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Editorial
In
this issue of the Citizen's Income Newsletter three
of the book reviews are on the same theme: Taxation. We
review the publications which have emerged from the Mirrlees
review, a collection of classic papers on taxation, and
a collection of conference papers. All of these volumes
are essential reading for anyone wishing to gain an understanding
of the development of the study of the economics of taxation,
of the different types of tax available to a government,
and of some of the options for reform facing the UK tax
system.
However,
when the reviews are read together they reveal a serious
gap. Whilst in the Mirrlees Review publications, and in
the other volumes reviewed, there is occasional reference
to means-tested benefits, none of them contain sustained
discussions of the differences between means-tested, contributory
and universal benefits and of the different effects of these
different benefits. None of them study the combined effects
of the tax and benefits systems on the income maintenance
structure for a population.
This
matters. The structure of net incomes, the behaviours of
their components, and those components' combined effects
on the many different aspects of people's lives, are arguably
far more important than the characteristics and effects
of tax systems studied alone. It is the systems working
together which need to impose as little administrative complexity
as possible on individuals, households, employers, and governments;
and it is the systems working together which need to impose
as few labour market, savings and other disincentives as
possible. Genuine tax credits would be a step in the right
direction (by which we don't mean the means-tested benefits
which the Government calls Tax Credits). Even better would
be a Negative Income Tax. But better than that would be
a universal, nonwithdrawable and unconditional benefit alongside
a progressive tax system. This would be economically and
administratively efficient, and it would impose the fewest
possible disincentives.
It
would be a pleasure to see this option as both the subject
of a major review process and of future edited collections
of classic and newly written papers.
Main
article
Passported
Benefits and a Citizen's Income
By
Anne G. Miller
Passported
benefits
The
Government's Social Security Advisory Committee's press
release of 15 June 2011 heralded a 'Public Consultation:
Passported Benefits under Universal Credit - review and
advice.' In a footnote, the press release stated:
By
Passported Benefits we mean those benefits to which working-age
claimants of certain means-tested benefits are automatically
entitled. For example, free school meals, free prescriptions,
free dental treatment, etc.. We will consider the range
of Passported Benefits available to working-age claimants
but the recommendations will focus on the main Passported
Benefits. We are particularly interested in receiving
views about benefits in kind but welcome responses relating
to cash benefits and discounts as well.
In
this short article, I briefly examine the concept of Passported
Benefits (PBs) as presented in the consultation document
of the Social Security Advisory Committee (SSAC) (http://ssac.independent.gov.uk).
Then I examine whether these needs would be met already
within a CI scheme, or whether special arrangements would
have to be made.
Passported
benefits in the consultation document
The
SSAC's consultation document's Annex B gives the consultation's
Terms of Reference:
The
purpose of the advisory report is to analyse the range
of passported benefits ("benefits") which currently
exist in order to:
- classify
the target audience(s) for these benefits;
- identify
the needs which those benefits address, and the wider
policy objectives served by them now and in the future;
- identify
and analyse the mechanisms that are currently employed
to determine entitlement;
- consider
the potential impact of changes in eligibility rules.
(The document's annex A comprises the table below)
The
target audience (recipients) for PBs comprises working-age
claimants who are in receipt of certain means-tested benefits
(MTBs), such as Jobseeker's Allowance and certain Tax Credits.
It can therefore be assumed that the recipients are poor,
and that many of them will be living in poverty.
The
purpose of the benefits appears to be to support
low-income households, whether out-of-work or in-work, in
specific ways. Some are designed specifically to help low
income people meet the ordinary costs of raising children
(Healthy Start Vouchers, free school meals, and school clothing
grants).
Some
PBs address exceptional circumstances that lead to
extra expenditure, such as Exemption from Court Fees, Help
with Prison Visiting Costs, and Legal Aid. These are circumstances
that most of us do not experience as a matter of course.
Educational Grants to enable gifted children to receive
special training, for instance, in music and dance, provide
another example. The travel costs associated with healthcare,
and School Transport provision for those in rural areas,
also fall into this category.
Many
PBs can be seen as part of wider policies, often
representing an investment in the future, (eg. our children's
health and education), and in the general health of the
population (through free prescriptions, eye and dental care,
leisure services and healthcare travel costs), thereby reducing
future National Health Service bills. Similar considerations
apply to the environment, such as Warm Front, and bus and
tram discount schemes. Others represent an attempt to redress
failures of public policy.
Benefits-in-kind
are often controversial, because they offer no choice compared
with cash benefits. Cash benefits permit the consumer the
autonomy that most of us enjoy. Sometimes it may be cheaper
to give benefits-in-kind rather than cash, but often it
is a case of controlling benefit recipients because they
are not trusted (rightly or wrongly) to select what others
regard as best for them.
An
interim statement says this:
The
information-gathering phase of the Social Security Advisory
Committee's review has found that more than 25 different
passported benefits are provided by government departments
and through local authorities. The committee's findings
to date confirm that passported benefits are viewed by
many respondents as fulfilling important needs. The consultation
found that the value placed by claimants on individual
passported benefits differs depending on their personal
circumstances; respondents' views on the withdrawal and
delivery of passported benefits were mixed. For example,
some respondents supported a tapered withdrawal whilst
others favoured a timed withdrawal when a claimant moves
into work; and the design of passported benefits should
incentivise people to both move into work and stay in
work. (Hansard, 5 Oct 2011, Column WS75, Written Statement
on Universal Credit)
The
final report will be published in the Spring.
The
consultation document's Annex A: A list of main passported
benefits and responsibilities
| Benefits
in kind |
Cash
Benefits |
Discounts
on charges or fees |
| Responsibility
of Government Departments |
|
|
| Benefits
from the Pupil Premium (Department of Education) |
|
|
| Exemption
from Court Fees (Ministry of Justice) |
Help
with healthcare travel costs (Department of Health) |
|
| Free
School meals (Department for Education) |
Help
with Prison Visiting Costs (Ministry of Justice) |
|
| Health
goods/services, e.g. free prescriptions/eyecare/dental
care (Department of Health) |
|
|
| Healthy
Start Vouchers (Department of Health) |
|
|
| Legal
Aid (Ministry of Justice) |
|
|
| Warm
Front (Department of Energy and Climate Change) |
|
|
| Responsibility
of local authorities |
|
|
| Help
with the costs of school visits |
School
clothing grant (cash/cheque) |
Bus
and Tram Discount Scheme – London (Transport for London) |
| Leisure
services, e.g. free swimming |
|
Leisure
discounts |
| School
clothing grant (vouchers) |
|
|
| School
Transport |
|
|
| Responsibility
of other bodies |
|
|
| Leisure
services |
|
BT
Basic (BT) |
| |
|
Leisure
discounts |
| |
|
Warm
Home Discount/Voluntary Social tariffs from utility
companies e.g. WaterSure |
Citizen's
Income and passported benefits
Our
question is, 'Are the needs addressed by PBs already accounted
for in a typical CI scheme, and, if not, should they be,
and how?'
A
Full Citizen's Income (FCI) would be expected to be adequate
to meet the needs of the recipient, including people over
pension-entitlement age, people with disabilities, carers
of last resort, and the responsible parent of a dependent
child. The more generous the scheme, the more likely this
is to be true. Thus, if the FCI and Child CI (CCI) are sufficiently
generous, then Passported Benefits should not be necessary.
