by Citizens' Income Trust | Jul 3, 2015 | Opinion
Christopher Balfour, Learning from Difference: 150 years of family endeavour. From Afghanistan and the Americas to the Meon Valley and loss of an airport, Tricorn Books, 2014, 1 1909660 27 4, hbk, 267 pp (along with some diversely numbered pages of photographs), £20. Available from pgwells@btconnect.com and Amazon
You need to be strong to read this book, because it weighs in at 1.5 kg; and you need to have time to spare, because it is long – perhaps rather too long in places. But it is worth the effort, because by the end of it you will have a deeper knowledge of Britain’s industrial history and of its politics, and you will feel that you know both Christopher Balfour and his fascinating collection of ancestors.
Family history is a boom industry, but there are few people who have constructed such a detailed family tree back to the seventeenth century. (Distant relatives are Basil Jellicoe, of Camden Housing Association fame, and Ludwig Wittgenstein, the philosopher.) And there are few people who have gathered so much detail about the lives of parents and grandparents – sometimes too much detail. But having said that, the reader will finish the book knowing a family of independent-minded entrepreneurs – mainly in the aircraft and shipping industries – and feeling deeply the financial and other risks that they took, and their successes and the failures.
The first part of the book is about Christopher’s forebears, but readers of this Newsletter, and particularly those who know Christopher, will value most the second part. Here we hear about Christopher’s time at Eton, his National Service in Libya (he thinks that he should have delayed it to join Rootes the car manufacturer), his rather desultory Cambridge career (he arrived not having decided what to study), a journey by road to Afghanistan (clearly much enjoyed, but it’s where his health problems began), a few years of doing this and that, failing to win Gloucester for the Conservatives at the 1966 General Election, and then being ejected as Gloucester’s Conservative candidate because of his rather independent views. He worked for the Youth Employment, later Careers, Service, in Warwickshire and a London borough; became an independent local councillor in the Forest of Dean ( – independence clearly suited him); employed family capital to become a Name at Lloyd’s (which involved unlimited liability); and at various periods bought, refurbished and sold valuable ancient cars. To those of us who know the quiet-spoken Eton-voiced Christopher, the risk-taking and the general air of chaos of the life recorded come as an interesting surprise.
As a Councillor, Christopher was involved in establishing training projects for people without employment, and battled to raise the earnings disregard relating to Supplementary Benefit (an out-of-work means-tested benefit). As a member of the Conservative Party he was firmly in the ‘One Nation’ camp with people like David Howell and Brandon Rhys Williams, and in the book he argues not only for the Citizen’s Income that they wanted to see implemented, but also for the raising of additional money to pay for it, perhaps by establishing a financial transaction tax.
This is a most honest book in which we meet Christopher, the real person, with his enthusiasms, successes, failures, and humanity. A conclusion that perhaps Christopher might have drawn is that his life mirrors that of our economy during his lifetime: the difficulties of manufacturing industry; the rise and fall of the public sector; and the risks of the financial industry. And there is also a sense in which his life mirrors that of our society: war, the post-industrial world, and the journey from open debate to machine politics. It is easy to see how Christopher’s advocacy for a Citizen’s Income stems from his multi-faceted experience. That life and our economy and society having run so closely parallel, we now await both our economy and our society advocating a Citizen’s Income: and, we hope, implementing it.
by Citizens' Income Trust | Jun 22, 2015 | Opinion
Andrew Jackson and Ben Dyson, Modernising Money: Why our monetary system is broken, and how it can be fixed, Positive Money, 2012, 0 9574448 0 5, pbk, 334 pp, £14.99
A bank loan is a change in the electronic digits attached to my bank account number. The bank has simply created the money that it has lent to me. The message of this book is a very simple one: This shouldn’t be allowed. The only institution that should be able to create money is an independent public body.
Modernising Money recounts the history that gave rise to the current state of affairs; shows that 97% of money exists in the form of bank deposits; and discusses the factors that determine how much banks lend, and therefore the size of the money supply. Much of the money created by the banks buys assets that are in limited supply, such as houses, and it therefore creates price bubbles. Too little of it is employed as investment in the productive economy. If the loans are not repaid, then lending stops and a recession is the result. Interest on public and private debt transfers money from the poor to the rich and so increases inequality; and the payment of interest requires climate-changing economic growth: but attempting to reduce the level of debt reduces the money supply and can lead to recession.
