has there been such an interesting time for the Citizen's
UK's coalition government has promised a Citizen's Pension:
a nonwithdrawable, unconditional income for every citizen
over pension age;
Department for Work and Pensions is planning a Universal
Credit, which, as we explained in our response to the
consultation paper 21st Century Welfare (published in
our last edition) is an important step along the road
to a Citizen's Income;
proposals to means-test Child Benefit mean that the importance
of universal benefits is firmly on the agenda;
Iran has a Citizen's Income (almost): and it is with that
most interesting piece of news that we begin this Newsletter.
Iran's economic reforms usher in a de facto Citizen's Income
concept of a Basic or Citizen's Income is virtually unknown
in Iran. In nearly three years of discussion and debate
over the government's new economic reforms, there has been
no mention of it at all in political, academic or media
circles. And yet, the country has just launched a nationwide
cash transfer programme that has the hallmarks of a Basic
Income in disguise. Some 60.5 million Iranians, or 81 percent
of the population, have just had the first payment of 810,000
rials (about US$80) per person deposited in their bank accounts.
The payments will be made every two months, involve no means
testing, and are unconditional. They are also likely to
double in amount over the next few years as implementation
proceeds. The remaining 19 percent of the population opted
out of the programme voluntarily, mainly because they do
not need the money.
as this is, the novelty does not end there. The tens of
billions of dollars involved each year will not come from
oil exports, or from government coffers. The transfers will
be financed entirely through the higher prices the nation
will henceforth pay for a variety of basic goods and services
-- mainly fuel products -- that have been massively subsidised
for decades. (Until now petrol has cost US$0.10 a litre
and diesel fuel under $0.02.) The same applies to natural
gas, electricity, water charges, and bread. Such subsidies
have benefited the well-off far more than those with modest
incomes (70 percent going to 30 percent of the population)
and resulted in wasteful consumption of energy and foodstuffs,
inadequate investment in new technology, and environmental
pollution, not to mention smuggling to neighbouring countries.
In order to put an end to this inefficient and unfair system,
the 'Targeting Subsidies Law' of earlier this year mandates
the gradual phase-out, over five years, of nearly all implicit
and explicit price subsidies, to be replaced with regular
cash transfers to households and various economic and social
sectors. The scale of price increases are not yet known
(as of mid-November 2010) but they are likely to be huge,
in some cases severalfold. Official announcement is expected
towards the end of November with new prices coming into
enough, the universality and uniformity of cash grants came
about without anybody really pushing for them or even wanting
them, either from the government side that put forward the
original plan, or from those opposed to the plan in the
parliament who wanted it modified, if not scrapped. The
intention was firmly to target the cash transfers on the
less well-off sections of the population, the haggling being
over whether the beneficiaries should be the lowest two,
or five or seven deciles of the population on the income
scale. The idea was also to pay more to those with lower
incomes, in the interests of social justice. If in the end
it was decided to pay the same amount to everyone who bothered
to register, it was only because a massive exercise in means-tested
targeting (over 17 million household questionnaires were
filled out and analysed) turned into a fiasco as public
protests mounted over the results. The principle of equal
payment to all forced its way in because it just made sense
under the circumstances. There could hardly be a more dramatic
vindication of Philippe Van Parijs's characterisation of
Basic Income as a 'simple and powerful idea'.
be sure, Iran's 'cash subsidy' (that's the official designation)
falls short of a fully-fledged Basic Income grant as commonly
understood. The entitlements of all household members go
to the head of the household alone, not to individual members,
even if adult. There is no word on the duration of the programme,
although it should in principle continue as long as Iran
is able to produce oil for its domestic consumption. Means-tested
targeting has not been abandoned altogether and may be resurrected
if the government decides at some point that it can do a
better job of targeting than its last attempt. The rights-based
underpinnings of the Basic Income have no place in the current
Iranian discourse on cash grants. The payments are not regarded
as 'income' to which the citizens are entitled by right,
but as another type of subsidy to compensate for the loss
of price subsidies ( - though whether this makes any practical
difference is an interesting question). Neither do they
come anywhere close to a decent subsistence income ( - the
US$200 which a family of five receive per month is about
two-thirds of the monthly minimum wage). They also exclude
more than two million Afghan and Iraqi refugees who have
been living in Iran for years, sometimes decades, and will
now have to bear the full brunt of price hikes. And last
but not least, once price rises go into effect in the days
ahead, and if inflation gets out of hand due to mismanagement,
there is genuine fear that the whole edifice might come
the other hand, it might be argued that the hardest obstacles
towards a national Basic Income have already been overcome.
The programme is enshrined in law. The payments are universal
(except for those rich enough to forfeit their right by
simply not signing up). Funding is assured and looks destined
to continue in the medium term. And if the reforms succeed
even partially in achieving their stated objectives of rationalising
consumption patterns, boosting investment and efficiency,
redistributing incomes in favour of the have-nots and reducing
poverty, their future should be fairly secure. The continuation
of the programme will also allow its shortcomings to be
identified and put right, particularly if this enormously
important shift in social policy is subjected to rigorous,
comprehensive and continuing impact evaluation as it unfolds
and progresses in the months and years ahead.
replacement of price subsidies by a cash transfer system
of unprecedented scope and scale has placed Iran in the
forefront of all countries in advancing towards a nationwide
Basic Income. The fact that such a transition takes place
first in a developing, Middle Eastern, Islamic state, not
in a developed country in Northern Europe as many had presumed,
underlines the relevance of the concept of Basic Income
for a broad range of countries. The specificities of the
Iranian experience should of course not be ignored. It is
in large part the combined availability of domestic fuel
resources and an exceptionally distorted pricing policy
that has made it possible, indeed almost inevitable, for
a de facto Basic Income to emerge as part of the solution.
But the model may still have some relevance for other countries,
in particular mineral producing nations. There may also
be scope in some countries with large subsidy bills to explore
the feasibility and wisdom of rerouting subsidies to fund
a Basic Income, without additional taxation. Iran's experience
may hold some lessons of wider applicability, if they are
properly drawn and are convincing.
For more on this subject, see Hamid Tabatabai, 'The "Basic
Income" road to reforming Iran's subsidy system', in
Basic Income Studies, forthcoming, or contact email@example.com
the 23rd November the Daily Mail summarised the story
of the 2008 financial meltdown, and Gordon Brown's reaction
to it, as told in a new book, Brown at 10: 'Both
Number 10 and the Treasury were to toy with the idea of
giving £100 in cash to every British citizen. But
there was no existing mechanism for doing so, which is why
Brown opted instead for a temporary cut in VAT to 15 per
cent.' (Adapted from Brown at 10 by Anthony Seldon
and Guy Lodge, published by Biteback on November 25 at £20.