If they were necessary, then it would represent a failure
of the scheme.
A
Partial Citizen's Income (PCI) would not meet all of the
needs of the recipient and would not be enough to live on.
With this scheme, where exceptional needs are indicated,
the PBs should continue. But, the question arises: 'Should
all those with the exceptional needs receive these benefits,
or only the poorest?' If the latter, how do we identify
those on low incomes? - because everybody would be in
receipt of a Partial Citizen's Income, so the benefit would
not act as a passport to PBs. As the PCI would not be enough
to live on, it would need to be topped up with other income,
usually through earnings. There will be some individuals
who are unable to obtain even part-time work, and there
will be some areas that suffer from multiple deprivations,
where opportunities for work are thin on the ground. There
will therefore have to be safety-net arrangements, and a
simple scheme, possibly in the form of a Housing Benefit,
would have to remain. Thus, those receiving a PCI and who
are also receiving Housing Benefit or some other safety-net
assistance could be eligible to receive PBs.
The
largest group in the population with exceptional circumstances
are those with a variety of disabilities, and a CI scheme
would grant to all of these, without any means test, a costs-of-disabilities
package (for constant care, mobility, special diets, etc.)
in addition to their CIs. Here, the receipt of the package
could act as a passport to other PBs.
Where
the PBs are seen to be part of a wider policy, one
must question whether the PBs for low-income, working-age
adults, and especially benefits-in-kind, are the
best way to achieve the objectives. Investment in the early
years of childhood is known to pay large dividends to society
later, in terms of healthy, well-adjusted adults. Notwithstanding
adequate FCIs and CCIs, maybe benefits-in-kind, such as
Healthy Start Vouchers, and free school meals, should be
universally available to all children. As well as education
projects to inform people about healthy diets and lifestyles,
other instruments might be necessary, such as subsidies
on fresh fruit and vegetables, and taxes on processed food
with significant proportions of fat, salt and sugar. A CI
is not a panacea for all social ills, and, where other public
provision is made, it will usually be better to get the
policy right in the first place, rather than to use benefits
to paper over the gaps.
Universal
schemes, such as the NHS, and universal benefits such as
Child Benefit, are popular, inclusive, and redistributive.
If a generous CI scheme were to be introduced, one might
find that expenditure on other public services, such as
health and the criminal justice system, would fall significantly,
especially where those systems combat the effects of poverty.
As with most things, it is cheaper to prevent poverty than
to deal with its fallout later.
News
The
Pensions Policy Institute has published a report: An
assessment of the Government's options for state pension
reform. The report concludes that the Government's second
option, a single tier state pension, 'would dramatically
reduce the number of pensioners reliant on means-tested
benefits. The proportion of pensioner households eligible
to claim Pension Credit could fall from 35% of pensioner
households (4.4 million pensioners) in the current system
to only 5% of pensioner households (0.8 million pensioners)
by 2055. The reform would be broadly cost neutral to introduce.
To read the report, go to: www.pensionspolicyinstitute.org.uk/default.asp?p=12&publication=0296&
A
new think tank, Green House, has published a report
entitled Mutual Security in a Sustainable Economy,
by Molly Scott Cato and Brian Heatley. The authors argue
that the benefits system needs to be taken out of the context
of a neo-liberal market economy and re-considered afresh
against the reality of the coming sustainable economy. They
call for a new definition of poverty, a system based on
individuals, the abolition of a retirement age, greater
thrift, an emphasis on traditional skills for self-reliance,
and a Citizen's Income. To read the report, go to: www.greenhousethinktank.org/page.php?pageid=recentpublications
The
Institute for Fiscal Studies has published a report
on Child and Working-Age Poverty from 2010 to 2020.
'In the short run, relative child poverty is forecast to
remain broadly constant ..., before rising slightly in 2013-14.
Relative working-age adult poverty is forecast to rise slightly
... before rising faster in 2013-14. Absolute child and
working-age adult poverty are forecast to rise continuously,
and by more than relative poverty, over this period.' (p.1)
This unusual combination is because 'real median household
income is forecast to be 7% lower in 2012-13 than it was
in 2009-10, and to remain below its 2009-10 level until
at least 2015-16.' The report concludes that 'there is almost
no chance of eradicating child poverty ... on current government
policy.' (p.3) www.ifs.org.uk/publications/5710
The
Organisation for Economic Co-operation and Development
(OECD) has issued a new report, Divided We Stand: Why
inequality keeps rising. 'In OECD countries today, the
average income of the richest 10% of the population is about
nine times that of the poorest 10% - a ratio of 9 to 1.
However, the ratio varies widely from one country to another.
It is much lower than the OECD average in the Nordic and
many continental European countries, but reaches 10 to 1
in Italy, Japan, Korea, and the United Kingdom; around 14
to 1 in Israel, Turkey, and the United States; and 27 to
1 in Mexico and Chile. … Until the mid-1990s, tax-benefit
systems in many OECD countries offset more than half of
the rise in market-income inequality. However, while market
income inequality continued to rise after the mid-1990s,
much of the stabilising effect of taxes and benefits on
household income inequality declined … Reforming tax
and benefit policies is the most direct and powerful instrument
for increasing redistributive effects. … However, redistribution
strategies based on government transfers and taxes alone
would be neither effective nor financially sustainable.
First, there may be counter-productive disincentive effects
if benefit and tax reforms are not well designed. (An
Overview of Growing Income Inequalities in OECD Countries:
Main Findings, pp.22, 37, 40). www.oecd.org/els/social/inequality
Conferences
The
eleventh Annual North American Basic Income Guarantee Congress,
Putting Equality back on the Agenda: Basic
Income and Other Approaches to Economic Security for All,
will take place from Thursday May 3rd to Saturday May 5,
2012 at the University of Toronto. Speakers will include
Richard Wilkinson, Co-Author of The Spirit Level,
and Armine Yalnizyan, Senior Economist with the Canadian
Centre for Policy Alternatives. If you are interested in
presenting a paper, oragnising a panel, or displaying a
poster, please contact the organising committee at basicincome2012@gmail.com.
The deadline for proposals is the 13th January 2012.
The
BIEN Congress 2012
Citizen's
Income Trust bursaries
The
next Basic Income Earth Network (BIEN) Congress will take
place in Munich from the 14th to the 16th September 2012.
(Please note the correct dates. The dates published in the
last edition of the Citizen's Income Newsletter were incorrect).
The
Citizen's Income Trust is offering up to three bursaries
of £500 each to Congress participants who live in
the United Kingdom and/or are staff members or students
at UK universities, to enable them to give papers at the
Congress.
The
bursaries will be awarded to those whose papers have been
accepted for presentation at the Congress and who, in the
view of the Citizen's Income Trust's trustees, have submitted
the best abstracts and draft papers to the Trust.
The
paper should be on philosophical, political, economic or
social aspects of moving towards a Citizen's Income. Draft
papers, including an abstract, should be submitted by the
31st January 2012.
Please
submit your abstract and draft paper to the Director, Dr.