Clear and persuasive diagnosis is followed by a clear and persuasive prescription. Banks should be prevented from creating money, and an independent body should be charged with creating money and spending it into the economy as government spending, tax reductions, debt repayment, payments to banks on condition that the money is lent to productive businesses, and direct payments to citizens. Chapters then discuss the transition between the current system and the new economy that would be created by the new method for creating money, and the impacts of the new system on democracy, the environment, household indebtedness, the banks, and businesses are debated. As the concluding chapter puts it, ‘the monetary system, being man-made and little more than a collection of rules and computer systems, is easy to fix, once the political will is there and opposition from vested interests is overcome’ (p.283).
In some ways the situation relating to money creation mirrors the one facing our tax and benefits systems. Both have evolved over time, both exhibit complexities, both are tangled up with a wide variety of other aspects of our society and our economy: and genuine reform of both is resisted because the transitions look difficult and the effects of change are difficult to predict. It is precisely these aspects of the two situations that make it so difficult to generate the necessary political will to create the necessary change. Both fields would benefit from Royal Commissions or similar wide ranging consultation exercises. In both cases, the international effects of making the recommended changes would be important matters for discussion, as would be the details of the transitions that would need to be managed between the current situation and the future situations envisaged by the authors of this book and by the Citizen’s Income Trust.
The book has no index, which is a pity: but otherwise it is a well-produced, informative and well-argued essay that deserves attention.
by Citizens' Income Trust | Jun 5, 2015 | Opinion
John Hills, Good Times, Bad Times: The welfare myth of them and us, Policy Press, 2014, 1 44732 003 6, pbk, xviii + 323 pp, £12.99
The title says it all: the normal experience for most families and individuals is that there will be good times and bad times; and it is simply not true that society is made up of two relatively stable groups: one group of people that pays for the welfare state, and the other that benefits from it. The political polemic of ‘strivers’ and ‘skivers’ is precisely that: political polemic. At different points in our lives we might be net contributors or net recipients in relation to the welfare state, but there is nobody who does not at some stage benefit from its provisions. Another myth that the book challenges is that vast sums are spent on supporting people who are ill, disabled, or out of work, whereas in fact the budgets for the relevant benefits are small compared with the budgets for the pensions and healthcare from which all of us benefit.
The author employs a number of literary devices to get his message across. He writes about the different ‘wavelengths’ along which changes occur: for instance, the long wavelength within which we accumulate and then run down assets as we progress through middle age and into old age; and the short wavelength of coping with the loss of income precipitated by unemployment or illness. And throughout the book he follows the fortunes of two fictitious but recognisable families: the middle class Osbornes, and the working class Ackroyds.
If you don’t have time to read the whole book, then read the diagrams and text about these two families at the beginning of each chapter. The picture that they reveal is that both families benefit from the welfare state, and that taking the tax and benefits systems as a single system, the Osbornes do rather well out of it. But if you do have time to read the whole book then you will find that the mass of survey data discussed in the body of each chapter reveals a highly complex picture, an important characteristic of which is that what is normal for the Ackroyds is rapid and frequent change in their economic position. One week a government minister might describe them as ‘skivers’, and the next they would be praised as ‘strivers’. Another important characteristic that hits the reader time after time is the effect of initial social and economic capital on economic and social capital outcomes. The social mobility ladder seems to have some rungs missing.
Along the way, we discover how unequal predistribution is in the UK compared with most other countries, and how much harder our welfare state therefore has to work to generate a little more equality; we notice how much everyone benefits from the welfare state, particularly in childhood and old age; we discover how difficult it is for Working Tax Credits – and in the future how difficult it will be for Universal Credit – to respond to the rapid changes in income level experienced by an increasing number of households; we understand how current austerity measures reduce the incomes of low income households but largely protect the incomes of higher earners; and we find that wealth inequality is exacerbated by a tax system that rewards the already wealthy and a benefits system that takes household wealth into account when benefits are calculated.
John Hills is the Director of the Centre for Analysis of Social Exclusion at the London School of Economics, and this book is full of thorough analysis of social exclusion. A few questions are asked at the end about the ways in which future policy might take into account the book’s findings, but Hills leaves it to others to work out what should be done to rectify the situation that he discovers.
