Aspects of the debate on a Citizen's Income:

To see the Citizen's Income Trust's response to the Government consultation paper 21st Century Welfare, see Citizen's Income Newsletter, issue 3, 2010

A Citizen’s Income is an unconditional, nonwithdrawable income for every individual as a right of citizenship. For twenty-five years the Citizen’s Income Trust has been promoting debate and research on what is now seen in many quarters as a desirable and feasible reform of tax and benefits systems. And there is now increasing international interest driven by a significant pilot project in Namibia.

One of the reasons for current interest in a Citizen’s Income and in benefits reform generally in UK is that at the moment there is little financial incentive to take a part-time job, even if that would fit with someone’s caring responsibilities. With a Citizen’s Income the situation changes considerably, to the advantage of the household’s income, carers’ ability to care for dependents, and the economy.

A smaller Citizen’s Income which we have researched and which we submitted as evidence to the House of Commons Work and Pensions Committee’s inquiry into Benefits Simplification in 2007 – evidence which they printed in their report - redistributes from rich to poor, increasing the net income of households in the lowest earnings decile by 25% and decreasing the net income of households in the highest earnings decile by only 4% - and all this at the same time as reducing the poverty and employment traps which households find themselves in today. (We reprinted our evidence as a booklet, available in print form, and also downloadable: see the notice to the left)

Research subsequent to our submission of evidence to the Committee shows that a larger Citizen’s Income would be as feasible as the smaller one discussed in our evidence.

Both of these schemes are revenue neutral, that is, the income tax rate won’t need to rise. [When discussing income tax rates it is important to note whether the scheme in question subsumes national insurance contributions into tax rates] We used to think that not costing anything was an essential characteristic of a viable reform of tax and benefits, but the way in which the Government has found the money to throw at the banks suggests that we might not need to be quite so careful with the Chancellor’s money. What’s particularly interesting politically is the support for major reform, and for a Citizen’s Income, in both houses of parliament.

A recent project shows that by replacing Working Tax Credits and Child Tax Credits with Citizen's Incomes of £60 pw for each adult and £31.59 pw for each child (in addition to Child Benefit) and by changing allowances and tapers it is possible to

• increase employment incentives and make nobody worse off in a range of household types for household gross earnings up to £750 per week for families with children and up to £450 per week for single adults without children
• considerably reduce administrative complexity by abolishing Working Tax Credits and Child Tax Credits
• do it by it making as few other changes as possible to the current system
• employ the Upper Earnings Limit for National Insurance Contributions as a cost regulator: that is, the Limit can be located so that the scheme saves money, costs money, or is revenue neutral.