|
Editorial
These
are interesting times for debate on the reform of the tax
and benefits system.
By
the time you read this Newsletter the Government's
consultation period on the future of the state pension will
have ended and we shall be awaiting the outcome. In our
submission (reprinted below) we commented on the second
option for reform floated in the consultation paper: a single-tier
flat rate pension based on the pensioner's contribution
record. We wrote:
The
second option without a contribution record condition
would meet the principles of simplicity and personal responsibility.
It would be fair in the sense that every individual would
be treated in the same way. Those few people who might
be thought not to have contributed to society would in
any case be receiving a means-tested pension under the
current system, so there would be little if any additional
cost to including them in a new single tier State pension.
Another
of today's political themes continues to be the Big Society,
and in this edition Bill Jordan asks important questions
about its character and asks how advocates of a Citizen's
Income should relate to some of the ways in which our society
might evolve.
Frequently
in the news is the future of the National Health Service.
Health policy is not a field normally discussed in these
pages. However, the National Health Service is a universal
benefit: unconditional, nonwithdrawable, and a right of
citizenship. We would welcome discussion on how the debate
on the future of the health service and the debate on the
future of the tax and benefits system might inform each
other.
Main
articles
The
Citizen's Income Trust's response to the Department for
Work and Pensions' consultation paper A State Pension
for the 21st Century, April 2011, Cm
8053.
The
Government has published a consultation paper on the reform
of the State pension system, and the Citizen's Income Trust
has submitted a response.
The
consultation paper can be read at www.dwp.gov.uk/state-pension-21st-century
Here
we print excerpts from the report (in italics), the consultation
questions (in bold type), and our responses to those questions
(in plain type).
Guiding
principles. In terms of pension reform, we have four
clear guiding principles:
- personal
responsibility - enabling individuals to take responsibility
for meeting their retirement aspirations in the context
of increased longevity;
- fairness
- ensuring an adequate level of support for the most vulnerable,
ensuring everyone with a full contribution record should
be entitled to a state pension above the standard level
of means tested support 1, and ensuring
all groups are treated fairly;
- simplicity
- simplifying the state pension so that it is easier for
people to plan and save for their retirement; and
- affordability
and sustainability - given longer-term pressures on the
public finances, any state pension reform must be affordable.
Any options for reform must be cost neutral in each and
every year to avoid placing an unsustainable burden on
future taxpayers. Any proposals will be subject to confirmation,
including on affordability, and will reflect the projections
set out in the Office for Budget Responsibility's forthcoming
Fiscal Sustainability Report. In addition, changes to
State Pension age should ensure the system is sustainable
for future generations (p.5).
Question
1
Would
the current state pension, if left unchanged, meet the Government's
principles for reform and provide an effective foundation
for saving?
A
substantially means-tested system doesn't encourage people
to take responsibility for retirement income because it
makes it difficult to predict the effect of savings on net
income in retirement.
The
current system is not fair, in the sense that different
people receive different and often unpredictable amounts
from the State. It is surely not fair that someone with
a full employment record who saves small amounts during
their working life and pays some of their earned income
into an occupational pension scheme should receive less
from the State for the duration of their retirement than
someone else with a full employment record and the same
earned income and household structure who hasn't saved any
of their income and who hasn't paid some of their income
into an occupational pension scheme.
The
current system is far from simple, mainly because of the
too complex means-tested Pension Credit, with its two separately
regulated elements of Guarantee Credit and Savings Credit.
The
current system could be made affordable and sustainable,
but only at the expense of more recipients being brought
into the means-tested elements.
Options
for reform
Option
1: Faster flat-rating
The
Government believes it is necessary to reform the state
pension for future pensioners so that it provides a better
foundation for saving. This paper seeks views on two broad
options for reform to deliver a simple, flat-rate contributory
state pension that lifts the majority of future pensioners
above the standard means-test:
-
Option 1: acceleration of existing reforms so that the
state pension evolves into a two-tier flat-rate structure
more quickly; or
- Option
2: more radical reform to a single-tier flat-rate pension
set above the level of the Pension Credit standard minimum
guarantee.
Chapter
2 sets out these options in greater detail and assesses
each option against the Government's principles for reform.
Option
1: Faster flat rating
Currently
the basic State Pension is a flat-rate payment worth £97.65
a week and the State Second Pension is partly flat rate
and partly linked to earnings, such that higher earners
receive a higher state pension. Option one would accelerate
the pace of existing reforms so that the State Second Pension
would became flat rate by 2020 instead of the early 2030's.
This would give people a clearer idea of the state pension
they would get in retirement as they would receive a set
amount of pension for each qualifying year. At the end of
transition, all those with a full contribution record, for
example 30 qualifying years, would build up the same state
pension, currently estimated at around £140 a week,
albeit through two tiers.
It
would be possible to go further by ensuring all earners
built up the same pension, better aligning the detailed
rules of entitlement between the basic State Pension and
State Second Pension, and using the same uprating for the
two pensions when in payment. This would further simplify
the system and increase the number of people receiving the
full pension. The precise value of this combined, flat-rate
pension would need to be set at a level that met the affordability
principle. Under Option 1 contracting out would continue
for members of Defined Benefit schemes (p.7)
Question
2
To
what extent would faster flat rating meet the principles
for reform and improve savings incentives?
This
option envisages consolidating the calculations of State
Basic and Second Pensions and reducing the differences between
them, and also envisages reducing the length of the period
during which the earnings-related component of State Second
Pension will be phased out.
These
and other minor adaptations of the State pension system
would reduce slightly the uncertainty related to the impact
of savings and private and occupational pension provision
on net income during retirement. However, they would not
by themselves reduce complexity, and thus would not encourage
personal responsibility or promote greater fairness. They
would not deliver a simple system. It would of course be
possible to determine pension levels which could make the
system affordable and sustainable, but reductions necessary
to achieve this would propel more people into the means-tested
safety net. To retain two levels of State Pension in a context
of means-testing makes simplification impossible unless
the rules of the two levels were to converge to agreement
and the pensions were large enough to avoid recipients requiring
Pension Credit.
Question
3
What
further reforms might be required to the State Second Pension,
such as crediting arrangements and uprating of pensions
in payment, to better meet the Government's principles,
recognising that there is a trade-off between coverage and
the potential level of any combined, two-tier flat-rate
pension?
In
the cause of simplicity, the State Second Pension regulations
should converge towards those of the State Basic Pension.
Option
2: a single-tier state pension. Option 2 would be a
more radical approach to state pension reform, combining
basic State Pension and State Second Pension into one single-tier
state pension. Future pensioners with at least 30 qualifying
years would receive the same flat-rate pension currently
estimated at £140 a week - with this payment being
set above the basic level of support provided by Pension
Credit.
Under
this option, contracting out for Defined Benefit schemes
would end. In itself, this could ultimately bring simplification
of the personal tax system. The complexity associated with
contracting out would, however, continue during transition
to the single-tier pension (p.8).
Question
4
To
what extent would a single-tier pension meet the Government's
principles for reform and improve savings incentives?
In
the longer term, the principles for reform would be more
clearly met by Option 2 than with Option 1. The system would
be simpler, and individuals would be treated more fairly.
The option would make net income in retirement more predictable
for given levels of saving and of occupational and private
pensions, and so would encourage personal responsibility.
Far
fewer individuals would be in the means-tested part of the
system so many more people would reap the full benefit of
their savings and occupational and private pension provision.