Of particular interest to readers of this Newsletter will be the numerous ways in which a benefits system based on a Citizen’s Income would respond to the problems explored in the book. In particular, a Citizen’s Income would cohere far better with rapidly gyrating earnings than means-tested benefits will ever manage to do. But perhaps the most important lesson that the book holds for anyone promoting debate on social policy reform is that however thoroughly robust evidence and logical argument manage to demolish myths perpetrated by the press and by politicians, those myths persist. So perhaps however good the evidence that a Citizen’s Income would be feasible, the myth will persist that it isn’t. If John Hills’ book manages to reduce the potency of the myth of them and us, then some of us might begin to hope that the myth of a Citizen’s Income’s infeasibility might one day lose some of its strength.
by Citizens' Income Trust | May 24, 2015 | Opinion
Donald Hirsch, ‘Could a Citizen’s Income work?’ A paper commissioned by the Joseph Rowntree Foundation as part of its Minimum Income Standard programme, and published in March 2015. www.jrf.org.uk/publications/could-citizens-income-work
The Citizen’s Income Newsletter usually mentions relevant think tank research and working papers in the ‘news’ section, or occasionally in the context of an editorial, but Donald Hirsch’s paper is particularly significant and so demands a full review. Its importance is twofold: it evaluates a number of Citizen’s Income schemes for viability; and it identifies the changes that might be required in the ways in which the public and policymakers think about income maintenance if a Citizen’s Income were to be a possibility. The paper therefore tackles a number of different feasibilities: financial feasibility, psychological feasibility, and what we might call institutional or policy process feasibility.
The paper recognises that a Citizen’s Income would address some very real problems experienced by the UK’s current largely means-tested benefits system. For instance: a Citizen’s Income would not be withdrawn as earnings rose, and so would not impose the employment disincentives that means-tested benefits currently impose; no stigma would be attached to a Citizen’s Income; and a Citizen’s Income would be simple in structure and so would not suffer from the complexities of much of the current system. The full list of arguments on page 4 of the paper is a model summary of the case for a Citizen’s Income.
The major contribution of the paper is the way in which it outlines the three ‘seismic shifts’ that would need to occur in public attitudes if a Citizen’s Income were to be implemented. The public and policymakers would need to be convinced
- ‘that everyone should be given some baseline level of financial support from the state, even if they choose not to do anything to try to earn money for themselves;’ (p.5)
- ‘that the basic marginal tax rate should be substantially higher than it now is, since otherwise almost everybody’s net income from the state would rise, and there is no obvious way to finance this.’ (p.5)
- ‘potentially a reduced role of the state in ensuring that each citizen can afford particular essentials, notably housing and childcare, through income transfers, if a citizen’s income replaced means-tested payments for these.’ (p.3)
Hirsch says of the first two of these seismic shifts:
Politicians are likely to perceive both of these as unacceptable to voters, a view supported by evidence on social attitudes. It can be argued that both of these conditions could become more acceptable under a regime with a citizen’s income than they are now. Persuading the public and politicians of these arguments, however, would not be easy. (p.5)
And he says of the third:
Under a system of largely market-based rents, it would not be easy to include a simple rent element in a citizen’s income payment without creating shortfalls for some or large surpluses for others. (p.5)
Particularly in relation to the first two seismic shifts, Hirsch’s conclusion is that ‘a debate about the principle of a citizen’s income may thus contribute to a long-term reconsideration of policies and attitudes towards state support’ (p.3).
