by Citizens' Income Trust | May 31, 2012 | Opinion
Thomas Bahle, Vanessa Hubl, and Michaela Pfeifer, The Last Safety Net: A handbook of minimum income protection in Europe, Policy Press, 2011, xi + 271 pp, hbk, 1 847 42725 0, £70
This thoroughly researched survey of European means-tested minimum income protection (MIP) systems – the safety-nets into which households and individuals fall if other earned or benefits income is insufficient – will quickly become an essential research tool for anyone interested in social policy generally and in income maintenance in particular. The more precarious nature of both families and employment has made means-tested safety nets more significant for increasing numbers of citizens, which means that means-tested systems will become more politically important (and this, in turn, is one of the factors that has led to Iain Duncan Smith’s success with Universal Credit). Greater political importance will mean more social policy debate, more need for research, and more need for books such as this one, especially if it takes into account and puts more emphasis on insurance companies like Curo Financial that promote policies on income protection.
The first part of the book contains introductory material on defining MIP (as means-tested, and as raising total income to a social minimum), measuring minimum income protection, the datasets used, problems of comparability, and welfare state contexts (including social insurance and other non-MIP benefits). If you’re conducting research into MIP, you may also want to learn more about income protection insurance vs mortgage protection, which works together with MIP. If you’re out of work, the MIP is in place to make sure you can cover your bills.
The central section contains country analyses. For each of seventeen European countries, the welfare state context is discussed, MIP systems are described, and current issues and reforms get a mention. The section on the UK reveals the extent to which our social policy is dominated by MIP, and also the reason: the inadequacy of social insurance provision. The chapter describes the UK’s MIP benefits in detail (including Tax Credits), and suggests that ‘MIP in the UK continues to play a strong and exceptional role by international standards’ (p.152).
The third section of the book compares the MIP systems of the seventeen countries in terms of benefit levels (for both individuals and households), and in terms of benefits levels’ ability to keep up with the cost of living – and here the author finds no clear correlation between adequacy of benefits and the country groupings developed in relation to other aspects of the analysis. Further sections compare numbers of MIP recipients, how recipients are distributed across demographic groups, ways in which different schemes serve different categories of recipient, whether or not reliance of MIP is increasing, and expenditure levels. When the authors cluster MIP systems on the basis of the material in this section, the UK finds itself with Spain and Portugal: ‘relatively low benefit levels but generous treatment of families in comparison with the benefit rates for single persons … indicating that principles of need and desert have priority over equality’ (pp.221, 228).
The authors conclude: ‘In most countries, the last safety net fails to lift persons out of poverty. Europe, which is proud of its social model, containing strong social cohesion and comprehensive social protection, has so far failed to institute a viable and effective last safety net for all of its citizens’ (p.233). A final section studies the effect of the recent financial crisis on Europe’s MIP systems, and, in relation to the UK, the authors note a large increase in the number of MIP recipients, ‘confirming the high structural importance of needs-based benefits … and the low availability of other (better) forms of social protection’ (p.236).
That ‘better’ is a welcome but rare value judgement. Introductory material on different kinds of benefits system locates MIP within different countries’ social insurance and other benefits systems, but what the book lacks is a structured evaluation of the advantages and disadvantages of means-tested safety nets and of other benefit types. Universal benefits are not discussed as a category, and the UK’s Child Benefit doesn’t get a mention.
Some recent developments clearly came too late for inclusion. The Government’s recent consultation on a more adequate single tier state pension answers to some extent the book’s criticism that in the UK ‘basic pensions are too low to secure a decent livelihood in old age’ (p.49); and Universal Credit will be a considerable improvement on the present patchwork of means-tested benefits. Unfortunately, the book’s analysis wouldn’t have picked this up because it doesn’t compare the benefits withdrawal rates of different countries’ systems. This is an important omission. An MIP system with a withdrawal rate of 95% of additional earned income is a very different animal from one with a withdrawal rate of 50%. Also lacking is any discussion of the labour market disincentives that means-tested systems create and of the surveillance systems that inevitably accompany household-based benefits systems.
We really ought to have a second volume from these authors, containing a comparison of MIP systems in relation to such characteristics as withdrawal rates and earnings disregards, and a comparison of different benefits types in terms of their social and economic effects. Such a volume would be a major contribution to debate on welfare state reform. These authors are clearly capable of it, and I look forward to reading it.
by Citizens' Income Trust | May 30, 2012 | Opinion
Kevin Farnsworth and Zoë Irving (eds), Social Policy in Challenging Times: Economic crisis and welfare systems, Policy Press, 2011, xi + 335 pp, pbk, 1 847 42827 1, £27.99, hbk, 1 847 42828 8, £70
Whilst in all of the countries studied in this edited collection the welfare state can be regarded as entering a new age of austerity, the picture that emerges is one of diversity: of different kinds of financial crisis in different countries, of different cultural contexts, and of different effects on welfare provision. For instance: ‘Liberal market economies … are least well equipped in both economic buffers and social solidarity to deal with the impact of a crisis in welfare funding because interests are not shared corporately or between social classes’ (p.24).