This would be much fairer than the present system.
In
the short term, transitional arrangements might create unfair
outcomes; but short term problems are no reason for rejecting
a scheme which would provide long term improvement.
Automatic
enrolment into employer pension schemes: While we are
living longer fewer are saving for their retirement. Overall,
between 1997 and 2010 the number of jobs in the private
sector with any employer sponsored pension provision declined
from 46 per cent to 36 per cent 2.
The Government is introducing automatic enrolment into workplace
pension schemes from 2012 to tackle undersaving (p.8).
Question
5
Which
of these two options would act as the best complement for
automatic enrolment?
The
fact that contracting out will cease and that only thirty
years of contributions will be taken into account under
the second option makes automatic enrolment important, particularly
for shorter or interrupted working lives.
State
Second Pension was posited on the basis of lack of voluntary
enrolment in occupational pensions, so its rationale would
be diminished by automatic enrolment.
It
therefore appears that the second option is the better fit
with automatic enrolment.
Question
6
Government
would be interested in hearing views on other reform options
that would meet the Government's principles for reform.
The
second option without a contribution record condition would
meet the principles of simplicity and personal responsibility.
It would be fair in the sense that every individual would
be treated in the same way. Those few people who might be
thought not to have contributed to society would in any
case be receiving a means-tested pension under the current
system, so there would be little if any additional cost
to including them in a new single tier State pension. Even
if the cost of the single tier pension were to be raised
by abolishing the contribution record condition, the additional
cost would be small and would be offset by administrative
savings as contribution records would no longer be required
(provided that other contributory benefits received the
same treatment).
For
65 years New Zealand has paid a flat-rate and non-withdrawable
Citizen's Pension to everyone aged 65 or over who satisfies
a residency requirement, so there would be a working model
from which to learn if our own Government ever decided to
establish such a Citizen's Pension in the UK.
3
The
next logical step would be to combine National Insurance
Contributions with Income Tax: a process that has already
begun with the recent Government announcement of the convergence
of their regulations and administrations.
It
is important that everyone is protected from poverty in
old age by an adequate state pension. A further question
is whether the state should subsidise, by tax reliefs or
other tax expenditures, the contributions to occupational
and personal pensions of those with earnings and with aspirations
for a higher standard of living in their retirement than
that provided by the State Pension.
Ending
contracting out: Where individuals are contracted out
of the State Second Pension they and their employers receive
a rebate on their National Insurance contributions to reflect
the fact they are building up less state pension entitlement.
Schemes are obliged to either invest the rebate directly
into the scheme on members' behalf (in Defined Contribution
schemes 4) or provide members with
a minimum level of benefits as set out in legislation for
Defined Benefit schemes. The purpose of the contracting-out
rebate is, in effect, to compensate members for the additional
state pension they have given up.
This
chapter has set out two options for state pension reform.
Under option 1 (faster flat-rating), contracting out would
continue, although the value of the rebate would fall over
time. Under option 2 (single tier) contracting out for Defined
Benefit schemes would end completely (p.28).
Question
7
What
would be the impact of ending contracting out, as implied
by any single-tier model?
Under
pressure from lower investment returns and increasing longevity,
Defined Benefit Schemes are becoming less sustainable and
less generous, causing pension fund trustees to close the
schemes to new entrants, reduce the level of pensions paid,
and increase the number of years of contributions required
to earn a full pension. There is therefore a trend towards
employers contracting back into the State Second Pension.
This suggests that the ending of contracting out for Defined
Benefit Schemes would not be unwelcome, provided the single
tier pension remains of sufficient value.
If
contracting out were to end, the accrued benefits would
need to be taken into account when an individual's pension
is calculated: so that any impact of the change would be
slow.
It
would be helpful if all contracting out were to end.
To separate private, occupational and State pensions clearly
from each other would inject greater simplicity and comprehensibility
into a currently complex system.
Question
8
If
the decision is taken to end contracting out, how could
the process be best managed so as to minimise any adverse
impacts on employers and individuals?
Provided
sufficient time is given to enable employers and employees
to prepare for the change, a switch to higher National Insurance
Contributions, and presumably lower occupational pension
contributions, should not be difficult to manage. What people
will expect is a realistic level of State pension,
and this they should receive under the single tier pension.
The
fewer complexities there are in the system, the more individuals
will put their financial resources and other assets aside
for retirement, and the more they will pay into private
and occupational pension schemes, so long as they believe
that the stock markets will provide reliable returns.
Whilst
transitional periods can be difficult, they are worth the
trouble if the new scheme will be beneficial in the longer
term, and it is clear that it is possible to get from the
current income maintenance system to the new one. These
conditions are fulfilled in the case of the consultation
paper's second option, so management of the transition should
not be too difficult.
Means-tested
Pension Credit: Under each of these proposals the Government
will, in due course, give consideration to whether reforms
are needed to the current system of means-tested support
to ensure that this part of the system delivers on the principles
for reform. Just as we have taken steps to rationalise the
welfare system to ensure that work pays through introduction
of the Universal Credit, we need to ensure that it pays
to save for retirement and that complexities in the current
system are reduced where possible (pp.8-9).
Question
9
In
conjunction with the reforms outlined [above] are there
ways we can change the means-testing system for future pensioners
to make it more simple, reduce disincentives and encourage
personal responsibility while continuing to help pensioners
avoid poverty?
The
more individuals there are on the new single flat rate pension,
the smaller will be the number on means-tested benefits.
A new genuinely universal single pension would remove the
need for a means-tested supplement altogether. The vast
majority of those not on the full flat rate pension would
end up being paid by the State a total income not very far
below the level of the State single tier pension. The flat
rate pension paid to everyone would not require much additional
expenditure and would allow the whole means-tested pension
system to be dismantled. One result would be a considerable
saving in administrative costs.
The
whole system would then be simpler, disincentives would
be reduced to zero (in relation to the State single tier
pension), and everybody would be encouraged to save for
their retirement. Pensioner poverty would be considerably
reduced.
(Different
housing costs in different regions will of course continue
to pose a problem, as they do for any income maintenance
system; but this particular complexity should continue to
be dealt with separately, and no discussion of this problem
should be permitted to confuse the important consultation
now taking place on the right structure for the State Pension.)
State
Pension Age: The State Pension age plays an important
role in ensuring that the state pension remains sustainable
and affordable - one of the key principles for future pension
reform. The Government has acted quickly to take recent
increases in life expectancy into account by setting out
proposals to increase the State Pension age to 66 by April
2020.
But
these increases in longevity will not end in 2020 and it
is only fair that those generations who will benefit from
these increases share in the costs. Not to do so would be
unfair on the people of working age who would need to bear
the burden of this increased longevity. In addition, there
are important benefits to the economy and individuals from
working longer.
The
Government must continue to consider the State Pension age,
and the question now is how to build into a future state
pensions system a more automatic mechanism for ensuring
further revisions in life expectancy are taken into account
in a way that is timely and transparent.
The
two options are:
- Increasing
the State Pension age through a formula linked to life
expectancy.
- Increasing
the State Pension age through a review.
Question
10
What
mechanism should be used to determine future increases in
State Pension age?
We
would rather study the question: Should there be a State
Pension age?
As
longevity increases, it will be important to provide incentives
to defer the receipt of occupational and private pensions.