Malcolm Torry, whose contact details can be found above.
Interview
Social
insurance is not for the Indian open economy of the 21st
century
This
interview with Guy Standing first appeared in The Times
of India, Crest edition, 9th July 2011, and we are grateful
for permission to reprint it. For the original interview,
please see www.timescrest.com/opinion/social-insurance-is-not-for-the-indian-open-economy-of-21st-century-5775.
The interview was conducted by Rukmini Shrinivasan
Guy
Standing is professor of economic security at the University
of Bath, before which he was director of the ILO's Social
Security Programme. He is also co-president of the Basic
Income Earth Network (BIEN).
You
have become a strong advocate of cash transfers. Why so?
From
my point of view, cash transfers are an essential pillar
of a comprehensive social protection system. Social insurance
was for an industrial society; it's not for the Indian open
economy of the 21st century. You can't have unemployment
insurance - it doesn't reach the poor. You can't have a
means-tested system because we've seen the problems with
it. So, you're going to need to have some basic income transfer.
The technology to do it is rapidly emerging - in some respects,
India is becoming a world leader in this - and rolling this
out within the next few years is certainly within the capabilities
of the Indian state, if there was a will to do so.
I
think cash transfers should be seen as whether they're good
or bad in themselves. They should not be discussed as an
alternative to any specific policy. I do not think it is
fair or correct to see this debate around cash transfers
as a substitute for something else such as the public distribution
system (PDS). I may have my criticisms of the PDS but they
are separate from the reasons why I think cash transfers
are good.
That
may apply to cash transfers in general, but a general income
cash transfer is not on the policy table in India right
now. The only cash transfers that are being discussed within
the government are those that replace subsidies.
I
agree, but then there should be a proper debate. Clearly,
there are chronic inefficiencies in the existing subsidy
system. It goes right across the board, and anybody who
defends that system is just charging against a volume of
evidence that says it is chronically inefficient and inequitable
and it is not solving poverty. The Prime Minister knows
that, Sonia Gandhi knows that. If we know that there are
very good reasons why a scheme doesn't work, then it is
intellectually reprehensible to continue in that direction.
But
many of the problems in the PDS can be traced to targeting.
The state of Tamil Nadu, which has a universal PDS, has
both the best record of reaching beneficiaries and the lowest
leakages. Why then are cash transfers the natural direction
in which you look, rather than universalisation of the PDS?
I
don't know enough about Tamil Nadu, so I'm not going to
say anything. Sure, you could universalise if that's what
works. But, I don't think that's an argument against cash
transfers.
Even
if it's a targeted or conditional cash transfer, as is currently
being proposed in India?
I
really hope that the conditionality issue can be defeated;
I think that's the wrong way for India to go. One just imagines
the scope for corruption and inefficiency; the mind boggles.
I also hope that the simplicity and transparency of cash
transfers will be appreciated for what it is. I hope that
policy makers will look at food security as just a small
part of overall security. We saw food security improve dramatically
in a universal cash transfer pilot programme in Namibian
villages as a result of not handing out food, but people
having cash by which they could buy seeds and grow things.
You
and the BIEN repeatedly talk of a universal income transfer.
However, when this is operationalised by countries like
Brazil, they do impose conditions and targeting. Isn't it
disingenuous to continue to talk of a universal income transfer
when countries take up only a targeted version?
The
whole of my professional career, I have advocated universalised
and unconditional social protection and cash transfers.
You are right that in Brazil, it was not only targeted in
trying to reach just the poor, but it was also selected
in trying to reach just women. It was not universal and
it was conditional. The realisation was that the conditionality
- sending kids to schools and attending clinics - was merely
helping to legitimise the cash transfers among the middle
class. But in 2004, Brazil passed a law committing the government
to implement a universal, unconditional cash transfer for
the whole population. The objective has been to roll it
out and the number of beneficiaries has risen from 11 million
to 60 million and the conditionality is being faded out.
I foresee that something like that could happen in India.
What
was the impact of the basic income cash transfer pilot in
Namibia that you were a part of?
Child
school attendance went up dramatically, use of medical clinics
went up. Those with HIV/ AIDS started to take ARTs (Antiretroviral
Therapy drugs) because they'd been able to buy the right
sort of food with the cash. Women's economic status improved,
and the economic crime rate went down. Income distribution
improved. This is very relevant in India because with your
existing handout of goods and even with NREGA, you don't
alter the structure of local economies; in fact, you almost
rigidify them. If you provide an equal amount of cash to
all members of a community, you are automatically giving
proportionately more to the poor. If you do that, you release
the constraints that are on the lower income groups - they
can pay off their debts, they can take risks, and they can
buy things that they need for petty production.
Are
there pilot schemes going on in India?
Social
protection policy develops best when it builds on pilots,
because pilot schemes allow institutional learning. There
is no one-size-fits-all solution. The scheme that may evolve
in the Indian context may be unique - we don't know yet.
But what would be sensible is if there were calm, collected,
quiet pilot schemes that were tried out with good principles,
were professionally advised, developed, and implemented
- without fanfare, without misrepresentation. I'm afraid
that at the moment, the political polemic is making sensible
piloting harder. Too many people are posturing and are keen
to disrupt sensible, well-meant pilots being conducted.
It is not in the interests of anybody that pilots be disrupted
or prevented. The Delhi situation seems to have fallen into
that trap and I think it's very sad.
The
Delhi Pilot
The
Delhi government, in 2010, appointed the Self Employed Women's
Association (SEWA) and the India Development Foundation
to conduct a pilot study into cash transfers as a possible
alternative to the Public Distribution System (PDS). The
pilot, which began in January 2011, will run for one year
in West Delhi's Raghubir Nagar slum.
100
households volunteered for cash transfers and will receive
Rs 1,000 per month but will have no access to the ration
shop. Another 100 volunteer families will only get a bank
account and will continue to use the ration shop. The third
volunteer group of 150 families will neither receive cash
nor a bank account and will have to use the ration shop.
The last group is of 150 families who did not want cash
transfers and will not receive it. All cash transfers will
be made in the name of the woman of the family.
The
pilot will study the consumption, expenditure, and nutrition
of the four groups and compare them against each other to
determine the impact of cash transfers, and will submit
its findings to the government.
However,
the pilot programme has faced serious opposition from NGOs
opposed to cash transfers. Members of these groups distributed
pamphlets in the slum warning that participating in the
pilot would lead to ration shops shutting down, and disrupted
public meetings held by SEWA in the area. The pilot continues.
RS
Reviews
Stuart
Adam et al (eds), Dimensions of Tax Design: The Mirrlees
Review, Oxford University Press for the Institute
for Fiscal Studies, 2010, xii + 1347 pp, hbk, 0 19 955375
4, £90
Stuart
Adam et al, Tax by Design: The Mirrlees Review,
Oxford University Press for the Institute for Fiscal Studies,
2011, xvii + 533 pp, hbk, 0 19 955374 7, £45 (both
volumes £110)
Fiscal
Studies, vol.32, No.3,
September 2011: a special issue on the Mirrlees Review
The
completion of the Institute for Fiscal Studies' review of
taxation, chaired by Sir James Mirrlees, Nobel Laureate
and proposer of a theory on optimal taxation, has given
rise to three valuable volumes.