The first part of the book tackles more general questions. Has the crisis resulted in a shift in the economic paradigm? No: that would require positive action. Has a crisis in financialised capitalism fostered a new economic and social strategy? No: it has resulted in welfare state retrenchment and widening inequality. Are we all in this together? No: there is one strategy for financial institutions, and another for citizens. Is a global social floor a good idea? It’s a better idea than national safety nets. How will relatively young welfare states in the developing world cope with the financial crisis? In Brazil and South Africa, the crisis has led to the expansion of income transfer programmes, and in particular to the inclusion of 16 and 17 year olds (p.104).
The second half of the book studies individual countries. South Korea’s experience of the 1997 crisis suggests that extreme neoliberalism doesn’t work. China’s response to the recent crisis has been to include previously excluded groups in welfare systems. Germany’s small financial sector, and adjustments already made during unification, have meant that the crisis has had a ‘muted’ effect. Ireland’s weak welfare state is suffering retrenchment rather than reform. Iceland’s crisis has seen the neoliberal model questioned. In Scandinavia unemployment has risen, but only slowly. Domestic policy concerns drove the United States’ healthcare reforms, and in neither the United States nor in Canada has the crisis resulted in much welfare state reform. In the UK, the depth of austerity measures is more ideological than necessary.
‘More of the same’ is the picture that emerges: that is, it is long term cultural and ideological factors that determine welfare structures. Whilst the financial crisis might have precipitated minor change, and in some cases it has exacerbated existing trends (especially in the UK and Ireland, and over the extent of punitive measures imposed on the unemployed), it has stimulated little genuine reform. The editors’ concluding chapter extracts a number of ‘solutions’ from the different chapters, but they can’t be said to constitute any kind of package; and their confident conclusion that
What the contributions here demonstrate is not only that emergency events are crucial to both the shaping of social policy, and to the understanding of that process, but also that challenging times are as likely to widen the scope for progressive welfare state-building as they are to diminish it, and that how states respond is a matter of political struggle and political choice (p.278)
isn’t borne out by the evidence.
The strengths of the book are the amount of detailed evidence and the careful analysis in each of the very different chapters; and a particular strength is that the chapter authors don’t draw clear conclusions where there are none to be drawn. A justifiable clear conclusion is Farnsworth’s: that Government policy is bound to increase inequality in the UK. What he might also have said is that reduced withdrawal rates under the new Universal Credit will reduce inequality and will incentivise labour market activity. The lesson to draw is that reduced benefits withdrawal rates and an increase in universal benefits would both reduce inequality and incentivise labour market activity: both outcomes which would enhance the economic outlook and the social fabric.
by Citizens' Income Trust | May 29, 2012 | Opinion
Tony Fitzpatrick, Welfare Theory: An introduction to the theoretical debates in social policy, 2nd edition, Palgrave Macmillan, 2011, xvi + 241 pp, pbk 0 230 27202 6, £19.99
The map with which political philosophers and social theorists are concerned overlaps, to a considerable extent, with the particular territory occupied by social policy. This book starts from the premise that you cannot properly understand the one unless you understand the other. (p.xiv)
This accessible and thoroughly researched book is also a vindication of Fitzpatrick’s conviction that ‘welfare theory’ – the philosophy of social policy – is a discipline in its own right. Welfare theory draws on both ‘social theory (the philosophy of sociology and social science) and political theory (the philosophy of politics and government)’ (p.xv), but it orders things in its own way and develops its own emphases. It is not insignificant that the first chapter is entitled ‘wellbeing’, now a focal concept for welfare theorists and social policy makers.
The book is structured around a number of concepts: equality, liberty, citizenship, community, state, power, poverty, society, and class. Fitzpatrick explores the histories of these ideas, the different ways in which they have been understood, and ‘recent developments’. Throughout, there is reference to social policy. For instance: the National Health Service’s achievements are judged against a variety of definitions of equality (p.39), the distribution and redistribution of income is the field on which a discussion of the relationship between equality and liberty is constructed (ch.3), new forms of ‘deliberative democracy’ are related to the idea of ‘democracy’ (p.79), and the chapter on ‘state, power and poverty’ is largely driven by the history and current state of the UK’s welfare state, the detail of current social policy, and measured outcomes (ch.5). The first three of these relationships fit the three types of relationship which Fitzpatrick lists in his introduction: ‘assessment’ (of practice by theory), ‘explanation’ (of practice by theory), and ‘reform’ (of practice by theory). But we can see that there is also a fourth relationship: practical policy’s influence on welfare and its concepts. To take a particular example: Beveridge’s ‘contributory’ and ‘social assistance’ welfare state was largely driven by previous government-supported co-operative insurance provision and by the Elizabethan Poor Law. The real-world relationship between welfare theory and social policy is a circular one, with each affecting the other. Fitzpatrick’s book is a text-book for students ( – the first edition was written for that purpose, and this second edition has benefited from the first edition’s use for that purpose), so we would expect it to concentrate on the ‘welfare theory forms social policy’ side of the relationship; but in his ‘concluding remarks’ Fitzpatrick suggests that
it is often necessary to take social policy themes and issues into account when discussing social and political theory. Social policy students do not simply debate how to translate principles into practical reality. Instead, they ask distinctive questions that enhance the method and assumptions of social philosophy. To explore social and political thought without substantial reference to the battles fought over social policies is to miss a key feature in the development of modern societies. (p.211).