© Anthony Seldon and Guy Lodge 2010)
Institute for Public Policy Research has published
the results of research which shows that 'in-work poverty
has been on the increase over the last decade and this increase
has not been dampened by the recession: The proportion of
poor children living in working households increased to
61 per cent in 2008/09, up from 50 per cent in 2005/06;
there are now 1.7 million poor children in working households
compared to 1.1 million in workless households; and the
number of working-age adults in working households increased
by 200,000 in 2008/09 and 60 per cent of poor adults now
live in working households'. (p.1). IPPR says of the report:
'Analysts had thought that the trend towards a greater proportion
of poverty being found among working households might be
reversed by the recession, as low earners lost their jobs
and swapped in-work poverty for workless poverty. However,
our analysis shows that this had not happened by March 2009
and that in-work poverty continues to account for a rising
share of poverty. This creates a key challenge for the Coalition
Government as it sets out its plans for welfare reform and
develops its child poverty strategy.' Recommendations include:
'Increasing hourly pay;
helping low earners to work
providing incentives for both partners
in a couple to work; and
increasing the value of
benefits and tax credits for low earners' (p.1) (Glenn Gottfried
and Kayte Lawton, In-work poverty in the recession,
ippr, September 2010: www.ippr.org.uk/publicationsandreports/publication.asp?id=774)
the Social Policy Association Annual Conference 2011
- 6 July
Social Policy Association's (SPA) 45th annual Conference
will be held for the second year running at the University
of Lincoln's main campus on the waterfront of Brayford Pool,
from 4 - 6 July, 2011. The theme this year is 'Bigger Societies,
Citizen's Income Trust would like to organise several sessions
on all aspects of Citizen's Income, CI, including one or
two symposia, (each symposium being a series of three linked
papers), that aim to provide a coherent social policy in
which a CI scheme provides a core, on the assumption that
a CI is a necessary, but not sufficient, condition for a
better society. A CI is an unconditional non-withdrawable
income for every individual as a right of citizenship. It
is granted on an individual basis: would be universal to
everyone who has the right to legal permanent residence
in the UK; is non-selective, except by age, and those with
disabilities would continue to receive their disability
benefits. It is delivered automatically to those who qualify.
The amounts could be a Full CI or a Partial CI, and it would
be financed for this exercise by a flat-rate or progressive
income tax system. If a realistic but feasible CI scheme
were in place, that aimed to redistribute from wealthy to
poor sections of society, to reduce poverty, and to restore
incentives to work, what effect might this have on the nation's
health; on alcohol and drug abuse; on the level and types
of crime, and criminal justice; on household-formation,
children and families; on employment, self-employment and
small businesses; and what sort of housing policy would
be required to ensure that poorer people were adequately
participate in one of these CI sessions, please send a title,
an abstract of 300-400 words for your paper proposal, together
with full contact information and affiliation, as a Word
document or in rich text format, as an e-mail attachment
to Annie Miller (from whom further information about CI
can be obtained) at the CIT office, firstname.lastname@example.org
by Friday, 18 February 2011. These papers will be
grouped by topic and sent to the SPA for their approval.
Decisions will be conveyed after the 21st March. The deadline
for full papers, in pdf format, is Friday 10 June 2011,
for uploading onto the conference website.
participants must register with the SPA. Further details
of the conference are available on www.lincoln.ac.uk/conferences/SPA2011.
Online booking has already opened. Discounted fees are available
by booking by Friday 15th April, and reduced fees
are offered for students, unwaged and retired people. This
conference fee, which goes entirely to the SPA, includes
coffees, teas and lunches, and a year's subscription to
the SPA. The conference starts with lunch on Monday 4 July
and ends with lunch on Wednesday, 6 July 2011. The Conference
Dinner will take place on the Monday evening, and there
will be a Reception on the Tuesday evening.
SPA publishes a journal Policy World, and members
also receive copies of the Journal of Social Policy
(CUP) and Social Policy and Society (CUP) free as
part of their subscription. For further information about
the SPA, see www.social-policy.com. If you would like to
submit directly to the SPA, you must send your abstract
and contact information to SPA2011@lincoln.ac.uk by Friday
25 February 2011.
Credit: Welfare that works
Miller reviews the Department of Work and Pensions' white
paper, Universal Credit: welfare that works, Cmd
7957, briefly summarising the main proposals, and assessing
to what extent the changes are moving in the direction of
a Citizen's Income.
current Social Security system comprises a contributory
National Insurance scheme and a means-tested safety net
(Social Assistance) based on the Beveridge Report of 1942.
The original conception has become compromised over time,
and the structures of the society and the economy for which
they were designed then are very different now. The National
Insurance and Social Assistance schemes now fail Beveridge's
basic, but still relevant, principles of 'the right of every
citizen to a minimum level of subsistence', and 'the need
to preserve incentive, opportunity and responsibility'.
Department of Work and Pensions' white paper, Universal
Credit: welfare that works, (Cmd. 7957, 11 November
2010, £19.75) identified two significant problems
inherent in the current, complex, means-tested benefit (MTB)
the benefits and Tax Credits (TCs) have to be claimed from
up to four different agencies, (Jobcentre Plus, and The
Pension, Disability and Carers Service, both within the
DWP, together with HM Revenue and Customs, and Local Authorities),
involving duplicated, extensive form-filling, uncertainty
about outcomes, and increased incidence of error and fraud;
the extremely high Marginal Deduction Rates (MDRs), arising
from the interaction of the deduction of income tax and
National Insurance contributions with the application of
several separate tapers (benefit withdrawal rates). Some
benefit claimants can find themselves facing an MDR as high
as 95.95%, which acts as an inbuilt deterrent to entering
or increasing paid-employment.
white paper proposes two key improvements. The first is
the replacement of four out-of-work benefits and two in-work
benefits by a 'Universal Credit' (UC), based on similar
rates to the benefits that it replaces. The four benefits
that are being replaced are Income Support (IS), income-based
Jobseeker's Allowance (JSA), income-related Employment and
Support Allowance (ESA), and Housing Benefit (HB). The in-work
benefits are Working Tax Credit (WTC) and Child Tax Credit
(CTC). The second improvement is the combination of several
benefit tapers into a 'Single Unified Taper' of 65% on net
earnings, thereby reducing the MDR to 65% on incomes below
the income tax and NI thresholds, and about 76% above them,
until the benefit entitlement is exhausted.
