|
Citizen's
Income Newsletter,
issue
3,
2002
Contents
Editorial
A new agenda: complexity theory, tax and benefits
News
Events
Future events
The Citizen's Income Trust's response to
the Labour Party's National Policy Forum's
Consultation Document A Modern Welfare State
Reviews:
Peter Kemp, Steve Wilcox and David Rhodes, Housing
Benefit Reform: Next Steps
Jorgen Goul Andersen and Per H. Jensen (eds),
Changing Labour Markets, Welfare Policies and Citizenship
Jay Ginn, Debra Street and Sara Arber (eds.),
Women, Work and Pensions
Ethics and Social Security Reform,
edited by Erik Schoffaert
Mohibur Rahman, Guy Palmer and Peter Kenway,
Monitoring poverty and social exclusion 2001
Viewpoint: 'Targeting'
Citizen's Income Newsletter
ISSN 1464-7354
Citizen's Income Trust
P.O. Box 26586
London SE3 7WY
Tel: +44 (0) 20 8305 1222
Fax: +44 (0) 20 8305 1802
email: info@citizensincome.org
Website: www.citizensincome.org
Registered charity no. 328198
Director: Malcolm Torry
Following our suggestion in the last issue that the Citizen's
Income Trust might use the internet as the chief means of disseminating
its regular newsletter, we have received some very useful affirmative
and constructive comment and only one objection. This will therefore
be the last newsletter disseminated primarily in printed form.
The first issue for 2003 will be published on our website. An
email will be sent to everyone for whom we have an email address.
Anyone who asks for a print-off of the newsletter will be sent
one.
We would be very grateful if readers would return the form at
the bottom of the enclosed letter or communicate their current
email address by email.
Please note our new fax number: 020 8305 1802.
Editorial
This issue contains the Citizen's Income Trust's response to
the Labour Party's National Policy Forum's consultation document
A Modern Welfare State. The consultation document is important
because it is already the result of consultation, because it will
form the basis for further consultation and then for discussion
at a Labour Party conference, and because it asks many of the
right questions. Our response is the result of consultation and
agreement amongst the trustees of the Citizen's Income Trust.
In order to inform our own continuing study of the debate on the
feasibility and desirability of a Citizen's Income, we would welcome
comment on our response, and on anything else which appears in
the Newsletter.
In our last issue we reported on a conference held at the Institute
for Fiscal Studies to evaluate the current Government's effect
on social security provision during the past five years. On the
20th July a 'Socialist Conference' was held in London entitled
After New Labour. This was constructively critical of the Government's
approach to a variety of issues. Of particular relevance to readers
of this newsletter is Peter Townsend's paper on The Future of
the Welfare State. Townsend bases his approach on the Universal
Declaration of Human Rights, and in this context recommends an
extension of social insurance and a Citizen's Income, both for
this country and internationally. (Copies of the paper are available
from the editor).
But New Labour is still with us, and, we are pleased to say, still
strongly committed to the universal approach to benefits represented
by Child Benefit. (See the item on Child Benefit in the News section
below). By offering a careful and detailed response to the Labour
Party's consultation document we hope to contribute to a more
vigorous debate, both within the Labour Party and within the Government,
on the feasibility of extending this universal approach to all
citizens. We are encouraged by the National Federation of Pension
Funds recent publication (see the news item below) to believe
that we shall not be the only organization contributing to such
discussion.
There is no reason for the debate to wait until after New Labour.
A new agenda: complexity theory,
tax and benefits
This brief article sets a question: Does the rapidly developing
field of complexity theory offer a) a way of understanding tax
and benefit systems, and b) a context within which their reform
can fruitfully be debated ?
There is no one 'complexity theory': there are complexity theories.
Ilya Prigogine and Isabelle Stengers, in their Order out of Chaos:
man's new dialogue with nature (London: Heinemann, 1984) explores
the seething complexity of physical systems and discovers a wealth
of examples of fluctuation leading to new levels of self-organisation
rather than to chaos; and Gregoire Nicolis (in 'Physics of far-from-equilibrium
systems and self organisation', in Paul Davies (ed.), The New
Physics (Cambridge: Cambridge University Press, 1989), pp.316-347)
summarises one of the findings of this 'Brussels School': "Nonlinear
dynamics and the presence of constraints maintaining the system
far from equilibrium will turn out to be the basic mechanisms
involved in the emergence of these phenomena [of self-organisation]
… All in all, these developments contribute to the emergence
of a novel picture of our natural environment, more complex, more
realistic, and undoubtedly more challenging than the idealised
archetype proposed by classical science" (pp.316, 346). As
Paul Davies points out: at the micro-level, at the macro-level,
and at every level in between, "it is one of the universal
miracles of nature that huge assemblages of particles, subject
only to the blind forces of nature, are nevertheless capable of
organising themselves into patterns of cooperative activity"
(Paul Davies, The New Physics (Cambridge: Cambridge University
Press, 1989), p.4), and he suggests, on the basis of evidence,
that systems generally undergo both self-organisation and chaos,
or they undergo neither.
Stuart A. Kauffman, in his The Origins of Order: Self-organisation
and Selection in Evolution (Oxford: Oxford University Press, 1993),
concludes that living organisms are "the result of the unfolding
of many developmental mechanisms which have become integrated
with one another. If our bold hypothesis is right, such integrated
complexity generally yields simplicity; [the process whereby viable
forms evolve] may be inherently robust, not exquisitely fragile"
(p.642).