Dimensions
of Tax Design contains thirteen papers given at conferences
organised as part of the review, along with numerous associated
commentaries. It would be difficult to envisage a more comprehensive
discussion of UK taxation policy, and even if there had
been no outcomes of the review beyond this collection of
papers, then the review would still have been worth conducting.
Of
particular interest to readers of this Newsletter
will be the paper on 'Means-testing and Tax Rates on Earnings'.
Unfortunately, the paper starts off badly, as it suggests
that there is 'a trade-off between the goals of equity and
efficiency: governments want to transfer resources from
the rich to the poor; on the other hand, such transfers
reduce people's incentive to work' (p.91). This is patently
not true of Child Benefit. It is only true of means-tested
transfers. The rest of the paper is better informed, and,
on the basis of the evidence, it recommends that 'marginal
rates ... when people enter work should be set low (and
perhaps even negative) for potential low earners rather
than set high as the standard model suggests' (p.91). The
authors recommend a scheme which looks rather like Universal
Credit (pp.150-62). Also of interest will be the papers
on labour supply and taxes, on the tax base for direct taxation,
on administration and compliance, and on the political economy
of tax policy.
Nowhere
in the collection is there any discussion of Child Benefit.
This is a major omission.
The
review's conclusions are contained in Tax by Design,
the title itself suggesting that a piecemeal approach to
taxation policy needs to be replaced by a more co-ordinated
approach. Of particular interest will be the chapter on
integrating tax and benefits, which can't find a good word
to say about either our current benefits system or Tax Credits.
Again, there is no mention of Child Benefit. The authors
propose that Income Tax and National Insurance Contributions
should be integrated, that benefits should be integrated
with each other, and that tax and benefits should remain
separate but their behaviours studied together. These suggestions
reappear in the report's final conclusions, as does the
suggestion that effective tax rates should be lowered for
low earners. 'The current tax and benefit system is unnecessarily
complicated and induces too many people not to work or to
work too little. By creating a simpler and more rational
system, minimizing disincentives where they matter most,
the reforms we propose have the potential to deliver major
economic gains' (pp.483-4). Yes; and to have asked about
the current effects of Child Benefit, the likely consequences
of increasing its value, and the likely effects of extending
universal benefits into working-age cohorts, would have
enabled some even more important overall effects to have
been achieved.
The
September 2011 edition of Fiscal Studies repeats
the recommendations contained in Tax by Design. It
contains a comparison of Tax by Design with the Meade Report
of 1978 and with taxation reviews in Australia and New Zealand
(where government sponsorship of the reviews has resulted
in less radical proposals but ones which might have more
chance of immediate implementation); and a comparison of
Tax by Design with recent literature in the field. It
also contains an article which employs Tax by Design's
systemic and revenue-neutral approach to question some of
the report's conclusions, including its suggestion that
effective tax rates should be lowered for people potentially
or actually in low-paid employment.
We
are in the review team's debt for their committed work on
a wide-ranging review. The two volumes and the September
edition of Fiscal Studies will inform debate on tax
policy for many years to come. However, one omission does
need to be remedied. The Mirrlees Review did not review
income maintenance, and it should have done. In particular,
there is no study of the different effects of contributory,
means-tested and universal benefits, nor of the ways in
which they interact with each other and with the tax system.
We now need to see income maintenance tackled by a review
team with the same level of expertise and the same resources
as the Mirrlees Review.
Emilio
Albi and Jorge Martinez-Vazquez (eds), The Elgar Guide
to Tax Systems, Edward Elgar, 2011, xi + 462
pp, hbk, 0 85793 388 1, £145
The
editors' introduction to this volume of thoroughly researched
conference papers shows just how much has changed in OECD
tax systems during the past few decades: flatter income
tax rates, ubiquitous VAT, the almost complete disappearance
of wealth taxes, a substantial reduction in excise duties,
and much more. The separate chapters discuss the reasons
for these changes, and also such fields as corporate taxes,
environmental taxes, decentralized taxation, tax administration,
and the relationships between tax policy, politics, and
research. The important debates within taxation policy are
discussed: the balance between direct and indirect taxation;
different types of taxations' relationships to economic
stabilisation, growth, competitiveness, and income redistribution;
whether capital income should be taxed (yes, minimally);
how viable (national) corporate taxes are in a globalizing
world; whether the decline of wealth taxes and of excise
duties is inexorable; how VAT and environmental taxes are
best designed; whether anything other than a property tax
is a good candidate for subnational taxation; and the extent
to which administrative feasibility should drive taxation
policy. The final two chapters tackle two different influences
on tax system reform: politics, and research. The authors
conclude that political considerations are important determinants
of tax systems, and particularly of their complexity, and
that research is more likely to follow policy change than
to lead it. Given this, the researcher's task 'is the long-term
game of building up the institutional capacity both within
and outside governments to articulate relevant ideas for
change, to collect and analyze relevant data, and of course
to assess and criticize the effects of such changes as are
made' (p.443).
Of
particular interest to readers of this Newsletter
will be chapter 3 on individual income taxation. True tax
credits are correctly understood as income tax allowances
which are paid out proportionately to the amount that earned
income falls below a threshold, and these are rightly seen
as enhancing progressivity and as being efficient to administer.
(The UK's current 'Tax Credits' are a means-tested benefit,
and not tax credits.) 'To the extent that all tax credits
and exemptions were made refundable, this would turn the
income tax system into a full-fledged negative income tax
system,' (p.105). The chapter identifies as problematic
both income transfers not delivered through the tax system,
and tax credits which change with a household's circumstances.
It notes that enhancing refundable tax credits delivered
through the tax system to complement stand alone transfer
programs could go some way to alleviating poverty in the
lower income range (p.106). This is a lesson that the UK
Government learnt during the early 1970s, but has forgotten
since.
At
a point in the discussion at which the UK's Child Benefit
might have been discussed (where universal education provision
and the Child Trust Fund are discussed), there is
no mention of it; and what I didn't find in this collection
was any understanding of the administrative and other efficiencies
related to a combination of universal benefits and a progressive
income tax. This is a pity in such a wide-ranging collection.
Positively
important to the Citizen's Income debate is the light which
this collection throws on a variety of possible funding
methods. The chapter on environmental taxes is relevant,
as is the mention of land tax (p.337). What isn't in the
collection is any discussion of a field which will one day
be important: transnational taxation. There is now wide
recognition of the possible utility of a 'Tobin' financial
transaction tax, including the European Commission's welcome
recognition that this kind of taxation would best be administered
at regional level, and therefore by the EU. Any future collection
of papers on taxation policy really will need to discuss
the feasibility of transnational tax collection and whether
a financial transaction tax might fit into this category.
Perhaps
it isn't fair to say too much about what a book hasn't done
when it's done so much already. The book discusses many
of the issues facing tax systems and attempts to reform
them, and it will be of considerable value both to policy-makers
and to students of taxation policy.