Universal Credit will have a simple structure designed to:
a basic income for people out of work, covering a range
work pay as people move into and progress in work; and
lift people out of poverty.' (p.14, para 5)
UC (which could be called more accurately a 'Unified Credit')
consists of a basic personal amount with additional amounts
for disability, caring responsibilities, housing costs and
children. 'The purpose of the personal amount is to provide
for basic living costs. It will broadly reflect the current
structure of personal allowances in Income Support, Jobseeker's
Allowance and the assessment phase of Employment and Support
Allowance, with single people and couples getting different
rates. As now there will be different rates for younger
people, (p.18, paras. 19 & 20). IS, JSA and ESA entitlements
currently give different amounts for lone parents by age,
and for dependent children; they give premiums for family
and carers, and add extra for disability, (by degree of
disability, age and whether a single person or a partner
of a couple).
is expected to be made online in most cases, and claims
'will be made on the basis of households rather than individuals
and both members of a couple will be required to claim Universal
through a single application.' (p.33, para
5). 'When an existing award to a current benefit ends and
the recipient is to be instead awarded Universal Credit,
that award will be a household award. In couple households,
therefore, the other member will cease to be entitled to
existing benefits and will become part of the household
award for Universal Credit.' (p.37, para 20)
Government is committed to providing the financial support
less well-off families need to cover children's living costs.
We will therefore include fixed amounts within Universal
Credit to provide for these costs. The amounts will be based
on those currently provided through Child Tax Credit. They
will be additional to Child Benefit.
intends to keep the current principle in benefits and Tax
Credits that, where parents are separated and provide shared
care, only one of them will be eligible to receive the child
element of Universal Credit.' (p.21, paras. 38 and 40)
assume that ordinarily with a joint claim, only one of the
partners would receive the Universal Credit payment. However,
we will consider the scope to arrange payments to parents
in couples, so that support for children goes to the mother
or main carer, as now in Tax Credits.' (p.68, para. 10)
'upper age limit for Universal Credit will be the age at
which people are eligible for Pension Credit, which is currently
linked to State Pension age for women and, on current plans,
will be 65 for both men and women in 2018.' (p. 22, para.
amount of the UC for those out of work will be similar
to that of the replaced JSA, but the simplified system could
lead to some claimants receiving their full entitlement
for the first time, by receiving components of the UC to
which they did not realise that they were previously entitled.
Take-up is expected to increase, since it will be easier
for new claimants to understand the new system, and their
application will be made to only one agency, the DWP.
virtue of the changes to entitlement and improved take-up,
Universal Credit will have a substantial positive impact
on poverty, for both children and adults: Universal Credit
could lift as many as 350,000 children and 500,000 working-age
adults out of poverty. This is before we consider the positive
impact of more people moving into work.' (p.52, para. 9)
is a significant project, affecting 19 million individual
claims and an estimated eight million households.' (p.37,
assessment for UC will have two stages: 1) a gross entitlement
calculated by the DWP based on circumstances, and income
other than earnings; 2) recipients with earnings from employment
will have the earnings taken into account, and the single
unified taper will be applied, (p.35). Real-time details
of earnings, which will be passed by employers to HMRC,
means that immediate adjustments can be made to the UC received,
rather than by the former year-end adjustments for under-
or over-payments. Information about significant changes
of circumstances, (moving into work, becoming sick, losing
a job, having a new baby, moving house), all will also normally
be entered on-line.
the emphasis in this reform is to get people back into work,
if it were found that the reduced MDRs do not provide enough
financial incentive for certain categories of out-of-work
recipients to seek paid employment, then conditionality
(applied to all recipients as individuals) and financial
sanctions will be brought into play.
'There will be four broad conditionality groups:
conditionality - jobseekers;
preparation - people with a disability or those with a
health condition which means they
have limited capability for work at the current time;
in touch with the labour market - lone parent or lead
carer in a couple with a child over
age one but below age five; and
conditionality - people with a disability or health condition
which prevents them from
working, carers, lone parents or lead carers with a child
under the age of one.' (p.24)
Government expects that the Universal Credit reform will
reduce the number of workless households by around 300,000
within two or three years of implementation, (p.59, para.
those in work:
single constant taper will reduce the MDR from its current
varying, unpredictable, high rates, and make the outcome
of entering paid employment or increasing paid work more
predictable. By reducing the MDR facing low earners from
around a possible 96%, as now, to about 76% at most, the
Government expects to improve the work incentives of around
700,000 low earners, (p.50, para. 1b).
long-term benefit recipients, small amounts of work can
be a very positive way in which to refresh skills, gain
valuable experience and rebuild confidence. However, small
amounts of work are discouraged by the current benefits
system.' (p.43, para. 10)
selected groups there will be a system of Earnings Disregards
before the taper is applied. In Annex 3, examples are given
for a couple, a lone parent and a disabled person, but actual
amounts will be set closer to the date of implementation.
However, it is envisaged that these Earnings Disregards
will be reduced by one-and-a-half times the recipient's
eligible rent or mortgage interest support. Further, the
reduction in housing costs is capped by a 'disregard floor'.
Thus, the actual earnings disregard has a possible range
with a maximum value and a floor, (p. 66).
distributional impact of UC is expected to be such that
in 'the bottom decile, the average impact of Universal Credit
will be to increase net incomes by around 1.5 per cent -
a cash value of £2.40 per week. In decile two this
figure is around 1 per cent, which equates to more than
£3.60 per week. This is before we take the impact
of increased take-up into account, so is likely to significantly
understate the gains to those on the lowest incomes', (p.
52, para.12). 'We expect to see average net incomes reduce
in the long term in only deciles 7 to 10, and even there
the average reduction will be small - less than 15 pence
per week in deciles 8 to 10.' (p.52, para 14)
simplification of the system, with the UC being administered
only by the DWP, rather than HMRC and Local Authorities
as with the benefits that UC replaces, reduces the amount
of duplication, and thus the resultant waste and inefficiency,
and also the risk of error and fraud. Similarly the single
unified taper, by reducing the MDR, reduces the incentive
towards fraud, and it is hoped that the use of an integrated
computer system will also lead to a reduction in errors
and fraud, and will free claimants from the anxiety associated
with paper-based self-assessment. The DWP's program to deter
fraud, imposing penalties and recovering debt, will be renewed,
(pp.43-44, paras. 13-19).
greater simplicity of the Universal Credit system will lead
to a streamlined administration, which we anticipate will
lead to savings of more than £0.5 billion a year',
(p.51, para. 7).
course, there are many more details in the white paper than
we have space for here.
the new UC, several of the other state benefits will be
retained, although some of these may be reviewed and reformed.