At the Complexity and Organisational Learning Research Programme
at the London School of Economics, Eve Mitleton-Kelly and her
colleagues are exploring the relevance of these developments for
the understanding of social systems. They take up Nicolis' and
Prigogine's suggestion, made in their Exploring Complexity (W.H.
Freeman, 1989), that "it is more natural …… to
speak of complex behavior rather than complex systems" (p.8),
and they apply it to organisational complexity. Theories of complexity
provide a way of seeing the world, and it is such a way of seeing
which has led Geoffrey M. Hodgson, in his Evolution and Institutions:
On Evolutionary Economics and the Evolution of Economics (Cheltenham:
Edward Elgar, 1999), to insist that unless the discipline of economics
remains diverse it will not be able to develop new usable theory
and "will eventually suffer a dull death" (p.13), and
to recommend that economics should experiment with methods learnt
from the kind of biology which Kauffman's work represents.
The theories of complexity, with their terminology of connectivity
and interdependence, coevolution, degrees of connectivity, fitness
landscapes, feedback, unpredictability and emergence, have led
Mitleton-Kelly to follow Kauffman in suggsesting that complex
systems of many kinds share a number of characteristics. We are
not here in the world of metaphor and analogy: we are dealing
with observable characteristics which systems in physics, biology
and the human sciences seem to have in common. The Centre at the
LSE thus treats organisations as complex evolving systems, and
bases its consultancy work on identifying and creating enabling
infrastructure within which experiment can lead to new order.
The Centre's work has shown them that complex systems cannot be
'designed' in great detail because they are made up of changing
patterns of behaviour and because within them unpredictable new
patterns emerge. The researchers conclude that human beings are
remarkably resourceful if they are allowed to self-organise.
There are some obvious lessons for tax and benefit systems:
· Tax and benefit systems are themselves complex and they
coevolve within a complex society. We should therefore expect
them to exhibit properties which other complex systems exhibit.
· Methods appropriate to the study and transformation of
other complex social systems, such as industries, are likely to
be applicable to tax and benefits systems as they adapt to serve
a changing society.
· The tax and benefit systems will need to remain diverse
if they are to evolve creatively. This suggests (counter-intuitively)
that simplification of the system as a whole is what is not required,
and maybe that a combination of universal provision, private provision
and means-tested provision for each age-group is what is required.
· The total social system will develop most creatively
if it is not overcontrolled by any part or parts of the tax and
benefit system. This suggests that disincentives and coercion
should be reduced and the number of elements which might enable
other parts of the system to develop freely should be increased.
This short article has merely suggested an agenda. It is a large
agenda, but that is no reason not to make a start.
Malcolm Torry
News
The National Association of Pension Funds recommends a Citizen's
Pension of £100 per week.
A new Citizen's Pension, worth £100 a week and rising in
line with earnings, is at the centre of radical new proposals
for pensions reform, published today by the National Association
of Pension Funds (NAPF).
In its wide-ranging policy paper "Pensions - Plain and Simple"
the NAPF sets out a number of key reforms which would boost incomes
for the poorest pensioners, strip away complexity, encourage consumers
to save more, remove barriers to workplace pension provision,
and improve consumer understanding and protection.
The proposals include replacing the present tangle of State provision
with a single, universal, flat rate payment worth about 22% of
average earnings and rising in line with earnings. Beyond that,
individuals will be encouraged to make extra provision, either
through the workplace or with personal or Stakeholder pension
providers.
Among the key recommendations in "Pensions - Plain and Simple"
are:
· replace the tangle of existing State pensions with a
single, universal, flat rate Citizen's Pension worth £100
a week at present and rising in line with earnings;
· abolish restrictions on retirement age, but raise the
age at which the new Citizen's Pension becomes available from
65 to 70 between 2020 and 2030 - allowing the new, more generous
pension to be provided at no additional cost to the public purse;
· offer more generous tax treatment for longer-term savings,
rewarding pension savers more than savers in ISAs or other short-term
savings vehicles;
· abolish rules limiting individuals' ability to join more
than one pension scheme;
· offer better pension protection for occupational pension
scheme members nearing retirement age whose employer goes bust;
· remove rules preventing employees continuing to work
for the same employer while drawing down part of their pension;
and
· abolish rules restricting the amount individuals can
pay in, or receive in benefits from, their pension scheme.
Launching the paper, NAPF Chairman, Peter Thompson, said:
"Today's pension system is weighed down by red tape, jargon
and complexity. Because of this, too many of today's workers are
put off thinking about pensions, storing up potentially massive
problems for the future. The proposals we have published today
tackle this problem head-on. They would replace the present over-complicated
mix of State pension provision with a single, flat rate Citizen's
Pension, payable to everyone, set at a high enough rate to help
more pensioners out of poverty, and linked to rises in earnings
rather than prices. This would be achieved at no extra cost to
the public purse. Today's workers would then know exactly where
they stand. They will also know that if they wish to enjoy a more
comfortable income in retirement, they must make additional arrangements,
either through the workplace or with a personal pension provider.
With this one straightforward and affordable change, the whole
picture becomes simpler. Not only are the various State pensions
rolled into one, but the need for complex decisions over contracting
in or out of the State scheme is removed, along with a forest
of red tape. ….. These proposals are a well-thought out,
costed and effective answer to many of the problems which threaten
to push today's pension system into crisis. I hope the Government
will use them in drawing up its own reform proposals to be published
later this year."
A copy of the full document, "Pensions - Plain and Simple",
can be downloaded in PDF format from the NAPF website at www.napf.co.uk.
