rather dangerous interactions with cars and lorries.
We cannot afford to build several more nuclear reactors, except the small modular ones that are now being recommended, and I expect Cumberland will probably have one of those to partly replace Sellafield.
@Jenny Barnes
A key issue with the grid is frequency stability. Which is easiest done with a few large rotating machines, such as power stations. It is also correct that having some dispatchable capacity would replace the gas powered stations. That would be the core system around which renewables can be arranged. And “we” can afford them if they pay for themselves. Their financing need not be within central government borrowing but could be some sort of arms length arrangement. So some small integer number of plants seems a likely number.
The big problem though is the legacy. Suddenly there is political comment that the UK should have had an uniform fleet with common safety data, and this would have driven much lower risk. Hence lower financing costs. Which is what experts said during the major era, based on Canadian and some European experience. But what we got was the maximum number of different designs and what amounted to vendor financing. With Strike Prices. Much of which looks poor in retrospect.
Would we be on course for an EDF station, a Chinese one, some PWRs and a few SMR?
Will Great British Nuclear grasp the nettle, or trim within Treasury Rules? Will the public be informed accurately about the long maturation – investment – that SMR will require?
@ Katherine Pindar. As I said before, some journeys need a car, but many don’t. As to hills, muscular weakness – electric bikes take much of the effort out for those that need assistance. And your point about the danger from cars is well made. Proper cycling infrastructure deals with that.
You suggest “we” cannot afford nuclear power stations. If so, how will we deal with the decommissioning of the existing 4+Gw of nuclear generation? the need to reduce our dependence on fossil fuel? the increased demand – probably aroung 30 Gw – from converting to heat pumps and electric cars? At night, if the wind isn’t blowing very hard, total renewable output can be as low as 1Gw against a demand of around 20Gw. Gridwatch shows that our current demand is largely met by gas fired generation.
Personally I’d add in something about:
1 free markets and free trade properly regulated so as to internalise the cost of pollution so that the polluter really does pay.
2 sound money – maintaining sound money should be left with central bankers . It’s worked well. Watch how the US markets shudder at the thought of the Head of the Fed doing Trump’s bidding.
3 Maintaining and increasing capital, including natural natural , intellectual capital and social capital as well as financial capital.
4 Maintaining the rule of law (including human rights)
.
@Jenny Barns
“some journeys need a car, but many don’t.”
And some journeys always need a car – absence of any usable public transport.
“As to hills, muscular weakness – electric bikes take much of the effort out for those that need assistance.”
How far might one travel on an electric bike in say moderately hilly terrain? What about someone who has done very little cycling and that very many years ago when there was far less traffic about?
“And your point about the danger from cars is well made. Proper cycling infrastructure deals with that”
Doesn’t that imply that there is room to provide proper cycling infrastructure – which I take to be a cycle track separate from cars and other vehicles?
Certainly not the case where I live.
Neither the article nor any of the comments have mentioned the word ‘sustainable’. Yet it will be essential that any growth/developments should be measured against their impact on the environment and not just SMEs. The Net Zero/climate deniers need to be challenged.
Simon R’s point 2: I have been suggesting for some time that the artificial link between
wholesale gas and electricity prices should be cut, allowing electricity bills to be reduced at the expense of gas, and avoiding the need for windfall taxes on the excess profits of the fuel providers. That would be a real help on the cost-of-living and encourage a move away from gas (to heat pumps?).
Three cheers for David Murray for mentioning “sustainable.” Are Liberal Democrats not aware of the mass of literature following “The Limits to Growth.”(1972.)? Two I can put my hands on from my bookshelves are “Prosperity without Growth” (Jackson,2009) and “Enough is Enough” (Dietz and O’Neill, 2013). A more recent one I haven’t read yet is “The Economics of Arrival” but I love the title. Like the dowager duchesses in the Wilde play who pronounce “We have no need for travel, we are already here,” we need to recognise that we’ve cracked it: we have enough wealth and income to provide everyone with a decent standard of living if we share more equitably. Unless we as a party find a way sof campaigning on that truth rather than recklessly advocating further poisoning and pollution of the planet and unnecessary exploitation of the earth’s scarce renounces we are dong a disservice to the existing millions without the necessities of life, and future generations.
Wow!
Fascinating comments, thanks everyone. Agreed, David Murray, that ‘growth/developments’ should certainly take into account effects on the environment and progress towards Net Zero. Peter Wrigley, I have to focus on a sentence in your comment: ‘ We have enough wealth and income to provide everyone with a decent standard of living if we share more equitably.’ But unfortunately we don’t. I hope my Liberal Democrats will commit to taking measures to combat more of the vast inequalities of our society.
Nonconformistradical, thank you for those very good points.
Katherine Pinder.
“But unfortunately we don’t”
Oh yes we do. “The World has enough for everyone’s need, but not everyone’s greed ” (Gandhi, I believe.) The per-capita income in the UK is now around $40 000. That comes to $160 000 a year for every family of four if shared evenly. “Wow!” indeed. I’m not suggesting it should be shared evenly: effort, talent (and luck?) deserve to be rewarded. I’m simply making the point that there is quite enough for everyone to live comfortably, and some a bit more-so, if we shared more fairly. And with plenty left over to enable us to spend 0.7% of our ample income to help the less fortunate parts of the world.
I would disagree with those who think the UK has enough for everyone if only we shared it more equitably. As an obvious counter-example we don’t have nearly enough houses to house everyone. It also seems that we struggle to generate enough energy for everyone’s needs. We also appear not to have enough trained doctors, dentists, nurses or care workers to meet the demand for them.
@Peter Wrigley; The argument that we have enough because GDP per capita is so big makes the mistake of confusing money with wealth: Money is purely a claim to wealth. Actual wealth is all the things you might buy with the money. If you could somehow magically distribute all the money in the equally, you’d very quickly find inflation making all the things that we don’t have enough of (such as homes) unaffordable again as the market matches supply and demand.
@ Katharine,
“But unfortunately we don’t {have enough wealth and income to provide everyone with a decent standard of living if we share more equitably.}”
I have to agree with Peter Wigley- although he does understate his case. Google gives the UK GP capita as 52,636.79 USD (2024). This works out as £39,654.20 each.
I’d say I could live perfectly well on this amount. How much would you need?
@ Simon R,
You’re making the mistake of confusing income with wealth. GDP is a measure of income not wealth per se. Income is a useful measure of the resources that are consumed – albeit not a perfect measure. Money isn’t purely a claim to wealth. It’s possible to own wealth, for example landholdings, at the same time as having very little money. Many elderly people are asset rich but cash poor.
Wealth is a stock whereas incomes are a flow.
Though of course wealth itself generates its own income without having to work for it. Liberals should be able recognise this. The argument is expressed in the words of the song “the Land.”
“Why should we work hard and let the landlords take the best?
Make them pay their taxes on the land just like the rest,
The land was meant for the people.”
@ Katharine,
“The Bank of England should have an objective of maintaining economic growth which has the same importance as their inflation objective.”
Why?
The Bank of England is owned by the government and is effectively a part of government. The so-called Independence of the BoE is a pretence. It didn’t decide of it’s own volition to buy up £700 bn or so of Treasury bonds in the secondary market. It only has the power to set short term interest rates because Govt has handed it over.
But once we get used to the idea that the BoE is a part of government it’s of no more significance than moving this responsibility from one department of government to another. If we merged the BoE with the Treasury it would be just like merging two departments of Govt. Nothing much would change.
All you end up saying is that Government should attach equal importance to maintaining low inflation and having reasonable growth which is hardly a novel concept.
@Peter: No, I’m not making a mistake. You’re correct in that I was simplifying by not distinguishing static wealth (such as houses) from things that are created and paid for as they are consumed (such as energy or food). But that doesn’t change my point: The idea that – based on looking at monetary GDP – we have enough for everyone is flawed because it’s looking at money rather than actual resources (whether fixed wealth or stuff that’s created and consumed).
Money might feel like wealth to the individual holding it, but from a national perspective it is just a claim to wealth, not actual wealth. You can see this by imagining that the Government suddenly prints enough money to double what’s in circulation: In this scenario, the amount of money doubles, but the actual wealth (and income, measured in resources produced) of the country has not changed at all.
Jenny Barnes,
It seems that normal nuclear power stations can’t be built without government financial assistance. There should be more storage capacity for electricity and as Henry Hill said on Sky News last night we should be generating more energy from wave power.
Tristan Ward,
Maintaining the rule of law goes without saying for a liberal party.
Indeed, markets need to be regulated so the polluter pays, but the issue can be how these costs are not passed on to the consumers. I am reading Martin Wolf’s book ‘The Crisis of Democratic Capitalism’ where he lists as governments giving power to central bankers as a factor in the rise of populism.
The government does provide financial capital, and does support the expansion of intellectual capital. I am not sure it should get involved in increasing social capital.
David Murray,
Indeed, the link between wholesale gas and electricity prices should be cut.
“We have enough wealth and income to provide everyone with a decent standard of living if we share more equitably”, you write, Peter Wrigley, and I wasn’t arguing with your statement (though please will you spell my name correctly), which Peter Martin is also upholding. The point to me is the ‘if’, because we surely DON’T share our nation’s wealth equitably; the wealthy appear to be able to increase their wealth, while the number of the poorest people in our country remains sadly static.
To borrow from fellow author Alastair Bowman’s writing in his latest piece here, ‘Unequal bargaining power at the heart of every transaction systematically favours the stronger side’ and ‘market prices suck wealth up from the poorest’.
Simon R. I like your idea of focusing on ‘resources’ rather than wealth, Simon.
Peter Martin,
It is generally accepted that central banks are independent of government, perhaps in the same way as the judiciary. It is possible the financial market would see a difference if the BoE and the Treasury were merged.
Since 1946 the Bank of England has been owned by the government which sets the BoE’s objectives. Katharine and I are not advocating that the Liberal Democrats change this.
@ Michael BG,
Or perhaps not in the same way as the judiciary. That concept goes back centuries. We’re talking here about something which is far more recent. “Generally accepted” by whom? The people in the know don’t agree. I don’t often quote John Redwood but he’s quite right when he says:
“Gordon Brown made the Bank of England independent, as everyone thinks they know. Truth is it was a very limited independence.”
It’s always better to go with the truth. Especially if you are claiming to be radical. As JW goes on to say:
“This system worked badly during the banking crash of 2008-9 with split responsibilities for the banks between the FCA, the Bank and the Treasury, ending with the need for Treasury bank bailouts on a grand scale.”
I’d say it has always worked badly. Typically we had years of Govt running a fiscal policy which was too tight and the BoE trying to fight that by running a monetary policy which was too loose. This created a huge pool of private debt in the economy.
It’s like having two pilots fighting each other on the controls of an aeroplane, or three if you include the FCA.
https://johnredwoodsdiary.com/2024/05/01/the-bank-of-england-was-given-a-very-limited-independence-by-gordon-brown/
@ Simon,
You’re quite right to point out that the economy is much more about resources than money. We can never be short of money. We can run short of resources. Although we would not be quite so short of housing if the existing stock was utilised more equitably.
The problem of inequality still remains though and will still remain no matter how much growth we have in the economy. Any economic system has to create the conditions for the production of sufficient goods and services. So we need people to drive the trains, work in the factories and do all the jobs that are needed to be done to run the country. They aren’t going to do that if they don’t have to. They won’t have to if they have too much money which they would if everything was shared out evenly. Big winners on the lottery don’t tend to carry on with their previous jobs.
So although Lib Dems have this nice idea that no one should be enslaved by poverty it is only the threat of it which keeps, or has kept, most of us getting up in the morning to go to work. If poverty didn’t exist it wouldn’t be a threat!
Agree with much in this article but we do need to keep up with the times for example on-line shopping is now well established ,Click and collect could be used by village and parish collectives . Community Supermarkets and pantries are springing up offering discounted groceries for the vunerable and economic challenged . Active travel by walking cycling and wheeling could be a positive way to keep our market towns alive , significant areas of blighted brownfield still stand empty pro-active help to developers in terms of decontamination costs could also help.
