Wednesday, January 28, 2015

Problems with the Citizen's Income hitting the poorest

A problem has arisen today with implementation of CI.

The Guardian carries this piece: Green 'Citizen Income plan hits the poorest hardest'.

The excellent Citizen's Income Trust have run CI through a model.

They find that 32% of households would be losers, with many of the biggest losers among the poorest households.
1/5th of the two lowest income deciles would lose 10% of their income.
An account of a series of model runs of CI including the latest paper is in the CIT newsletter here: (scroll down to The Citizen's Income Trust's 2013 illustrative scheme).

Malcolm Torry, the CIT writer, suggests a couple of alternatives, but both are costly:
£20bn p.a. for a scheme that gives 10% losses to 9.8%, and £24 bn p.a. for schemes that put losers at -15%.

These complex difficulties with systemic wholesale transition to CI should cause us to look again at the Green Wage Subsidy (GWS), which simply allows people to keep their JSA if they find work in the green sector of the economy.
Its advantages are:

  1. There are no losers with GWS
  2. It paves the way conceptually and economically for CI, since it uses an important aspect of CI, i.e. no loss of benefit on taking up work.
  3. Its simplicity means that it can be introduced in a matter of months by any LA that chooses to do so
  4. It stimulates the Green sector of the economy
  5. There is a gain to the economy in the order of £10 billion/year at 50% roll-out  
  6. A slow incremental increase in outlay will accrue to the Treasury as numbers on GWS slowly build up, i.e. as GWS gradually moves the welfare system to CI status.
Of course it is too late to make the switch to GWS now, but it should be borne in mind as we struggle with the issue.

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