The paper contains a useful study of the differences between Universal Credit, Negative Income Tax, and Citizen’s Income; a discussion of the ways in which Income Tax would have to rise to pay for different levels of Citizen’s Income; an exploration of the different ways in which Citizen’s Income schemes might tackle differing housing costs; and a discussion of the way in which abolishing tax allowances, such as the Personal Allowance, rather than simply raising Income Tax rates, could pay for a Citizen’s Income. It also contains a description of the differences between the levels envisaged in various researched schemes and the Minimum Income Standards researched by the Joseph Rowntree Foundation ( – although it has to be said, of course, that the current benefits system does not come anywhere near to the levels of the Minimum Income Standards). Then follow descriptions of the kinds of households to which a Citizen’s Income would tend to redistribute income, and the important statement that ‘all the [paper’s] calculations make the simplified assumption of no behavioural change. Knowing what would actually happen to earned incomes as a result of a citizen’s income is very difficult, but is likely to affect outcomes quite profoundly’ (p.16). Then come discussions of household and individual assessment units, the effects of different approaches to meeting housing costs, and lifecycle redistribution. A particularly important section is a discussion of a Partial Citizen’s Income as a stepping stone towards a full one. A partial Citizen’s Income would be likely to impose losses on low income families if means-tested benefits were abolished, and to impose additional complexity if they were not. Hirsch suggests that a Partial Citizen’s Income might be useful if it could be implemented as one stage of an already agreed plan to implement a full Citizen’s Income. There is much merit in this suggestion.
Hirsch describes the Alaska Permanent Fund, and the Namibian and Iranian schemes, but not the more recent Indian pilot project. He correctly points out that these schemes have not reduced employment market activity, and might also have said that in the Namibian pilot project a significant increase was in evidence.
Hirsch makes the important point that income is different from such services as healthcare and education because households generate income as well as require it. This means that it is important to ensure that a Citizen’s Income scheme does not inadvertently reduce the amount of income created, and that both removal of the Personal Tax Allowance and higher Income Tax rates might have such effects on earned incomes. In his concluding section, Hirsch suggests that a Universal Credit with a lower taper rate might be a useful step in the direction of a Citizen’s Income. He might also have pointed out that Universal Credit is not universal, is not based on the individual, is not unconditional, is still means-tested, and is regressive.
When it comes to the study of particular Citizen’s Income schemes in the paper’s appendices, the paper makes two valid points: that the immediate implementation of a ‘full’ Citizen’s Income is unlikely to be feasible in the short term; and that, because a ‘partial’ Citizen’s Income would not fully replace means-tested benefits, it could make the system even more complicated.
Following a description of the Citizen’s Income Trust’s 2013 illustrative scheme, Hirsch proposes changes and lists their additional costs, which is useful, but is not itself a criticism of the scheme as published. He then studies the Institute for Social and Economic Research working paper proposals (reprinted in the previous edition of this Newsletter), and correctly recognises that in order to reduce losses in disposable income, a means-tested system needs to be retained and that this would create an additional level of complexity.
Hirsch’s descriptions of these recently researched Citizen’s Income schemes are largely accurate. There are places in the discussion at which a broader canvas would have been helpful. For instance, the discussion of the higher rates of Income Tax that would be required might have included consideration of overall gains and losses – for if a household’s Income Tax rate rises, but the overall effect of the Citizen’s Income, increased Income Tax, and alterations in other benefits, leaves the household with the same disposable income, then for households originally on in-work or out-of-work means-tested benefits, it really is no problem that Income Tax rates have risen – except that, as Hirsch correctly points out, Income Tax rates are a psychological issue as well as a fiscal one: and it is in the area of the psychological issues related to Citizen’s Income that his paper makes a most useful contribution. An additional important issue is that where households are not currently on means-tested benefits, and Income Tax rates rise, then even if there is no overall loss in disposable income at the point of implementation of a Citizen’s Income, those households’ marginal deduction rates will rise. This might result in behavioural change in the employment market.
A further issue to which Hirsch correctly draws attention is that of redistribution. For schemes in which means-tested benefits are abolished, redistribution effects could be substantial. Hirsch evaluates a particular scheme of this nature, and concludes that
the overall distributional effects would include, but not be restricted to, a redistribution of income from better to worse off groups. There would also be a significant redistribution from people without children to those with children among lower earners, and also some losses for those with very low part-time earnings. Finally, … among groups presently receiving transfers from the state, couples would do relatively better than single adults (with and without children). (p.15)
So either such redistributional effects would need to be justified, or a different kind of scheme would need to be selected. Hirsch does not study in detail the redistributional effects of Citizen’s Income schemes that retain means-tested benefits, where those means-tested benefits are recalculated by taking into account households’ Citizen’s Incomes as existing income. This would require the kind of microsimulation work contained in the Institute for Social and Economic Research working paper (Torry, 2015). The low levels of gains and losses generated by such modelling of the alternative schemes in that working paper suggest that redistributional effects would be far less significant than for schemes that abolish means-tested benefits. Clearly further research is needed in this area.