benefits, which are paid on the basis of National Insurance
contributions, will be reformed but will continue to exist
in parallel to the Universal Credit,' (p.46, para. 4), 'but
in most circumstances would only be paid for a fixed period,
only to facilitate a transition back to work.' (p.46, para.
respect to the Social Fund, elements that can be automated,
such as Budgeting Loans, Sure Start Maternity Grants and
Cold Weather Payments, will be come part of UC. More discretionary
elements, such as community care grants and crisis loans,
will be devolved to Local Authorities in England and Wales,
current benefit dependent thresholds for access to a range
of passported benefits (for example, free school meals and
health benefits) will no longer exist. We will replace the
current rules with an income or earnings-related system
that gradually withdraws entitlements to prevent all passported
benefits being withdrawn at the same time.' (p.45)
'government has already announced in the Budget that it
will fundamentally reform Disability Living Allowance from
We plan to consult shortly on our proposals,
which will complement the support provided to disabled people
by Universal Credit.' (p.48, paras. 17 & 20)
government is still considering ways of changing Council
Tax Benefit, and of offering childcare support.
1 shows which current benefits are unified and which are
retained or modified.
1. CURRENT WORKING-AGE BENEFITS AND UNIVERSAL CREDIT
TO BE REPLACED
Working Tax Credit
Single £65.45 pw
Couple £102.75 pw
Carer £30.05 pw
£2850 pa for 1st child
) Basic personal amount
) + extra for:
Disability Living Allowance
* Child Benefit
Council Tax Benefit
or £13.40 pw
Carer £53.90 pw
review (p.19, para. 24b)
Revisions being developed
Fund: for emergencies,
Sure Start Maternity Grant,
Cold Weather Payments,
Community Care Grants
that can be automated to become part of UC.
More discretionary elements to be devolved to Local
National Insurance Benefits:
* Contribution-based JSA
* Contribution-based ESA
* Statutory Sick Pay
* Statutory Maternity Pay,
paid for 39 weeks
* Maternity Allowance
under25, £51.85 pw
) over 24, £65.45 pw
90% of av.gr. weekly earnings, capped after 6 weeks
at £124.88 pw. maximum.
90%, but capped for whole 39 weeks
To be administered as with UC.
ESA will be paid for only 1 year
* Industrial Injuries
rules to be replaced and entitlement gradually withdrawn
* = non-means-tested benefits (that will not be replaced
DWP, Benefit and Pension Rates, BRA5DWP, April 2010,
can one assess whether the proposed changes to the benefit
system are moving in the right direction?
Since a Citizen's Income (CI) scheme is a set of instruments
rather than a program of policies, (although we believe
that the instruments that comprise the CI will lead to benign
outcomes), one can assess a policy proposal by comparing
the features of that proposal with those of a CI scheme.
Thus, in Table 2 below, the main features of any benefit
and income tax system are listed in column 1, the elements
of the current system that it is proposed be replaced are
detailed in column 2, and the key aspects of the DWP proposal
is given in column 3, while the main features of a CI are
indicated in column 4. An examination of the table reveals
that, although the DWP's proposed scheme demonstrates a
small but important shift in the right direction, which
we welcome, many features of the current benefit system
2: TO COMPARE THE DWP'S PROPOSED SCHEME WITH A CI SCHEME
SOCIAL ASSISTANCE BENEFITS: some to be replaced.
ref: Universal Credit:
welfare that works.
A UNIVERSAL CREDIT
transition Oct 2013-Oct 2017
simplify system, reducing complexity, uncertainty,
errors, fraud & administration costs:
reduce MDR and thus paid-employment disincentives,
helping to lift out of poverty those who are o-o-w
and those on low wages.
to reduce poverty,
incentives to be in paid employment.
basis, ie. couples or individuals
basis, ie. couples or individuals
ie who is covered
of people who are out of work, & those with low
for all permanent residents:
adults & children.
ie. variations in amount according to circumstances
often based on frequently changing circumstances
on current benefit and TC rules: i.e., different amounts
for singletons and for partners of a couple, and less
for younger people
(& retaining CB).
of disability paid in addition to CI.
and CTB available to some on Partial CIs.
credit to be paid by DWP to the household member making
automated CI to each adult, & responsible parent
of dependent child.
JSA, ESA, HB, WTC, CTC.
IS, JSA, ESA, HB, WTC and CTC replaced by an integrated
benefit of a similar amount.
CI or PARTIAL CI for adults,
expenditures subsidise tax- payers
tax and NI contributions deducted first.
higher tax rates retained.
DEDUCTION RATE, (MDR):
of several tapers, for IS, JSA, ESA, CTC, WTC, HB and
CTB, and income tax and NI deductions, leading to MDR
of up to nearly 96 %, (regressive).
A unified constant taper of 65% on net earnings, leading
to a MDR of 65% on incomes below the tax & NI
threshold, and of 76% on higher incomes until benefit
entitlement is exhausted. (Still regressive).
Earnings disregards for selected groups.
'income tax + NI contributions' combined, (for instance,
32 - 42% depending on scheme),
low (HB + CTB) taper.
to the table:
benefits, (for those who are unable to work, or for those
who are willing to work and are seeking work), ie: IS =
Income Support; JSA = income-based Jobseeker's Allowance;
ESA = income-related Employment and Support Allowance:
benefits: TC = Tax Credit, as support for working people
on low earnings; ie: WTC = Working Tax Credit; CTC = Child
= Housing Benefit. CTB = Council Tax Benefit. CB = Child
Benefit. CI = Citizen's Income. NI = National Insurance.
= Marginal Deduction Rate, (combination of deduction of
income tax, National Insurance contributions, and benefit
withdrawal rates (tapers)).
It is obvious from the white paper that the whole impetus
for these reforms is to get people off benefit and back
into paid work. The government hopes that the reduction
of the MDR from nearly 96% for some claimants, to 65% for
those with incomes below the income tax and NI thresholds,
and about 76% for those with incomes above these thresholds,
will be a sufficient incentive for many who are out-of-work
to seek work, and those suffering from in-work poverty to
increase their earnings.
single person working 35 hours per week, on the National
Minimum Wage of £5.93 per hour, would earn a gross
wage of £207.55. The first £124.18 will attract
an MDR of 65%, yielding a net amount of £43.46, and
the remaining £83.37 will be subject to 76%, leaving
£20.01. The net earnings from 35 hours work will be
a total of £63.47, representing an average net wage
of £1.81 per hour, with an average MDR of 69%. It
is not surprising that a stiff regime of conditionality
and sanctions, and thus of expensive monitoring, has to
be in place to enforce this incentive.