Peter Martin. Poverty, Peter, is still experienced by people in Britain with paid work, and we hoped that this Labour government would ensure that that was no longer the case. No such hope though for people on Universal Credit, whether working or not, as the Chancellor’s Spring Statement threatened unacceptable Welfare cuts which would drive many more into relative poverty.
Liberal Democrats demand much more, not to be described as just a nice idea! At our Spring Conference at York in 2023 we agreed the policy of Guaranteed Basic Income, aiming to lift people out of deep poverty within a decade, and with the long-term target of providing enough financial support to every household to ensure they can ‘afford to live in dignity and can pay for the essentials of housing, heating and food – even if the household has no opportunity for work.’ Part of our espousal of a Fairer Society, which we hope the Labour Party will come to accept.
Neil Sandison. Yes, Neil, community action to share both food shopping and local transport is clearly a good idea, and hopefully already pursued in small towns and villages by Lib Dem councillors.
@ Katharine,
” At our Spring Conference at York in 2023 we agreed the policy of Guaranteed Basic Income…..”
This is another nice well meaning but impractical Lib Dem idea. The problem is one of unintended consequences. It becomes a subsidy to employers who wish to get away with paying low wages.
This is from the Adam Smith Institute.
“There’s an interesting claim out there that benefits are just a subsidy to low wage employers. They can get away with paying low wages because we taxpayers then top that up. Alternatively, we might think of benefits as being subsidies to those people who, for whatever reason, have incomes lower than we think they ought to be. ….
Much the same process is evident today in the growth of Britain’s low-wage, low-productivity economy. There is little incentive for employers to improve their productivity, and therefore their wage levels, when labour is subsidised to the degree it now is from general taxation.”
https://www.adamsmith.org/blog/welfare-pensions/are-benefits-a-subsidy-to-workers-or-employers-yes
Peter Martin,
If the government and the Bank of England were not independent of each other they would have followed the same policies not opposite ones as you describe. However, I agree that it is a limited independence.
If a person is working full-time then I wish they wouldn’t need any support from the government. Increasing Universal Credit should increase wages. The Labour Government increased minimum wages above the rate of inflation. Hopefully this will continue. The Real Living Wage is only 39 pence more the National Living Wage.
I am not convinced that £24,242 a year is enough to pay housing costs. More housing should reduce the increase in housing costs. Also someone earning this amount with two children would still receive Universal Credit without any housing costs taken into account. I calculate that they would need to earn £24,983.18 not to receive any Universal Credit, which is nearly £13 per hour.
It is an interesting question whether it is possible to increase Universal Credit over a decade to eliminate deep poverty. The Conservatives increased it by £20 a week for a short time; Labour are increasing it by nearly £14 plus the normal inflation increases over the next four years. I do think it would be possible to increase it by a further £46 a week plus inflation over next six years.
@ Michael BG,
Good point in your first sentence! Maybe we should refer to it as a quasi independence!
The second point in your OP is “to raise the standard of living for everyone”. I don’t know about “everyone”. There are plenty of people who should have a reduced standard of living IMO. And, probably most others too! You might want to alter the wording on that. The idea that economic growth can always be relied upon to eradicate poverty hasn’t proved to be accurate.
So to say that the standard of living of everyone should be increased at the same time as achieving a reduction in inequalities is going to be difficult if not impossible.
When most people have become better off it creates the effect of pricing those who haven’t out of the market. Young people in many parts of the country are now competing in the housing market with others who want second homes. They have to move further away which creates increased price pressure on the areas they move to. It ends up not being just a localised effect.
The instinct of most Lib Dems is to subsidise the rent paid by someone in need of housing if they can’t afford it. This solves one particular problem but it creates a problem of higher rents for everyone else at the same time as making landlords better off. You might want to address the question of whether the landlords should be better off and subsidised this way.
As usual @Peter Martin makes good points about the LibDem’s unrealistic policies on poverty and benefits. I would suggest that GBI being LibDem policy shows what happens when you have party policy being set entirely by activists: Activists in all parties (not just the LibDems) are inevitably passionate, strongly idealistic, and very keen to see society improved. But because they tend to be ordinary people and mostly not experts – often lacking the skills to analyse the full consequences of their proposed policies. Thus you end up with well meaning, but economically illiterate (and probably unachievable) policies like GBI.
(That’s not necessarily a criticism of the LibDems btw: It is important for democracy that members and activists have a strong say in setting the party’s aims – and the LibDems do manage that much better than most other parties. But how to do that while also ensuring you end up with realistic, pragmatic, policies is a problem no party has managed to solve.)
@Michael BG
“Indeed, markets need to be regulated so the polluter pays, but the issue can be how these costs are not passed on to the consumers.”
I don’t see how costs (of pollution) can’t ultimately be passed on to consumers unless they are not in the cash flow/on the balance sheet at all. After all, all production ultimately is for a consumer.
Take sewerage/nitrate in rivers. For sewerage, the polluter isn’t really the water company – its the human that produces the waste. For nitrates, that comes from the fertilizer producing food that a consumer eats. If the water company cleans up the sewerage, the consumer has to pay the cost of doing that; if the farmer does not use fertilizer the farmer doesn’t need to recover the cost of that fertilizer from the consumer.
Should read:
I don’t see how costs (of pollution) can’t NOT ultimately be passed on to consumers unless they are not in the cash flow/on the balance sheet at all. After all, all production ultimately is for a consumer.
“Indeed, markets need to be regulated so the polluter pays, but the issue can be how these costs are not passed on to the consumers.”
Besides – in many cases the consumer SHOULD pay the costs of (cleaning up) pollution. Some who flies one a month surely should pay the costs of neutralizing that CO2 output. And that might encourage that person to fly less or incentivize fuel efficiency.
I see your point about perhaps not wanting the standard of living to rise for everyone, Peter, but I don’t agree with it. For one thing, it is generally desirable that food costs and energy prices are kept down for everyone. For another, we don’t discriminate between sectors of society as the Labour Party has been wont to do – Liberal Democrats being concerned with the welfare of everyone, we don’t say that because we are for the poor we are against the rich.
Simon R., we Lib Dem activists in working groups and at Conference actually do use our brains, and if we lack skills and expertise in areas under consideration we already do, I can assure you, seek advice from experts. We also keep thinking and deliberating. So in the case of our policy of Guaranteed Basic Income, we had previously endorse the policy of Universal Basic Income, but trials of this in various parts of the world hadn’t worked well, and we knew the costs of it as a national policy would be enormous. We worked out instead in 2023 that a Guaranteed Basic Ins, brought in gradually over ten years, would be both possible and desirable, as our policy paper discusses in detail.
@ Katharine,
Yes thanks, I do understand the Lib Dem viewpoint. However if you want to increase the standard of living for everyone and at the same time reduce inequality, the arithmetic will dictate that it can’t rise as much for the wealthy as it does for the less wealthy.
So that’s actually a discrimination. You can’t have it both ways. The socialist POV requires less mental gymnastics. It’s not that we are against the rich. We just want them to share out what they have more equitably. There’s no need to set up guillotines in town squares! 🙂
Peter Martin,
Liberal Democrats support councils being able to have higher Council Tax rates for second homes. I don’t understand why you think Liberal Democrat members instinctively want to subsidise rent rather than have rent controls. Recently I was at the SLF Conference where it was proposed that rent controls should be brought back. Liberal Democrats want there to be more houses to be built for rent. If there were more homes for rent than people wanting to rent, rents wouldn’t be as high.
Tristan Ward,
To make the companies pay for pollution rather than the consumers the companies will need to pay for pollution from their profits rather than from price increases. Sewerage should be treated not pumped into rivers untreated. Restoring the rivers should be paid for by the company not the consumers. If the rivers are polluted by the fertilizers farmers use then the farmer should pay.
Simon R,
Our policy making process includes the policy working group taking evidence from experts before the final policy paper is presented to conference.
@ Michael BG,
I’m sure you’re right in that there are some LIbDem members who would favour rent controls. However, this doesn’t sound very liberal in the economic sense. I thought you guys were in favour of buyers and sellers being able to negotiate a price free from State intervention?
Of course, if the supply of houses were to increase the free market price, both for rental and sale, would fall. That’s what all politicians would say except when they have to deal with their constituents who are concerned about houses being built in their locality.
The snag is that the collateral that supports the high level of private debt in the economy depends on prices not falling. So regardless of what anyone might say this won’t be allowed to happen.
@Katharine: If there is expert input into policy, then I’m glad to hear it. And also glad that has caused UBI policy to be dropped (but if there was expert input, why on Earth was something as unworkable as UBI ever adopted in the first place??? That doesn’t seem to say much for the expert input). I hope there will be continued analysis, and that will over time lead to the LibDems choosing a more realistic way to deal with poverty than GBI.
@Michael: You are correct that if there are more homes for rent, that will cause rent prices to fall (And building more homes is exactly what is needed). But it doesn’t work the other way round! Using rent-control regulation to try to make rent prices fall won’t lead to more homes for rent – it’ll lead to fewer homes for rent, a lower standard for those that are available, and a black market in lettings for those people willing to pay the actual market price. I’m dismayed to hear that people are seriously considering that as a solution. Anyone who thinks that controlling prices in a free market is ever in normal circumstances a good idea really needs to read a basic primer in economics and learn how supply and demand work.
I’m sure you’re right in that there are some LIb Dem members who would favour rent controls. However, this doesn’t sound very liberal in the economic sense.
The evidence from post war Rent Acts is that the supply of private rented housing would significantly fall. Personally I think rent controls would be a great mistake.
The answer to housing shortages is to allow councils free rein to build council houses again as LibDem run Eastleigh and Kingston are doing. Selling off council houses and
not replacing them was a huge mistake. Private builders have no incentive to build low cost housing to rent and social housing providers, though well intentioned have not provided enough social housing to meet demand.
Now, rent control. The aim was to make rent affordable to the many and to limit the profits of private landlords. It will only work if combined with a massive housing programe of low cost housing to rent and, sadly, Labour seem content to leave housebuilding in the hands of developers, whilst destroying local communities ability to decide where new housing should go. As an aside, there is no planning block. There’s plenty of planning permission for houses, but they’re not being built, because big building companies are hording land waiting for the price to go up.
“To make the companies pay for pollution rather than the consumers the companies will need to pay for pollution from their profits rather than from price increases. Sewerage should be treated not pumped into rivers untreated. Restoring the rivers should be paid for by the company not the consumers..”
Where does the company get its money to pay for the clean up/make its profit from? I can think of 3 possible sources – tax payers, consumers or by financing the costs by equity or debt raised on the financial markets (which of course has to be paid for either by the tax payer or the consumer).
I agree that the costs of equity/debt can be taken out of the system by not having it in the first place (and the benefits of competition promised on privatisation have proved to be the illusion most of us said they would be) but the cost of clean up will still be paid by either the consumer or the taxpayer.
“If the rivers are polluted by the fertilizers farmers use then the farmer should pay.” I agree in principle, and where does the farmer get the money from? Ultimately, the consumer, and ultimately the consumer pays. The risk is that the consumer decides to buy cheaper food from somewhere where nobody has to pay these environmental costs (ie the costs of maintaining natural capital.)
@ Simon R. Thank you for the slight concession, Simon – the party processes are indeed more rational than you realised. Perhaps in the original backing of UBI idealism did temporarily win out over rationality (apart from the cost, personally I could never see it selling on the doorsteps), but Guaranteed Basic Income is not cloud-cuckoo land.
The government is planning to increase Universal Credit by small increments above inflation in this parliament, amounting to nearly £14 a week extra (sadly less than the £20 extra of Covid times, but belatedly something); and the Lib Dem plan for GBI is, specifically, to have ‘regular increases in welfare payments until this long-term target was reached’ (policy paper 150, ‘Towards a Fairer Society’). So, if the government itself comes to commit to seriously tackling poverty in our country (and manages its finances better!), we can perhaps persuade them to consider approaching GBI in the following parliament.