A seamless income maintenance architecture would be helpful
in this respect. We therefore suggest that a useful mechanism
for encouraging people to earn income for longer, and thus
to delay until later in life the receipt of their occupational
and private pensions, would be a Citizen's Income: an unconditional,
nonwithdrawable income for every citizen, paid for by reducing
tax allowances and contributory and other benefits. Such
a Citizen's Income could rise as individuals pass age thresholds,
but it would otherwise remain of the same structure from
young adulthood to old age. The concept of 'retirement'
would largely disappear as individuals chose their own income
maintenance strategy, reducing earned income and taking
private and occupational pensions as best suited them.
A
transitional phase could be a 'mature worker's income' for
the over 50s, paid for by a reduction in tax allowances
and other benefits, with regulations to match those of the
State single tier pension. 'Retirement' would become far
more flexible an experience, to the benefit of employers,
the economy, and individual workers.
With
this scenario the concept of 'State Pension age' would disappear.
Question
11
How
should the Government respond to the frequent revisions
in life expectancy projections while giving individuals
sufficient time to prepare?
See
the answer to question 10.
The
Citizen's Income Trust's additional comments
a)
It is understood, although not explicit in the consultation
paper, that the newly structured pension will only be paid
to those who reach state pension age at or after its implementation
date, reported to be 2015 or 2016. We recognise that the
new pension scheme has to be cost neutral and cannot therefore
include all existing pensioners from the start, so that
a contribution-based, means-tested system will have to continue
in parallel for a long time. With rising life expectancy
this could extend many decades into the future. We propose
that at the inception of the new pension structure every
legal resident over 100 should immediately be eligible and
that existing pensioners should become eligible on reaching
the age of 100. This would mean that two parallel pension
schemes might continue until about 2050 but we would expect
that considerably earlier than this a future government
would decide that everyone should be brought within the
scope of the new scheme in order to eliminate the cost of
having to administer the existing scheme for a minority
as well.
b)
Option 2 for a single tiered pension makes a considerable
advance towards a Citizen's Pension paid at the same rate
to all legal residents of a qualifying age, and it is welcome
that lesser amounts are no longer paid to couples than to
two single people. However, it still depends on National
Insurance contributions having been paid or credited for
a minimum of 30 years. It is appropriate that this should
be one way of establishing legal residence and that those
who have worked in this country illegally and have not paid
income tax or NI contributions should be excluded from entitlement
to the State Pension, but other evidence of legal residence,
such as inclusion in the electoral register, should be considered
when determining eligibility.
Those
most likely to be excluded are married women who have not
worked, been unemployed or disabled, or had caring responsibilities
for long enough and who currently rely on receiving Category
B pensions based on their husbands' contributions. There
will also need to be regulations for legal immigrants from
other countries who have not been in the UK as long as 30
years. If the UK has a reciprocal arrangement with their
country of origin then they should be paid the new pension
in full. If not, they should be paid pro rata and be expected
to enhance that by claiming the pension to which they became
entitled before leaving their country of origin.
c)
People should be able to defer the single tier pension and
receive it later at a higher rate, as they can now for the
basic state pension. If a Citizen's Pension were to be implemented,
then the same could apply. If a Citizen's Income for all
adults were to be implemented then such provision would
no longer be appropriate or required.
We
would be pleased to receive correspondence relating to our
response to the Government's consultation paper
Notes:
1.
This is defined as the level of income provided by the Pension
Credit standard minimum income guarantee which in 2010-11
tops up pensioners' income to £132.60 a week.
2.
Office for National Statistics, (2010) The Annual Survey
of Hours and Earnings 2010. ONS.
3.
www.treasury.govt.nz/publications/research-policy/wp/2004/04-22/05.htm;
www.pensionspolicyinstitute.org.uk/uploadeddocuments/PPI_CP_Introduction_Oct04.pdf
4.
Under Pensions Act 2007, contracting out for Defined Contribution
schemes end in 2012
The
Big Society and Citizen's Income
by
Bill Jordan
Is
it a cloak for revitalised Thatcherism or a genuine transfer
of power to the people? Wrong question; the Big Society
is the domestic counterpart and complement to the coalition
government's attempt to maintain the UK's position in global
capitalism. In this article, I shall argue that advocates
of CI should address the strategy adopted by this government
as a dual one, which distinguishes between those parts of
the economy that trade in global markets, and those (in
which most citizens get their work and income) that do not.
The Big Society is a plan to transform the latter, which
might be enabled by CI; but this would have to be funded
mainly from the activities of the former.
The
Big Society was conceived as a response to New Labour's
programme for a top-down transformation of UK economy and
society, according to a blueprint derived from the theory
of information, incentives, and contracts (Jordan, 2010).
Every institution, from the Bank of England and the Financial
Services Authority to the regional government agencies,
the strategic partnerships and the public services, was
redesigned on this model (favoured by the World Bank), with
detailed prescriptions for policy, inspection, management
and practice. It was a rational, abstract, elitist project,
in the Fabian tradition, which paid scant attention to the
cultures or traditions of communities or even professions.
It relied on compliance and checklists, not loyalty, solidarity
or commitments; it undermined civil society and the basis
in active engagement of democratic politics.
The
Conservative response, first expressed in speeches by David
Cameron, emphasised the need to revive collective life,
associations and communities, and the significance of research
on well-being. He insisted that relationships were, along
with health and job satisfaction, the most important constituents
of individual happiness. His themes included the weakening
in family and neighbourhood bonds, and the evils of excessive
individualism (Cameron, 2009, 2010).
So
the Big Society idea evolved as an attack on those features
of the New Labour programme which were most obviously derived
from Thatcherism. These included the idea that citizenship
was a contract between the state and the individual requiring
the latter to be an independent, self-reliant, property-owning,
credit-card carrier who turned to the banks, not to neighbours
or a wider community, for all his or her needs (DSS, 1998,
p. 80).
But
the other main theme of the Conservative strategy was 'Broken
Britain' - the claim that part of the population had become
structurally detached from the mainstream, and lacked the
opportunities, links and incentives to rejoin it. Here the
Conservatives relied mainly on the work of the Centre for
Social Justice, whose lengthy reports under that title (CSJ,
2006) documented the social problems concentrated in districts
with the highest levels of deprivation. The Broken Britain
theme found its way into the party manifesto of May, 2010,
alongside the Big Society one (Conservative Party, 2010,
pp27, 37).
It
surprised many commentators that these ideas played such
a large part in that campaign; they did not go down particularly
well with voters. But in retrospect, it now seems clear
that this was a necessary balance to the inevitable fiscal
austerity which was to follow from a victory at the polls.
In government, the Conservatives were to need some positive
proposals to offset the savage cuts in public spending,
and a new version of that part of the economy which had,
especially in peripheral, less dynamic regions, come to
rely on New Labour's multiplicity of state agencies and
initiatives.
The
first priority of the coalition was clearly to reassure
the bond markets of its earnest intention to bring down
the government deficit, and thus to avoid the fate of Iceland,
Greece, Ireland and Portugal. Keeping the bondholder wolf
from the door meant guaranteeing the profitability of the
City, ensuring that the one 'world class' sector in the
UK would continue to thrive during the uphill struggle to
'rebalance' the economy by boosting manufacturing industry.
George Osborne became the finance-friendly face of the government,
concerned with the globally-traded part of UK plc; Cameron,
Maude, Letwin and others were left to preach the Big Society
gospel to those whose real incomes were declining as they
faced higher taxes and higher prices.
