Green Party's Citizen Income: stroke of genius or another benefit trap?

The Citizen’s Income is not as mad an idea as it looks, says Ben Walker

Ben Walker, Editor - Accounting Technician Magazine

Many people have been on the dole at some point. I’m different to most in that I have not only been on the dole, but signed other people on it too.

Neither experience was particularly heart-warming – although the latter was certainly instructive.

One of the big problems with the dole (or Jobseekers’ Allowance – JSA – as it is officially called) is that it creates a direct disincentive for people to take casual work.

Lots of the people I used to sign on when I worked in a Newcastle JobCentre had opportunities to earn some money: tending to local gardens, doing odd jobs, cleaning church halls. The trouble was that, for every pound they earned in odd-job work, they lost from their dole.

It was worse even than that. The administrative burden of having to declare little bits of work they had done, lose their dole commensurately and – eek! –alert the JobCentre’s staff to the fact that they may not always meet its crucial criterion of being ‘available’ for full-time work made taking casual work a counterproductive exercise.

This is what economists call the ‘benefits trap’. Not only do the unemployed miss out on much-needed extra cash, they also miss out on opportunities. Who knows where that weeding job for a neighbour might lead? Build a reputation in the area and you could end up with a thriving gardening business but not if you are on the dole.

Enter the Green Party, which this week revived an ancient idea called the Citizen’s Income. Under this system every British adult would receive a weekly payment, similar in value to the dole, and dole would be abolished. And guess what? If Joe from down the road offers to pay you a tenner for clearing his lawn of leaves, you get to keep it.

Green leader Natalie Bennett did a pretty lousy job (see video below) of explaining the idea when she met the rottweiler-like Andrew Neil on BBC’s Sunday Politics  programme at the weekend. And sure, the problems with the concept are manifold: it’s potentially very expensive (although Bennett is at least part right when she says the gross £280bn cost would be mitigated by removing the eye-watering costs of administering JSA and other similar benefits); its necessary universality means the state pays both the idle rich and idle poor as well as more deserving cases; and it’s not a perfect welfare mechanism – as adjustments would still have to be made to help meet the high costs of housing, and the special needs of lone parents and the disabled.

But it is not without some defenders. David Orrell, the Oxford educated economist and mathematician believes a Citizen’s Payment system could be paid for – just about – from the UK’s existing spend on welfare benefits.

Whatever its benefits, it is highly unlikely to be adopted by the two parties who are likely to lead a government after May – Labour and the Conservatives. It would require such a titanic overhaul of our byzantine tax and benefits system few governments would voluntarily take it on.

But Switzerland, a direct democracy where citizens directly vote policy into law, might. Five centuries since Thomas More first proposed the Citizen’s Payment, its citizens are soon to put the idea to the ballot paper.

‘Do you agree with back paying every citizen a set allowance?’

Let us know by leaving a comment below or join the conversation on Twitter or Facebook

 

Ben Walker is the former editor of Accounting Technician.

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