What we need is a narrative so that when we say these things it makes sense to voters that this is what we believe in.
The big advantage that Reform curently have and why they are leading in the polls is that they have one that resonates with a lot of people.
Their narrative is that Britain is in decline because of excessive immigration enabled by having weak border security and the liberal metrolitan elite (which includes most of the Tory party, the Lib Dems, Labour, Greens, SNP/PC, and the Jeremy Corbyn party) allow it to happen.
Their narrative is a powerful one because it claims that they alone have the answer and their opponents would do the opposite. If you buy into that narrative, your only option is to vote Reform.
We need our own, different narrative.
Tristan Ward,
Please can you provide the evidence that rent controls reduced supply? Rent controls were introduced in 1915 and greatly expanded in 1939 after declining in scope after 1923. Rent controls were improved in 1949 with the introduction of rent tribunals to fix reasonable rents and again in 1965 with the introduction of rent officers. The review into rent regulation that came out in 1971 reported that they were working well.
Simon R,
I didn’t say that rent controls would result in there being more homes to rent. I am not aware of there being a huge black market in homes for rent when the UK had rent controls. As a Liberal Democrat I don’t believe in free for all markets I believe markets should be regulated and rent controls are one way of regulating the renting market. Do you have any evidence that lots of landlords would stop renting because of rent controls? A few of the worse ones might, plus any that find it no longer economic to rent out their property because they have to charge a fair rent. I understand that the government is ending no fault evictions from 2026 and this would be required with rent controls. As currently it is being used when tenants complain about the condition of the home. Also rent controls should not reduce the standards of homes for rent, because ending no fault evictions should improve the standards of homes for rent.
@ Michael BG, and Tristram Ward. “Rent controls were introduced in 1915”.
They were introduced after rent strikes in Glasgow in 1915 helped to undermine the previous Liberal Party dominance in Glasgow and Scotland.
@Michael BG
“Please can you provide the evidence that rent controls reduced supply? ”
Have a look at chapter 2 of the first link (from 2004) below. I quote (page 8) “Before the First World War almost everyone rented, yet by 1991 less than 6% of the population was actually living in the privately rented sector.”
Of course Council Houses rose during that period as a significant form of tenure which may well have been a factor.
From my perspective as a property lawyer (advising both landlords and tenants) I can say that many buy to let landlords are actively considering selling (and some are) and relatively few are buying. And that’s simply because of the abolition of “no fault eviction” and the Renter’s Rights Bill combined with the delay (well over six months in most cases) of evicting a “bad” tenant with no rent controls in the bill. Landlords are paranoid about tenants obtaining security of tenure, especially a “bad” tenant.
I am aware of one case where the tenants had been using drugs in the house (it stank of weed as well as the stink of an unneutered tom cat, dog excrement all over the garden (animals at the property without landlord’s consent), dirt everywhere, damage to carpets etc etc when the tenants finally left. It cost the client about £5,000 to clear it all up.
Of course most tenants are nothing like this but the bad ones steal the headlines.
https://www.smf.co.uk/wp-content/uploads/2004/06/Publication-The-future-of-private-renting-in-the-UK.pdf
Peter Martin,
I do recognise that there would be problems if house prices fell as they did in the 1990’s causing negative equity for years. However, after the financial crash of 2008 this seemed to be less of a problem, because of government intervention.
Mick Taylor,
Indeed, councils should build more council houses. I would like our 150,000 target for building new social housing to be the target for new council homes with another one for other social housing.
In Bournemouth in September 2023 we passed a motion on housing which stated we would, introduce “‘use-it-or-lose-it planning permission’ for developers who fail to develop land that has been given full planning permission”.
Tristan Ward,
The paper you linked to provides some of the answer – ‘owner occupation has replaced renting as the major tenure in the UK. That tenure now contains around 70% of all households.’ And you provide the rest – the increase in council homes. Also the paper states, ‘Social housing … rose to house around 30% of all households in the early 1980s’. It would be interesting to know the numbers rather than percentages. Also lots of bad landlords were forced out of the market in the 1960’s as ‘Rachmanism; was ended.
I am not surprised that some ‘buy to let’ landlords are selling up. Hopefully, these homes will be used either by new tenants of new landlords (in my area many housing associations buy homes to rent them out) or by owner occupiers.
@ Geoffrey Payne. Thanks for joining in here, Geoff, and reminding us of the desirability of having a ‘narrative’ to combat Reform’s. Yes, let’s work on that through SLF Council and then the party in Bournemouth. Still, I am not convinced that the public will continue to buy into Reform’s for many years.
Competence in performance of Lib Dem councils will continue, as Daisy Cooper MP has suggested, to give us credence; will by contrast the Kent public continue to be satisfied with the single-minded concentration on the immigrant influx by their new Council leaders, or the folk of Lincolnshire really applaud their new Mayor who deplores the excellent growth of wind-power and solar power in the county? The Reformers have come a long way in a short time, but as we know their ideas are wrong and their finances don’t add up.
@ Michael BG,
If you consider the BoE to be independent you should be saying it was their intervention that rescued the UK housing market after the 2008 crash by reducing interest rates to very low levels. I think you’re right first time though!
As buy-to-let landlords are reportedly selling up in some numbers it looks like it’s a case of the bigger fish moving in. The big private equity companies like Blackstone are moving in to take their share of the market. The Thatcherite dream of a ‘property owning democracy’ doesn’t look to have lasted very long.
https://www.telegraph.co.uk/business/2024/06/04/thousands-uk-rentals-blackstone-uk-housing-shortage/
@Michael: Yes markets should be regulated. We regulate for transparency – so companies don’t mislead customers; for safety, and for quality, to prevent selling shoddy goods. And in housing that’s reflected in for example, regulations about gas safety, about tenants’ rights and so on – such as the ending of no-fault evictions that you mention. Those kinds of regulations ensure that the market works in a fair manner that improves everyone’s lives. But when you regulate to control prices, that’s completely different: Price regulations prevent businesses from charging the market rate for their product, and that fundamentally destroys the ability of the market to match supply and demand. The results are almost never good.
To take a different example, we have strong regulations on food safety, which are good. But now imagine that, in a misguided attempt to help poor people, the Government decides to regulate prices, and makes a rule that you can’t charge more than – say – £1.25 for an 800g loaf of bread. It’s blindingly obvious that, if the Government did that, any bakery that can’t bake bread for well below that price will stop selling bread; others would reduce the quality of their bread so they can still make a profit.
Hopefully that example illustrates why price controls invariably do much more harm than good. So why do you imagine it would be any different for lettings?
@Katherine “we had previously endorse the policy of Universal Basic Income, but trials of this in various parts of the world hadn’t worked well, and we knew the costs of it as a national policy would be enormous”. There have been no trials of UBI. There have been trials of giving random people far more free money than any realistic scheme suggests. That is the oposite of universality.
A straightforward replacement of personal allowances with UBI (all primary benefits reduced by the same amount) would cost considerably less than our current policy with the main cost being to pay a small amount of money to those that currently fall through the inevitable holes in UC.
Tristan Ward,
The point I was making is that prices should not be increased to pay for environmental damaged caused by companies, instead profits should be reduced or eliminated to pay for it. The party wants director’s bonus and salaries to be reduced to pay for stopping sewage being pumped into rivers.
I think it is difficult for an individual farmer to increase their prices to pay for any environmental damage, as prices seem to be set nationally. The farmer could reduce their salary if possible, borrow money to pay for sorting out the environmental damage if the farm can finance it, or they could sell some of their assets.
Geoffrey Payne,
Indeed we do need a narrative. Should it start from 1979, or from 2008?
Simon R,
The rents would not be set at one level for all or even the same for all two-bedroom house etc. I would expect the system to be where tenants could appeal rent increases and each property would be assessed against local conditions to decide what a fair rent is for that property.
Peter Davies,
Have you read the party’s consultation paper 146 on UBI (https://d3n8a8pro7vhmx.cloudfront.net/libdems/pages/61596/attachments/original/1628504431/embedpdf_CP146_book.pdf?1628504431) and policy paper 150 (https://libdemnewswire.com/files/2023/03/Policy-Paper-150-Towards-A-Fairer-Society.pdf)?
Peter Davies. There have been various experimental projects world-wide to try out UBI, Peter, of which the longest-running currently according to Wikipedia is one in Kenya, for 20,000 people, which began in 2016. No, of course there have not been comprehensive country-wide trials for whole populations. But I don’t understand your comparison in costs between our proposed GBI scheme and a non-Universal scheme “to pay a small amount of money to those that currently fall through the inevitable holes in UC”.
The policy discussion in paper 150 (which Michael helpfully gives the link to above) says, in section 3.1.11, that GBI’s costs in the long term could be similar to those of the proposed UBI, “But, for the same amount of spend, it will lift a greater number of people further out of poverty. This is because all the additional money is targeted on low-income households, rather than some of it being provided to individuals who have little or no income but live in well-off households.” Quite so.
@Katherine
The Kenya project is about how to give aid in a country without a means-tested benefit system. It’s not terribly relevant to replacing some means-tested benefits with universal ones in the UK. For what it’s worth though, giving aid as a universal benefit seems incredibly effective.
The scheme proposed in our UBI paper was costed at about £30 bn. They missed elimination of Marriage Allowance and a significant reduction in student loan defaults so I calculate about £27 bn. I think that is possible. The scheme I suggested above would replace £67 of UC (current value of personal allowances) of UC for single people, £134 for couples. This would be significantly cheaper and would represent the cost of universality separate from the cost of increasing benefits to those who already receive them.
Your point about “individuals who have little or no income but live in well-off households” is the crux of our difference. The current tax system has single income couples paying more tax than richer two-income couples and singletons. This iniquity would be reduced by UBI. The amounts involved are small because there are very few rich single income families.
@ Peter Davies,
“The scheme proposed in our UBI paper was costed at about £30 bn. …….. I calculate about £27 bn.”
It’s not just, if at all, about the ££. The real economic questions are always about the availability of resources.
Do we have enough medical professionals, hospitals, beds and equipment to deliver services? Do we have enough care workers and professionals to deliver social services for retired people. Can we find enough policemen? Enough train and bus drivers etc? Has the government put a long term strategy in place to ensure that all essential services are deliverable?
We all know that if a care worker wins big time on the lottery they will almost certainly cease to be a care worker. What will happen if they receive much less but still a substantial amount?
How will the implementation of a UBI affect the future availability of resources?
You’ve not attempted to answer the most important question of all.
@Michael: What do you mean by, ‘local conditions’? The only sensible interpretation I can put on that is, ‘what the local market rates are’ – which would imply your suggested rent controls just uselessly duplicate the price setting that the market will do anyway. If you mean something below market rates, then you’re still preventing the market from matching supply and demand – which will cause bigger problems, such as worsening the shortage of (legal) homes to let.
Trying to control prices in a free market is in any case a fool’s errand because the market will invariably find a way round your controls. For the particular scheme you propose, I’d expect landlords will charge higher rents to new tenants to protect themselves against not being able to increase rents later on. You’ll probably also see an increase in landlords finding legal reasons to evict tenants (‘I need to renovate the property’ etc.) driven by that the landlords actually need/want to increase the rent.
And for all this, you’ve created new bureaucracy, forcing cash-strapped local councils to employ more people – which in wider economic terms means fewer people in the country who are employed actually creating wealth. Imagine if all the people you’re employing to enact these controls were instead employed building new houses…
Worth pointing out that Peter Martin’s question about resources applies equally to GBI. For GBI, you’re telling – for example – all care workers that, if they stop being care workers, they’ll instead be given a guaranteed income. This income is probably less than they’d get for being care workers, but balanced by that they don’t have to work at all so their time is 100% free time and all the stress of working and commuting has gone. Any guesses how offering care workers that choice will impact the availability of care for those who need it…? Ditto every other resource in the economy that requires workers.