This
was the background to the welfare reform package presented
to Parliament in November 2010 by Iain Duncan Smith, so
comprehensively analysed by Annie Miller in January's CI
Newsletter. This was a watered-down version of the CSJ's
scheme for partial tax-benefit integration, Dynamic Benefits:
Towards Welfare that Works (2009); that set of proposals
relied on improved incentives for marriage, saving and employment.
The eventual legislation embodied benefits cuts and an increase
in conditionality and coercion, against a background of
rising unemployment. What price progress towards CI in this
kind of Big Society?
The
element of the CSJ proposal which was retained in the modified
reform was the integration of the tax-benefits system at
the lowest level of earnings. Because the diagnosis of Broken
Britain put heavy emphasis on the interactions between benefits
withdrawal and the impact of income tax at these levels
as barriers to labour-market participation, this feature
survived. The effect will be to allow a higher disregard
of earnings for those doing a few hours of paid work, and
an even rate of deductions from pay packets for employment
up to 16 hours a week.
This
was a step in the direction proposed by Hermione Parker
in her 1989 book Instead of the Dole. Even though
the reformed system retains the household basis of eligibility
assessment, and is strongly reinforced by medical tests
on claimants of incapacity benefit and programmes for pushing
unemployed people into whatever work or training is available,
it is difficult to see how a move in the direction of CI
could be started without this shift. Together with the plans
for consolidating state retirement benefits into universal,
equal citizens' pensions for all, the implication is that
National Insurance principles are being set aside in favour
of a new form of income guarantee.
The
question is whether the Big Society in turn points towards
a change in economic and social relations which is compatible
with a gradually less conditional implementation of the
scheme - with steps, for instance, via the 'participation
income' approach anticipated by Atkinson (1995) towards
a CI. Will the new network of co-operatives, mutuals and
social enterprises envisaged by its architects rely on Serco
and other outsourcing company conscripts for its workforce?
Will the active citizens who participate in neighbourhood
schemes for conservation and social care be volunteers,
or claimants on 'work readiness' programmes? And will the
cure for Broken Britain actually involve the creation of
whole districts whose austere economies and communal social
forms exist in parallel with more glittering cosmopolitan
ones that share in global prosperity?
Obviously
there can be no definitive answers to these questions, and
the outcome will depend on the balance of political forces
in the coalition. Critics of the whole Big Society concept
insist that it can never become a viable model of how a
modern industrial state is organised. But CI advocates must
also ask ourselves which other feasible scenario of the
future might now be expected to deliver the vision of an
unconditional subsistence income for every citizen.
For
the past 40 years, the case for CI has primarily been framed
in terms of a progressive political project, in which the
scheme would supply the basis for equality, freedom and
security within an overall context of social justice. The
best known texts in justification of the principle, such
as James Meade's Agathotopia (1988) and Philippe
Van Parijs' Real Freedom for All (1995) relied on
allegory or counterfactual fancy to construct imaginary
societies, in which CIs for all allowed relationships of
moral rectitude. The assumption behind their analyses was
that benevolent political processes would enable a rational
(if not consensual) progress towards a more harmonious social
order.
Now
there seems little likelihood of such a pathway, because
global capitalist development has cast the most advanced
economies as centres of finance, research and technological
innovation which require but few highly-specialised workers,
and leave the majority of their populations to supply services
for each other and themselves. The question becomes one
of how the prosperous, mobile minority who are plugged into
the global marketplace can be persuaded to fund the activities
of a majority who are not.
Some,
like the German theorist Dirk Sloterdijk (2009), think that
they can be flattered into a new form of nineteenth century
philanthropy; the super-rich might be honoured with various
kinds of charitable institution bearing their names. But
the leading intellectual behind the whole Big Society project,
Phillip Blond (2010), argues for a government-led programme
for redistributing property and assets (such as the taxpayers'
stake in the nationalised banks, along with other corporate
and state resources) that would allow enterprises and income
streams to be generated at the local level.
In
this, Blond harks back not only to the Toryism of Cobbett,
Carlyle and Disraeli, but also to the Liberal Distributism
of Hilaire Belloc and G. K. Chesterton. In the first decades
of the twentieth century, they campaigned against Lloyd
George's embryonic National Insurance scheme; Belloc's The
Servile State (1912) was a polemical attack on the principle
of making income security conditional on citizens' willingness
to offer their labour power to commercial and manufacturing
employers. In this context, Blond refers approvingly to
Samuel Brittan's (1995) scheme for CI, although he does
not develop the point (Blond, 2010, p. 32).
So
Blond's version of the project involves a political balancing
act between policies which allow the internationally competitive
parts of the economy to thrive, while sustaining local banks,
building societies, shops, co-operatives, mutual societies
and a wide range of community groups and social enterprises.
At the same time, the public services would be devolved
to staff co-operatives and service user groups, with accountability
to an engaged community of active citizens.
All
this implies that the battle lines are being drawn up between
those who still adhere to the Third Way project - the state
as rational central designer of a public infrastructure
which functions like a machine, running on the rational
self-interest of individual citizens and the inducements,
penalties and nudges of the official order - and those who
subscribe to a more organic set of patterns, 'uneven and
lumpy', as Francis Maude (2011) has described it, responding
to local conditions and creating particular niches, homespun
and idiosyncratic rather than standardised and streamlined,
and running on collective action.
Advocates
of CI have perhaps unconsciously associated the idea with
the former type of project, more Sweden than Spain or Italy.
But globalisation itself, as much as the Big Society programme,
challenges the assumptions on which this bias has been founded.
There has, after all, been little evidence that social democrats
incline towards the CI principle, and the rejection of state-led
programmes all over Europe, even during an economic crisis,
should give us pause. Now Ed Miliband is rethinking Labour's
strategy in the face of working-class disillusion; Blond's
Red Tory message is being answered by the Blue Labour communitarianism
of Maurice (now Lord) Glasman and Marc Stears (BBC Radio
4, 2011). Maybe we should keep an open mind about the Big
Society.
References
Atkinson,
A.B. (1995), Public Economics in Action: The Basic Income/Flat
Tax Proposal, Oxford: Clarendon Press.
BBC
Radio 4 (2011), 'Blue Labour', Analysis, 21 March
Belloc,
H. (1912), The Servile State, London: T. N. Foulis
Blond,
P. (2010), Red Tory: How the Left and the Right Broke
Britain and How We Can Fix It, London: Faber and Faber.
Brittan,
S. (1995), Capitalism with a Human Face, Aldershot:
Edward Elgar.
Cameron,
D. (2009), 'The Good Society', Hugo Young Memorial Lecture,
London, 10 November
Cameron,
D. (2010), 'Labour are now the Reactionaries, We are the
Radicals - as this Promise Shows', The Guardian,
9 April
Conservative
Party (2010), Invitation to Join the Government of Britain
(Election Manifesto), London: The Conservative Party
Centre
for Social Justice (CSJ) (2006), Broken Britain (6
volumes), London: CSJ.
Centre
for Social Justice (CSJ) (2009), Dynamic Benefits: Towards
Welfare that Works, London: CSJ
DSS
(1998), A New Contract for Welfare, Cm3505, London:
Stationery Office
Jordan,
B. (2010), Why the Third Way Failed: Economics, Morality
and the Origins of the 'Big Society', Bristol: Policy
Press
Maude,
F. (2011), Interview on BBC Radio 4, PM, 12 January
Parker,
H. (1989), Instead of the Dole: An Inquiry into the Integration
of Tax and Benefit System, London: Routledge
Sloterdijk,
D. (2009), 'Die Revolution der gebende Hand', Frankfurter
Allgemeine, 13 June.