In relation to those same alternative schemes, and to his discussion of housing costs on p.13, Hirsch might have mentioned that the schemes researched in the 2015 Institute for Social and Economic Research working paper are clear that housing costs support would be left as it is under the current system. A further issue that Hirsch might have discussed is that the ISER paper employed the Euromod modelling software and Family Resource Survey data to generate entirely robust costings and results on gains and losses. As he recognises on p.26, his own paper does not calculate precise tax rates and income outcomes. It would have been able to do so if his suggestions had been modelled using Euromod.
This review cannot do proper justice to the detail contained in Hirsch’s well-researched and well-ordered paper, but we hope that it will encourage our readers to read his paper for themselves, to study his arguments, and to ponder his conclusions. Any future study of the feasibility of a Citizen’s Income, and of particular Citizen’s Income schemes, could do a lot worse than set out from the arguments of this paper.
Hirsch has already done the Citizen’s Income debate a significant service, and we hope to see further such analysis and argument in the future. What would be particularly useful would be to have a side-by-side evaluation of the current benefits system and of a Citizen’s Income scheme (both with and without accompanying means-tested benefits), treating the two systems as competitors on a level playing field, and evaluating them according to a set of clear criteria. As Hirsch says,
the present system suffers from strong negative perceptions and a consequent lack of political support, which has helped the implementation of recent cuts in the real value of benefit levels without obvious political fallout. If a citizen’s income or any other reform could command public confidence, this would help strengthen the underpinning of a system which ensures that nobody in the UK lacks a basic level of income. (pp.4-5)
by Citizens' Income Trust | Feb 20, 2015 | Opinion
Bruce Nixon, A Better World is Possible: What needs to be done and how we can make it happen, O Books, 2011, 1-84694-514-4, pbk, 396 pp, £14.99
This really is a book about everything: the financial crisis, climate change, peak oil, ecosystem destruction, poverty, and war: and it is about solutions to everything, with the solutions organised in layers: first, principles, then the required paradigm shifts, and then the detail. For instance, in relation to climate change: the solution is ‘greening the world’; basic principles are, for instance, ‘minimise use of non-renewable resources …’; one of the paradigm shifts required is ‘from linear to cyclical production processes’; and that paradigm shift is then spelt out: ‘Creating an economy founded on solar and nature’s energy and the principle of recycling’. Perhaps the best way to describe the book is as an instruction manual for the planet.
In relation to the economy, Nixon calls for money to be created only by national reserve banks as agents of the state, and not by commercial banks; and he calls for a Citizen’s Income to be paid for by a Land Value Tax. Nixon’s two main reasons for calling for Citizen’s Income are that it would ‘reduce the need to chase economic growth for the purpose of income distribution’ and that it would ‘introduce the culture of sharing, recognising that everyone has a right to a minimum share in wealth created through the use of skills and technologies that are our common heritage’ (p.142).
Chapters follow on community democracy, food sovereignty, sustainable cities, an end to war, and (again) climate change. A final chapter is titled ‘What we need to do’, by which Nixon means both ‘What the whole of humanity needs to do’ (for instance, ‘fair taxation, land value tax and citizen’s income’ (p.205)) and ‘What you can do’ (for instance, ‘organise … massive education and awareness raising’ (p.206)).
This book is both exhaustive and exhausting, and properly so. Some massive interconnected problems face the human race, and to bring so many of them together in a single book makes clear the size of the task and the fact that change is required at every level: global, nation state, local community, and individual. The size of the task suggests that success might be out of reach, and that we should resign ourselves to runaway climate change, resources wars, and poverty; but that is not where the book ends up. Nixon is a fan of Mahatma Gandhi: ‘Whatever you do may seem insignificant, but it is most important that you do it’ (quoted on p.209).
As the book suggests, just one element of the diverse and complex changes required of us is a Citizen’s Income. This is one element of Nixon’s massive wish-list that is achievable in the medium term and that could be implemented without requiring additional public expenditure. It could be an early win in the long process of creating a ‘better world’. Until it happens our task remains ‘education and awareness raising’ (p.206), and it is most important that we do it.