James
Alm (ed.), The Economics of Taxation:
The International Library of Critical Writings in Economics
251, Edward Elgar, 2011, 2 volume set, xxxvii + 592 pp,
and x + 695 pp, hbk, 1 84844 829 2, £435
The
title of the series to which these volumes belong contains
an important ambiguity. A critique is a careful examination
of a subject, so a critical writing is a careful study of
the subject under review; but in common parlance 'critical'
also means 'significant'. (We might say that the title of
the series contains a critical ambiguity.) It is in this
double sense that the writings contained in these volumes
are 'critical'. They are careful studies of aspects of taxation,
and they are also significant, in relation to the study
of taxation, in relation to the social policy field as a
whole, and because they have been seminal in their field.
As
the editor's introduction states, taxation policy has multiple
goals: adequacy (to collect enough revenue - we see the
consequences of not doing so in the current plights of a
number of Eurozone countries), equity, and efficiency (in
the sense that taxation should interfere as little as possible
with firms' and individuals' decisions in markets for labour
and other commodities).
The
papers collected in these two volumes fall into sections
on the effects of taxation (equity, income distribution,
efficiency, revenue collection, economic growth, and politics),
optimal taxation, tax reform, individuals' decisions (in
relation to incentives, labour supply, saving, portfolio
choice, capital gains, estate taxes, tax evasion, and income
reporting) and business decisions (in relation to capital
taxation, investment, and financial structure). Many of
the papers, and the collection as a whole, offer a good
balance between theory and practice. A good example of such
balance is Fullerton's paper 'On the possibility of an inverse
relationship between tax rates and government revenue' -
and it is in this paper that we find a clue to an important
problem related to any attempt at a collection of papers
on taxation. 'Welfare programs that make recipients ineligible
at a given income level imply effective marginal tax rates
of 100 percent or higher' (p.20 of Fullerton's article,
p.272 of volume I of the collection). For UK residents in
receipt of the means-tested 'Tax Credits', the rate of withdrawal
of the benefit is at least as important a determinant of
labour market decisions as is the income tax rate. Similarly,
Slemrod's conclusions about behavioural responses to changing
tax rates and changing tax avoidance possibilities apply
as much to benefit rates and income non-declaration as they
do to tax rates and tax avoidance. Hausmann's paper on labour
supply correctly identifies transfer payments' effects on
net income as an important factor (p.37 of his article,
p.27 of volume II of the collection). All this is to say
that many of the conclusions drawn in the papers are generalizable
to the characteristics and effects of means-tested and other
benefits, and to the combinations of benefits and taxes
that many people experience. To incorporate consideration
of household-based means-tested benefits into the theoretical
models employed by many of the papers (and particularly
in papers such as Atkinson's and Stiglitz's on the design
of tax structures) would considerably complicate the mathematics,
but it is surely essential to attempt this, which suggests
that many of the papers here really are, as they themselves
suggest, starting-points still awaiting further development.
It
is a pity that this two volume collection contains no index.
To have included one would have considerably enhanced usefulness
of the set to researchers. But that is the only problem.
This collection, which will be consulted mainly in libraries,
will give to students of taxation a valuable source of critical
writings to aid their studies. What we need now is a similar
collection of papers which study tax and benefits systems
together, which study their combined behavioural effects,
and which discuss the policy consequences of those effects.
Atkinson's work on a flat tax and a Citizen's Income would
surely find an honoured place in such a collection.
Policy-makers
need to integrate tax and benefits policies, and preferably
tax and benefits. A collection on the economics of tax and
benefits as good as Alm's on the economics of taxation would
be of considerable assistance.
Policy
and Politics, volume 39, number
1, January 2011, Special issue: Basic Income, Policy
Press, 2011, 144 pp, pbk, ISSN 0305 5736, online ISSN 1470
8442
This
substantial collection of articles rehearses a plethora
of arguments for a Citizen's income (here termed a Basic
Income), arguments both pragmatic and visionary; and an
important byproduct for the reader is a distinct sense that
the pragmatic and the visionary are related in a way more
complex than we might at first have thought.
Guy
Standing calls a Citizen's Income an 'economic stabilisation
grant' because it would boost aggregate demand, more efficiently
allocate resources, and tackle uncertainty and rising inequality.
As he suggests, times of crisis can lead to major change,
and a failing paradigm can find itself displaced - but only
if a new paradigm is ready to take its place (p.21):
One
modest recommendation is that the emerging generation
of economists and social policy students should urge their
peers, and particularly the new political leaders, to
match their rhetoric about being 'radical' by assessing
genuinely radical ideas. Economics is a constantly unfolding
body of thought, and those charged with implementing economic
and social policy should face demands to think afresh
and evaluate alternatives with open minds. (p.22)
Almaz
Zelleke suggests that a feminist theory of justice requires
a Citizen's Income, and that such a universal unconditional
income would promote a more gender-inclusive citizenship.
'Most importantly, basic income indirectly compensates care
and society's other unpaid work without reinforcing the
existing gendered distribution of labour or the primacy
of the public sphere by equating care with work' (p.38).
Louise Haagh's following article notes the correlation between
a country's level of equality and its citizens' control
over their time, and seeks a balance between employment
and non-employment which she believes would be best served
by a Citizen's Income in a social insurance context.
Stuart
White discusses two different 'citizen's endowments': a
Citizen's Income, and universal capital grant. 'Freedom'
and 'entitlement' arguments fail to separate the two options,
and the way in which different 'freedom' arguments lead
in different directions suggests that a combination of a
Citizen's Income and a universal capital grant might be
the best option. Leading to the same conclusion, Tony Fitzpatrick
discusses the concept of paternalism, distinguishes between
a variety of types, recommends a 'social paternalism' that
prioritises autonomy but doesn't exclude other values, and
suggests that a Citizen's Income and a universal grant together
will best promote such a social paternalism.
Bill
Jordan recognises that the UK Government's current benefit
reforms as a useful step along the way to a Citizen's Income,
and raises the question: Will a small Citizen's Income,
established to make labour markets more flexible, then be
increased in order to create a new basis for citizenship,
or will it remain small and fulfil only its initial purpose?
'The first steps towards basic income may become politically
feasible for a variety of reasons, at a number of different
developmental stages, all of which will also be perilous
for the principle in various ways' (p.112) - but those steps
should not for that reason be rejected: 'Social policy can
seldom deal in pure principles or utopian solutions, and
basic income is no exception. It cannot resolve all the
challenges of globalisation … in a single reform, but
these measures may be a step in the right direction' (p.112).
Finally,
Jürgen De Wispelaere and Lindsay Stirton study 'the
administrative efficiency of basic income'. Identifying
those people entitled to a Citizen's Income would be a necessary
administrative task, and a variety of payment methods might
be needed in order to reach the maximum number of payees,
so administration of a Citizen's Income would not be as
simple as some might think. The authors discuss a dilemma:
'Proponents can claim important administrative savings for
basic income, provided they restrict those arguments
to the most radical paradigmatic form, while simultaneously
having to face up to the reality that this radical version
of basic income may face insurmountable political obstacles'
(p.121: their italics). De Wispelaere and Stirton also quite
properly suggest that a Citizen's Income isn't the only
way to make administrative savings: other forms of administrative
simplification are possible, such as the sharing of information
between tax and benefits authorities and aligning tax and
benefits rules with each other.