News
On
the 9th March the Financial Times reported that Hong
Kong has paid HK$6,000 (about £470) to every resident.
The recent Hong Kong budget has led to local anger that
the Government's large surplus has not been spent on better
public services or on cleaning up Hong Kong's pollution.
The article, which can be found at http://www.ft.com/cms/s/0/2731d5f0-4a87-11e0-82ab-00144feab49a.html#axzz1G6BE9mSn,
suggests that in a fiscal context experienced as inequitable,
undemocratic, and unjust, a small Citizen's Income might
be caught up in feelings generated by the wider context.
At
its Spring conference, the Green Party reaffirmed
its commitment to a Citizen's Income. Alex Ramsay writes:
'Citizens' Income is a proposed system where benefits would
be paid as one lump sum to every citizen, and then taxed
back progressively from people as they earn - ensuring that
no one lived in cash poverty. The motion was supported by
Clive Lord and … Alex Wood, and effectively opposed
by Caroline Lucas MP and Darren Johnson AM. Despite two
prominent opponents arguing that the policy is currently
unaffordable, Alex won the day, by arguing for higher taxes
on the wealthiest. For me, you can tell a party is truly
democratic when its most prominent members can be defeated
by those using the quality of their argument alone.' (http://brightgreenscotland.org/index.php/2011/02/green-conference-monetary-reform-and-citizens-income/)
Pro-BI
book becomes best-seller in Germany (part II), by Conall
Boyle
In
an article in the last CI Newsletter we reproduced the first
part of a review by Johannes Richardt of a best-selling
pro-Basic Income book in German 1.000 Euro für Jeden:
Freiheit. Gleichheit. Grundeinkommen, by Götz W
Werner and Adrienne Goehler. That was a purely factual review
of the book's contents. Richardt then went on to rubbish
the idea, and the whole notion of Basic Income. The following
are some of the points he makes: (I cannot help adding a
few comments of my own.)
His
ideal is an '... emancipatory social state that would not
rely on government intervention into the private lives of
its citizens. It would take people seriously as autonomous
citizens and provide material security only for the needy.
It would provide the best medical care, quality education
and child care available for those who call on it. And it
would provide cheap energy, excellent infrastructure and
investment in science and research.'
Basic
Income by contrast exhibits the 'abandonment of any aspiration
toward full employment' (where having a job, presumably,
represents for Richardt the highest emancipatory role of
the autonomous citizen?) More jobs are needed because 'humans
have consistently developed new needs that in turn have
demanded rising levels of production.' (To equate human
needs with a requirement for more (undifferentiated) production
in the form of greater GDP is to fall into the economists'
trap. It also ignores the real human needs described
by Maslow and others.)
On
a different tack, BI is criticised as a worse form of dependency:
'Basic income undermines previous notions of welfare, which
assert that only the needy get help from society.... Autonomous
adult subjects are uniformly transformed into vulnerable
objects of state assistance.' (No differentiation here between
a help-up and a hand-out; the massive supports given to
farmers and bankers do not seem to turn them into 'vulnerable
objects'!)
And
it won't work anyway, he claims: '€1,000 a month is
not very much. ... basic income is only a higher form of
poverty.' (This is simply wrong. 'Happiness' studies in
countries around the world have shown that when GDP per
person reaches this level, subject well-being is maximised.)
This
is all glorious nostalgia! Perhaps Richardt dreams of a
better, nicer version of the DDR (the ex-East German Communist
state) so delightfully parodied in the film 'GoodBye Lenin'.
Such yearning for a better yesterday explains why BI is
such a dangerous concept to Richardt and other Marxists.
The danger is that BI really works and would create a better
life in the future for everyone in a post-industrial age!
You
can read the review in full at www.spiked-online.com/index.php/site/reviewofbooks_article/10136/
Reviews
Molly Scott Cato, Green Economics:
An Introduction to Theory, Policy and Practice,
Earthscan, 2010, xvi + 224 pp, pbk, 978-1-84407-571-3.
Molly
Scott-Cato, economics spokesperson for the Green Party and
lecturer at the Cardiff School of Management, has produced
an excellent introductory account of green economics.
Green Economics is not, as its author readily admits,
a monograph based entirely on new research or empirical
evidence, though it has that too. Instead, what Cato offers
is a summary of how Green economics as a field has developed
historically, and what it offers which other approaches
to economics often fail to take account of.
The
book opens with a short introduction in which Cato sketches
the key tenets of green economics. These include a desire
to expand what we understand as being the economic sphere;
a deep concern with social justice and equality; and a concern
to alter the ways in which economic relationships shape
our relationship to the environment. More generally, this
section also sees Cato advance her most succinct definition
of how green economics differs from conventional capitalist
economics:
In
the capitalist ideology it does not matter that economic
growth is destructive and does not increase human well-being;
it only matters that there is more money changing hands
in the global market. There is too much emphasis on standard
of living, usually measured in purely material terms,
and not enough on quality of life. For green economists
growth is the major problem, not only because it is usually
bought at the expense of the planet, but also because
it is actually reducing our quality of life (p. 9).
The
book itself is structured in 3 parts. The first sketches
the contours of green economic theory. Here, Cato fulfils
the valuable function of drawing together a diverse range
of work by a wide range of contemporary green economists,
including Mary Mellor, Derek Wall, James Robertson, Richard
Douthwaite and others. She also links this body of contemporary
work to both longer historical tendencies and wider, non-European
strains of thought. In part 2, Cato outlines a green economic
'vision for the future,' discussing important areas such
as work, money and business. Part 3, the longest and most
detailed section of the book, details a number of policies
for a green economy, and sets them within the wider context
of the policy environment as it presently stands.
Cato
offers a number of excellent ideas, including discussions
of the democratization of the money system, co-production
as an economic strategy, and the broader idea of a 'convivial
economy,' in which economic forces are structured around
human needs, rather than the other way around. Such ideas
press towards a justification of her argument that 'for
the majority of green economists, a sustainable economy
will not be a capitalist economy' (p 106). Within this vision
for an economic future, Cato gives central prominence to
the idea of a Citizen's Income. During a chapter on 'Green
welfare,' as well as during other stages in the text, Cato
sets out the crucial role which a Citizen's Income might
play in a green economy, and in doing so illustrates perfectly
how green economics involves altering conventional social
relations as well as our engagement with the environment.
Cato
argues that a Citizen's Income is important because of its
status as a universal benefit, payable to all. This she
supports as an effort to move away from the intrusive, means-tested
benefit system we currently have which both undermines 'a
green commitment to autonomy,' and creates social divisons
by 'sowing discord between those who are and are not eligible'.
Cato argues that a Citizen's Income might be funded in part
through a new system of taxation which would include the
taxation of 'common resources,' most importantly of land.
Cato
has provided an excellent synthesis of a broad range of
work and succeeds in establishing in outline what a green
economy might look like, and what steps might need to be
taken in order to move in this direction. That said, the
book also suffers from some problems which are also associated
with the broader field of green economics. For one, it sometimes
feels that there is an over-fetishisation of 'the local,'
in that this occasionally seems to be put forward as the
panacea for all our economic ills in contrast to the inequities
of globalization. Yet this formulation relies on a false
division between the local and the global, and also ignores
the fact that there is nothing inherent within them that
stops locally-based economies being just as uneven and unequal
as supposedly more 'global' ones.