Other News
The Select Committee on Work and Pensions' Social Security Committee's
second report on the Integrated Child Credit stated: "We
value the role of universal Child Benefit and believe it should
continue to play a substantial role in supporting the children
of this country. We welcome the commitment from the Chancellor
to Child Benefit. We recommend that the Government takes steps
to ensure that, as integration develops, a separately identifiable
universal element, presently Child Benefit, is preserved."
The Government's response states: "The Government is committed
to Child Benefit as the foundation of support for families with
children. In the last parliament the rates of Child Benefit for
the first child were raised by 26% in real terms. On 31 May [2001]
the Chancellor said: 'Millions of families can be absolutely reassured
that not only will Child Benefit not be taxed, it will remain
universal, and in the (next) parliament it will rise in line with
prices.' Child Benefit will continue to form the universal foundation
of support for families."
In an assessment of the New Deal, Dave Simmonds reports in the
journal Working Brief (issue 135, p.10), from the Centre for Social
Inclusion, that Treasury calculations show that the introduction
of the Working Tax Credit will make a single person over 25 in
work 18.5% better off on average. He suggests that "this
should have an impact on incentivising people to take jobs and
stay in jobs," but concludes that "to be effective as
an incentive people need to know about in-work benefits and have
confidence in the 'better off' calculations done by Jobcentre
Plus and other agencies. A major effort will be needed to communicate
the general message that 'work pays', as well as increasing the
capacity to deliver high standard advice." In issue 137 (p.13),
in a discussion of the needs of 16 to 18 year olds who are not
in work or education, the Centre suggests that the current "system
of discretionary payments needs to be replaced by a wider entitlement
to financial support in return for a commitment to enter learning:"
a 'Learning Allowance' "of at least £40 per week as
the core financial mechanism for supporting young people who do
not enter paid employment or an apprenticeship at age 16 …..
. The mix of financial support received by young people and their
families should not favour either the work-based route to learning
or college and school participation beyond the age of 16"
(pp.22-3).
In 2000, John Veit-Wilson published an article, 'States of Welfare:
A Conceptual Challenge' (Social Policy and Administration, vol.34,
no.1, March 2000, pp.1-25), suggesting that the term 'welfare
state' has such an imprecise meaning that it is contributing nothing
to the debate on poverty. He suggested that 'welfare state' should
be taken to mean that the state "ensures a minimum real income
for all." Now, two years later, Charles Atherton has responded,
saying that Veit-Wilson's approach is "too limiting"
('Welfare States: A Response to John Veit-Wilson', Social Policy
and Administration, vol.36, no.3, June 2002, pp.306-311) and that
'welfare state' is legitimately used as a description of "those
societies that have used the welfare state to reduce substantially
the depth and incidence of poverty." Veit-Wilson responds
in the same edition of Social Policy and Administration ('States
of Welfare: A Response to Charles Atherton', vol.36, no.3, June
2002, pp.312-317), saying again that the term should be restricted
to "states which offer a minimum real level of living to
all their citizens." Veit-Wilson recognises that such an
income might be means-tested, and at the same time writes that
"tests of desert are features of the Poor Law, not the welfare
state" (p.314). Since Jobseekers' Allowance is conditional,
it would seem that the UK does not have a welfare state.
The Department for Work and Pensions reports that the Government
has decided that from April 2003 the normal method of paying benefits
and pensions will be by credit transfer directly into a bank or
building society account. Nearly half of all recipients already
receive their payments in this way and more than 80% already have
access to a bank or building society account. Order books and
girocheques will be phased out gradually, and by 2005 all benefits
will be paid direct into an account. The Inland Revenue is also
to pay some tax credits directly into accounts. For people new
to banking a 'basic' bank account will be available from banks
and building societies (which will enable people to pay money
in and get cash out), and, for anyone unable or unwilling to open
a current or basic account, a card account at the Post Office
will provide access to benefits payments.
Events
The Ninth Congress of the Basic Income European Network, Income
Security as a Right, was held in Geneva from the 12th to the 14th
September.
For three glorious, blue-skied days, more than 200 delegates
congregated in the imposing building which houses the International
Labour Office above the shores of Lake Geneva, to explore the
implications of introducing various types of Basic Income schemes,
and to hear how the debate has progressed in different parts of
the world.
This must have been the largest BIEN Congress so far, in terms
both of the number of delegates and of the number of presentations
offered. The large number of participants was exciting but changed
the congress from being an intimate meeting where one could have
a conversation with most people to a gathering in which it was
harder work to get to know people. There were about 110 presentations
in all: some were invited papers, but the majority were given
during parallel sessions, which meant that a participant could
hear about 40 papers at most, leaving the participant frustrated
at having to miss so many other interesting papers. One of the
notable features was the number of eminent speakers. His Excellency
Dr. Pascoal Manuel Mocumbi, Prime Minister of the Republic of
Mozambique, took a day out of his busy schedule to hear some of
the presentations, and expressed himself very interested in the
idea. The Director General of the International Labout Organisation,
Juan Somavia, welcomed the subject matter, 'income security as
a right' as being central to the ILO's interests, tackling as
it does the underlying causes of economic insecurity. Another
delegate who took a keen interest was Pierre-Francois Unger, the
Conseiller d'Etat for the Canton of Geneva, with a post in the
Department of Social Affairs and Health. The UK fielded two eminent
speakers: Professors Tony Atkinson and Raymond Plant (who sent
his paper but was unable to be present in person), economist and
philosopher respectively, each of whom has contributed to CIT
events in the past. Also present were Eduardo Suplicy, who is
Senator for Sao Paulo in Brazil, and who has been attending BIEN
Congresses since 1994; Rehman Sobhan, an eminent economist from
Bangladesh; and Dharam Ghai, the former Director-General of the
United Nations Research Institute for Social Development (UNRISD),
now retired and researching social protection and poverty alleviation.