@Michael BG “The point I was making is that prices should not be increased to pay for environmental damaged caused by companies, instead profits should be reduced or eliminated to pay for it. The party wants director’s bonus and salaries to be reduced to pay for stopping sewage being pumped into rivers.”
Yes of course, and we agree on the policy. The hope is that diverting company financial resources (derived ultimately from consumers, taxpayers or the financial markets) away from profit will be sufficient to pay for the expenditure needed to improve the infrastructure to the extent necessary to deal with with sewerage and nitrate pollution (not to mention avoiding hosepipe bans).
My point though is that ultimately the pollution dealt with by water companies comes from humans. The water companies’ obligation is to deal with it to the standard voters/government requires at a price consumers/taxpayers are willing to pay.
Having the consumer pay the bill (as opposed to the taxpayer) at least concentrates the consumers’ minds more directly on the trade-offs.
The comments apply far more to GBI than UBI. GBI would greatly increase the number of people facing a taper in excess of 60%. UBI greatly reduces that number. In general UBI increases the viability of working in the kind of jobs that people only take because they need the money.
Michael BG
Here is a House of Lords report on nitrogen pollution published last week in case anyone is interested. (I have not read it yet): https://publications.parliament.uk/pa/ld5901/ldselect/ldenvcl/161/16102.htm
“I think it is difficult for an individual farmer to increase their prices to pay for any environmental damage, as prices seem to be set nationally.”
UK farmers are almost always price takers – they have to accept what the market offers them. Cereals prices are set in local markets typically dictated to by local millers/animal feed suppliers in the context of global prices. Farms may deal directly with purchasers via grain merchants or though a co-op. Red meat, there may be direct contracts with supermarkets/wholesalers (who dictate prices) and there are still some local markets. Veg tends to be similar to red meat I believe.
“The farmer could reduce their salary if possible, borrow money to pay for sorting out the environmental damage if the farm can finance it, or they could sell some of their assets.”
The problem of nitrates is continuous because fertilizer is applied every year and animal waste produced continuously. Ultimately these costs would force producers to stop growing – I doubt farming businesses could carry the costs.
Alternatively reduce or eliminate fertilizer use. Could growers make a profit on lower yields? Organic food commands a price premium to make up for lower yields even taking lower input costs into account. Wheat production of 10 tonnes to the hectare would be a thing of the past.
Reducing food production in the UK would require yet more imports (exporting the pollution problem). Perhaps the only answer is genetic manipulation for food crops so that (like legumes) each crop manufactures its own nitrogen.
Delving into these lively new comments (thanks, everyone, though Peter D. please spell my name correctly!), I don’t think it is relevant here to raise the idea of UBI once again: the party debated it and decided that GBI would be better. It appears to me that our proposal of GBI will not lead to care workers or others on the minimum wage giving up their jobs if it is implemented, even if only the pay were considered, leaving aside all the personal satisfaction, status and use to the community that comes with fulfilling a needed job. No, the Guaranteed Basic Income will be provided to prevent destitution: to give people of working age who have no means of providing the basic necessities of life enough to live on for as long as they need it. It is keeping with the spirit of William Beveridge’s intention of preventing total lack of resources for life.
@ Peter Davies,
“The comments apply far more to GBI than UBI.”
Wouldn’t this depend on the details of both?
Simon R is right in his comment that a reduction in the labour supply will be a feature of both a UBI and GBI. So regardless of which is more prone to this effect, this needs to be factored into the total costs of each scheme. I haven’t seen anyone attempt to do this so far.
I perhaps should say the legitimate labour supply. The incentive to work in the black economy will be increased. Just take what is on offer either from a UBI or GBI and then make up the rest tax free by working cash-in-hand.
This may extend well beyond mowing lawns, walking dogs and cleaning windows. There will be an increased incentive to participate in criminal activities too.
@Katharine: We already have a system designed to prevent destitution: It’s called welfare benefits. I’ll be the first to admit that it’s not perfect and could do with some significant reworking, but it’s served us ever since Beverage. What makes you think benefits can’t (with some reform) continue to do that and we now need a completely different system?
You say you believe that GBI won’t cause people to give up their jobs, but that belief seems to me to fly in the face of both human nature and of my own life experiences, and you offer no evidence in support of it. On the other side, I can think of several people I know personally who would jump at the chance to get a free income without needing to work. And bear in mind that you only need that to be a small minority of people to cause problems: If even – say – 5% of people on low wages, or 5% of care workers decided they’d prefer the freedom of getting a free GBI income (while the other 95% continue to work), that would still be enough to substantially shrink the economy/cause a massive crisis in care provision.
Peter Davies,
If someone was on Universal Credit and received £67 we suggested it would count as income and therefore that person would lose £36.85, so they would be only receive £30.15. If Universal Credit was increased by £30 a week this would cost less than £9.9 billion using the same basis as the costs in our papers. Therefore £27 billion would increase Universal Credit by more than £81 a week.
According to HMRC in the last tax year 6.3 million paid the 40% income tax rate and 1.13 million (3.4%) the 45% rate. These 1.13 million people will benefit by the whole amount of your proposed UBI.
Simon R,
New tenants would be able to appeal their rents, so new rents would not be allowed to be significantly above existing rents. However, I am not an expert on rent controls but they worked in the past and so they should work in the future.
I can’t imagine that the people being employed to investigate and fix local rent levels would be employed in building homes if they were not doing that role.
Looking at the decline in unemployment benefit compared to average earnings, it seems that the rate could be increased by 80% to restore it to the level in the early 1970’s. Having benefits at this level did not cause unemployment then, so it is unlikely to cause it in the future.
Tristan Ward,
Indeed, the pollution we are discussing comes from humans.
I appreciate that my comments on what may be described as over generous social benefits could be construed as being somewhat right wing, and somewhat surprising from someone with socialist views. It’s a typical working class view though. This is that wages should be fair and enough to keep anyone out of poverty, but that everyone who is physically capable has an obligation to work.
When time are tough and unemployment is high the demand isn’t for increased welfare benefits it’s for real jobs with 35 hour weeks, sick and holiday pay etc. There’s no reason they can’t be provided for everyone who is capable.
Michael BG might want to ask those who work a full week for average wages if they are happy that those who don’t should still receive 80% of them.
@Michael BG. The cost of increasing UC is non-linear. Each extra pound added to the basic costs more than the last because more people are brought into the taper. A £50 per week (£75 per couple) increase would be received by everyone already receiving UC but a smaller sum would be received by anyone above the current threshold by less than £82 per week (£123 if they have a partner) and that is a lot of households.
The GBI proposal would not have the full £27 bn to put into raising the basic. both proposals included removing the requirement to be available to work. That means UC would be payable to more people. Students alone account for over £7bn of the cost of both schemes.
“These 1.13 million people will benefit by the whole amount of your proposed UBI”. No they wouldn’t they would lose exactly the same amount in basic tax allowances. That’s before their contribution to the taxes needed to pay for it.
FPC have never allowed redistribution to be discussed as a whole (taxes and benefits) but that is the only way it can be discussed sensibly.
@Peter Martin “Wouldn’t this depend on the details of both?” In the case of UBI there are no details except the amount so this really means the details of the tax system and which other benefits remain. Adjusting other benefits and taxes to ensure no household on below mean income loses out would be complex but possible. You would probably see basic rate (including NI) going to about 1/3 which won’t put many people off legitimate work (did anyone notice a change in behaviour when it was cut to 28%?). A lot of people however will go from 55% (UC taper) to 1/3 and these are far more likely to be the sort of people who are deciding whether to take propper jobs, gigs or dodgy stuff. I don’t therefore agree that a reduction in labour supply is inevitable with UBI. If you do it right then labour supply increases.
Simon R. The people who would ‘jump at the chance of a free income without needing to work’ would very soon realise how limiting and constricting the proposed GBI would be. The high cost of living we have today in Britain reflects our increased expectations, which could no longer be fulfilled on a GBI. Already we know that some of our fellow citizens who retired happily in their late 60s have had to seek paid work again, particularly if they have new family care responsibilities; but even for those of us without them, the costs of maintaining our houses and cars and ourselves with increasing age mount up unexpectedly.
I don’t think welfare benefits came in with Beveridge, who wasn’t a kind of drink by the way (:)), but you are wrong also to think the proposal is for ‘a completely different kind of system’. The proposal for GBI is that it is gradually achieved after regular small additions above inflation to the existing benefits. And it is hard to imagine it will be available to people who ignore their capacity for a job, which is what our society surely rightly expects of people of working age.
@ Katharine @ Peter Davies
Simon R put it as “a free income without needing to work”. I’d add “in the legitimate economy”.
It’s already questionable that it makes economic sense for any young parent (usually the mother) to bother going out to work for £15k or so once the costs of child care have been factored in. It’s only just about worthwhile if only there one child is involved and there is a fairly generous tax free personal allowance. This is shrinking due to bracket creep but if it shrinks any more due to a shift in the balance between benefits and taxation levels then it probably won’t be. This is due to the so-called tapers that are at work.
This is probably the least of the problems . Incidentally, I have never heard anyone outside of this forum use the term ‘taper’. Most people just look at what they receive as net pay subtract the costs of going to work and then say something like “well it’s hardly worth it for that”.
What no-one is addressing is the increased incentive that both a UBI and GBI will create to participate in the black or shadow economy. It’s running at about 10% of GDP. This is relatively low by European standards but is still £200 bn or so per year.
https://iea.org.uk/publications/research/the-shadow-economy
@Peter Martin. I have explained how a UBI allows people on low incomes to keep more of the money they earn and hence reduces the incentive to hide it. Replacing personal allowances would allow us to tax most income at basic rate at source. One form of dodgy payment is when a sole trader pays employees cash-in-hand out of taxed income. It’s undetectable and it works because the boss is only paying a maximum of 47% while the worker would effectively pay 55%. Another is where a worker gets paid for work an unemployed relative does. The worker is only paying 28% while the relative would lose 55%. With far fewer people getting UC, both these scams become impossible but also unnecessary because the person who does the work could afford to be paid legitimately.
Peter Martin,
Liberal Democrat policy is to increase benefit levels to 50% of average wages based on family type over a decade. Perhaps you misunderstood my comment about 80%. I was referring to increasing benefits to the same percentage of average wages as they were in the early 1970’s. To do this they need to be increased by about 80%.
Tapers have worked on some benefits for years e.g. Council Tax Benefit, but I first came across the word with the introduction of Universal Credit where its rate has always been published.
The government pays for some childcare costs. I think it is 30 hours a week for 3 and 4 year-olds. So one parent should be able to work during school hours without paying any childcare costs if their child is 3 or above.
It is interesting what the iea counts as part of the shadow economy such as selling smuggled and counterfeit goods. It might even count paid baby-sitting. The shadow economy might be decreasing because of the reduction in the cash economy.
Peter Davies,
I don’t understand where you get £82 and £123 a week from. Everyone receiving UC would benefit from the whole weekly increase. Benefits are reduced in relation to other income and that is not changing, so there are no increased deductions. The Universal Guaranteed Income does not give anything to students.
@Michael I slightly underestimated by using the old taper rate. It’s £91 and £136. If say a single person is earning the minimum amount that they get no UC and you add £50 to the basic benefit then they need to earn £50 / .55 (= £91) before they cease to be entitled.
The GBI scheme does not explicitly mention students but “It sets a long term target of providing enough financial support to every household to ensure they can afford to live in dignity and can pay for the essentials of housing, heating and food – even if the household has no opportunity for work”. That does not exclude students.
Indeed the Guaranteed Basic Income provision when it is brought in will enable households to live in dignity, and also without fear, Peter Davies. Besides students, there are all the home carers and the voluntary workers who may one day need it. Meantime, it was good to hear former PM Gordon Brown being eloquent on the Today Programme this morning about how ending the two-child benefit cap will be the most effective way to reduce child poverty in Britain, as we have long recommended ourselves.