Despite
this criticism, Green Economics offers important
ideas for anybody seeking a way beyond our current economic
impasse which will put the interests of the bulk of humanity
and the natural world ahead of those of a cabal of wealthy
individuals and corporations. As Cato so clearly demonstrates,
green economics is an emerging field within which there
remains room for considerable discussion and debate, and
it is high time that it came to be taken more seriously.
Daniel
Whittall
Guy
Standing, The Precariat: The new dangerous class,
Bloomsbury, 2011, ix + 198 pp, pbk, 1 849 66351 9, £19.99
In
the 1970s, a group of ideologically inspired economists
captured the ears and minds of politicians. The central
plank of their 'neo-liberal' model was that growth and
development depended on market competitiveness; everything
should be done to maximise competition and competitiveness,
and to allow market principles to permeate all aspects
of life.
One
theme was that countries should increase labour market
flexibility, which came to mean an agenda for transferring
risks and insecurity onto workers and their families.
The result has been the creation of a global 'precariat',
consisting of many millions around the world without an
anchor of stability. They are becoming a new dangerous
class. (p.1)
Standing
lists the many different levels of security available under
pre-1980s 'industrial citizenship', and compares them to
the insecurities experienced by the precariat: a new pattern
of existence which has now infected most occupational groups.
For all of them, 'labour is instrumental (to live), opportunistic
(taking what comes) and precarious (insecure)' (p.14). Anxiety,
alienation, and information overload, are some of the results.
Standing
discusses the reasons for the precariat's growth: a global
labour market, the weakening of social and trade union labour
market protections, individual and temporary contracts replacing
regulated permanent ones, and unemployment benefits becoming
more precarious so that they don't look more attractive
than precarious employment. When he asks 'Who enters the
precariat?' he finds that it can be any of us, from interns
to post-retirement age employees who, subsidized by small
pensions, deprive younger people of the employment they
need. Particularly welcome to mobile capital is ultra-precarious
migrant labour.
The
24/7 global market is changing our sense of time, and also
our understanding of 'work', which is now not only 'labour',
i.e., 'work having exchange value' (p.117), but 'work for
labour' (p.120), i.e., job-search and personal financial
management. Also now very different is our politics. A surveillance
society, an anxious precariat, and the collapse of political
engagement, have given us a commodified politics, with competitive
political parties advertising their wares to disengaged
voters. Successful promotion can turn the previous fringe
into the mainstream.
How,
in this situation, can we provide the sense of security
necessary for constructive functioning in flexible labour
markets and in a chaotic social environment? Standing's
well-argued response is 'universal provision'. As he has
shown in his second chapter, the recommodification of labour
(a shift from the reward for labour being diverse social
benefits to being entirely and simultaneously monetary)
is an inevitable result of temporary contracts (p.41). This
results in a loss of employment benefits: a particular problem
where healthcare is employment-based. The UK, with its healthcare
free at the point of use, is able to weather the change
to precarious labour contracts better than many other countries.
Standing could with profit have used this example to bolster
his already persuasive argument for a Citizen's Income (pp.171-3).
Standing
concludes with a plea that we take note of the precariat's
situation, because, if we don't, then its members will be
sucked even further into the orbit of extremist right wing
parties, where at least they find an outlet for their anger.
As he recognises, anxiety and freedom go together, and a
more precarious lifestyle is not necessarily worse than
one founded on a secure full-time job, and might offer possibilities
which that didn't. What we need is the basic securities
which will make precarious living a positive experience.
This
is an important book.
Hugh
Bochel (ed.), The Conservative Party and Social Policy,
Policy Press, 2011, vii + 326 pp, pbk, 1 847 42432 7, £23.99,
hbk, 1 847 42433 4, £65
New
Labour's social policy exhibited considerable continuities
with the previous Conservative administration's policy directions,
so the context within which the Conservative Party in opposition
formulated policy was a rather complex one. Hugh Bochel's
introductory chapter charts the rise of Iain Duncan Smith's
and David Willetts' 'compassionate Conservatism' and David
Cameron's concern to combat poverty, and he understands
Cameron's Conservatism as a variety of Thatcherism, as related
to One Nation Conservatism, as exhibiting continuities with
New Labour's 'Third Way', and, perhaps most significantly,
as pragmatic, complex, and dynamic.
Succeeding
chapters tackle particular policy areas. Robert Page concludes
that 'the degree of hostility or acceptance displayed towards
the welfare state at any particular point in time has tended
to be linked to fine calculations as to whether it was operating
in ways that bolstered or threatened deeply held Conservative
beliefs, such as freedom, responsibility, inequality, voluntarism
and the family' (p.39); Nick Ellison describes the party's
'historical scepticism towards public spending' (p.59);
Andrew Defty charts a hardening of public attitudes towards
benefits recipients; and Alan Deacon and Ruth Patrick find
significant continuity between New Labour and Conservative
welfare-to-work policies.
As
Stephen McKay and Karen Rowlingson show in their chapter
on social security benefits, this policy area also exhibits
considerable continuity. They point out that ministers in
the Coalition Government's Department of Work and Pensions
(DWP), Iain Duncan Smith, Chris Grayling, and Steve Webb,
all have relevant experience in the field, and all bring
the insights of a religious faith to bear on their interest
in benefits policy. We have seen changes to housing benefit
which will not relieve poverty, however much one might understand
the need to reduce employment disincentives; and we have
seen changes to uprating policy which will erode the value
of benefits: but we have also seen Iain Duncan Smith's proposal
for a Universal Credit to replace existing in work and out
of work means-tested benefits in such a way as to reduce
marginal deduction rates, and we have now seen Steve Webb's
proposals for a Citizen's Pension: an initiative which came
after this book was published. The relevant chapter's verdict
that 'there appears little different in policy between New
Labour and the Coalition' (p.157) in pensions policy is
no longer true; and Webb's proposals also cast doubt on
the authors' view that there is 'a general distrust of universalist
policies' (p.159). A particular political context at a national
party conference gave rise to the impractical suggestion
that households containing high earners should be deprived
of their Child Benefit, and there is in fact no sign of
a thought-through policy on universal benefits. The fact
that a coalition government is bound to be more pragmatic
than a government formed by a single party, and the fact
that the Liberal Democrats are the Conservatives' partner
in government, suggests that we shall increasingly see policy
evaluated in relation to whether it will solve identifiable
problems rather than in relation to ideological positions:
hence a Citizen's Pension to remove disincentives to save
for old age.
In
two or three years' time it will be interesting to look
again at this book's chapters on different policy areas
and ask whether the trajectories suggested have proved to
be the directions in which policy has gone, and in particular
to see whether the pragmatic or the ideological has taken
centre stage, or whether they have achieved a pragmatic
balance. It will be particularly interesting to see whether
the pragmatism of coalition has retained Child Benefit as
a universal benefit, has seen a Citizen's Pension enacted,
and has prompted work on an unconditional benefit for working
age adults.
Alan
Walker, Adrian Sinfield and Carol Walker (eds), Fighting
Poverty, Inequality and Injustice: A manifesto inspired
by Peter Townsend, Polity Press, 2011, xiii +
312 pp, pbk, 1 847 42714 4, £21.99, hbk, 1 847 42715
1, £65
Peter
Townsend died in 2009, having done more than anyone else
during the second half of the twentieth century to research
the extent and causes of poverty, to campaign for social
justice, and to teach others to do the same.
This
book is inspired by Townsend's writings and activities,
the breadth of which the first two chapters well represent.