There were six themes running through the Congress: Assessing
selectivity; Citizenship credit cards; Workfare vs Basic Income;
Income security for Care Work; Income Security for development;
and Legitimising Basic Income Politically.
Sometimes it seems quite difficult to find new things to say about
basic income, since the implications have already been well worked
out, but two things bring a freshness; one is the type of welfare
systems which are currently being implemented, so that comparisons
may force us to view BI in a different light, and the second is
that new delegates bring new enthusiasms. We were very privileged
to be able to welcome to this Congress many delegates from developing
countries, particularly from South America and from Africa, from
which came an enthusiastic contingent of young South Africans.
As often happens, new delegates referred to means tested benefits
(MTBs) rather than to a true BI system, and maybe this would be
easier to implement in a poor country. There was some discussion
as to whether there was a critical threshold of wealth necessary
before a country could implement a BI or MTB scheme, and it was
thought that the poorest countries would need international aid.
It was suggested that it would be far more effective if international
aid could be given in the form of a BI, rather than as grants
to the leaders of countries to buy prestigious goods from the
donor country with few controls on how the aid is spent. Uma Devi
queried whether a BI scheme is only feasible in rich western countries
with cash economies, and to what extent it would be dependent
on the process of globalisation. Certainly, there has to be both
a culture and an infrastructure of tax collection and benefit
distribution for a BI to be implemented
Eduardo Suplicy reported the successful institution of a conditional
BI for children in Brazil, which has helped to reduce the problem
of street children. A benefit is paid to poor families for each
child, so long as the child attends school for 85 % of the time.
Families are reclaimimg their children from the streets, now that
they can afford to feed them, and school attendance has risen
dramatically.
Another perceptible change in the BIEN Congresses is the increase
in the number of delegates from North America. A few years ago,
the emphasis in the USA was on the distribution of shares, which
might seem more appropriate for a country which abhors taxation.
However, there have always been American advocates of BI, at least
since the Negative Income Tax experiments of the 1960s. For the
last few years there has been a very real example of an annual
BI in the form of The Alaska Permanent Fund Dividend. Professor
Scott Goldsmith reported on the history and success of this 'Experiment
in Wealth Distribution', resulting from substantial tax revenues
from oil production since 1977.
It has long seemed to me that the BI argument will be won or lost
on philosophical or political grounds, rather than straight economic
ones, and I can listen to the discussions for 'legitimising Basic
Income politically' all day, trying to find new debating points
or examples to add to my quiver of arguments. Rosamund Stock's
paper 'The Psychological Rationale for Basic Income' provided
fascinating insights into the connection between the different
bases for the distribution of resources in society and the different
types of relationships which they foster. This again brings us
to the key question for any discussion on welfare reform: 'What
sort of society would we like to be part of and help to create
?'
Once again, I left the Congress with my head buzzing and full
of ideas, wishing that there had been more time to talk with people,
to hear more papers, and to read more of the unheard ones. Two
and a half days, interspersed with receptions by the city and
by the ILO itself, is really too short a period to solve all the
problems of the world!
Anne Miller
Future events
The 4th International Research Conference on Social Security,
Social Security in a Long Life Society, will be held in Brussels
from the 5th to the 7th May 2003.
The organizers write: "Demographic ageing, globalisation
processes, radical changes in traditional family structures have
major impacts on everyone's lives. The lengthening of the average
life span has resulted in a tremendous impact on society, creating
fresh opportunities as well as new risks. This demographic shift
has been accompanied by new life patterns and family arrangements.
It has also altered the balance between work and leisure time
- a trend magnified by the shrinking duration of the working life
and by less stable patterns of employment. Overall, these developments
challenge the validity and adequacy of existing social security
programmes. The evolving nature of the life cycle - and new associated
risks - need to be described, analysed and taken into account
in the development of innovative policies. Comparative research
can offer invaluable guidance to policy makers in reshaping social
security programmes to satisfy the challenges and opportunities
of the emerging 'long life society'."
For further details, see the International Social Security Association's
website at www.issa.int.
The Citizen's Income Trust's response to the Labour Party's
National Policy Forum's Consultation Document A Modern Welfare
State.
Introduction
The Labour Government's introduction of various tax credits is
welcome as an improvement on Conservative policies because it
has reduced the extremely high effective marginal tax rates which
resulted from the withdrawal of benefits as income from paid work
rose. However, the present and proposed marginal rates of 60%
to 70% are still much higher than the combined rates of Income
Tax and National Insurance Contribution and they result in eligibility
for benefit extending much further up the income scale. This means
that we are still supplementing the incomes of the very poor by
depriving those who are not quite so poor, instead of introducing
a truly progressive tax system.
We should change our approach to a higher Income Tax rate for
all and much higher rates on higher incomes, up to 60% for the
highest incomes, as in the period from 1979 to 1988 under Conservative
rule. This should be combined with a Citizen's Income, an unconditional
income paid to all, regardless of gender, marital or employment
status, without means-testing and varying only with age. The levels
of Citizen's Income and the rates of Income Tax (including employees'
National Insurance Contribution) could and should be set in such
a way that the net payment of income tax offset by the Citizen's
Income by everyone below male median earnings would be less than
now.
