| 1.
Is CI a completely different system?
Yes,
payment of most existing benefits depends on work status. Claimants
must be out of work but available for work, or out of work and
unable to work. Lower-paid families with children can claim Working
Families Tax Credit. Otherwise, with the notable exceptions of
old age pensions and Child Benefit, working and at the same time
claiming any of the main benefits is a criminal offence. That
means unemployed claimants cannot study, train or do voluntary
work to any significant extent without jeopardising their benefits.
This
leads to situations where the unemployed find it difficult to
find a job that pays as much as the State benefits PLUS income
tax, National Insurance contributions, council tax, and travel
expenses which the job entails. This is the unemployment trap.
The Working Families Tax Credit improves the position for lower-paid
families with children but replaces it with the poverty trap (see
below).
A
Citizen's Income tackles the unemployment trap by removing the
link between benefits and work status. Unemployed people, invalidity
pensioners, lone mothers - anyone entering or re-entering the
labour market - would keep their CIs. Students and trainees would
have a secure income. A Citizens Income would increase, not impair,
economic efficiency.
2.
What makes a Citizen's Income so relevant today?
Once
again mass unemployment has since 1980 become a chronic problem.
The existing social security system dates from the Beveridge Report
over 50 years ago which assumed very low levels of unemployment.
Today the whole structure of the work force is changing. Information
technology is ensuring that fewer employees produce more goods.
We need a social security system which matches the changing needs
of society in the 2lst century.
3.
Would a Citizen's Income promote employment?
By
abolishing the availability-for-work test , the introduction of
a Citizen's Income would reduce the level at which paid work became
worthwhile. With a CI in hand, part-time work, flexible working,
temporary contracts and self-employment would become more attractive.
The
present pattern of employment opportunities is too rigid and inflexible,
particularly for disadvantaged groups such as people with disabilities
and single parents with small children. It is also unsuitable
for increasing numbers of older workers who might prefer some
form of part-time working in the transition from full-time employment
to retirement.
By
helping to break down the barriers between employment and unemployment,
a Citizen's Income should enable workers to develop more flexible
patterns of work more consistent with their own needs. And it
would give some reward to those whose voluntary caring contribution
to society is so important.
4.
How else would it help the economy?
It
would ensure that those seeking higher education, training or
re-training would be able to take advantage of a small secure
income. Today some get grants or training allowances but there
is no income guarantee. It is hardly surprising in these circumstances
that British industry suffers from a severe and chronic skills
shortage. At present students and trainees depend almost entirely
on a hit-and-miss system which prevents a long-term view of the
country's industrial needs.
5.
Would employers take advantage of CI to keep wages low?
Some
may but the best would not; and now that a National Minimum Wage
is in place, it is more difficult for employers to pay very low
wages. Rather than a CI enabling employers to pay lower wages,
it would enable people to move more easily from one job to another,
and it would at the same time provide an incentive for people
to take jobs, because it overcomes the worst effects of the unemployment
and poverty traps. A CI would therefore improve the efficiency
of the labour market.
The
poverty trap arises when people are taxed beyond the ability to
pay. Housing Benefit and Council Tax Benefit are withdrawn, and
the benefit of the Working Families Tax Credit reduces, as net
income after paying income tax and National Insurance contributions
rises, at such a high rate that only a few pence remains out of
each extra £pound earned.
6.
Wouldn't a Citizen's Income decrease incentives to work?
Some
people believe that without an availability-for-work test a benefit
such as Citizen's Income would destroy the work ethic. Paradoxically
it is the present system that decreases the incentives to work,
train, care for others etc. by paying benefits to people only
so long as they do nothing and penalising them when they try to
help themselves.
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