He researched in numerous social policy fields, taught students,
headed university departments (and founded one), advised
governments, and campaigned, both locally, in Colchester,
and nationally (mainly with the Child Poverty Action Group),
and latterly internationally as well. His The Poor and
the Poorest (with Brian Abel-Smith) in 1965 and his
massive Poverty in the United Kingdom, published
in 1979, ensured that during the 1970s and 80s no-one could
claim that they didn't know the extent of poverty in this
country.
The
rest of the book surveys Townsend's contributions in a variety
of policy fields, and asks what action we should be taking
today. Here we shall review those chapters which study his
work on income maintenance.
Tony
Atkinson relates Townsend's contribution to the campaign
for Child Benefit during the early 1970s, and his continuing
opposition to income testing. Atkinson details his own preference
for 'generous universal benefits to families with children'
(p.83) and his reasons for continuing the campaign against
means-testing. 'A renewed commitment to Child Benefit by
a future government would be a fitting testament to Peter'
(p.89).
Jonathan
Bradshaw discusses Townsend's achievement in defining poverty
as relative poverty and as multi-factorial, and suggests
that today's appropriate tasks are research on minimum income
standards, study of the relationship between poverty and
subjective well-being, and persuading the World Bank to
prioritise social protection, and in particular to insist
on universal child benefits in developing countries. He
commends the Namibian Citizen's Income pilot project (p.105.
See our summary in the Citizen's Income Newsletter,
issue 2 for 2009).
Ruth
Lister recounts Townsend's research and campaigning on child
poverty. Today's task is to campaign for equal life chances
for all children in the UK. We can no longer be complacent
about the very different life chances that children experience
in our society; and we must, of course, campaign for Child
Benefit to remain universal (p.124). This theme is taken
up in Carol Walker's chapter, 'for universalism and against
the means test' (p.133), which offers a comprehensive history
of means-tested benefits since 1942, discusses their social
consequences, sees them as an instrument of social control,
and lists some of their disadvantages: lack of take-up,
high marginal deduction rates, etc.. Townsend argued that
universal benefits are 'an efficient, economical and socially
integrative mechanism' to prevent poverty which 'have as
... by-products certain advantages, such as the reduction
of social conflict, the greater integration of certain social
minorities, and a strengthening of the earning incentives
of low-income households, quite apart from any strengthening
of social morals as a basis for a more productive economy'
(quoted on p.149). She offers her own list of advantages:
- 'Universal
benefits offer the most effective way of tackling poverty.
They are the only benefits that are capable of reaching
all those who are eligible.
- Universal
benefits are the basis of social justice. They allow redistribution
vertically and horizontally.
- Universal
benefits show solidarity between the rich and the poor;
between the sick and the well; between the old and the
young; between families with children and those without.
- Because
universal benefits are received by the affluent as well
as the poor, they are less likely to be poor quality.
- For
those who do not wish to see universal benefits 'squandered'
on the rich, they can be recouped by a more equitable
tax system.' (pp.149-50)
Final
chapters on linking the human rights discourse to social
policy, and on radical global social policy, suggest to
this reviewer two foci for further action in the Townsend
mould: Citizen's Income as a human right, and a European
and then a global Citizen's Income. Neither of these are
impossibilities.
Amongst
the editors' conclusions are these:
- 'There
should be a universal child benefit and a universal basic
pension paid at a level that enables full participation
in society.
- The
widespread acceptance, nationally and internationally,
that means-tested benefits are the more efficient and
effective way of helping the poor, must be countered ...
Only universal benefits and services can reach all of
the poor and have the potential, if paid at a sufficient
level, to prevent poverty and to avoid the social
divisions inevitable in any means-tested system or where
the individual has to pay, for example, for healthcare'
They
conclude: 'It is essential to restate unequivocally the
case for universalism because that is the bedrock of a strategy
to realise social justice.' (p.283)
Peter
Townsend wrote books, articles and reports, and actively
campaigned, in a wide variety of social policy fields: 'ageing,
disability, poverty, health inequality, human rights and
international social policy' (p.2), and in relation to all
of them he combined careful research with a passionate concern
for equality and social justice. We have recently reviewed
The Peter Townsend Reader (in the Citizen's Income
Newsletter, issue 1 for 2011), and this present volume
accompanies it as a worthy commentary and call to action.
We shall respond appropriately both to the Reader
and to this book if we do as the editors of this volume
have done: that is, if we seek the abolition of poverty
by combining thorough research with careful campaigning.
Gary
A. Berg, Low-Income Students and the Perpetuation of
Inequality, Ashgate, 2010, xiv + 198 pp, hbk,
1 409 40154 4, £55.
In
the United States of America, 'college is a principle mechanism
through which privilege is passed on from parents to children'
(p.3), and Gary Berg's study - strong on both quantitative
and qualitative data - shows why. The school system doesn't
provide sufficient support for those students whose home
backgrounds have disadvantaged their learning and diminished
their ambitions; universities' admissions policies favour
the already advantaged, partly because only the wealthy
plan the sports which can give students an admissions advantage,
especially at elite universities; because financial aid
policies are inadequate; and because members of low income
groups are more likely to drop out of college because there
isn't adequate support in relation to problems which they
might be carrying with them, particularly fragile self-esteem.
A chapter which finds that gender and race interlock with
low income to create compound disadvantage, and that the
rolling back of positive discrimination policies, at the
same time as universities have sought wealthy international
students in order to appear diverse, is taking the country
even further from inclusivity. A case study of a student
summer school rams home the point. A chapter on the public
image of universities shows that the public no longer expects
them to offer social mobility in the way in which it used
to be hoped that they would; and the final substantial chapter
demonstrates that a degree has less impact on lifetime earnings
for a poor student than for a wealthy one, and suggests
that the causal link isn't between family income and future
success but is rather between parental characteristics and
both quality parenting and income, both of which then have
consequences for the would be student. A final chapter reiterates
the chapters' conclusions and suggests that higher education
needs to be redesigned for low income students, that universities
need to serve their students rather than achieve prestige,
and that the United States needs to become a more equal
society: 'America is far to comfortably unequal' (p.164).
A major reason for this inequality is the tax system, in
which substantial mortgage cost tax allowances advantage
the already wealth and don't benefit the poor.
This
passionate and well-researched study show just how many
factors determine a student's preparedness for university
admission and their ability to benefit from higher education.
Their own and their family's incomes are just two of those
factors, but these are two factors that a government can
do something about. The UK's new higher education funding
regime is going to provide us with more of the difficulties
outlined in this book. Again, families' and students' incomes
are partly functions of government policy. The only conclusion
to draw is that the funding of higher education and family
income maintenance are policy areas that need to be integrated
with each other far more than they are at the moment.
Tindara
Addabbo, Marie-Pierre Arrizabalaga, Cristina Borderias and
Alastair Owens (eds), Gender Inequalities, Households
and the Production of Well-Being in Modern Europe,
Ashgate, 2010, xx + 318 pp, hbk, 0 754 67968 4, £65.
The
symposium in Barcelona which gave birth to this edited collection
belongs to a European research project on gender and well-being
charged with developing a new concept of well-being and
new social indicators which will reflect the different circumstances
of male and female lives. This will in turn provide a gendered
framework for the evaluation of social policies. The Barcelona
symposium was particularly concerned with the production
and distribution of well-being within the family: a family
which can no longer be regarded as an 'undifferentiated
economic unit' (p.xix), suggesting that an important question
is the extent to which largely female work within the family
compares to largely male work outside it in relation to
their contributions to well-being within the family.