To
round off the substantive articles section of this focused
and comprehensive edition of Policy and Politics with
De Wispelaere's and Stirton's article, which concludes that
'administrative efficiency … is … political' (p.128),
seems really quite appropriate.
Tony
Fitzpatrick (ed.), Understanding the Environment and
Social Policy, Policy Press, 2011, xviii + 366
pp, hbk, 1 847 42380 1, £65, pbk, 1 847 42379 5, £21.99
This
is an exploration of the complex relationship between social
policy and the environmental challenges which we all face,
with social policy here defined as 'systematic public interventions
relating to social needs, well-being and problems' (p.2)
- and the relationship really is complex because, whereas
in the short term there might be a trade-off between money
spent on protecting the environment and money spent on health,
housing and education, in the longer term money not
spent on protecting the environment will impact on health,
housing and education. In the other direction, social policies
in areas such as fuel poverty will have an impact positively
or negatively on the environment; social policies have often
been designed to promote economic growth, and this has an
impact on the environment; and to redirect the aims of social
policy will have an impact, too, and preferably one which
will steer us away from the worst of the possible climate
change outcomes.
In
the first chapter Hodgson and Phillips describe the causes
and implications of climate change and the depletion of
non-renewable resources, and they discuss the different
solutions available: mitigation, adaptation, geoengineering,
and conservation. In chapter 2 Hannigan asks how ecologically
valid solutions can be politically feasible when economic
growth appears to be the political imperative. Any
useful solution will therefore need to moderate consumption
by the wealthy and provide a basic level of security for
the poor so that they don't need to destroy the forests.
In chapter 3 Fitzpatrick discusses environmentalists' criticisms
of social policy's current presuppositions, and outlines
a 'green economy' and the social policy agenda to which
it would give rise (for instance: 'How can social insurance
systems be adapted to cope with collective uncertainties?'
(p.84))
Chapters
follow on the state's (historically understood) role in
environmental protection, environmental (consequentialist)
ethics, philosophies (of environmental justice), and environmental
policy (markets, regulation, and education); and then chapters
on particular social policy fields: health, urban planning,
transport, employment, citizenship and care, and international
development and global poverty.
Fitzpatrick's
concluding chapter is an eloquent description of the options
facing us: a sustainable global society, the human race
clinging to survival at the Earth's poles, and something
between the two.
In
Fitzpatrick's chapter on environmental justice there is
a discussion of a Citizen's Income's complex relationship
to environmentally sustainable social policy, and at various
points social insurance and taxation are discussed, but
there is no chapter on income maintenance. This policy area
is discussed in his Freedom and Security (Macmillan
1999) and in his Environment and Welfare (Palgrave
2002), but a chapter here would have aided our 'understanding
[of] the environment and social policy'.
The
proof reading is poor in places. A particularly nice error
is Fitzpatrick's 'I promised to void complexities' (p.77).
This
book does exactly what it sets out to do. It offers us understanding
of the environment and social policy, and it does it well.
Daniel
Dorling, Injustice: Why social inequality persists,
Policy Press, 2011, xvii + 403 pp, pbk 1 847 42720 5, £9.99
Daniel
Dorling's Injustice (reviewed in the Citizen's
Income Newsletter, edition 3 for 2010) has been reissued
in paperback with a new foreword by Richard Wilkinson and
Kate Pickett and a new afterword by the author.
In
the book, Dorling gathers evidence for 'continued belief
in the tenets of injustice' (p.13): 'Elitism is efficient',
'exclusion is necessary', 'prejudice is natural', 'greed
is good', and 'despair is inevitable' - tenets imbibed by
the wealthy as they grow up, and which perpetuate them in
power and perpetuate their power; and tenets in which many
others acquiesce. Dorling persuasively argues that the result
is growing inequality, and it is surely shocking that 'in
countries such as Britain people last lived lives as unequal
as today, as measured by wage inequality, in 1854, when
Charles Dickens was writing Hard Times' (p.316).
Presumably
Wilkinson and Pickett were asked to write the new Foreword
because of the success of their book The Spirit Level,
which found that inequality (sometimes understood as income
inequality, and sometimes more generally understood) was
correlated to a variety of social ills. In their significant
Foreword to Injustice they do as we suggested in
a review in a previous edition of the Citizen's Income
Newsletter (issue 1 for 2010), and have located the
causes of inequality and of various other social ills in
deeper social structures - social structures which they
interestingly suggest have prehistoric and indeed pre-human
origins.
Dorling's
new Afterword is equally significant. The Coalition Cabinet
contains more millionaires than any other in the last hundred
years, and Dorling shows that in the interests of the élite
which they represent, Cabinet members are consistent exponents
of the 'tenets of injustice'. He suggests that they have
established a new higher education funding regime likely
to restrict higher education to a social elite because they
believe that elitism is efficient. Perhaps he's right.
The
Afterword locates the cure for all of this injustice in
changed beliefs, as does the original book, but there is
little to suggest how this might be achieved apart from
the idea that we should fortify ourselves for the journey
by reminding ourselves that things have sometimes changed
for the better. This lack of a prescription raises an important
question: Do we change behaviour by changing beliefs, or
is it the other way round? The process is probably circular,
which means that behavioural and structural change will
be important methods of changing people's beliefs, and vice
versa. To take an example: Enforced good behaviour in the
workplace in relation to racial equality has promoted belief
in racial equality, and increasing belief in racial equality
has promoted better workplace practice. If the process is
circular in this way then we shall need to construct 'equality
mechanisms' if we are to see people's beliefs change.
Needless
to say, Child Benefit, a Citizen's Pension, and then a Citizen's
Income, will be such mechanisms. This leads us to suggest
that, at last year's Conservative Party Conference, George
Osborne announced that Child Benefit would be deuniversalised
because, in its present universal form, Child Benefit represents
everything which the 'tenets of injustice' are against.
Daniel
Dorling, Fair Play: A Daniel Dorling reader on social
justice, Policy Press, 2011, xiv + 397 pp, pbk,
1 847 42879 0, £24.99
In
this book Daniel Dorling has brought together fifty-two
of his academic papers, newspaper articles, magazine articles,
and unpublished essays, to create a nicely structured and
really quite devastating critique of our unequal society:
devastating because so carefully researched.
The
book contains sections on inequality and poverty, injustice
and ideology, race and identity, education and hierarchy,
elitism and geneticism, mobility and employment, bricks
and mortar, wellbeing and misery, and advocacy and action.
Most of the sections follow the same pattern: a scene-setter
(often a newspaper article); then mainly articles from peer-reviewed
journals; and finally a newspaper or magazine article, or
occasionally a final journal article, suggesting a policy
direction which might reduce inequality.
Thus
the section on inequality and poverty opens with an article
on murder: 'Behind the man with the knife is ... the man
who decided that his school did not need funding, the man
who closed down the plant where he could have worked, the
man who decided to reduce benefit levels so a black economy
grew ...' (p.25). Then come articles showing how economic
growth is generally higher in urban areas nearer to London,
and that 'society in Britain has become so divided that
very few people live anywhere where they can see how a representative
range of folk live' (p.55). Finally there's a more political
piece: 'Cameron says he is worried about "deep poverty",
about the poorest in society. But he clearly does not want
a redistribution of the money, the land, the work, the educational
resources and the "opportunities" that the rich
have expropriated from the poor over the past three decades'
(p.59).