Peter Martin: it sounds surprisingly worthy of praise if the British shadow economy amounted to only 10 per cent of the whole, much less according to your reference than in the rest of Europe. However the reference is dated 2013, and it seems rather likely that with the huge influx of immigrants in the last dozen years, including students who brought their families until this year, the shadow economy will have grown.
@ Peter Davies,
I’m still not sure you appreciate how most people think. As I’ve previously said, it’s not using the concept of tapers. Just to take some simple numbers:
Suppose we have a worker earning £500 pw before tax and other deductions. These come to £100. Therefore it’s £400 pw after them. You give the worker an unconditional £200 pw and increase total deductions to £250. So the worker now has a net income of £450. So you’ll be thinking they should be happier.
They may at first but won’t be later. They are sure to know someone who is getting the £200 for doing nothing at all so that will be disregarded. They’ll consider that they are paying £250 in tax on the £500 they have earned. A tax rate of 50% which they’ll consider to be too high.
They’ll look for ways to reduce that!
@ Katharine,
The reference below is more recent but still but still states that ” 10% of all economic activities were in the Hidden Economy”.
“it seems rather likely that with the huge influx of immigrants in the last dozen years, including students who brought their families until this year, the shadow economy will have grown” ??
It sounds like you’re saying that immigrants are disproportionately guilty of tax dodging. Tax evasion even. Have I understood you correctly?
https://www.gov.uk/government/publications/the-hidden-economy-in-the-united-kingdom-wave-2-2022/executive-summary
Peter Davies,
It is still not clear where you get £91 or £136 a week from. The original taper rate was 65%, then it was reduced to 63% and then to 55%. If someone earns £50 a week when on Universal Credit today they would have their benefit reduced by £27.50 (55% of £50) I am not aware of a minimum rate for income with UC.
The question of eligibility is not addressed in the paper. It is only implied. The GBI in the paper is based on the current Universal Credit system.
Appendix 3.13 on page 28 gives current incomes for people with no earnings. This income is clearly what people received on benefits when the paper was written. Other tables also imply that no earning implies they receive an income from benefits. (I spent some time working with the author over the calculations to check the figures in lots of these table.)
Peter Martin,
From the government report it seems that most people getting an extra income from the hidden economy receive less than £5,000. Only 21% of those involved have an income above £1000. And only 12% of those involved get the majority of their income from it. Also casual work is only 21% of the activities.
@ Peter Davies, @ All,
An understanding of the psychological aspect of high marginal tax rates in this discussion does seem to be somewhat lacking. In my working life I did have some experience of trying to persuade hourly paid workers to do overtime. There was often a reluctance backed up with the argument “there’s no point because we lose it all in tax”. “Tax” did include other deductions like NI.
However, when I looked at the figures it was nowhere near as bad as claimed, especially when the pay rates were time and a half, or even double time on Sundays. However, once the idea became fixed it was hard to shift it.
I wouldn’t have had any chance at all if the tax rate for their normal week had been anything like 50%.
@Peter Martin. People who are doing nothing are already getting benefits. I am not suggesting increasing that by much. The scheme I suggested would decrease all primary benefits by exactly the amount of the UB. Those who receive only the basic adult UC would probably see their entire UC replaced by UB and a slight increase. Those with children or additional benefits would still have some UC. For each pound they then earned they would then get 45p net until the UC ran out then 67p until they hit higher rate tax.
The people who get a big increase (apart from people who fall through the cracks in UC) will be people who earn a little and would be prepared to work an extra hour for £8.14 but wouldn’t for £5.50.
Peter Martin. Thank you for that very interesting later report on the Hidden Economy, Peter. I suppose we all know people who participate in it for extra money, usefully for us, and though the Inland Revenue misses out, the report suggests most people don’t earn much that way. On a different scale are the organised gangs which pursue the production or import and distribution of drugs in Britain, and are likely to employ the failed asylum seekers we hear of who have escaped detention, and that is I suppose the harmful part of the hidden economy. It’s only the immigrants who aren’t going through the legal processes of consideration of their cases who I was supposing may be contributing it, perhaps forced to do so.
As for students, it wouldn’t be surprising if their family members engaged in a small way in making or selling goods to supplement their income. Personally I welcome all immigrants who can make a good contribution to British society.
@ Katharine,
It’s useful to make a distinction between the relatively harmless parts of the hidden economy and the more criminally inclined part of it. It’s not hard to find that. People see this every day with youngsters obviously selling all kinds of drugs on the streets. I’m reliably informed that, in what seems like my relatively peaceful small town, a phone order can be made, in a matter of minutes, to supply whatever I might like: Ketamine, Cocaine, Marijuana etc.
You may disagree but it’s the opinion of everyone I know that the illicit income of these traders should not be topped up with a single penny from government sources. It’s quite immaterial whether this is called UC, GBI, or UBI. So whatever policy the Lib Dems decide upon is going to be quite meaningless unless you have a large measure of public approval.
My preference is for a guaranteed job for everyone who needs one. This wouldn’t be taken up by anyone who didn’t need one and would create a problem for those who weren’t engaged in any kind of official work. They’d have trouble explaining where their money was coming from.
@Katharine: I’m intrigued that you say, And it is hard to imagine it will be available to people who ignore their capacity for a job, which is what our society surely rightly expects of people of working age. That seems to imply that you think GBI should not be available to people who could work but choose not to – which seems to make it quite comparable in principle (although more generous) to today’s benefits – and not very ‘guaranteed’. Is that what you’re saying? If it is, then perhaps we don’t disagree as much as we’ve thought.
It’s a bit shocking to think of the drug-spreading local economy of your small town, Peter, but I was told once that there is quite a bit of it also in my local town, and one still hears from time to time of drug running in the so-called County Lines – a hidden and undesirable type of economy. No, I wouldn’t refuse Universal Credit to people engaged in it if they had a good reason to claim it, but one would want prosecution of the suppliers and dealers, certainly.
Yes. I too, and I’m sure Michael as well, would like there to be a guaranteed job for everyone who needs one, and the job should be one suitable for their own situation and capacities. A Liberal wish for us all!
Peter Martin,
In the 1980s income tax rates were much higher than today, but the workers where I worked were happy to do 4 hours of overtime on a week day and 6 or 7 on a Saturday. Saturday was at double time as were the some of the weekday overtime once someone had done 2 hours at time and half.
Peter Davies,
Are you really suggesting replacing Universal Credit of £92.34 a week with your UBI of £67 a week? Our proposal treated UBI as income so once it was introduced at £73 a week someone on existing benefits would be £32.85 better off if the taper was 55%. Your scheme of UBI would do nothing for those not working and nothing for those earning more than £12,570.
Simon R,
The test for receiving GBI if someone is fit enough to work should be being available for work.
Simon R. Yes, Simon, I do think that GBI should not be available to people who could work but choose not to, or as Michael suggests. don’t make themselves available to do so although fit enough. The details of applying GBI may not yet be fully worked out, but it seems to me a simple principle: it should be made available to people who have become destitute, unable to gather enough of the basic resources of life which are usually expected for people living in Britain today.
Heard on the late news tonight – the arrest of many delivery drivers in our cities who are illegal immigrants, prime examples it seems of the hidden economy. An undesirable part presumably – the delivery of the goods may be appreciated, but our society doesn’t want illegal immigrants to do the jobs, if only because they have to live somewhere and our cities don’t have sufficient housing.
@ Michael BG,
I’m not sure what evidence you are presenting but there’ll will always be someone who’ll do extra time to help the company out. I’ve done it myself – even though I’ve haven’t been paid extra for overtime since I was in my early 20!
The link below does suggest that there is a real problem. You’d think someone earning just over the £60k level wouldn’t have any money worries even if they have a mortgage, a student loan and a couple of kids. The snag is that they are in a marginal tax band of 65%+
I know this, also, from my own family experience.
https://recruitonomics.com/some-uk-workers-wont-work-overtime-blame-tax-insanity/
Peter Martin. Thanks, Peter, for continuing to brighten this thread! The point you are making about the disincentive of current marginal tax rates is very much shown by the paper you refer to. People with a marginal tax rate of 65% or more might understandably decide to add to the hidden economy as far as they can to keep some of their money out of the clutches of HMRC! That can’t be good for the country, and our party will it seems need to be thinking anew about all aspects of much-needed taxation reform, as well as proposing well-argued tax increases.
@ Michael BG – “In the 1980s income tax rates were much higher than today”
Need to adjust, yes the headline rates were higher at the start of the 1980s, but in real terms the thresholds were higher, so fewer actually paid the higher rates of tax.
As a new graduate in the early 1980s the biggest disincentive to working overtime was moving from hourly paid to salaried with the same hours and overtime expectations (I typically worked 60~70 hour weeks – suggest reading Tracy Kidder’s “ The Soul of a New Machine” to get an idea of what parts of the IT industry were like back then).
Peter Martin,
Let us take a different example from the one Dan Needle does in the article you provided a link to. A couple with three children with an adult working 37 hours a week at the minimum wage would have gross earnings of £23,492.04, which after deductions is £20,433.87. They would be entitled to Universal Credit. For every extra pound this person earns they will only receive 32.4 pence – a marginal rate of 67.6%.
Therefore Dan’s example with their student loan payments and the reduction in their child benefit has a lower marginal rate. If they didn’t have the student loan it would be only 57.5%. This is 15.5% for the reduction in benefits, but in my example the reduction in benefits is 39.6%.
The High Income Child Benefit Charge threshold was increased for this tax year by £10,000. Also a person could just opt out of receiving Child Benefit and so would only face a 42% marginal rate. Also once a person’s income reaches £70,000 their marginal rate returns to 42%.
Perhaps Child Benefit should be lost once a person’s income reaches £70,500 (about twice of double of average pre overtime earnings). Perhaps you would prefer it to be at £75,100 (about twice of double of average earnings including overtime earnings). Perhaps it should be lost at a monetary value rather than a percentage. However, it has to be completed by the time someone is earning £100,000.
@Michael BG The figure of £67 is the current value of personal allowances. I gave it as a basis for calculating the cost of universality in a scenario as suggested by FPC where the taxes to pay for it don’t interact with the benefits. In that case, only those under 25 would be taken out of UC completely if unemployed. Many who earn a little would also be taken out and hence be better off and have better incentives to work.
In a more realistic scenario in which Income tax (incorporating NI) is raised back to 32%, you would need to raise UB to about £94 to ensure people on median income did not loose out. That would take out couples without children or other additional payments and leave most people currently on UC better off.
@ Michael BG @ All
I think we we all agree that the income tax/benefits system needs to be progressive in nature. However, the rate of progression, whatever we decide it might be, needs to be far smoother in terms of the rates of marginal taxation than it is.
We really shouldn’t have all the discontinuities, shown in the link of my comment of the 10th Aug ’25 – 9:53am, that we do. The marginal rates of those on a lower income shouldn’t be higher than those on a higher income.
We probably need to get some mathematicians on the problem. If Drs Duckworth, Lewis, and Stern can come up with a method of working out the scoring in rain affected cricket matches, (I must admit I’ve never fully understood this), I’m sure there must be a few looking to solve a problem with our taxation system.
While we’re talking about marginal tax rates, there’s also a very serious problem here with GBI that I’ve never seen the proponents of GBI attempt to address: As I understand it, the long term aim is to pay GBI of 60% of median income. Well median household income in 2024 was £36700, and average household size is 2.36.
Let’s take a single person household. Adjusting for household size, median income would be £36700/2.36 = £15551, and HMRC’s income tax calculator says someone earning that will keep £14718 after income tax+NI – or 95% of their salary. So if someone earning nothing gets given 60% of 1-person median (£9331) as GBI (I assume you don’t want to tax people at GBI income), then earning £15551 means your income only increases by £5387 – you’ve lost 63% of your income to tax + GBI lost. That’s a huge disincentive to work.
It’s even worse for a 2-person household with one earner. Median income for 2 people is £31102, of which you’d keep £25915 after tax+NI. Running the same calculations says that from zero income to £31102, the household would keep just 28p of each £1 earned.