An
introductory chapter is followed by a discussion of Amartya
Sen's 'capability approach': well-being understood as the
opportunities open to us. Ingrid Robeyne's verdict is that
this approach needs to be supplemented by research on the
extent to which decisions within the family are a matter
of free choice and the extent to which they are conditioned
by cultural norms which encourage unjust decisions within
the family.
Chapter
3 offers a history of the British family which shows that
'the families of today are neither novel nor new. They have
a fragility and form that with minor shadings has been common
for working-class families through the industrial era' (p.57).
The fourth chapter combines production and reproduction
into a single complex system, notes that higher numbers
of women in employment has become the means of maintaining
families' economic viability during a period of 'wage containment'
(p.74), and finds that in this context adequate public services
are essential to family members' well-being.
Most
of the rest of the book studies particular aspects of the
field in particular places and at particular times: Scandinavian
widows' income strategies between 1890 and 1910; communal
and state care in nineteenth-century Austria; unpaid work,
well-being and the allocation of time in contemporary Italy;
home care workers in contemporary Belgium; intergenerational
support in families in Britain since the nineteenth century;
gender inequalities in family consumption in Spain from
1850 to 1930; differential access to education in Switzerland
between 1880 and 1930; celibacy and gender inequalities
in the Pyrenees since the nineteenth century; the relationship
between Italian family members' life plans and the ways
in which money moves and is controlled within the family;
and post-separation incomes in four European countries.
What
emerges is the complexity of relationships within the family,
of the ways in which resources are distributed, and of the
ways in which different kinds of work are allocated. Whilst
it is still possible to generalise that care work within
the family is still mainly undertaken by women and that
material resources from outside the home are still generated
mainly by men, there are complexities within that generalisation,
and there is much evidence that doesn't fit into it. Diversity
is now the reality: between countries, between families,
and within families.
What
isn't clear from this well-researched and most interesting
book is how the research findings might influence the direction
of social policy. One obvious conclusion to draw is that
in a situation of such diversity, policy should be neutral
in relation to how a family organises its relationships,
its employment patterns, and its care work. Many of our
current tax and benefits provisions are not neutral in this
way. Individualised universal benefits, of course, would
be.
Viewpoint
A
Perspective from Shanghai, by Tim Hawkins
I
am a British economist currently working in Shanghai. Discussion
about manufacture of Solar PV panels with a friend, who
is CEO of a major producer, brought home to me the urgency
of establishing a Citizen's Income and lower marginal wage
rates in the developed western countries. Factory labour
in Shanghai is paid around 500 yuan per week - about £50.
Looking forward say three years the figure is likely to
increase to say £75 because of three factors :-
- shortages
in Shanghai
- inflation
in Chin
- strengthening
of the yuan exchange rate.
Long
term, companies will need to experience very similar marginal
labour costs in different countries. Manufacturing can take
place in many locations and no country will be able to enjoy
a sustained advantage due to knowledge or skills that is
large enough to maintain high employment. There is probably
little support now for the idea that the insurance, banking
and retail sectors can together provide enough in the UK
for us not to worry about manufacturing. Insurance and banking
are easily copied, while good retailing mostly creates jobs
in the country where the outlets are situated. The only
sectors likely to persist as edges for the UK for many years
are expensive legal services, educational services and global
expert institutes. Germany has good international competitiveness
currently based on quality and efficiency. But it will not
be sustainable long term over China. In the short term,
getting quality to an adequate level is a major challenge
for China. But equally, it needs to be recognised that there
are already exceptions, such as Solar cells production.
Of course, long term equilibrium is rarely reached, but
given differences in key economic measures between China
and the West, it is clear that more needs to be done to
increase global competitiveness. And in practice change
can only be made progressively, so a figure of £60
per week as a Citizen's Income is a great start, but much
more will be needed to sustain competitiveness long term.
A
sound long term expectation is for working individuals to
receive a Citizen's Income plus a globally competitive pay
level, the latter element varying by skill level. The level
of the Citizen's Income should mainly reflect the cumulative
wealth of the country, though some income redistribution
could also take place. By contrast, if countries choose
to use their cumulative wealth to support high marginal
wage rates and simply exhort their citizens to be innovative,
that is a recipe for unemployment and a trade deficit. And
it will get much worse as China develops and improves quality.
The
tax/benefit system need not really balance to current revenue
levels - a progressive increase in VAT (together with energy
consumption taxes) would anyway be beneficial. A move to
a Citizen's Income will reduce company costs and mitigate
inflationary pressures from an increase in VAT. The same
general arguments about competitiveness mean that the income
tax threshold should be increased significantly.
To
return to the figures, if reasonable income for a low skilled
manufacturing worker in a developed country is £300
per week, then a more efficient (and fairer) economy would
develop from a Citizen's Income of £200 per week plus
a manufacturing wage of £100 per week. That latter
figure is close enough to the Chinese equivalent of £75
estimated above. For now, the European economies will still
have skill and quality advantages that can offset some labour
premium.
Some
will argue that this balance would discourage work in the
UK. I think that this is a small risk. In their hearts most
people understand the importance of work and will make decisions
at the margin. Moreover, there is enormous scope for an
expansion in the work force (including part-time) from the
over 60's, the under 18's, housewives and people with disabilities.
The social and emotional benefits of working are well understood.
In any event, implementation - though urgent - would have
to be progressive and £60 per week is a good start.
But it is important that the minimum wage is reduced as
the Citizen's Income is provided and increased.
Alternatively,
a Citizen's Income of £150 per week plus a wage of
£100 is a balance, because of household structure
- in that approximately 50% of women of working age are
carers - but this is a theoretical debate at this stage.
The effect on the economy of establishing a Citizen's Income
and reducing minimum wages, will be so dramatically good
as to easily support a progressive increase in Citizen's
Income while maintaining a prudent fiscal policy. The figure
of around £200 per week is also supported by the current
old age pension level and would sweep away the debate on
retirement age.
One
effect of a Citizen's Income and a reduced minimum wage
would be immediate cancellation of some unnecessary automation
projects, which typically involve expensive imported machines.
Some other savings will also be readily available - maybe
coal mining would become viable again. And at the margin,
a much lower wage rate would make employing a few more staff
in many areas in a company sensible.
With
current levels of global communication and popular understanding,
a Citizen's Income and lower marginal wages is the only
economically sound way of avoiding increasing unrest in
Europe. There is some chance that people will put up with
the alternative of years of austerity, but not a high one.
The situation in the United States is possibly even more
serious. Even though many will theoretically agree with
the strength of the arguments in favour of a Citizen's Income,
getting significant change achieved in the USA is notoriously
slow and difficult.
The
opportunity for the UK to major on Solar PV equipment is
a great one. The market is currently expanding by 40% per
annum and a major scale increase, ranging between 50 fold
and 250 fold, is highly likely in the next few decades.
To compete with China, we need a Citizen's Income and lower
marginal wage costs as soon as possible.
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.
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. Abstracts
should be submitted by the 1st September 2011, and draft
papers should be submitted by the 31st January 2012.
Please
submit your abstract and draft paper to the Director, Dr.
Malcolm Torry (contact details on p.1)
For
further information on the congress please see BIEN's website
at www.basicincome.org
or write to kontakt@grundeinkommen.de
©
Citizen's Income Trust, 2011
|