Detailed response
On page 3, the document sets out some guiding principles:
"Work is the most secure means of averting poverty. We are
reshaping the welfare state so it helps and encourages those of
working age to work where they are capable of doing so. But for
those who cannot work Labour will provide security. We want to
ensure pensioners share fairly in the rising prosperity of the
nation. Those who are disabled should get the support they need
to live a fulfilling life with dignity. Tackling child poverty
is central to our approach and we're rebuilding the welfare state
to support families with children."
There is a recognition that "modernisation of the welfare
state has to be a long term project" and that a "whole
new culture for welfare" is required. The emphasis in this
new culture is on 'work', by which is meant paid employment, and
the document calls for responses to the following questions:
"Are we right to focus on work as the best form of welfare?
"What more should we be doing to help people into work, stay
in work and progress at work?
"Many people have particular difficulty in getting work such
as people over 50, black and other ethnic minorities, lone parents,
women returnees and those with long term health problems. How
can we best tackle unfair job discrimination?
"How can and should we build upon the New Deal ?" (p.6)
To which our response is:
Since a large proportion of the population is unable to engage
in paid work (especially pensioners, children and those with caring
responsibilities), state benefits are as important as earned income.
Therefore an adequate level of state benefits is vital, and the
way in which such an income is paid is crucial.
Reduce further the poverty and unemployment traps by paying to
every citizen a small unconditional income and reducing their
tax allowances and means-tested benefits to pay for it. Because
the administrative costs of such a Citizen's Income would be extremely
low (as are those for Child Benefit) and because even the smallest
Citizen's Income would reduce the effects of the unemployment
and poverty traps, there is no reason for resisting the logic
of this proposal.
A Citizen's Income would enhance the flexibility of the labour
market by making part-time employment more attractive. This would
particularly benefit lone parents, women returnees, people over
50, and those with long-term health problems.
A more flexible labour market would enable the New Deal to offer
a broader range of employment options to those who currently find
it difficult to find or remain in paid employment.
The third and fourth responses together also apply to the following
two questions: "What more help should we give disabled people
to help them find work, stay in work or make an early return to
work?" (p.6). "What can we do to help people whose circumstances
often exclude them from taking up paid work, such as lone parents
and disabled people ?" (p.7).
The move to tax credits is an improvement on Family Credit, but
a question remains as to how women in households, and particularly
non-earning women, will gain or maintain financial independence.
The next step is to transform tax credits into a Citizen's Income,
a step which would lower marginal tax rates even further and would
thus improve on the already beneficial effects of tax credits.
In answer to the question "How can we ensure that this help
gets to everyone entitled to it?" (p.7), we would point out
that, because a Citizen's Income would be paid automatically to
every citizen, there would be no take-up issues to discuss; and
in response to the question "What are the main barriers to
making work pay and what more can we do about them?" (p.7)
we have already discussed above the reduction of marginal tax
rates and the effect which this would have on the attraction of
paid employment. The same reduction in marginal rates would also,
of course, encourage people to increase their skills and to seek
higher-paid jobs: both important ways of making work pay.
A real problem related both to means-tested benefits and to tax
credits is the uncertainty which people experience as they move
from unemployment to employment, or from one pay-level to another.
A Citizen's Income of any size would increase the predictability
of the change in individuals' net income which would follow a
change in employment status.
The consultation document discusses steps which have already been
taken to ease the return to work. These have all been helpful.
In response to the question "What more needs to be done?
We want to help parents balance work and home responsibilities.
How can the welfare system help?" (p.8), we would respond:
Enabling the labour market to offer a far greater variety of employment
patterns would be of immense help. The continuing rigidities of
the tax, tax credit and benefit systems mean that part-time employment
of varying numbers of hours and of varying earnings remains problematic.
A Citizen's Income would ease the transition to such a labour
market.
In relation to the problem of housing benefit, we would draw attention
to our extended treatment of this complex issue in the Citizen's
Income Newsletter, issue 1, 2002.
Much has been achieved in relation to child poverty. In response
to the questions "Are we right to treat work as the best
form of welfare for those able to do so? What further help do
people need to make the most of work opportunities?" (p.9),
the answers are 'Yes, provided the employment on offer is sufficiently
flexible,' and 'Greater opportunities to be employed with very
flexible hours.' And in response to the question "Are we
right to concentrate on children as the best way to help families?"
(p.9), the answer is again 'Yes'. The one-off increase in Child
Benefit contributed to the reduction of child poverty; and similar
one-off increases would be enormously helpful - provided Child
Benefit remains unconditional and non-means-tested and thus contributes
no deepening to the poverty and unemployment traps.
In answer to the question: "How do we ensure that these policies
reach the widest number of people - how do we ensure that they
are simple and effective?" (p.10) we would respond: Child
Benefit is simple and effective, and take-up is not a problem;
and an increase in Child Benefit is an important part of the solution
to child poverty.
The dilemmas which the Government faces in relation to pension
provision are real, particularly at the moment. In answer to the
question "Should we continue, while building on the foundation
of the basic state pension, to do more to support the poorest
pensioners and reward the thrift of pensioners with modest savings,
or, as an alternative, should all our resources go to increasing
the basic state pension for everyone?" (p.12) our response
is: The latter. If a Citizen's Pension were paid to every elderly
citizen unconditionally, then the maximum possible incentive to
save for old age and to invest in private pension provision will
have been offered. Means-testing would then affect only a minority
of pensioners, particularly if the Citizen's Pension were to rise
with increasing national prosperity. (This response is also an
answer to the questions on page 13: "What should the main
priorities of the Pension Service be?" "We want to encourage
everyone who can afford to save for their retirement to do so.