Following the chapters on particular concepts, chapter 7 is entitled ‘ideologies’. Here Fitzpatrick describes the Radical Right, Conservatism, Social Democracy, Marxism, and Feminism. (Descriptions of the first two and of Marxism are followed by ‘criticisms’; descriptions of social democracy and of feminism are not.)
Chapter 8 is on ‘identities’: a recognition that social policy is often driven by the ‘recognition’ of an ‘identity’ (for instance, disability). Chapter 9 is on ‘globalization’, and shows how a global economy constrains national social policy; and this chapter in particular shows how economic policy has influenced both the idea of globalization and changes in social policy. The final chapter, on ‘global justice and environmentalism’, is new to this edition, and contains a useful taxonomy of types of global justice.
Finally, Fitzpatrick suggests that the utopian and the pragmatist need each other. The truth of this in relation to our tax and benefits system is obvious. Maybe it’s time for a second edition of his Freedom and Security, his book about a Citizen’s Income: a book which exemplifies the complex relationship between welfare theory and social policy which the book under review is all about.
by Citizens' Income Trust | May 28, 2012 | Opinion
More than fifty delegates, of all ages and from sixteen countries, gathered at the European Parliament in Brussels on the 26th and 27th April 2012 to discuss an exciting new venture: a European Citizens’ Initiative (ECI) entitled ‘Unconditional Basic Income’ (UBI). This was the inspiration of Klaus Sambor from Austria. Together with a group of people who met in Vienna in October 2011, he put together a text in English which was circulated to interested parties for comment prior to the Brussels meeting. This initiative has been possible because on April 1, 2012 a new participatory tool was born: the European Citizens’ Initiative. From now on, we – the citizens of the European Union – have the same right as a majority in the European Parliament and the Member States: to contribute to setting the political agenda for the whole continent. (The European Citizens’ Initiative Pocket Guide, by Bruno Kaufmann, published by the Green European Foundation, March 2012, www.gef.eu.)
The purpose of the meeting in Brussels was to agree the text of the ‘Unconditional Basic Income’ paper for the introduction of an ECI into the Parliament, asking the EU to speed up the introduction of a UBI. The paper comprised a short section that introduced the topic of a UBI, setting out the objectives and defining what was meant by a UBI. The major part was taken up by referring to Articles in various pieces of legislation, including the Treaty on European Union, the Treaty on the Functioning of the European Union, and the Charter of Fundamental Rights of the European Union, March 2010. The introduction of a UBI would help the Parliament to fulfil its obligations under each of the specified Articles.
The meeting was hosted in the European Parliament by Gerald Häfner, MEP for the Green Party in Germany, who welcomed the delegates on the Thursday afternoon. Then Werner Rätz, also from Germany, led an interesting debate on the social context for the introduction of both an ECI and the UBI: changing employment patterns and inadequate income maintenance systems, which had led to widespread poverty, and to increasing inequality between rich and poor. Participants deplored the punitive and controlling nature of the various social security systems within the EU.
Klaus Sambor then went over the first definitive part of the document, giving the purposes for, and definition of, the UBI, indicating why certain wordings had been chosen. ‘The emancipatory “Unconditional Basic Income” is defined by the following four criteria: universal, individual, unconditional, and high enough to ensure an existence in dignity and participation in society.’ He said that the UBI does not replace the welfare state, but completes it and transforms it from a compensatory into an emancipatory one. He explained that only the four criteria for the UBI would be specified, and not any particular means of funding it at this stage. He felt that it was important to get the idea of the UBI accepted first, and to fight the sources-of-funding battle later. It was recognised that it would be up to each member state to work out its particular means of implementing its own scheme, but that the EU would probably have to be involved directly to some extent.