MDRs are extremely high, especially when compared with an
MDR of 42% (40% income tax + 2% NI contribution) for higher
rate tax-payers. This makes the system highly regressive
the white paper, reference is made to supporting claimants
to participate fully in society, by which is meant, of course,
participation in paid work. The equating of society with
paid-work reveals the government's attitude to society,
which does not augur well for David Cameron's idea of The
household basis for couples as the benefit unit is retained.
A joint application has to be made, and the benefit is paid
to one partner. An extreme case occurs when a spouse, usually
but not exclusively a woman, with caring responsibilities
for children or disabled or otherwise infirm people, is
financially dependent on a partner who is wealthy enough
not to be eligible for a UC. As the Social Security law
stands, cohabiting partners of all categories are required
to support each other, but it could be 'in-kind', and does
not have to be in the form of cash. However, despite ubiquitous
references to 'the common purse', a financially dependent
partner even in a formal union does not have legal rights
to an income from the wealthier partner. The redress for
this is an important part of a Citizen's Income. A further
aspect of this repressive attitude to couples is that they
receive less than that of two single people, thus further
penalising them, and sometimes driving them apart.
'Universal Credit' is not universal, as it does not apply
to all members of the population who have the legal right
to permanent residence in the UK. Paradoxically, if a universal
CI system were adopted, and income tax expenditures (which
subsidise the richer part of society) were rescinded, then
the MDR could have been much less, certainly no more than
50%, for most people.
changes detailed in the white paper, though welcome as far
as they go, are not radical, since they merely remove some
of the accretions that have been bolted on to earlier versions
of the system, usually in the name of radical reforms. It
is still the same non-universal, means-tested system, with
claimants lumped together as households, thus retaining
the concept of a 'financially dependent adult', and in which
a significant section of society is excluded on the basis
of her/his relationship with a wealthier person, from whom
they have no rights to an income. Couples are still penalised,
and the system can add to their problems, driving them apart.
Too many adults and children will still live in poverty.
As is well known, means-tested benefits almost always involve
inherent high disincentives to work, which in turn lead
to the imposition of conditionality and sanctions. The system
is still regressive, and tax expenditures still subsidise
tax-payers. It is a pity that the opportunity for really
radical new thinking, in the form of a Citizen's Income,
presented by the need to reduce the public deficit drastically,
was not seized, to try to rectify many of these other aspects
of the current system.
Hartley Dean, Understanding Human
Need, Policy Press, 2010, xvii + 217 pp, pbk,
1 84742 189 0, £21.99, hbk, 1 84742 190 6, £65
concept of need is at least as complex as the human experiences
to which we apply it, and this book brings some valuable
order to the ways in which the term is used by policy makers
and social scientists.
first substantive chapter (ch.2) understands 'inherent'
need as needs which belong to every human being simply by
virtue of our being human - and straightaway we are into
a variety of ways of understanding need because the different
ways in which we understand our human nature result in different
understandings of inherent need. If we understand ourselves
as utilitarian subjects then our needs will be understood
as objective interests; if we understand ourselves as market
actors, then our needs will be understood as subjective
preferences; if we understand ourselves as psychological
beings, then our needs will be understood as inner drives;
and if we understand ourselves as members of a species,
then we will understand our needs as (evolved) constitutive
characteristics. Social policy is about the meeting of need,
so how we understand need matters, which means that how
we understand ourselves as human beings matters rather a
Dean recognises that all need is to some extent interpreted,
he gives chapter 3 to 'interpreted need' as a concept: that
is, to understandings of need drawn from our experience
of society and its culture. All understanding of need is
culturally specific, so, for instance, in our consumer society
consumerism generates our understanding of need. Social
policy relates to need as we understand it, and so to normative
(i.e., expert-defined), felt, expressed and comparative
needs, with their respective discovery methods: for instance,
participatory methods for discovering expressed needs.
4 and 5 discuss poverty in terms of unmet need, inequality
as a risk that some people's needs might not be met, social
exclusion as exclusion from needs satisfaction, capabilities
as the extent to which people are free to meet their needs,
and 'recognition' as the extent to which people's needs
are recognised. A tension underlying each discussion is
that between the individuals' autonomy and our interdependency
within society, and the related question: To what extent
are my needs purely my own, and to what extent generated
by and understood within our societal relationships?
this context Dean explores in chapter 6 what he clearly
regards as a crucial distinction: that between 'thin' and
'thick' needs. Whilst a variety of expressions are given
to this distinction, underlying all of them is the distinction
between need as individual and need as social; and much
of the rest of the book is taken up with exploring this
distinction through discussion of differing theoretical
Chapter 7 develops a fourfold taxonomy of need constructed
from the two main distinctions so far discussed: that between
inherent and interpreted needs and that between thin and
thick needs. Each resulting quadrant gives rise to a different
social policy approach:
A taxonomy of needs-based approaches (p.120)
8 explores the ways in which needs are understood to imply
rights. Dean develops another fourfold taxonomy based on
the distinction between 'doctrinal' (or normative) rights
and claims-based (asserted) rights and the distinction between
understanding ourselves as autonomous subjects (thin needs)
and as potentially vulnerable and therefore interdependent
subjects (thick needs). Each quadrant generates rights understood
in particular ways: for instance, doctrinal rights and an
understanding of the person as vulnerable generate citizenship
rights based on needs understood as universal. Dean then
shows how each of Esping-Andersen's welfare regime types
prefers a particular category of rights: liberal welfare
regimes selective rights, conservative regimes protective
rights, social democratic regimes citizenship rights, and
all of them conditional rights: and he offers a detailed
critique of the 'welfare citizenship' to which social democracy
has given birth.
the final chapter Dean suggests that 'our humanity depends
on social engagement and self-fulfilment' and that
this implies universal and unconditional approaches to social
policy and the meeting of both particular and common needs.
His particular policy proposal is local social rights councils,
but it could equally well have been a Citizen's Income,
which does of course meet both particular and common needs
as well as promoting both social engagement and self-fulfilment.
The book contains summaries and questions for discussion
at the end of each chapter, and a reading list at the end.
