The debate on citizen’s income needs to go wider

We need a full and serious debate about the modern welfare state and citizen's income, says Chris Goulden (BLOG)

Introducing a citizen's income would need society to change; we need a wider debate about the modern welfare state, says Chris Goulden.

Just before a general election is not typically the time to float big ideas. But as the parties battle over a sometimes narrow policy agenda, some credit should be given to those trying to get us all to think differently about the big questions affecting the modern state. A citizen's income (CI) is an idea that has been around for a long time, but has recently gained more attention following proposals by the Green Party to consider it as a major reform to welfare.

JRF has today published an independent review of the implications of introducing a citizen’s income in the UK, what it might mean in terms of redistribution and tax and the changes that would be needed in public and political attitudes towards the levels and nature of state support. But what is a citizen’s income?

It is at heart a very simple idea – and that is one of its main attractions, as a simpler way to ensure everyone has enough to live on. Under the scheme, each citizen receives an unconditional payment that is not withdrawn when they get a job or earn more. In theory, it does away with the need for complex and stigmatising means-testing and would potentially address its disadvantages, particularly the rapid withdrawal of benefits with rising earnings which can create a disincentive to work. Under CI, people still pay income tax on earnings above a certain threshold, not least as giving a fixed amount to everyone is an expensive policy that needs funding.

Indeed, the money to pay everyone an unconditional income, even at the subsistence level of £70 a week, needs to come from somewhere. The analysis by Donald Hirsch indicates that it would require direct taxes, taking at least 40% of all earned income with no allowance. The proportion might rise to well over 50% if state support for housing costs is included. This flags up one of the snags of any simple scheme (one that also dogs Universal Credit). People’s lives are complicated by very different costs arising from their rent, disabilities, childcare and other aspects that are currently supported to some extent by the state. Once these complexities are brought in, some of the apparent simplicity of a citizen’s income starts to break down. So, either CI has to be set generously to cover extra needs (too expensive), or some level of needs-testing has to remain (undermining its simplicity). There are always trade-offs.

This leads to a more fundamental issue with CI. The public have a certain view about 'something for nothing', even if they might all be getting a nominal amount themselves. The introduction of CI would require society to change how it views the role of the state in redistributing income. If it is to become a reality, then its proponents need to engage with a much wider audience about its implications and the trade-offs involved in funding it.

Better still, let's have a full and serious debate about the modern welfare state and our expectations as citizens, contributors and recipients, before narrowing the options.