What more should we be doing?" ) The proposed Pension Credit
gives some reward to pensioners who have additional pensions or
savings and the Minimum Income Guarantee helps the poorest pensioners.
We recognise that at the moment there might not be sufficient
resources for an unconditional Citizen's Pension for everyone
over 65, especially in view of the large increase in numbers reaching
that age between 2011 and 2032. However, a Citizen's Pension at
the level of the Minimum Income Guarantee could be paid now to
everyone over 75, so that most people above that age would no
longer be subject to means-testing.
In answer to the question "How best do we encourage flexibility
into the retirement age?" we would respond that a Citizen's
Pension, because it would not be means-tested, would encourage
older people to undertake paid work if they wished to do so.
Conclusion
The questions which the consultation document asks are appropriate.
The Labour Government has already provided some answers to those
questions. A Citizen's Income offers an innovative way of preventing
poverty whilst maintaining incentives for individuals to engage
in paid work and to save. It is therefore time for a high-level
discussion of the universal benefits approach to the reform of
tax and benefits. The Citizen's Income Trust will be glad to facilitate
such a discussion.
Dr. Malcolm Torry, on behalf of the trustees.
Reviews
Peter Kemp, Steve Wilcox and David Rhodes,
Housing Benefit Reform: Next Steps (Joseph Rowntree Foundation,
2002). Paper
Back. Order this book
Our first issue for this year was on housing costs, and we particularly
noted the Pivot Initiative's proposals for Housing Benefit reform.
The Joseph Rowntree Foundation has now issued its own report on
the subject, in which Kemp, Wilcox and Rhodes concentrate on two
particular problems: the effects of rent restrictions and the
relationship between Housing Benefit and tax credits.
The Local Reference Rent and the Single Room Rent (which restrict
the level of rent on which Housing Benefit is calculated) are
aptly described as 'trip wires', because their effects are often
unknown until the tenancy agreement has been signed and Housing
Benefit applied for. The Foundation suggests that a more transparent
system which would at the same time provide a 'shopping incentive'
(an incentive for someone to seek cheaper accommodation) would
be to increase social security benefit levels by 25% of the local
average housing cost and then calculate Housing Benefit on 80%
of actual rent rather than on 100% of the restricted rent as at
present. (The Pivot Initiative suggest a similar solution). The
researchers model three schemes and conclude that there would
be less shortfall and thus increased cost.
The second major problem the report tackles is the fact that families
can suffer a 95% maximum marginal benefit deduction as Working
Families Tax Credit, Housing Benefit and Council Tax Benefit are
all reduced as income rises. Two solutions are offered: 1) A housing
tax credit which would taper out first, followed by the tapering
of other tax credits. (A housing tax credit, and tapering Housing
Benefit and Council Tax Benefit one after the other, are Pivot
Initiative solutions). This would reduce the maximum marginal
benefit deduction but would move the taper further up the income
scale. 2) A flat rate housing costs contribution (a partial tax
credit) could be added to existing tax credits to complement rather
than replace Housing Benefit. Again, 25% of average local rent
is suggested. With both solutions, of course, a new complexity
is added to an already complex situation, as regional variations
in housing costs would make tax credits in one area different
from those in another. The administrative problems which would
result are not fully explored.
Like the Pivot Initiative's report, Hope for Housing Benefit:
A Strategy for Housing Benefit Reform (Pivot Initiative, 2001),
this report also suggests bringing low income home-owners into
the Housing Benefit / housing tax credit system, and it also tackles
the issue of payment periods.
Kemp, Wilcox and Rhodes had the benefit of the Pivot Initiative's
report during the latter part of their work, which might be one
cause of the considerable unanimity between the two reports. Another
cause must be that the problems encountered with Housing Benefit
have some pretty obvious solutions. We would merely add, as we
did in issue 1 for this year, that to pay a locally-agreed nonwithdrawable
Housing Benefit to everyone would provide the greatest possible
shopping incentive and would remove the taper completely and thus
provide a far greater incentive to seek employment: something
which people living in London and who are unemployed and on Housing
Benefit are understandably hesitant to do.
An issue which does not appear with anything like the frequency
or the emphasis it should have in such reports as this is the
issue of administrative complexity, both of the present system
and of any proposed replacement or revision. Perhaps teams of
Housing Benefit researchers should contain at least one member
currently working in a Local Authority Housing Benefit department.
Jorgen Goul Andersen and Per H. Jensen
(eds), Changing Labour Markets, Welfare Policies and Citizenship
(Bristol: The Policy Press, 2002) ISBN: 1-86134-272-1. Paper
Back £ 23.99 Order
this book
Written by scholars from the British, Scandinavian and continental
European welfare state traditions, this compilation provides an
informative and stimulating account of recent developments in
European labour markets and social security systems. Contributions
take a variety of forms - surveys of general trends, conceptual
discourses, single-country case-studies and cross-national comparisons
- but what holds the book together is the editors' insistence
that, besides describing and explaining the changes that have
taken place over the past twenty years in the institutions of
the work-welfare complex, the paradigms that guide public policy
towards it and the norms that shape social behaviour within it,
contributors should also reflect on the significance of these
changes for the social dimension of citizenship.
Amidst a wealth of detailed findings and observations, some general
themes stand out. All welfare states confront common external
and domestic pressures for change, but the ways in which governments
and other social actors respond to these pressures vary widely
from one country to another. For example, comparative evidence
provides scant support for the standard neo-liberal claim that
contemporary unemployment is caused by a combination of skill
mismatch, labour market rigidity and dysfunctional tax and social
security systems, and can only be cured by some combination of
increased wage flexibility, investment in human capital and direct
or indirect subsidies for low-productivity work. There is, in
fact, no single best way to reduce unemployment, raise employment
and increase labour market participation, either in the aggregate
or among targeted social groups such as young people, older workers
and ethnic minorities. The same applies to other social objectives
such as the pursuit of gender equality.