The fundamental problem is that, the higher you make the floor income, the higher the taper has to be.
@ Simon R,
I have to agree. The remedies LibDems advocate make the problem worse at the lower end of the scale. The graphs in the link, I mentioned earlier, don’t attempt to include the marginal rates at the lower end of the scale when losses of social benefits are taken into account. Maybe someone would like to have a stab at this?
So, the problem is: How do we alleviate poverty, without creating very high marginal tax rates and so creating an ever deeper poverty trap? It also tends to create public mistrust in the system if people feel, rightly or wrongly, that others are working it for their own ends.
The only answer, as far as I can see, is to move towards a system of guaranteed jobs, rather than increasing social benefits.
@Peter Martin “We really shouldn’t have all the discontinuities, shown in the link of my comment of the 10th Aug ’25 – 9:53am, that we do. The marginal rates of those on a lower income shouldn’t be higher than those on a higher income.” absolutely.
Looking at tax and benefits as a whole, there are four elements to balance:
Need – this is only relevant at the lower end of the income scale
Fairness – this is important at all levels. It’s what the public generally see as wrong with the current system.
Incentives – any redistributative system will cause some disincentives but it is the cliff edges and high marginal rates at various levels of the current system that do real damage.
Complexity. The more complex a system in general, the easier it is for those who know what they are doing to beat it, the harder for people to get what they deserve and the more effort wasted in administration and pursuing unintended incentives.
“The marginal rate of those on a lower income shouldn’t be higher than those on a higher income”, writes Peter Martin, who also asks, “How do we alleviate poverty without creating very high marginal tax rates, leading to an ever-deeper poverty trap?”
I don’t have an answer, Peter, and it must be put to our party economists to think about. However, I want to raise a related question, arising for me from Simon R’s helpful comments on living on median income. You suggest a single earner on median income will end up with £14,718 after tax, Simon, while a non-earner being granted GBI will get £9331, being 60% of median income. My question is, since I have been reading that to have a moderate lifestyle (including one good holiday a year and small treats each week), a single person should be in receipt of £31,700 annual income. Sorry I can’t give a reference for that, picked up in reading about the dire need for drastic savings by young people for their eventual pensions, but if it is at all correct I would think nobody would voluntarily seek a GBI, or be satisfied with the current median income if s/he could boost it.
The Median Household Income quoted (£36700) is Equivalise Disposable Income. That is net of tax and adjusted downwards to account for household size. A single person with Median EDI would be taking home £36700. A childless couple with Median EDI would be taking home £55050. A Couple with two children at Median EDI would take home £77070.
£36700 is a median across all household sizes. The median for single earner families with children is a lot lower and that for childless couples a lot higher.
@Peter; Agreed about guaranteed jobs being the only realistic way to alleviate poverty. I do find it interesting that we’ve independently come to the same conclusion despite our very different philosophies – you being a socialist and me more of a market-oriented classical liberal. But we seem to be the two lone voices here arguing for a guaranteed-job approach. I hope one day we can persuade more LibDem members to take the idea seriously.
@Katharine: I don’t think there’s any one single income level that allows a good lifestyle. Personally, I’m pretty sure I could easily thrive on £6K/year + utilities + housing costs, but then I work from home, don’t tend to go to expensive pubs or restaurants and I cycle most local journeys. Someone who expects to drive everywhere (or actually works in a place inaccessible by public transport) would give a much higher figure. And the biggest single expense for most people – rent – varies massively by geographical area as well as whether the person is content with a shared house or expects their own apartment. Having said that, I do think anyone who claims that as a single person they ‘need’ £31K is probably confusing ‘need’ with ‘like to have’.
What’s really needed is a definition of poverty (or of minimum acceptable income) that’s based on a realistic assessment of what people actually need to live at a basic level in the community, rather than on an arbitrary % of median income.
@ Simon R,
Possibly, it is a bit odd that we agree on this. Those to the right don’t like the idea of a guaranteed job is because this is what used to happen in the Eastern bloc countries. There was no unemployment because the State would employ anyone in one of the State owned factories. The right has an ideological objection to too much State involvement in anything and doesn’t consider that it should be responsible for a certain minimum standard of employment.
Those in the liberal centre don’t like the idea because, no matter how many might deny the workfare link, it smacks of that and state compulsion.
Many on the left don’t like the idea because they want the Trades Unions to be responsible for negotiating the terms and conditions of all workers. A job guarantee would, by definition, mean there has to be full employment. It’s not going to be possible, though, to guarantee full employment and a stable inflation free economy unless wages and conditions are set solely by government.
So there are more than a few obstacles in the way!
Roland,
In 1981 the single person’s allowance was £1375 a year – £26.44 a week. In 1982 it was £1565 – £30.10 (http://taxhistory.co.uk/Income%20Tax%20Allowances.htm). According to the Bank of England website (https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator) if £31 was increased by inflation it would be worth about £110.76. The current personal allowance is £241.73. So the basic threshold was much lower then than now.
I think in 1982 the first higher rate on income tax was applied on incomes above £12,800. According to the Bank of England website this is now equal to £45,734.34. Today people pay the 40% high rate on incomes over £50,270 – again higher than in 1982. Both are the opposite of what you said.
Peter Davies,
I think you will find that 38.9% of £12570 = £4889.73 and is just over £94 a week, which is not much more than £92.34. I still note that you are not thinking of having people on your UBI being better off by them keeping some Universal Credit by applying the UC taper as the Lib Dem consultation paper did.
Peter Martin,
People on Jobseekers Allowance and Employment and Support Allowance lose their benefit on a pound for pound basis. So Universal Credit is better with its 55% taper. The rate people lose benefits is always going to be a problem, once they start paying NI and Income Tax. And of course the lower the taper, the higher the income someone can have and still receive benefit is.
Simon R,
I don’t know where you got your figure of £5387 from. With a net income of £14718 a person would lose 55%, which is £8094.90. So this person would end up with £14,718 from their wages and £1236.10 of GBI making £15,954.10. This is £6623.10 more than the £9331 you set GBI at.
Would you prefer that the benefit is removed as it was in the past on a pound for pound basis, so that this person would end up with £14718, which is only £5387 more than £9331?
The marginal rate for people receiving Universal Credit and paying NI and Income Tax is 67.6%.
The problem is not that the higher the benefit the higher the taper. The problem is that the higher the benefit the higher earnings can be before all the benefit is removed. There may be calls for higher tapers to ensure that people earning particular amounts don’t receive any benefits.
Katharine and I support Job Guarantees and successfully tabled an amendment in 2021 to include a green jobs guarantee in a motion at Conference (F24 autumn). We are considering another amendment this conference to expand it to a general jobs guarantee.
I note you don’t think you can live on the current rate of Universal Credit for those 25 and above which is £4801.68, from which people have to pay for their utilities too. I think your minimum should include your utility spending.
@ Michael BG – Thankyou for doing the legwork.
After I posted my comment and reflecting further, I saw that this still didn’t actually answer the question posed about people willingly doing overtime.
I know from my experience, I didn’t really think about the additional tax I might incur. Possibly because where I was working excessive levels of overtime were the norm. Also being in IT, higher salaries were the norm ie. If you wanted to progress beyond and entry level job, you would be a higher rate tax payer (in my case, two years after graduating I was paying 45% tax, I addressed this by running a series of startups 🙂 ).
I thus suspect part of the issue with people’s willingness to work overtime is more to do with the ethos of the business and the sector it operates within, more so that the marginal tax rates. Combined with a person’s time of life; I know after my children were born, I was less willing to work excessive hours as it represented time away from my new family.
Now, post COVID lockdown, people have re-evaluated their work-life balance and prioritise their time differently and hence will have a different view on the value of overtime.
@Peter Davies: Thanks for the correction. Double checking, I got the figure from https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyearending2024, and it is disposable HOUSEHOLD income, so income after tax etc. is deducted, but is not per person, so a single person would be on a lot less. (Getting exact accurate figures is a minefield, isn’t it 🙂 ) That means my calculations were ballpark correct but not exactly correct.
@Michael: I got £5387 as the difference between what a person on median income would be receiving and the 60% of income GBI aspiration. As noted in my response to Peter D, that calculation was off because I shouldn’t have deducted tax. The corrected figure would therefore be a bit more than that, but would depend on whether you want to pay GBI at 60% of net disposable median income or 60% of gross median income.
Either way, the point remains that if you want to pay GBI at that level, then the taper is going to have to be very high if you want to stop paying benefits at any reasonable income level (realistically, you’d better stop paying benefits and start taxing well before median income level because otherwise you’ll have more than half the working population receiving net benefits while less than half the working population (plus people on unearned income) support the entire income tax base – which is rather obviously unfair and unsustainable)
Regarding stories of people doing overtime etc. despite losing much of their extra income to tax/etc.: Of course, everyone is different. Some people care more than others about being able to take home most of what they’ve earned. Some people are desperate to earn even a few £ more a week, other people will not give up leisure time unless they are very well rewarded for it. So you will always be able to find and quote stories of someone who willingly worked or worked overtime for not very much reward.
But that’s missing the point: If you want to avoid having a high taper/high taxes/etc. damaging the economy through disincentivising work then you need to make sure you’re not deterring any significant number of people from working. As I mentioned upthread, if your benefits policies deter just 5% of people from working, that’s a big economic hit to the country, even if the other 95% carry on as normal. For that reason, it’s flawed logic to say that, because you saw some people working under high tax rates, those high tax rates are fine.
@Simon R “and it is disposable HOUSEHOLD income, so income after tax etc. is deducted, but is not per person”. It’s not per person but it is equivalised. I’m used to equivalisation to a single person (often used in poverty reports so you can compare it to a single person’s benefit). It is in fact equivalised to a “Standard” household of 1.5 adults. The way it works is Total Household Income / Household Size where Household Size is (Number of adults + 1) / 3 + (Number of Children) / 5. Adults start at 14.
A single person on £24467 net £29100 gross
A two earner couple on £36700 net £46111 gross
A single earner couple with four children on £66060 net £85,032 gross
would all be on median equivalised household income.
Peter Davies,
Do you have a web page where you got your figures from?
The Joseph Rowntree Foundation give the following equivalised median household incomes after housing costs:
Single person £16,500
Couple £28,400
Single person with two children £34,100
Couple with two children £46,000
DWP figures for 2022/23.
I found figures which start with a couple, give a single person 61%, a child between 8 and 10 – 21% and a child aged 14 – 27%. Using £28,400 as the base gives:
Couple £28,400
Single person £17,324
Single person with two children 1.09 – £30,956
Couple with two children 1.48 – £42,032
file:///C:/Users/User/Downloads/ELMR_Jan10_Grace_tcm77-101466.pdf
Simon R,
If we take the single person’s median net income as £15,551, then a person would lose £8553.05 leaving them with £777.95 if we set the benefit level at 60%. Party policy is to the increase the benefit level to 50% of medium household type earnings. With benefits at this level if this person received £7775.50 in benefits before getting the job with earnings of £15,551 they would receive none afterwards.
I am not convinced that using household disposable income is the relevant figure. The level of benefits should be in relation to the median after housing costs are paid (again adjusted for family size and composition).
If benefits were set at 60% of household type median after housing costs are paid, then it would make sense to set the taper at 60%, so when their earnings reach the medium they receive none of the benefit.
The whole point of reforming benefits by having Universal Credit was to reduce the disincentives of working. It seems to me that if a person earns the median or above the median they would not have a disincentive to have that job because of benefit levels.
Correction: The two earner couple would be on £41,250 gross provided both earned over £12,500
@MichaelBG The ONS data on family income distribution all claims to use the OECD Modified Equivalence. https://en.wikipedia.org/wiki/Equivalisation describes this using a single person as the base. Following a link on the ONS page, I got a definition with the same formula but using a couple (equivalent household size 1.5) as the base. Search for ELMR_Jan10_Grace_tcm77-101466.pdf.
The equivalence that you quote may well be better suited to UK reality but the government uses The OECD one which is based on world averages.