The initial explanation was followed by the first of the two purposes of the conference, which was to discuss the subject matter and objectives of the document. Part of the discussion revolved around the question as to whether one should change the definition of the UBI in order to increase the chance of its being adopted. However, it was agreed that some things were inviolable, such as the unconditional nature of the UBI. Even then, because its presence would alienate the Trade Unions, some recommended the removal of the clause which referred to there being no obligation to work (inserted to illustrate the unconditional nature of the UBI). The discussion went on past its allotted time of six o’clock, after which the delegates were invited to a drinks reception beside an exhibition comprising photographs and other documents from Ojivero-Omitara in Namibia, showing the tremendously beneficial lasting effects of the Basic Income experiment conducted during 2008 and 2009.
During the evening some modest changes were made to the document. The following morning, the company reassembled in order to approve the final draft of the ECI. Some further discussion took place about the wording of the ‘universality’ criterion, with respect to who should be eligible, whether the ‘European citizen’ (with its legal connotations), or a ‘member’, ‘inhabitant’, ‘legal resident’ or just ‘resident’ of the European Union. In the end, those present voted to refer to the UBI as a human right, without specifying the population, again leaving that battle for a later date.
In the end, the clause about there being ‘no obligation to work’ as an example of the ‘unconditionality’ criterion remained, even though members of the Italian basic income network, Bin Italia, were very pessimistic, feeling that it would make it almost impossible to achieve any success in Italy, because of the antipathy from the Trade Unions.
During these sometimes fierce debates, I was reminded of the Basic Income Research Group / Citizen’s Income Trust early discussions. After the relief of meeting some other basic income enthusiasts in 1983, I was surprised to discover how hotly we debated the finer details of our favourite schemes. Back then, as in Brussels, it took us some time to work out what our objectives were, and what was the instrument. Did we want a BI for its own sake, or because it fulfilled certain objectives? We noted that some good unintended consequences would follow, so should these also be listed with the objectives? We had to learn how to prioritise objectives.
Bin Italia had provided an alternative version of the ECI document, the purpose of which was to ensure that the group followed the procedures set out for the introduction of an ECI closely. They were in favour of having less precise definitions of a UBI, so that the EU would have less reason to reject the idea out of hand as inadmissible, and also to appeal to a wider set of interest groups, thus widening participation. Some of their ideas were adopted and were put into the final draft, but Bin Italia felt strongly that there should have been a proposal to vote for either their version or the previous one, but this did not happen.
In the end, compromise has to be reached because one cannot please everyone. I myself would have preferred a slightly different definition of the UBI, which would have emphasised that it was not means-tested, and that it was not just assessed on an individual basis, but also delivered to each adult recipient on an individual basis too. I would also have liked non-selectivity to be introduced as a concept, where the amounts that are received are not based on different characteristics, such as gender, age, marital status or household composition, to distinguish it from the unconditionality concept, where the right to the UBI would not depend on preconditions being met.
The second main purpose of the conference was to draw up the outline of a Campaign for the ECI. This requires obtaining the signatures of one million (1,000,000) EU citizens, out of its five hundred million inhabitants, either through a website, or by the usual signed petition, within a period of one year. A Citizens Committee was set up, comprising an organiser (together with at least two substitutes in case the need should arise) from each country present, to help to organise the campaign. The task is to specify some succinct wording on the petition, and to obtain legal advice to make sure that the wording and process of the ECI conforms to EU legislation: otherwise the Parliament could reject the ECI out of hand. Gerald Häfner was very helpful in giving some overall guidance about how to present an ECI to the Parliament, and he suggested strategies. Klaus Sambor and Ronald Blaschke (who had also been closely involved in the development of the ECI document) were voted as Chair and Vice Chair of the committee respectively. It was agreed that the first meeting of the committee will be held on the 7th and 8th July in Paris. It is hoped that the preparatory arrangements will be made in time for the Campaign to be launched on the afternoon of Sunday the 16th September, the last day of the 14th BIEN Congress, to be held near Munich, Germany.
I am left feeling excited about this new enterprise, but also feeling rather humble as, so often on the continent, all those around could communicate in many languages, while I could merely offer my one and only. I am also left with a warm glow of having been with a group of friendly people, who all believe that ‘human beings are more important than the economy’.
by Citizens' Income Trust | May 25, 2012 | Research
Research published by the Institute for Fiscal Studies shows that ‘Universal Credit will strengthen financial work incentives for some people, as intended, but weaken them for others. In general, incentives to work will be strengthened for the main earner in a family who works part-time or has low earnings, and will be weakened for those with higher earnings and for second earners in couples’ and that ‘moving from the current system of benefits and tax credits to a single benefit will require major administrative and IT changes. It is noteworthy that the government is attempting this at a time when spending on benefit administration (and public service spending generally) is being cut; the fact that such a major reform is being attempted at a time when benefit entitlements are being cut, overall, rather than increased, also increases the political risks to its implementation.
Fiscal Studies, vol. 33, no. 1, 2012, pp. 39-71