Moreover, strategies which are equally effective in achieving
these goals have divergent implications for citizenship, for here
what counts is not just success in creating jobs and activating
people who are, or risk becoming, disconnected from the labour
market, but success in overcoming insider-outsider divisions,
minimizing long-term unemployment, averting poverty and widening
the remit of work-welfare policy to encompass unpaid caregiving,
voluntary work and other socially valued, but unremunerated activities.
The contrast between, say, Denmark and the UK is instructive in
this regard. Since the early 1990s unemployment in both countries
has fallen steadily, but whereas the former has maintained generous
levels of social protection and has retained its traditionally
egalitarian ethos and income distribution, the latter's continued
drive to recommodify the labour market and create a residual welfare
state has taken it even further away from the partial, uneven
and fragile form of social citizenship that was established after
the Second World War.
It is reassuring to find that social scientists still have some
use for the concept of social citizenship, both as an analytical
category and as a normative ideal. It is also chastening to be
reminded what a slippery concept it is and what formidable difficulties
confront renewed efforts to pursue it in the age of the global
market, when old sources of social solidarity, formed in the course
of conflicts between classes and wars between nations, are finally
exhausted and when, in Europe at any rate, social policy is increasingly
influenced by interactions between states and by supranational
regulation, as well as by more traditional interactions between
national governments and domestic interest groups.
David Purdy
Jay Ginn, Debra Street and Sara Arber (eds.),
Women, Work and Pensions
(Open University Press, 2002, 270 pages). Paper Back £24.00.
Order
this book
The issue of income maintenance in later life is one of considerable
interest to the individual and the wider society. When the 'post
work' phase of life can last as long, if not longer, than the
period of participation in the labour market, issues of maintaining
incomes for this period become paramount. Indeed the whole issue
of pension provision is assuming increasing prominence in the
policy area and is one where the interface between, and the controversy
concerning, the respective roles of public and private provision
is seen clearly. These debates are of particular relevance to
women who, because of the nature of their employment patterns
and their involvement in a variety of caring activities, are especially
vulnerable to the experience of poverty and low income in old
age.
This edited collection of 13 chapters contributed by leading scholars
examines the position of women and their pension arrangements
in six 'liberal' welfare states. Through these 'case studies'
and several overview chapters the authors demonstrate a consistent
pattern of the 'feminisation' of poverty in later life. However,
the contributors also look behind this broad generalisation to
demonstrate the differential impact of factors such as class and
ethnicity upon women's income levels in later life. It is clearly
inadequate to deal with 'older' women as a single, homogeneous
group. Rather we must develop a more sophisticated analysis to
incorporate issues such as class, age and ethnicity. Several authors
also consider the influence of 'cohorts' by considering the likely
pension situation for future generations of elders. Whilst future
cohorts may be less handicapped by 'caring' responsibilities,
changes in pension legislation is likely to have a differential
impact upon those who are employed part time or have interrupted
working careers. Overall this is an excellent book that is extremely
timely, highly policy relevant and well written and organised.
It should be of interest to many colleagues; especially those
concerned with issues of social policy, feminist studies and gerontology.
Christina Victor
Ethics and Social Security Reform,
edited by Erik Schoffaert (International Studies on Social Security,
vol 7, Aldershot: Ashgate). Hard Back £65.00 Order
this book.
This volume, published for the Foundation for International Studies
on Social Security has thirteen chapters ordered into three parts.
The idea of the volume is that ethics enters into social policy
in various ways. Most obviously it enters in the concepts and
definitions that guide the principles of social policy. Secondly,
ethical considerations are important for the political feasibility
of different forms of social policy. Thirdly, they enter into
our evaluation of the successes and failures of different social
policies.
The first part contains five essays. Schokkaert's essay suggests
social institutions can be evaluated in terms of positive and
negative liberty, though the former turns out to be welfare understood
as avoidance of poverty, and negative freedom turns out to be
personal responsibility and privacy. Westerhall's essay is a good
case study of how changing a social policy may bring about inconsistencies,
here with regard to the employed and unemployed in Swedish sickness
benefit. Burgess points out how refugees are treated so differently
in different countries raising questions about the natural scope
of equality. The importance of ethical issues in the framing of
problems is brought out in two essays on the measure of poverty.
The first essay is by Robert Haveman and Melissa Mullikin and
the second is by Jonathan Bradshaw. There are a number of different
ways of measuring poverty and the choice of index will lead to
different measures of the level, the distribution and the trend
of poverty with obvious policy implications. As with Schokkaert,
Haveman and Mullikin favour Sen's capability approach though how
well they operationalize this concept is questionable. Bradshaw
discusses absolute poverty measures, though does not take enough
account of the relative wealth and moral expectations of different
nations.
The two essays in the second part deal adequately with moral expectations.
Saunders' and Pinyopusarerk's table (Table 2.1.4) shows that the
Australians they sampled have similar views about the state's
treatment of different categories of unemployed people, with about
a third thinking the state has got it about right, while one quarter
think the state does too much or not enough (the rest are 'don't
know's). The only categories that stand out are the older unemployed
(over 50) where few think the state does too much, and over half
think the state does too little; and migrants where only about
10% think the state does too little. The tables also show that
most people think that the unemployed should show they are looking
for work. The tables provides few surprises and the analysis in
terms of cultural theory categories does not add much.