There is an index, though unfortunately a flawed one: Bill
Jordan is frequently quoted and is in the index; Fitzpatrick
is also frequently quoted but isn't. Basic/Citizen's Income
gets a brief mention on p.136, but you wouldn't know that
from reading the index.
the index is a minor blemish on an important book: important
because it lays an essential foundation for any future discussion
of social policy and thus for any future discussion of universal
Jordan, Why the Third Way Failed, Policy
Press, 2010, iv + 228 pp, pbk 978 1 84742 656 7, £22.99,
hbk, 978 1 84742 657 4, £65
Blair's and New Labour's 'Third Way' expected contracts
in free markets, detailed targets in the public sector,
and close regulation of our collective life, to achieve
social ends. Jordan's thesis throughout this carefully argued
and quietly passionate book is that means need to cohere
with ends: that is, that social and moral means are needed
if moral and social ends are to be achieved; and that therefore
individualistic market-oriented policies will struggle to
deliver a sustainable and moral society. Under New Labour
'the collective processes at work in every society' were
submerged beneath an emphasis on 'individuals, their choices,
aspirations, and achievements'. What is now needed is a
return to a social order understood as 'a moral order of
interdependent members giving each other mutual recognition'
the first part of his book Jordan outlines institutional
arrangements which would enable 'justice, equality, wellbeing,
respect and [a] sense of membership' (p.18) to flourish:
lower benefits withdrawal rates, localism within a context
of broader solidarities, and an openness to scientific advances.
The second part of the book tackles the malaise into which
New Labour stumbled: a reliance on contracts to solve social
problems, and consumer choice. Jordan shows why contracts
between a government and the commercial sector rarely work
out as planned, and that consumer choice is rarely that.
Underlying these particular problems was a touching faith
in capitalism's ability to solve social problems, and in
a rather dessicated economic logic. The proper role of economic
science is as a tool in the cause of judgements made on
the basis of moral regulation by social relationships constituted
by ritual and symbol, and Jordan shows how New Labour failed
to understand this.
third part of the book contains Jordan's policy prescription:
a Citizen's Income to rebalance formal and informal work,
and radical devolution of public services. He concludes
that both contractual and moral regulation are required,
and calls for 'a heightened awareness of broader common
interests and a recognition of fellow citizens' (p.200).
book is classic Jordan, drawing in diverse material in the
service of wide-ranging political critique and social justice.
It is carefully argued - for instance, discussing in detail
iek's doubts about a Citizen's Income; it is
timely, because as well as offering a critique of the Third
Way it asks questions of David Cameron's 'Big Society';
and it is gently inspiring, because it shows how a combination
of not impossible policy changes could deliver a more just
is particularly uplifting about this book is that it could
be read positively from within any of our three major political
parties, which means that it has the potential to generate
a common mind on how future social policy should be shaped.
Cusworth, The Impact of Parental Employment: Young People,
Well-Being and Educational Achievement, Ashgate,
2009, xvi + 243 pp, hbk 0 754 675594, £60
parents' employment patterns influence their children's
well-being as children, as adolescents, and as adults? The
answer is 'yes', and this thoroughly researched book is
an attempt to understand how and how much.
first, introductory, chapter understands parents' employment
patterns in terms of 'their impact upon children's outcomes
in several ways: through the effect on household income
and socio-economic circumstances (economic or financial
capital); through the provision of cultural norms and expectations
(cultural capital); and through family relationships and
interaction (social capital). Parents' qualifications (human
capital) also play an important part, and are related to
levels of both economic and cultural capital' (p.3). The
second chapter studies this 'capital' approach and also
the social, policy and theoretical context of this important
field of study.
3 outlines the research method: cross-sectional and longitudinal
data collection and analysis, on employment patterns and
outcomes for children, using existing data sets. The following
three chapters present analyses of the data on young people's
educational and emotional wellbeing. Both workless households
and lone parents in full-time employment are shown to have
negative effects on young people's emotional wellbeing;
parental employment patterns and having a mother in part-time
(but not full-time) employment correlate with lower truancy
rates; and, interestingly, maternal employment patterns
make no difference to achievement at GCSE whereas paternal
unemployment has a negative effect. As expected, parents'
educational achievements correlate closely with their children's.
the final chapter, Cusworth concludes that 'the evidence
provided by this research tentatively supports the policy
of encouraging paid work for all, including mothers, although
part-time as opposed to full-time maternal employment might
offer young people greater protection against poorer emotional
well-being. Parental employment which guards children against
the experience of household worklessness would appear to
be overwhelmingly positive' (p.195). 'In moving away from
a climate where any employment of a mother which separated
her from a young child was frowned upon, there should not
be a swing to a situation where full-time continuous employment
is regarded as ideal or compulsory' (p.197).
would add to Cusworth's list of 'questions raised and future
work': Which feasible reforms of the tax and benefits system
will incentivise 'options for mothers (and fathers) to spend
more time in the self-provision of childcare' (p.196); and
which will incentivise the flexible part-time parental employment
which Cusworth's study shows to be so important for children's
Shutt, Beyond the Profits System: Possibilities for a
post-capitalist era, Zed books, 2010, 243 pp,
hbk 1 84813 416 4, £65, pbk 1 84813 417 1, £12.99
Shutt begins with a diagnosis of the evils which led to
the financial crisis of the last two years, and particularly
the global shift away from capital intensive manufacturing
and towards service industries, and thus towards fewer opportunities
for productive investment and to pension and other funds
seeking increasingly speculative investments (which Shutt
correctly terms gambling). Loans looking for lenders meant
increasingly risky loans and the eventual collapse of the
sub-prime mortgage market in the United States.
describes the banks bail-out as 'corporate welfare' (p.31),
outlines the effects of the austerity measures which the
bail-out has made necessary, and suggests that
can scarcely be denied that the combination of extreme
monetary laxity, rapid fiscal expansion and massive state
subsidy of banks and other private-sector businesses constitutes
a total negation of the principles of orthodox financial
management as traditionally espoused by capitalist market
economies. At the same time the pretence that such an
unorthodox strategy could be effective in reviving growth
in a situation where overborrowing by consumers had already
brought the global economy to its knees bespeaks an even
more total detachment from reality.' (p.46)
major long-term threat to classical capitalism is the devaluation
of both capital and labour: capital investment in internet-based
media is rarely profitable because it is difficult to demand
payment for information which can be so easily shared; and
technological change means that the 'global demand for labour
is in long-term decline' (p.56). Insecurity for both investors
and workers is the result. Governments' concern to maintain
growth leads to government policy designed to maintain corporate
profits - for instance, the privatisation of state enterprises
and assets - in a context in which the increasing costs
of the scarce resources of a finite planet and growing public
resistance to consumption increasingly constrain growth.