@ Simon R,
I generally agree with the point you are making but I’d put it as disproportionately high marginal tax rates rather than high tax rates per se.
We are never all going to agree on just what is too high. However, we might be able to agree that someone on a lower income should be able to put in a bit of extra effort to earn an extra few £k and not lose more in tax than someone who is on a higher income who might have earned exactly the same extra amount – possibly as a bonus payment.
It’s the discontinuities in the tax/benefits system which could relatively easily be smoothed out without affecting the total tax take.
Peter Martin,
It is not easy to have a progressive income tax system and a benefit system where the marginal rates of earnings increases over the whole system. Perhaps the only way to achieve it is to ensure all benefits are withdrawn before the income tax system starts. The Liberal Democrats’ policy to increase personal allowances and continued by the Conservatives for a while were moves towards achieving this. I hope we will have this policy again.
Hi Michael,
Actually, it’s not difficult to design a tax and benefits system where marginal rates of tax are never higher for a lower income taxpayer than for one with a higher income (which I think is what you are referring to in your post above), but delivers it at lower cost.
Almost everyone accepts the fact that as income increases, the need for benefits decrease and so a taper rate needs to be applied. The big problem is that politicos have come to accept that there has to be a point where a person earns too much to be entitled to receive a benefit (i.e. you need a cut off) and different benefits have different cut offs. Thus we end up with multiple bureaucratic systems, each set up to monitor income and manage the system.
It is quite simply a total mess.
However if income tax rates and employees’ NI were combined and all benefits were made taxable and all tapers on benefits due removed, it wouldn’t take a lot of effort to tweak the tax free allowance and rates so that the vast majority of people received pretty close to what they received before. Indeed once we we find useful productive work for those who run the benefits systems increases might be afforded or the deficit reduced.
It might even take two stages
1) Income Tax and NI consolidation, and then say two years after that
2) Benefit incorporation.
but it could be done.
David
Of course it would take a radical government that didn’t cave in as soon as some pressure group found a few examples of people who were actually worse off to avoid immediately creating a load of exemptions like Labour did recently, and also one that was competent enough to drive the civil service to deliver the system changes within a couple of years.
If the benefits system is to eliminate destitution, it must be based on need. The tax system for higher earners needs to be based on fairness. Somewhere in between there needs to be a transition. It can only really be done with higher rates at the bottom than in the middle. You can either make the taper rate low and minimise the difference or keep it high and get as many people off means testing as possible.
The other reason taxes tend to be high at the bottom end is that more people pay it so it raises more money. That’s why a rise in basic rate (including incorporating NI) has to be part of the solution.
@Michael: You suggest setting the taper so that people stop receiving benefits at the median income – but remember, the median income is the income that half the population are earning. You are therefore suggesting that we aim to pay benefits to half the population! Do you really think that’s financially sustainable, or would ever be accepted by the other half of the population who would see that their taxes are being used to pay benefits to people who are relatively well off? No, you’d need the cut-off at which people stop net receiving benefits and start net paying taxes to be significantly below median income – which means the taper would have to be correspondingly higher. There’s no way out of the problem that if you want to set a GBI to be a relatively high proportion of median income, then you’re going to have a taper that significantly disincentives people from working, thereby destroying the very wealth generation from which you’d need to fund GBI. (Which is one reason why GBI is just not a realistic policy)
@ Simon R,
“the median income is the income that half the population are earning…”
No it isn’t.
The median income is the income amount that divides a population into two groups, half having an income above that amount, and half having an income below that amount. We have to be careful when talking about income distributions and using terms like median and averages. Your phrase certainly doesn’t mean that half the population below the median income is earning half of the total income.
So, if the income distribution is skewed to the low end, as it is, it’s quite possible for those on median income to be quite poorly off in terms of the total.
Using an average is better but it still can be misleading!
In the olden days, over half the population had no disposable income. The median income was zero and everyone took home at least 60% of that. This is surely the easiest way to end relative poverty.
Peter Davies Would be most grateful if you could explain how to work out what 60% of nothing is.
Thanks Peter, that was careless wording on my part. I should have added the words, that half the population are earning less than. I did actually mean exactly what you’ve described (Hopefully that’s clear from the rest of my post, which depends on what you’ve clarified: If you aim for the income up to which you are paying benefits to be the median income, then you’re in effect aiming to pay benefits to half the population.)
(In case there’s any doubt – I meant Peter Martin: I started writing my correction before Peter Davies added his post 🙂 )
@Simon R – “But that’s missing the point: If you want to avoid having a high taper/high taxes/etc. damaging the economy through disincentivising work”
The trouble is the evidence: I suggest tapers, especially the ones related to welfare on people with low incomes, do act as a disincentive and there is probably evidence to support this viewpoint. However, the tapers seen by those on higher incomes (ie. incomes over £70,000), things aren’t so clear cut, in part because at this salaried income level financial pressures are different to those of someone on circa £30,000 with overtime pay.
Additionally, what do we mean by “disincentiving work”: people being unwilling to paid overtime, salaried people being unwilling to do unpaid overtime, businesses being unwilling to pay more than the minimum wage, businesses unwilling to employ more staff to fill positions they are cover by asking staff to do overtime…
I suspect at the higher pay levels the tapers have a constraining effect on pay; employers know for these staff a change of grade will need to be disproportionally larger to mitigate the effects of the taper.
I suggest whilst we should attend to the tapers that impact incomes similar to those of our MPs, the main focus has to be at those which disincentivise employment and work at lower income levels.
@ Simon R,
Sorry to be a bit pedantic! But it helps to be precise.
The majority receiving benefits is nothing new. If we understand the term benefits more broadly.
For example: everyone once had a tax allowance for children. This wasn’t considered a benefit. Rather that those who had family responsibilities shouldn’t pay so much tax as those who didn’t. We then saw fit to abolish tax allowances for children and replace them with child benefit. We’d moved parents from receiving what wasn’t considered to be a benefit to something that was even though their total income hadn’t increased .
The arguments of the time were likely along the lines that the change wasn’t about making anyone better or worse off. It was about putting money into the hands of mothers rather than the father’s pay packet.
So naturally everyone went along with it. A few years go by and we start to hear the argument (probably from LIb Dems too! ) that we have all these relatively well off people receiving child benefit when they don’t need it!
So it gets cut off at some point. This creates a discontinuity in the overall tax structure. To make matters worse it doesn’t get updated with inflation. So we now have the problem, as mentioned earlier, of train drivers and medical staff having a marginal rate of tax of 65%+ on their overtime whereas many bankers whose incomes are far higher pay a lower rate on their bonuses.
David Evans,
There is no need to consolidate income tax and NI so long as the rates change at the same levels. Income related benefits are already taxable.
Indeed, it seems that the tax and benefit system can be changed to achieve marginal rates of income reduction that are never higher for a lower income person than for one with a higher income by ensuring no one pays income tax on their earnings while they receive income related benefits and the starting income tax rate is higher than the taper rate. The Universal Credit couple rate for those 25 and over is £628.10 which is £7537.20 pa. With a 55% taper, earnings need to be £13,704 before taxes start to be paid. The marginal reduction rate then changes from 55% down to 28%. Increasing the personal allowance and the NI threshold by £100 costs about £1.2 billion. Increasing the basic rate of income by 1p costs about £7 billion. So for every £583.33 rounded down to £580 that the personal allowance and threshold are increased the basic rate needs to be increased by 1p.
David Evans (continued)
If we reduced the taper to 39% then the earnings a person would need to lose all their benefit would be £19,326. The personal allowance and NI threshold should be increased to £19,530 (using multiples of £580) with the basic rate of income tax being increased to 32% plus 8% NI equalling 40%, one percentage point above the taper rate. Someone earning £33,000 would be better off by about £467, but someone earning £50,270 would be worse off by about £143. So indeed it could be done. However as benefits are increased the personal allowance and NI threshold will also need to be increased, making increasing benefits much more expensive than currently.
Simon R (and Peter Martin),
Half the working population are not earning less than the median income. Some of the working population are actually earning the median income. So fewer than half the working population are earning less than the median income. The benefit levels should be fixed according to the equivalised median household incomes after housing costs. Therefore some people will be earning less than the median income, but their household will not be entitled to benefits as their household income is above the threshold for benefits.
@Peter Martin: A fair point. For this discussion I’m thinking in terms of net receiving benefits: In other words, is any income/etc. tax you’re paying higher or lower than any direct benefits (UC/ GBI/etc.) you’re receiving. I would expect someone at or even somewhat below median income to be net paying tax because otherwise the number of people contributing to the tax base is too small to be financially sustainable – and is unfair on the people paying tax.
@Michael: That won’t make any real difference. The number of people earning exactly the median income will be negligible (theoretically it could even be zero, but with 60 million+ people in the country, that’s unlikely). So if you’re counting all people earning less than the median, then to any reasonable approximation that’s half the population.
I don’t believe the ‘after housing costs’ makes any significant difference either. Doing the calculation the way you seem to be suggesting, people earning slightly less than median but with low housing costs will be approximately balanced by people earning slightly more than the median but with high housing costs who therefore end up receiving benefits even though their income is higher. So all you’re doing is introducing a bit of statistical noise without changing that it’s roughly 50% of people.
@Simon R
(@Peter Martin) People on below median incomes will probably be net contributors (taxes exceeed benefits) but those will not necessarily be income taxes. A system could provide services (indirect benefits) out of indirect taxes and hypothecate income taxes to redistribution.
(@Michael) Housing costs (specificly rent) is always the elephant in the room in discussions of income and standard of living. In general, poor people may be paying over half their disposable income in rent while rich people are typically paying nothing. Bringing rents down to historically low levels would be by far the greatest contribution a government could make to tackling poverty.
The gorilla hiding behind the elephant is debt. Mortgage payments are the biggest element but they generally replace the higher cost of rent. The real problem is unsecured lending and credit. There are regular reports of people having to choose between food and other essentials but often they are making that choice after servicing their debts. I have no answer for that one.
@ Simon R,
Yes you are quite right. It’s really doesn’t make any difference is someone is on exactly the median income, to the penny, or one penny more or one penny less. There will be 50% below the median income and 50% above.
I’m not sure I agree about housing costs. The old pre-60’s system was that house ownership provided an imputed rental income which was taxable. Buying a house on a mortgage meant that the interest against the loan could be offset against tax.
There’s a lot to be said for the fairness of this. It would level the playing field between owner occupiers and tenants if the taxation levels were correct but I’m not sure just how popular it would be politically. Or even if it would be possible to get public approval for the change.
I always make the point that there’s no point suggesting policies that have no chance of public acceptance. I’d put the UBI and GBI in that category.
Median income
The issue here is the particular statistical distribution we choose to use and the parameters we also choose to measure against.
The question we should be asking is what should the median income actually mean. I suggest it needs to be an income level which is reasonable for our society (ie. Not a minimum or living wage but a free standing participating member of society wage) then we can set the desired standard deviation to ensure 50% are within a reasonable variation of this number (naturally the target income will be towards to lower SD to ensure the majority are benefiting). Now we can compare this to actual income, adjusted for age etc. and enact policies that favour the setting of wages in this bracket.
Fundamentally, as a society we need a culture change away from the increasingly extreme macho individual to a more group centric culture common in Asia.
Hello Michael,
It is good to hear from you again, and I hope you are keeping well.
Thanks for your reply, where you go into significant detail with backup calculations as to why you think we could (or should) continue with at least three separate systems, Income Tax, Employees National Insurance and Universal Credit (or its replacement by GBI) and change each of them separately (but in some sort of co-ordinated manner) instead of consolidating them together as I proposed.
However, having demonstrated how by adding a further layer of complex co-ordination could achieve your objective, but with no indication of how it would actually be made to work, you conclude with the statement that it would make ‘increasing benefits much more expensive than currently’.
I just can’t see this as anything other than an admission of the weakness of your approach.
More importantly though, you don’t address the further advantages of my proposal, including
1) The removal of the massive complexity of the current three systems which costs a fortune in wages to three different sets of bureaucrats just to administer them separately.