The third part evaluates different institutional structures for
the provision of social policy. The six chapters in this part
are a rather mixed bunch of essays mostly considering social policies
and labour market participation. The first three concentrate on
the different incentives which are produced by different social
policy schemes. The best of them, and probably the best essay
in the collection, is by Barbara Wolfe, who discusses a scheme
in Wisconsin which attempts to reduce dependency by those receiving
state assistance. Providing work incentives for benefit recipients
while providing a safety net and high marginal rates of taxation
is problematic. She suggests that a complex strategy consisting
of a mix of health care, full employment practices, training,
loans and so on will best be able to overcome these problems.
But the reader is left with the impression that a careful analysis
(along the lines of her study of Wisconsin) of her own recommended
strategy if ever it were to be put into practice would reveal
a whole host of similar problems. Indeed, this impression is gained
for most of the recommendations of the writers in this part. Each
author analyses some current social policy and then thinks of
potential answers which may overcome particular problems; but
there seems little to assure the reader that other problems, not
considered by the would-be reformer, have been addressed properly.
The volume gains through being consciously theoretical whilst
examining practical policy problems, and gains through being comparative
across nations. The impression that is left, however, is that
whilst ethical attitudes are obviously important to the development
and implementation of social security, no-one in the volume, and
no nation in the world, has come to terms with different and competing
ethical demands. Either some demands must be left unsatisfied,
or more radical departures from the standard answers are required
which give basic security whilst allowing good market principles
and self-determining incentives to exist.
Keith Dowding
Mohibur Rahman, Guy Palmer and Peter Kenway,
Monitoring poverty and social exclusion 2001 (Joseph Rowntree
Foundation, 2001, ISBN 1 85935 069 0).Paper back. Order
this book
"This report provides updated statistics for 50 indicators
which between them portray the key features of poverty and social
exclusion today in Great Britain. Whilst income is the focus of
many of the indicators, they also cover a wide range of other
subjects including health, education, work, and engagement in
community activities. …. Each indicator is presented on a
single page, and comprises two graphs: one showing how the indicator
has changed over time and the other typically showing how the
indicator varies between different groups within the population"
(p.5).
The report lists improvements in education, in housing, and in
some aspects of health, but identifies continuing areas of concern,
many of which relate to income levels and inequalities. Particular
concern is expressed that children are more likely than adults
to live in low income households, and that two million children
live in workless households. "From a monitoring perspective,
the two key questions are first, whether the [Government's] initiatives
are collectively sufficient to address the scale and depth of
the problems over time and, second, how successful they are in
helping the more disadvantaged to catch up - or at least keep
up - with the rest of society" (p.8).
Of interest to readers of this journal will be the fact that the
number of people on means-tested benefits fell from 1995 to 1999
and then rose again in 2000 (with the replacement of Family Credit
with the means-tested Working Families Tax Credit in October 1999).
The executive summary misleadingly records a fall (an 'improvement')
in the number of people on means-tested benefits from 1999 to
2000. (It is only a fall if the tax credit is ignored).
What of course does not appear in reports such as this is the
percentage of families on Child Benefit because that is always
nearly 100%. Thus the beneficial effects which Child Benefit has
(e.g., disproportionately increasing low incomes and thus reducing
income inequality) are not give the recognition which they are
due. Maybe future editions could give some recognition to the
effect of Child Benefit on income inequality and to the way in
which it enhances the incomes of many low-paid families without
creating labour market disincentives.
The Joseph Rowntree Foundation is to be commended on this excellent
publication.
Viewpoint
Debunking weasel words: 'Targeting'
Governments often use words which have little or no meaning,
relying on the public to invest them with the meaning that they,
the public, wish them to have. Such a word is 'targeting'. The
current Labour Government has said that it "will target its
limited resources on those who need them most". Let's test
my hypothesis here. Write down what this statement means to you.
To a trusting citizen, who assumes that the Government will carry
out its responsibility to the less fortunate in society, he or
she might interpret this statement to mean that whilst the Government
reluctantly is unable to institute a basic income for everyone,
it will make sure that poverty is eradicated, or at least that
those most at risk of poverty are relieved of their condition.
So, what is promised in such a statement? Let us look at the verb
'to target' first of all. This means 'to label something to be
aimed at'. What is the criterion for those who need it most? Might
it be their costs of disablement? On the other hand, women and
children are another obvious group at risk of poverty, and increasing
child benefit would be a welcome cure, but that has not been hinted
at. The statement does not say how large this target will be.
The Government has not committed itself to all of those in need,
merely "those who need it most". How many? Will it be
3,000 people, or 30,000, or 3,000,000?
What will the Government do for those who have been identified
as those who need the resources most? Will it ensure that they
are lifted out of their state of neediness? The Government's statement
does not make any such promise. And finally, what of those who
fall just outside the definition? They too are in a state of neediness.
Will their needs be met? Again, there is no such promise. In fact,
the record of recent governments does not give one much hope of
help for them, since governments have on occasion required the
less poor to pay for the relief of those in greatest need. So
much for 'targeting' - an empty phrase. So, next time you hear
a Government minister, or a senior civil servant, claim that they
are targeting the resources on those who need them most, make
sure that you ask them, a) what criterion is being used to identify
those who need it most, b) how many will be targeted, c) how much
will be done for those so labelled - will they be relieved of
their neediness? d) what will be done for those who fall just
outside the criterion, but who also are in need? Make sure that
you get a written answer.
Anne Miller
|