An important source of the funds with nowhere to go is the
private pensions industry, which Shutt compares unfavourably
with the state pay-as-you-go pension system: a system which
he rightly suggests doesn't suffer from a rising dependency
ration between retired workers and active workers because
productivity is rising. The pharmaceutical, nuclear power
and arms industries are castigated as yet more artificial
receptacles for investment capital. The profits system,
far from allocating resources efficiently, misallocates
proposed replacement economic model abandons both growth
and the 'work fetish' (p.99) as priorities and instead aims
'to provide people with what they need and want to the maximum
extent permitted by the available resources' (p.108). The
policy instruments proposed are greater government control
over taxation and capital movement, increased non-profit
and state ownership of enterprises, restriction of working
hours, and a Citizen's Income. The final chapters recommend
'cooperation, creativeness, equality' and 'deepening democracy'
and ask whether the current crisis might lead some world
leaders to seek a more radical alternative to the status
the final chapter Shutt returns to an anti-globalisation
agenda which emerges at various points in his book, and
I wonder whether here he has not sufficiently examined the
options. National boundaries are contingent realities, and
there is no more reason for recommending a new economic
order founded on the nation state than a global one. What
surely matters is consistency, e.g., the free movement of
capital within Europe needs to be matched by a European
tax regime and a European Citizen's Income. Further exploration
of the alternatives would be welcome.
of Shutt's readers will want to argue with particular points,
but it is surely more important to experience the general
direction of his argument. Whilst his agenda appears radical,
he doesn't in fact attempt to dismantle capitalism. In spite
of the rhetoric, what he's done is to show how capitalism
can survive in a new context. One of those contexts is globalisation,
and we look forward to Shutt showing how his prescription
could work in an increasingly interconnected world.
Policy Press (ed.), The Peter Townsend Reader,
Policy Press, 2010, xviii + 678 pp, hbk 1 847 424051, £70,
pbk 1 847 424044, £24.99
reader is an inspiration, and we are hugely in the debt
of the Policy Press and of the book's section editors for
the comprehensive nature of this collection of excerpts
from Peter Townsend's writings.
sixty years Townsend did more than anyone in the UK to gather
evidence in the cause of social change, to treat social
policy sociologically, to define poverty as relative poverty,
and to found institutions which would have a long-term impact
on social policy: particularly the Child Poverty Action
Group and the Disability Alliance.
books have had as much of an impact on this reviewer as
Townsend's 1979 Penguin Poverty in the United Kingdom:
a survey of household resources and standards of living.
No collection of extracts could do justice to its 1,200
pages of evidence and analysis, but those printed in this
reader are carefully chosen and correctly begin with the
can be defined objectively and applied consistently only
in terms of the concept of relative deprivation
The term is understood objectively rather than subjectively.
Individuals, families and groups in the population can
be said to be in poverty when they lack the resources
to obtain the types of diet, participate in the activities
and have the living conditions and amenities which are
customary, or are at least widely encouraged or approved,
in the societies to which they belong. Their resources
are so seriously below those commanded by the average
individual or family that they are, in effect, excluded
from ordinary living patterns, customs and activities'
(quoted on p.191).
most important pages in a reader are the index, and this
reader has a good one. Reading it will reveal the breadth
of Townsend's interests, and using it will reveal the grasp
he had of the detail of a wide variety of policy fields.
Entries on 'means-tested benefits' and 'universal welfare'
will take readers of this Newsletter to excerpts
which will be of particular interest:
problem, which has not been examined by successive governments
during the past two decades [ - this was written in 1999]
is the effect of specific policies on trends in the inequalities
of living standards and, hence, health. The biggest influences
on structural trends need to be identified and explained.
In the United Kingdom these influences include
restraints on the value of child benefit
substitution of means tested benefits for universal social
insurance and non-contributory benefits for particular
population categories such as disabled people' (quoted
the more conditional and even punitive forms of selective
social assistance are counter-productive for social cohesion,
well-being and productivity; therefore social security
schemes involving entire populations and categories of
i.e., social insurance and tax-financed
"universal" group schemes, deserve priority,
even if for reasons of limited resources they have to
be phased in by stages' (quoted on p.575).
I have one negative criticism of this reader it is that
it contains no Townsend bibliography. A separate bibliography
is mentioned (but not referenced) in the introduction, but
that won't help readers of this volume. At least
a list of Townsend's books should have been included.
having said that, this reader is everything which students
of social policy would have asked for. It contains separate
sections on sociology and social policy, the history of
the welfare state, poverty, inequality and social exclusion,
health inequalities and health policy, older people, disability,
and social justice and human rights; within each section
it provides a broad diversity of material from different
periods of Townsend's career; and it quotes from little-known
and sometimes inaccessible articles as well as from Townsend's
better known books.
all, this reader is an inspiration to us to collect and
publish evidence in the cause of social change - and that,
I'm sure, is the legacy for which Townsend would have wished.
the money system be the basis of a sufficiency economy?
my book The Future of Money I argue that the money
system could be a possible mechanism for achieving a socially
just, democratically administered, sufficiency economy -
an economy that can meet people's material needs to the
minimum necessary to enable a high quality of life for all.
A major proviso is that even radical reform of the money
system will not eliminate private profit-oriented ownership
and control of economic resources, but it could provide
a stepping stone to a more ecologically sustainable and
socially just society. While money can be a source of greed,
alienation and exploitation it is also a symbol of social
trust between people. 'Sound money' is a product of society,
not of market forces. When we say people trust in money
they are trusting in the organisations, society and authorities
that create and circulate it, other people, traders, the
banks and the state. What has also become clear in the recent
financial crisis, is that the only mechanism that stands
behind the current money system is the state as representing
the collective economic resilience of the population.
economics tells us that money emerged spontaneously out
of barter markets when a precious commodity (gold/silver)
was adopted as a medium of exchange. This became embedded
in coin and represented by paper. This has been discredited
by the fact that banking and accounting emerged thousands
of years before precious metal coinage and coin value rarely
equated to precious metal content. The origin of money is
much more social. Money in all its forms has been issued
or administered by fiat, that is, issued and guaranteed
by an authority, such as a powerful leader, an office-holder
or a religious organisation. Historically, states or other
monetary authorities have used their power to establish
the circulation of money as accounting records or as physical
tokens such as clay tablets, tally sticks or coin by 'buying'
goods and services. Why should people give up their labour,
goods or resources for a worthless accounting record, tablet,
stick or coin? Because the 'money' must be returned as tax.
Even people not directly subject to state 'purchase' are
also required to pay taxes, so the money-tokens must circulate
widely in the economy. Taxation must also not reclaim all
the 'money' otherwise there would be no mechanism for general
circulation. The state must therefore always be in deficit,
an important lesson for today's advocates of a balanced
modern economies, the state's historic monetary role has
been virtually obliterated. Money has been privatised through
the issue of money through banks as debt, so much so that
states have to borrow money themselves.
modern banking system brings together private banking in
relation to trade and the currency-creating powers of the
state. Early commercial bankers issued their own credit
notes, but as money issue and banks became more regulated,
the money the banks issued was declared legal tender, that
is universally recognised money authorised by the state.