There
are two respects in which the introduction isn't quite accurate.
Dorling claims that he's edited the articles and extracts
so that they have a consistent style, but there is still
a considerable difference between the style of an article
written for the Guardian and one written for the
peer-reviewed Local Economy. The introduction also
says that each section ends with a discussion of what we
can do about the inequality evidenced. In many of the sections
this is only true in the sense that Dorling asks that a
current policy trend should be reversed. In just one section
he proposes a new policy direction: a land tax (p.129).
I suspect that this is because he's a geographer and has
studied our unequal land distribution and the many other
ways in which 'place ... matters in what might inspire (or
condition) you. Circumstances matter' (p.343), and where
we grow up has a considerable effect on our opportunities
and prospects. In the same vein, Dorling shows how recent
Housing Benefit changes will result in 'the cleansing and
clearing out of so many poorer people (and people made newly
poor) from more prosperous areas of the country' (p.99).
As
well as being Professor of Human Geography at the University
of Sheffield, Dorling is President of the Society of Cartographers,
and this book would be worth buying simply for the full-colour
maps which say more about inequality than words alone could
say. However, the main reason for buying this book has to
be the sheer variety of evidence which it offers for an
increasing social malaise. We are sleepwalking into a seriously
unequal society. A land tax would help to reduce that inequality.
To distribute the proceeds as a Citizen's Income would make
even more of a positive difference.
Stuart
Lowe, The Housing Debate, Policy Press, 2011,
1 847 42273 6, pbk, 280pp, £14.99
Stuart
Lowe's The Housing Debate takes a refreshingly broad
view of housing and welfare. Rather than a balanced introduction
for students to current debates around housing and social
policy, Lowe has a clear case to make. 'There is mounting
evidence that housing is not only an important pillar of
welfare states, but, looked at in its broadest sense, has
become a foundation.' (p33)
Through
a series of historical and thematic chapters, Lowe argues
that there is a fundamental connection between housing systems
and the type of welfare states that develop from them and
alongside them. In the UK, the growth of home ownership
from the mid twentieth-century and the liberalisation of
mortgage markets from the 1980s have been integral to developing
our asset-based welfare state, where individuals and families
use personal wealth to buy into welfare.
In
260 pages, Lowe doesn't attempt to offer a comprehensive
history of housing policy; rather, he draws out key themes
and illustrative aspects of housing policy that have helped
shape both the current structures of the welfare state and
political debates about housing. Historians and welfare
experts may occasionally be frustrated by this brevity.
Indeed, its introductory style is occasionally prone to
over-simplify, oto gloss over important subtleties. This
includes, for instance, the changes to social housing to
be introduced through the Localism Bill currently before
Parliament, which Lowe reduces to 'effectively creating
a mirror image of the tenancy arrangements in the privately
rented sector'. (p4) However, readers already interested
in tax, welfare and benefits, but who come fresher to the
housing debate, will value the clear structure and the balance
between history and welfare theory.
The
historical account begins by identifying the emergence of
a distinct housing policy from Victorian public health concerns,
and then traces the socio-economic roots of the modern concept
of home-ownership in the interwar years. Those interested
in a Citizen's Income might be particularly taken by Lowe's
comparative analysis of housing markets across Europe and
the US. He focuses on the divergence of a municipal approach
to housing in Britain, where state housing was an acceptable
response to a dwindling private rented market, and Germany,
where a social insurance model and related scepticism of
a statist approach helped more diverse provision to develop
through housing co-operatives. One can see this initial
split at the start of the twentieth century extending and
deepening. The author's perception of the 1961 Housing Act
is that it was the end of a brief period of reliance on
the private rented sector and the return to housing provision
by local authorities.
Lowe's
distinctive offer is in Chapters 6 and 8, where he argues
for a clearer role for housing in the analysis of welfare
states. The Housing Debate neatly contrasts a historical
analysis with literature on comparative welfare to argue
that different approaches to housing have shaped very different
welfare systems. In the UK, this means asset-based welfare.
This is, in part, due to home-ownership's significant initial
costs that lead to electorates in countries with high proportions
of home-owners favouring low taxes, low interest rates,
and low spend social policies. And so one trade off to be
made is between home-ownership and pension provision. Lowe
identifies examples of explicitly asset-based welfare, including
the Child Trust Funds in the UK and the experiment with
individual asset bonds for low income families in the US.
And as the author indicates in his conclusion, there is
much still left to consider in the welfare debate, once
we acknowledge that housing is part of a state model where
citizens are expected to secure savings and assets to contribute
to welfare.
This
book has been written to persuade students of social and
public policy to take housing seriously. The debate should
stretch further than this. It provides a very timely analysis
as policymakers turn again to reconsider housing policy
in the face of slow economic growth, accelerating private
rents, and projections for the costs of social care for
an ageing population.
Jake
Eliot
Peter
Dwyer, Understanding Social Citizenship, 2nd
edn, Policy Press, 2010, xix + 260 pp, hbk 1 847 42329 0,
£65, pbk 1 847 42328 3, £19.99
The
number of degree course modules on 'citizenship' is increasing,
and this book is designed as a core text; but it will be
useful not just to teachers and students, but also to social
policy practitioners and politicians because the contested
and complex concept of citizenship now informs debate on
all manner of social policy issues, as this book amply shows.
There
is material here on republicanism and liberalism, the development
of social citizenship in Britain, political ideologies since
the 1950s, class, poverty, gender, disability, race, ethnicity,
social Europe, and global citizenship (with a question mark).
Those
interested in the tax and benefits system will find relevant
material in most chapters - not surprisingly, given the
importance of the term 'citizen' to much social policy debate
and the connections between the tax and benefits system
and so many social policy fields.
Of
particular interest will be the material on the relationship
between class, poverty, citizenship and welfare to be found
in chapter 5. Increasing conditionality in relation to benefits
policy was a feature of the last government, and we are
waiting to see whether the same will be true of the new
one. The chapter contains an informative table of new conditionalities
in a variety of social policy fields.
Citizenship
suggests universalism, but it also has to cope with difference
( - a theme running through the book), and the final chapter
outlines three approaches to the relationship between universalism
and difference: a Citizen's Income, group rights, and differentiated
universalism.
The
erroneous argument that a Citizen's Income would be 'too
expensive' is, as usual, offered without evidence. Similarly,
the idea that 'for some a [Citizen's Income] is a step too
far as everybody, freeloaders included, would be able to
claim their citizen's income' (p.208) receives a response
in terms of a participation income rather than the challenge
which it deserves. He does concede that 'freeloaders already
receive means-tested benefits and these benefits actively
discourage them from seeking employment: a Citizen's Income
wouldn't do that', but it's encouraging to see a Citizen's
Income taken seriously as the feasible corollary to social
citizenship.
Given
the importance of a Citizen's Income and citizenship to
each other, a future edition of this excellent book would
benefit from an extended and better informed treatment of
both Child Benefit and Citizen's Income, which should be
treated together rather than separately as they are in this
volume.
