Friday, 28 May 2010

The Employmnet Trap - a Solution

Ir is good to hear Tory Ian Duncan Smith speak so passionately about the absurdity of the employment trap, by which unemployed people can face marginal tax rates of "70%, 80% and 90%"(Guardian 27/05/10) through loss of benefits when they take jobs. Unfortunately his proposed solutions do not include the obvious - the Citizens' Income as proposed by the Green Party.

Briefly, under this proposal every adult citizen receives as of right from the state an income of around the present level of the Jobseekers' Allowance, with a higher rate for pensioners (to replace state pensions) and a lower rate for children. Personal tax free allowances would be abolished so that, on taking up work, even the first tranche of income would be taxed at the standard rate. Thus every individual would be assured of a minimum standard of living as a right of citizenship, and everybody who wanted more, the overwhelming majority, would benefit by taking a job.

According to the Greens the abolition of personal tax allowances would pay for the scheme. I have no means of checking this but it is certainly something the government should explore. At a stroke, to quote Ted heath, it would abolish the demeaning benefits procedures and take away some of the heat out of the anger felt by many of the employed towards those they regard as "spongers" and possibly "benefits cheats" because they are unemployed.

A fuller outline of the Citizens' Income scheme and its advantages is given at the Young Greens website.

For a while the Liberal Democrats too adopted this splendid policy, but through lack of courage or imagination it seems to have been quietly dropped. Now we are in government, with the resources of the civil service available to us, we should at least demand its serious consideration.


  1. The Citizen's Income is an interesting idea that makes a lot of sense in terms of the Green ideology (which questions conventional assumptions on economic growth, work etc). But do the figures stack up. Are you aware of any estimates of the cost of such a measure? The website you refer to mentions raising the basic rate of income tax to pay for the change. From a quick look at pension, jobseekers' allowance, long-term incapacity benefit rates, and income tax allowances it is not clear to me at what level the Citizen's Income could be pitched (eg Jobseekers Allowance is worth about £3400 a year but the Income Tax allowance only about £1300. By the way Caroline Lucas had a hard time trying to outline the concept to an incredulous Jeremy Paxman during the election. There would clearly be a huge problem selling such a 'looney' concept in our dismissive political climate.

  2. i agree that the Greens' arithmetic sounds rather optimistic. In addition to the benefits you mention there is also housing allowance. However, presumably the Greens have made some attempt to cost it. In my view it is such a good ideal that, while Liberal Democrats have a toehold in government, we should get the civil service to do a careful analysis of the figures and publish a report.