2) Removing the iniquity of the reduced NI rate for those earning over £50,000 pa.
3) Addressing the absurd complexity of taking away Universal Credit if a one off income payment is received, and then insisting a new claim is made.
Overall, I just can’t see any substantial improvement of your approach in this aspect, just increased complexity.
I would urge you to think again.
David
Roland,
I note your comment
‘Fundamentally, as a society we need a culture change away from the increasingly extreme macho individual to a more group centric culture common in Asia.’
and while agreeing withe the first part, I would simply point out that the most common ‘group centric cultures common in Asia’
1) a communist authoritarianism centred on the party with one man as supreme leader, closely followed by
2) a religious authoritarianism centred on an ethno-religious party headed by a supreme leader, and
3) a largely hereditary system around a small number of rich men or families brought about by huge oil wealth
Are you sure what you want is indeed common in Asia?
@David – I got hit with the 250 word limit… I was thinking of Japan. In the 1980s we looked at their success and laughed at how superior we were valuing the individual above the group…
Taking the ideas embedded by Yin Yang, it is obvious neither the cult of the individual or the cult of group – as exemplified by yourself is good, but somewhere between is more balanced…
Fair enough Roland,
Personally I would go
1. South Korea,
=2-3 Japan, Taiwan,
possibly Malaysia and maybe Singapore, but both a bit too authoritarian, and apparently Mongolia, but I know nothing about it at all.
Simon R
In my earlier post I set out that the personal allowances and thresholds could be increased by £580 and the basic rate increased by 1p without any loss of income to the government (see the government’s annual ‘Direct effects of illustrative tax changes’ spreadsheet). The working age population is about 36 million. There are about 8 million who receive working age income related benefits.
Perhaps you have misunderstood. I was saying that the level of benefits should be set according to median equivalised median household incomes after housing costs, but basic benefits are allocated according to actual household incomes. Housing costs are covered by housing benefit which are determined by household income and local housing allowance rates.
David Evans,
The reason I concluded that the system I set out would make increasing benefits much more expensive than currently is because for every pound that benefits are increased by, the personal allowance and thresholds will also need to be increased by £1.82. Increasing benefits by £20 a week might cost £7 billion. Increasing the personal allowance and threshold by £1,891 would cost £22.7 billion. Even if the increase was £3.23 a week the extra cost would to £3.67 billion (on top of the £1.13 billion).
You didn’t set out any details. Can you provide any figures on the extra cost of collecting NI payments? I assume they are collected by HMRC. Do you know how much it would cost if NI contributions were abolished to give the new state pension to everyone with less than 35 years contribution? You didn’t suggest that you wanted to increase the additional NI rate to 8% and so increase tax take rates to 48% and 53%. That still would be possible under the system I set out. I am not aware of you suggesting how the situation of receiving extra weekly payments affects a person’s monthly benefit can be ended.
Do you think the system I set out could be administered by using negative income tax for those earning less than the personal allowance and threshold?
Hello Michael and thanks again for responding.
The fundamental problem Britain has with its multiple governmental income taxation and (income related) benefit reduction systems is the massive complexity that has been imposed on them by governments repeatedly trying to find ad hoc fixes to a never-ending series of real or imagined political issues.
While the biggest problems with marginal tax rates have largely been overcome regarding the interaction of the NI and income tax systems for higher earners (mainly by manually ensuring thresholds etc are changed in line every year), there remain significant problems in other areas. However at the lower income end substantial anomalies remain.
However, this pales into insignificance when you then look at the mess that the totally different approaches to benefit reduction we have with multiple differing tapers, cliff edges and timescales for determining eligibility where these interact to make totally indefensible results. In this regard, Labour’s recent action with its jobseekers’ “right to try” a new job is a step in the right direction, but it only applies to recipients of health-related benefits not UC.
Ultimately this means that efforts to improve the tax and benefits system in any significant co-ordinated way, as Lib Dems are all rightly are trying to do, effectively becomes impossible because of the massive spiders’ web of interacting and conflicting linkages.
We have to fix the foundations before we can make real progress. Everything else is just tinkering with an unstable system.
Hope this helps clarify things a bit,
David
David Evans.
I am afraid that your last comment doesn’t clarify what you are advocating and it didn’t answer any of my questions.
Looking back at my previous comment I think trying to implement what I set out with negative income tax would be very complicated as it is not a UBI system, and especially as taxation is done on an individual basis and benefits are allocated according to household income. Also I made a mistake about the extra cost on linking personal allowances and thresholds to when there is no taper. For every pound that benefits are increased by, the personal allowance and thresholds will also need to be increased by £2.56 not £1.82. If the increase was £3.23 a week the extra cost would be £8.4 billion on top of the £1.13 billion.
Hi Michael,
Thank you again for coming back regarding my posts and requesting/hoping for further clarification and answers to your questions.
Unfortunately, I think we are talking a bit at cross purposes.
Your focus here has quite rightly has been on what sort of improved outcomes can be achieved for people if we sort out the total mess of our income taxation and benefits system – or as you put it “It is not easy to have a progressive income tax system and a benefit system …”
My focus, based on total agreement with you on this part is then “What do we need to do to achieve this?” and in particular “Are the current systems that provide the foundations of the Income Tax, Employees National Insurance, and income related benefits systems capable of delivering what we want?”
My conclusion on this is a simple no!
Hence what I am advocating is the same as it was from my very first post, the consolidation of all three systems into one based on the Income Tax system, possibly in one or at most two stages.
This will provide a simple and sound foundation for any other developments we may want to adopt in order to remove the ridiculous levels of cut offs and tapers and the stupidity of different periods for assessment – annually for Income tax, weekly or monthly for NI and monthly for Universal Credit.
Hope this helps,
David
David Evans,
You suggest that to consolidate three major taxation and/or benefits systems into one unified system would be “simple”.
It wouldn’t. The slow, painful and chaotic development of “Universal Credit” to replace what were claimed to be unduly complex benefit systems proves the point. People like Ian Deuncan-Smith, who misguidedly believed that an idea that can be summarised on the back of a fag packet would be “simple” in reality, had harsh lessons to learn.
The reasons why any tax or benefit system develops complexities are because simplicity means unfairness. Lots of people lobby for exemptions and plead special cases. Some are justified, some are not. Plenty of the former are refused, plenty of the latter get granted. Then someone wants to upset the applecart and start again. Inevitably, all the special cases have to be rethought and relitigated, which takes ages. And the IT also has to start afresh, which takes even longer (see the PO / Fujitsu).
Sorry, but it’s a mug’s game.
David Evans,
Thank you for your reply.
I have set out that it is possible to reform Income Tax, National Insurance and Universal Credit to ensure that marginal rates of income reduction are never higher for a lower income person than for one with a higher income. However, I am not advocating doing it because it would make increasing benefits nearly 9 times more expensive (£1.13 billion to £9.53 billion).
I have also suggested that a negative income tax system would be too complicated to implement, mainly because benefits are based on household income and income tax is based on individuals. It seems that you are advocating such a system without setting out if it is possible. For your desired reform to be considered I think you need to set out how it would work and what the costs would be.
Hello David,
Good to hear from you again. I hope you are keeping well.
You raise valid points when you refer to my comment on the simplicity of combining the Income tax system and the Employees NI system, and when you describe the development of the Universal Credit system as “slow, painful and chaotic.”
Both points are very pertinent, but I fear your implication that the development of an entirely new benefits calculation and payment system combining six separate legacy systems (two income-based allowances, two tax credits, income support and housing benefit) is in any way similar to my IT/NI consolidation proposal is fundamentally mistaken.
NI and IT calculations are based on a single variable input – income. All other inputs are set annually by the government (tax rates, thresholds etc) and are better referred to as parameters.
Benefit calculations have a massive number of variables as all of us who have seen a benefit application form can confirm, a change in one of these variables can totally change the actual calculation routine.
IT and NI calculations are based on only two simple factors (rates and thresholds), which are these days are kept in line.
Quite simply consolidating IT and NI is a massively simpler project – with the usual caveat that you must not allow people to add on lots of “nice to have” extras. KISS – Keep it simple, stupid – has to be the watch word.
I hope this clarifies things for you,
All the best,
David
Hi Michael,
I’m afraid your most recent reply has made it almost impossible for me to determine what you are advocating regarding benefits and taxation reform except possibly that I have totally misjudged your posts as you are effectively proposing doing nothing despite all the well known problems and injustices that the current systems create.
However, I really do have great difficulty in reconciling your position as a strong supporter of the Social Liberal Forum with you apparently being in favour of the do nothing option in this area.
Can you help put me right on this?
David
P.S. I am not a proponent of negative income tax in any way as it is technically very complex to set up and manage (as in David Allen’s ‘mug’s game’) and also a vote loser on the doorstep.
Hi David Evans,
Don’t let me put words into Michael BG’s mouth – But – Your argument seems to be:
“Something must be done. A massive bureaucratic administrative revolution, which superficially might look simple, is certainly something. Therefore, it must be done.”
Hi David,
Thanks for the response, and I still hope you are keeping well, but I would strongly suggest we both let Michael answer for himself.
However, in answer to your portrayal of my proposal, I would say that you are totally ignoring my previous response and rebuttal of the view you expressed earlier that it would be
1) somehow equivalent to “The slow, painful and chaotic development of Universal Credit” – no it wouldn’t. There is a world of difference as I explained in detail there.
and
2) “A massive bureaucratic administrative revolution” – I’m sorry but you seem to have forgotten that it was Gordon Brown who instigated the “massive bureaucratic administrative revolution” way back in 2004 when he merged HM Customs and Excise with the Inland Revenue. What he didn’t do was the necessary tax system simplification by consolidating on the Inland Revenue System for IT and Employees NI. As always he was a complicator not a simplifier.
I would strongly suggest that you do engage with my earlier response to you, rather than just rephrase one liners that really are insufficient except as an expression of your opinion, and certainly not a basis for debate and exchange of information and understanding between fellow Lib Dems.
In the meantime, and as always –
All the best in what you are, like me, still working to achieve.
David
David Evans,
It is good to read that you are not proposing negative income tax. Merging NI and IT would be much easier than incorporating the benefit system into the IT system. You haven’t set out how this could be achieved, when one is based on individuals and one is based on household net income. You haven’t answered my question regarding one of the issues of merging NI and IT. You haven’t even tried to convince me that changing the system so increasing benefits is nearly 9 times more expensive than currently is acceptable. You haven’t made comparisons with the cost of the personal allowance increases since 2010.
So I agree with David Allen, that you have identified a bureaucratic problem and are saying this can be fixed by merging three things without looking at the issues involved. Being a member of the Social Liberal Forum does not mean I should support a reform that you haven’t told me how it would work and how it would deal with the issues that would arise.
I support party policy to increase Universal Credit to end deep poverty within a decade. I also support party policy to solve some of the well-known problems of the benefit system. I would support further reforms to remove problems from the benefit system. The personal allowance and threshold need to be increased so someone on the National Living Wage working 37 hours a week doesn’t pay any income tax and NI. Party policy was similar in the past.
@Michael BG “The personal allowance and threshold need to be increased so someone on the National Living Wage working 37 hours a week doesn’t pay any income tax and NI.”
That would give £3,100 to everyone earning more than £23,500 p.a. I thought your objection to UB was that it gave some money to better off people. It doesn’t give nearly that much.
Peter Davies,
Increasing the personal allowance and NI threshold to £23,500 would make people earning above this amount and below £125,140 better off by £3060.40. This would cost about £36.7 billion. About £35 billion would increase Universal Credit by £100 a week. You make a good point. It is about priorities. To use £35 billion to provide a UBI of £67 does not make those on benefits £67 a week better off. While I would like the benefit levels increased to the deep poverty level in a decade I would not expect that the personal allowance and NI threshold to be increased to the Living National Wage level over 10 years. It would take longer especially as minimum wages are increased. Perhaps over a decade they could be increased by £4000.