Universal credit for all

With the potential to appease both the left and the right of the political spectrum, the citizen’s income concept could well mark the road to a fairer, more equal welfare system in Britain.

What would you do with an extra £71 per week? That’s the question posed by The Citizen’s Income Trust, an organisation that promotes debate on the concept of a universal income for Britain, with citizenship as the only basis of entitlement.

The Trust proposes a radical reform of the national welfare system, suggesting the annual spend on benefits should be distributed equally among all citizens, regardless of their income or employment status. Under their proposals, 0-24 year olds would receive £56.25 per week, 25-64 year olds would receive £71 per week and those 65 and over would receive £142.70 per week.

Analysing figures from the 2012-13 financial year, the cost of such a scheme is projected at around £276bn per year – just £1bn more than the annual welfare budget that year –making the implementation of a citizen’s income close to revenue and cost neutral.

Disability and housing benefits would remain intact, but the scheme would replace all other benefits including child benefits, income support and jobseeker’s allowance, national insurance and state pensions. Included in the current annual spend figures is £8bn in Department of Work and Pensions (DWP) administration and £2bn in HMRC tax credit administration and write-offs.

A common objection to universal income is its potential to deter a population from working by creating a “money-for-nothing” culture. But in a 1970s pilot study called Mincome in Canada, establishing a citizen’s income didn’t produce a workshy population. In fact, the only people who stopped working or worked less were young mothers, teenagers in education and those due to retire soon.

Taking the Trust’s figures, it also appears unlikely that £3,692 per year would dissuade people from working or replace income from employment. Rather, it would prevent the poorest sections of society falling into dependency on state welfare and being discouraged from entering paid employment for fear of losing benefit entitlements. This welfare trap would be eliminated; a citizen’s income would be paid, tax-free, regardless of an individual’s working status or income level.

In this way, a citizen’s income has the potential to lead to a more equal and meritocratic society. Debates around reducing weekly working hours have been circulating for some time, and citizen’s income could aid this. For a person who currently works 40 hours per week at minimum wage, a £71 per week citizen’s income would facilitate a reduction of around 10 working hours.

A citizen’s income also helps compensate for people’s non-financial contributions in a society and culture such as caring for children or elderly parents, undertaking voluntary work or pursuing hobbies and creative interests. Given the safety net of a small guaranteed income, there’s more room for career changes, education and enterprise projects too.

With no need to prove entitlement in order to claim a citizen’s income, benefit fraud would be abolished and government bureaucracy reduced as the need for DWP administrators became significantly lower. No more invasive checks on an individual’s circumstances and no more stigmatisation of claimants; no need to spend money on chasing and punishing “benefit fraudsters”.

The Swiss are due to vote in a referendum on citizen’s income this year, while here in the UK, Green party leader Natalie Bennett has announced the policy will feature prominently in her party’s 2015 election manifesto. With the potential to appease both the left and the right of the political spectrum, the citizen’s income concept could well mark the road to a fairer, more equal welfare system in Britain.