Viewpoint
The
human cost of flexible labour
by
Deborah Padfield
This
article was first published on the Open Democracy website
on 24 October 2011: www.opendemocracy.net/ourkingdom/deborah-padfield/human-cost-of-flexible-labour.
We are grateful to permission to republish it.
Unemployment
hit a 17-year high in the three months prior to August.
That's headline stuff. Short-term employment is less noticed.
In the same period, more people than ever before (as number
and proportion) reclaimed Job Seekers Allowance less than
six months after their last claim. Over half of men claimants
are in that situation, and about a third of women (as set
out www.poverty.org.uk/57/index.shtml?2). Disabled job-seekers
are proportionally likelier to be in this situation. These
are people of an insecure world, the 'precariat'. (See Guy
Standing's The Precariat: the new dangerous class.)
This
trend towards short-term 'flexible' working is economic
and social folly, in the long term if not the short. Having
spent many years largely out of the labour market through
mental disorder, I know how destructive insecure work can
be.
Generalisation
is perilous. In many small and larger firms, recession-driven
redundancy apart, employment remains relatively stable.
The thrust, though, is towards flexibility.
This
is driven by technology: digitisation makes continual modification
affordable and hence competitively necessary. Workers must
adapt to technology, not the other way round. They must
be quick-learners, or readily disposable, or both.
It's
also been driven by rising shareholder power since the 1970s.
Corporate investors typically look to immediate profits.
In 1965 US pension funds held stocks for an average of 46
months; by 2000 the comparable figure was 3.8 months. (R.
Sennett, The Culture of the New Capitalism). Management
must prioritise today's share price or risk hostile buy-out.
That depends on labour flexibility. Even voluntary-sector
agencies must hire and fire to fit funding requirements.
The
flexible workforce is integral to LibCon growth strategies.
'We will review employment and workplace laws, for employers
and employees, to ensure they maximise flexibility for both
parties while protecting fairness and providing the competitive
environment required for enterprise to thrive', said the
Coalition Agreement. The Chancellor's announcement that
(save for discrimination claims) people must work twice
as long for their employer before being protected by Employment
Tribunals came straight out of the flexible employment manual.
What
does this mean for people returning to the workforce, particularly
those with mental health problems?
'The
positive link between employment and mental health is proven…
In contrast, there is evidence that the longer individuals
are absent or out of work, the more likely they are to experience
depression and anxiety. Satisfying work can therefore play
a vital role in improving everyone's well-being and mental
health.' (DWP/DH, Working our way to better mental health:
a framework for action, December 2009).
I
agree, on conditions. I only began to regain some sense
of my stable 'self' after finding work with Cambridge Citizens
Advice Bureau. Income and its self-respect matters hugely;
employment can also represent structure, an outlet for energies,
hope of a future, colleagueship. You may no longer have
to fudge answers to 'what do you do?' or, devastatingly,
'what are you?'
But
there's work and work. Insecure, low-paid work means none
of these. Precarians are a world apart from skilled, well-networked
professionals who thrive on mobility. Job Seekers Allowance
requires you - after an initial few weeks - to accept any
'reasonable' offer. You must become whatever is demanded,
unable to build a personal skill-set, devoid of colleagueship.
You've still no answer to 'what do you do?', let alone "what
are you?"
For
any returnee, this is tough: the endlessly repeated angst
of facing the unknown, being tested, knowing there's no
time for learning by mistakes. A mistake too many and you
return to Go. For many, it's impossible. Minister of State
Chris Grayling recently talked on the Today programme about
Universal Credit helping young people to take that critical
'first step' into work. He's out of touch. There is no one
'first step' but a whole series of them. These may, for
the securer person, build confidence. For the less secure,
being burnt doesn't callous the skin but makes it raw.
Anxiety
and depression were my bugbears, along with a few obsessive
compulsions. Being unable to connect with the world around
is terrifying. This is not about something being difficult
or unpleasant, nor about feeling a bit down or fuzzy-headed.
It's about impossibility. About struggling to make that
muscle called 'brain' move, but being paralysed. Many of
us know what it's like to be 'not here' ('derealisation'
in the jargon); to sort-of know that 'I' am 'walking along
the road'. Many of us know the grip of compulsions which
must be obeyed before all else, and/or the addictions -
to alcohol, drugs, eating or not eating - whose claws are
no less sharp.
Neither
paralysis nor compulsion can be wished or disciplined away,
nor will they vanish on exposure to the thing that's feared.
If only they would. Many of us keep hoping, trying to force
ourselves to master them. Many flog themselves (or cut themselves,
or drink) in bitter self-contempt.
Anxiety
is part of life. 'One in four has mental health problems'
says the Time to Change campaign (www.time-to-change.org.uk/).
But difference in degree becomes difference in kind. A physical
illness like arthritis can be uncomfortable or disabling.
So can anxiety. There are ways to ease the effects of both.
But unlike arthritis, recovery from mental illness is often
to a large degree possible - at the right pace, with the
right environment.
The
flexible workplace is wrong in both. It sustains the fear.
For obsessives, control by others is a consuming terror.
Fear of not coping can dominate for years. Familiarity can
ease the strain, reducing the unknowns, allowing coping
mechanisms to evolve. One can develop a work persona, invaluable
to most of us as protection and tool. Above all, time may
allow the growth of trust and respect, in others and in
self. But time is what the flexible workplace denies.
I
talked up my skills to get a job, then faced the brain-numbing
expectations of a fast-driving employer. I wasn't asked
back. Such 'first steps' can destroy. People on JSA have
to undergo them again and again. Being lucky in my support
systems, I could restart as a volunteer, then creep onwards
via undemanding admin work. I didn't dread abject dismissal
when my mind would not work. I could return to volunteer
status without question or loss of respect, still with a
possible way forward. So I climbed - as securely as I could
- out of the pit.
Employment
& Support Allowance is supposed to give such space,
though in practice it's far tighter. The minute you can
do some kind of work, that's what you have to do. That work
is usually short-term, never secure. So now a record number
of people must "take the plunge" again and again,
never knowing colleagueship, never having hope of sustained
progression, emotionally or professionally. Never being
granted the respect we all deserve until proven otherwise.
Most unemployed people I meet desperately want to work.
They don't need sanctions and conditionality to force them
into it. They need the security and opportunity which our
economic model does not provide.
Flexible
work is a good formula for ensuring a captive supply of
cheap, low-grade employees. It supports the short-termism
that has maimed many leading companies but pleased the City.
It promotes festering resentments against both the privileged
rich and the competing poor, especially immigrants. It condemns
many to a lifetime of fear, poverty and loss of hope.
No
economic model is inevitable. We set our priorities. Fiscal
incentives and regulation can encourage investment in employees.
Unions can reshape themselves as long-term home-bases for
precarians. A tax-funded basic income can give people security
for take-off. Respect and trust can replace stigma and sanctions.
Nor
is democratic freedom inevitable. I am afraid of the inequalities
growing in our society: the resentments, fears and angers.
I am afraid of where indifference to these realities, in
government and the comfortable classes, is leading us.
Post-war
European peace was built, however imperfectly, on a commitment
to investment in all classes, investing in them, respecting
them and allowing them to insure against calamity. In renewed
time of upheaval, we need to make a similar commitment.
©
Citizen's Income Trust, 2012
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