It is this combination of the public nature of money (national
tender) and the privatisation of its issue and circulation
that has created a money system based on private profit
and public responsibility. As banks are issuing new money
designated in the national currency, they are issuing what
is, or should be, a national resource. Certainly
they are issuing money that carries a public liability as
is clear from the recent financial crisis. Even when money
was deposited within another banking system (as in the case
of the Icelandic banks), default became the responsibility
of the British state. Equally, the Icelandic people, through
the state, were forced to take on financial liabilities
that were created by their private sector banks. If conventional
economics and neoliberal ideology tells us that money is
a private matter, the stampede of people towards a government
guarantee of bank deposits in the event of default tells
states, banks issue money by fiat, out of fresh air. Although
it is widely assumed that banks use savers' deposits to
make loans, albeit on an expanded fractional reserve basis,
this does not explain where the savers got their money from
in the first place. As with state money, bank money must
be issued before it is saved. The first loan must come
before the first deposit. Far from money representing
prior market activities as the barter theorists claimed,
it is the prior issuing of bank credit that is essential
to bringing profit-seeking activities into being. Issuing
money as debt also demands constant growth and expansion
of the economy. Capitalism would collapse if everyone paid
their debts, or if no further debts were taken out. Anyone
who takes on debt is therefore creating new money. Those
who take on debt are also making vital choices about the
direction of the economy and, as the financial crisis reveals,
those choices can rebound on society as a whole.
money system is a national resource that should not be appropriated
for private profit. This is important because the ability
to issue money in a society creates the ability to define
what is to be seen as valuable (in money terms). Letting
the market harness the allocation of money has prevented
the recognition of value created by the environment, non-market
activities and public investment. Allocating money to citizens
as of right or to public investment would give a completely
different message about what is important in society. Instead
of money circulating through the market to create 'wealth'
which is then taxed (under much protest) for public use,
public benefit would be the basis for the allocation
of money. Administration via a public money system would
avoid both the rigidity of a command and control economy
and the speculative exploitation, waste and inequality of
a capitalist market.
of money allocation for consumption and production would
remove much of the need to undertake unnecessary work and
enable people to be confident of a sufficiency of material
goods with more emphasis on the quality of life. Overall
priorities would also put public welfare first (hospitals,
education, transport) which would make people feel more
secure about their future. This would mean they did not
have such a need to accumulate money savings. The problem
with aiming to achieve future security in money terms is
that there is no way people can know what their money will
buy in the future. While sufficiency can be calculated in
real terms (how much bread will I need?), there is no basis
for sufficiency in money terms (what will bread cost in
thirty years' time?). Returning the money system to the
public would be an invaluable step towards creating a socially
just and ecologically sustainable sufficiency economy.
can read an extended version of this paper including references
Mellor is Emeritus Professor at Northumbria University.
Her most recent books are The Future of Money: From financial
crisis to public resource (Pluto 2010) and The Politics
of Money (Pluto 2002) (with Frances Hutchinson and Wendy
apology relating to 'With apologies to Yes, Minister'.
apologise that the author of the article 'With apologies
to Yes, Minister' in issue 3 for 2010 hadn't realized
that in 2003 the administration of Child Benefit had been
transferred from the Department for Work and Pensions to
Her Majesty's Revenue and Customs.
have rewritten and republished the dialogue.
are grateful to our informant for pointing out the mistake.
apologies to 'Yes, Minister':
the amended version
What did you think of the Chancellor's conference announcement?
Which one, Sir?
The one about Child Benefit.
I agree. Saves money, and it's good for our social justice
We're very pleased.
Revenue and Customs is very pleased, Sir.
We're going to have to collect huge amounts of information
on who's living with whom. TheDWP has been doing that amongst
the lower classes for years, but we'll now be able to do
it for the wealthy as well. That will be interesting. And
then we'll have to connect that information with data on
who's paying higher rate tax, and on who's receiving Child
Benefit. Do you think we should ask the company which tried
to computerize means-tested benefits if they can do it?
Shouldn't it go out to tender?
Of course. I'll see if anyone knows how to write a specification.
But do you think we need to do all that? Can't we just ask
Child Benefit claimants to tell us if they've got someone
in the household who's paying higher rate tax?
Yes, we could. But then we'll need to check up on them.
So we'll need a wonderfully large fraud department; and
we'll need to ask the DWP to train some snoopers for us.
Now that will be really interesting.
O dear, do you think so?
And we'll need to collect millions of changes of circumstances
every year. And we'll need a department to look after underpayments
and overpayments. The Child Benefit department doesn't have
to worry too much about that at the moment.
Don't we have all that trouble with tax credits?
We do, Sir. We like trouble. It gives us lots to do. And
we'll need tribunals, too. They take quite a bit of admin.
So we're really very pleased; and so are the unions, because
we'll be able to redeploy all the people we were going to
have to get rid of.
I wonder if I should have a word with the Chancellor?
I think it was the Prime Minister's idea, Sir. And they
both thought it was a good one. But don't worry. I'm sure
we can manage it. I'll have a note of the extra admin. costs
for you by tomorrow so you can tell the Chancellor how much
he won't be saving.
It hope it won't be too embarrassing.
I'm afraid it already is quite embarrassing, Sir. But at
least we won't need to employ consultants. We'll have most
of the expertise we'll need in the tax credits department.
I suppose that's a help.
But the argument's right,
isn't it? That it's wrong for low earners to be paying for
Child Benefit for the wealthy?
Of course, Sir.
Do you really think so?
You don't, do you.
It's as good as the argument that we should stop higher
rate taxpayers using the NHS.
You're really quite keen on universal benefits,
If I can speak in a personal capacity and off the record
It's much more efficient to give Child Benefit to
everyone. The wealthy are paying far more in tax than they
receive in Child Benefit, so there's really no problem.
But we would rather you didn't make that argument too clearly,
I can see that.
On the other hand, if you're interested, there is another
strategy. You could tell them how cheap Child Benefit is
to administer and suggest that they turn both tax allowances
and the Secretary of State for Work and Pensions' Universal
Credit into a universal benefit and give it to us to administer.
Employment incentives would improve, the labour market would
become more flexible, there would be more people in employment
and self-employment, and we could then take over what was
left of the DWP.
Do you think the Chancellor would understand that?
I think he can.
That's not what I asked.
Citizen's Income Trust, 2011