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Here's Why the Green Party's 'Citizen's Income' Could Make You Even Poorer

Weirdly, being given "free money" by the government could make you less well off.
January 26, 2015, 6:40pm

(Photo by Adam Barnett)

Absolutely everyone likes being given money, so the Green Party's announcement that they're calling for a "Citizen's Income" in their manifesto sounds like an idea that will have people climbing over each other to vote for them. The plan is that the government gives everyone in the country – no matter how rich or poor, employed or unemployed – a set amount of money each week. The Citizen's Income Trust – a campaign group advocating this measure – has suggested £71 per week. This would then replace some other benefits.

The concept isn't new, but it has been gaining traction recently, with a referendum in Switzerland on basic income set for this year. The arguments for a Citizen's Income are pretty straightforward. For starters, it means unemployed people don't have to worry about losing much needed benefits when they do find a job. It also compensates people for things that aren't technically "work" but ought to be recognised as beneficial to society – such as raising children. And of course, if everyone is given what is essentially one lump sum of benefit money, it ends the stigma around the welfare state – nobody hates benefit scroungers any more because everyone is one!

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But not everyone's convinced it would work. And perhaps surprisingly, not all of these boo-boys are call centre tyrants looking to fill their MDF hell-booths with desperately poor phone monkeys.

Donald Hirsch, director of the Centre for Research in Social Policy at Loughborough University, has been researching minimum income standards and basic income for years. He voices some hesitation about the practical implementation of a Citizen's Income. "You need to look at the technical calculations. Basic income sounds nice and cuddly, but if you could implement it, how is it then paid for? Despite arguments that it can be self-funding, this is not the case," he says. It could be funded by higher taxes – probably on the rich. This may not concern you if you're reading this from a damp bedsit on a five-year-old laptop, but the point stands: The "free" money is not free.

The other option would be savings elsewhere. "Sometimes it is argued that we can afford it by cutting other things, like cancelling Trident, but this does not mean it is self-funding," says Hirsch. "There may be other ways to spend savings from such policies." If the country pays for it, it might not be able to afford other things.

One of the most obvious problems with a flat rate Basic Income is the stark geographical inequality across the country. A weekly Jobseeker's Allowance payment of £72.40 stretches further in Wakefield than Camden. Setting a flat rate does nothing to consider the massive fluctuations in the cost of living. Accepting this, the Greens propose, "nobody will be in a position that they will receive less through the scheme than they were entitled to under the previous benefits system. Children will be entitled to a reduced amount which will be payable to a parent or legal guardian. People with disabilities or special needs, and single parents will receive a supplement. Initially, the housing benefit system will remain in place alongside the Citizen's Income."

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But with those caveats, it's not clear exactly how the proposals really differ from the current welfare system, aside from the fact people with money will now receive £70 a week as a bonus. Taxes would go to giving money to well-off people. How do you feel about Simon Cowell, the Duke of Westminster and the cast of Dragons' Den all being given your cash to piss up the wall?

The other side of that coin is that, for those who really need it – those who can't work, or can't find a job, and don't qualify for other benefits – the Citizen's Income is a poverty income. To get to a socially acceptable standard of living, Hirsch, in a report on minimum income standards for the Joseph Rowntree Foundation, says a single working-age person would need £16,800 a year. The proposed £70 a week Citizen's Income falls below that, by roughly £270. Setting a Citizen's Income too low risks trapping more people in relative poverty, rather than lowering poverty rates overall. Stewart White, associate professor of politics at Jesus College, Oxford, admits, "some people will be worse off as a result of the changes, and I don't think all of these are high earners."

Another issue is benefit-bashing. If you genuinely create a "something for nothing" culture – rather than one that exists merely in the fevered imaginations of tabloid readers – the backlash could be harsh. "Look at the political debate on conditionality – we have a conditional system now and even with all the various hoops you have to jump through [to receive benefits], the rhetoric is still fixated with 'scroungers'," Hirsch points out. "If you propose a system where if you want to sit at home doing nothing you can, then how are you going to sell that to the public?"

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The stigma surrounding welfare benefits could also be made worse by the fact the Greens' proposal for a Citizen's Income could exclude those who are not yet citizens. That means the most marginalised, including asylum seekers, and recent immigrants – they could end up even more economically excluded from society. Then there's the fact that, despite the low uptake of benefits among recent immigrants, politicians and certain newspapers talk constantly of cynical, greedy scroungers, travelling hundreds of miles across the globe purely for a subsistence payment and the chance to experience drizzle. You can see how explicitly attaching welfare spending to British citizenship could easily become another stick with which to beat immigrants.

What about British workers? If you don't have to rely on your wages to stop your family starving, you can walk away if your job sucks. In practice though, mooted basic income rates are usually too low to make this feasible. So you still have to work, but thanks to the Citizen's Income, low paying employers can argue that there's no need to pay a higher wage, since you're handed a weekly payment regardless. At the moment, the fact that most benefits are claimed by those in work is cited as evidence that the welfare state is simply propping up shitty employers who pay peanuts. As the Economist put it, "McDonald's has little pressure to pay you a living wage if the government is sending you supplemental cheques every month." Wouldn't it be easier and better to enforce a minimum wage that you can actually get by on, with proper safety nets for those who can't find jobs? And if individuals walk away from bad jobs to languish in state-funded poverty, they're less likely to strike to improve things – which is ultimately worse for downtrodden workers.

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A Citizen's Income should be political dynamite. It appeals to the left's humanitarian side, while many on the right – even free market Godfathers Friedrich Hayek and Milton Friedman – think it's great for cutting bureaucracy, therefore leading to smaller government. But while it is a seductive idea it could, without meaning to, make you worse off. Its proponents paint a picture of a world where nobody has zero money and people need to work less. The reality could be state-funded poverty, a benefit payment that treats the richest the same as the poorest and employers under even less pressure to pay people properly.

To create a Citizen's Income that didn't screw over the poorest citizens, politicians would need to be bold enough to set it at a rate high enough to lift people out of poverty wherever they live, bolster labour rights and not allow it to become an excuse to get rid of measures that protect society's most vulnerable.

@DawnHFoster

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