citizens credit

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INTRODUCTION


Some years back the renowned economist, Milton Friedman, in face of recession and low growth, came up with the idea of "Helicopter Money" where actual  cash would be dropped from helicopters for people to collect and spend. As an idea for getting cash directly to the people,and by-passing the banks in order to stimulate the economy, (i.e.Quantitative Easing for the people), it is in much the same quirky bag as Keynes and others' proposals  -  burying money in holes in the ground and people digging it up,etc


Unfortunately many of these schemes have a regressive odour about them : not that long ago in Britain in some rural areas there was a custom of " hot pennies" whereby the gentry tossed super-heated coins down into a crowd of village folk and much amusement was had from the spectacle of urchins and the poor scrabbling for the coins; he who could actually hold onto the hot coin could keep it. Yes, hilarious, and it doesn't take a great deal of imagination to see Milton's idea becoming potentially a successful TV game show : "The Helicopter Money Contest" where perhaps contestants even fight each other to secure the cash.


While Quantitative Easing directly to the people is a positive notion , actual delivery would be much more civilized if it were in the form of a Basic Income Guarantee.

Unfortunately again, there are many systems proposed for Basic Income and many are rightly dismissed as too expensive or too bureaucratic and all ultimately fall foul of the current poitically correct  need for people to be seen  to be  "hard-working" with the related idea of not giving poor people "something for nothing" .The concept of  "working for the dole",  which is  rarely if ever an effective solution to the problem of long-term unemployment ,consequently is also currently popular.

Ian Duncan Smith's proposed "Universal Credit" is almost a parody of the Basic Income idea with a plethora of benefits and allowances including Housing Benefit and some Child Allowances as well as unemployment and in-work benefits being amalgamated and means-tested and amended in real time -  all with the magic of massively expensive I.T. programmes ! While Ian flannelled over the inevitable "delays", the Conservative Party is soft peddling on this grandiose scheme and it is difficult to see it getting beyond a very limited application.

Similarly, the popular version of Basic Income - Citizens Income - is again wildly over-blown, promising "unconditional income for every individual including children" , attempting apparently to replace personal tax allowance and means- tested benefits in a massively complicated manner, which would reportedly result in people being only marginally better off, but with the poorest actually being worse off.No wonder the Green Party leader suffered a "brain fade" in atttempting to explain their Citizen's Income on the media .

My own solution is "Citizens Credit" and the related "Citizens Charter" which crucially modify the idea of Basic Income to make it become a feasible proposition  for both the political Right as well as the Left. A description of how Citizen's Credit would work and some of the potential benefits of the scheme follows. 



CITIZEN'S CREDIT : HOW TO ABOLISH  UNEMPLOYMENT AND REVITALIZE COMMUNITIES.


The current morass.


Whilst the Universal Credit, the UK  Government's flagship benefit reform, has come under increasing criticism -  the Commons public accounts committee describing its implementation as" extraordinarily poor " , and David Cameron's notion of the “Big Society" appears to have evaporated, unemployment remains a key issue, especially amongst the young.


A recent Local Government Association report forecasts 2 million young people jobless or under-employed by 2018, unless radical changes are made to "rescue"  them from long-term unemployment.


It’s not just the serious design flaws in the Universal Credit scheme, it’s a whole attitude to work and society that needs to change radically and urgently.

 

Even with  growth beginning, there is an increasing slide towards a "two tier" workforce. Millions of people are stuck in low-paid, part-time jobs and too often employed on exploitative zero-hours contracts.What growth there is, tends to be   localized and the government's "work and employment creation programmes" fail miserably.


No political party seems willing to bite the bullet and accept that for much of the post-industrial West, for self-evident technological and economic reasons, "employment" will become increasingly scarce and part-time. 


The economist, Edward Hadas, put it bluntly recently : "modern economies are always under job-destroying pressure"; but that's not to say there are not plenty of potential  "beneficial jobs" to be done ,only we need a radical change in values to realize them.


Growth or no growth, the country needs to become more efficient with social systems that are appropriate and productive, and that bring us into the 21st century, away from the almost 19th century language and proposals of the government. Powerful and over-centralized government and media, have eventually persuaded even the voters themselves that they are"supplicants" and not "citizens".


A social welfare system needs to be clear, simple and fair and administered on a local community basis as close to the individual as possible.The core of  the system  should  be based on a contractual recognition of the duties and responsibilities of both the State and the individual. The end effect should be socially integrative and productive and not the alienating and atomising tone of  Ian Duncan Smith's Universal Credit proposals.


No,we do not need more bureaucracy and complication,which IDS appeared manically intent on creating, we need money going directly into local people's hands  who will spend it locally and begin to generate job opportunities,organically, from the ground up.


A new Social Contract ?


And the answer is not revolution but massive devolution.Devolution as far as possible to the people and their communities and,critically,devolution of responsibility to the individual through a proper Social Contract or better, "Citizen's Charter", which will guarantee an individual the right to a decent standard of living through the mechanism of  “Citizen’s Credit” in return  for a positive commitment by them to their community, and the acceptance by them of a degree of responsibilty for the health and safety of themselves and their family, their community and their environment.


The Citizen's Charter would have far greater social and political resonance particularly when compared to the demeaning "Claimants Commitment" associated with Universal Credit.The Citizens Charter could indeed be the local manifestation of a  much needed future national written Constitution and Bill of Rights for the UK.

 

In our ultra-materialistic commodified culture, money is everything and life is impossible without it. Consequently “giving power to the people" must involve giving them money, (or a basic income), as well as the vote. Moreover, many economists are at last coming to realize that it would make more sense, in a situation like the recent  recession, to give money directly to individual citizens as "cash transfers",  (i.e. “quantitative easing” for the people), rather than to the discredited banks and financial institutions.


As Mark Blyth and Eric Lonergan recently pointed out in the journal "Foreign Affairs" : cash transfers like Citizen's Credit,  by affecting demand directly, could put an end to recessions, and also " would help address inequality  -  without skinning the rich " .


With its  roots in 18th  and 19th century visionaries like Thomas Paine, the idea of Basic Income has come to have a surprisingly wide appeal on both the left and right of politics; recently Sam Bowman ,of the Adam Smith Institute, affirmed  his belief  that "the ideal welfare system is a  Basic Income".


Although a substantial Welfare Budget already exists, its effective distribution suffers from over-centralized bureaucratic inefficiency and unaccountability which , (on previous form),the “Universal Credit” will not resolve. Ultimately the more democratic and cost- effective “Citizen’s Credit” scheme should not, in effect, necessitate any extra funding, particularly when the value of the participant's "free labour" is taken into account; there could in fact be significant savings.


Citizen's Credit is a matter of urgency...


Given the wretchedness of so much of modern politics and politicians,both domestic and international, and the threat of imminent economic collapse or armed conflicts, the need to look seriously at Basic Income becomes increasingly urgent.


Firstly ,because there needs to be some form of quid pro quo for the general public to compensate for the actual loss of liberties(and privacy) involved in living in our "modern world of surveillance and security", as well as other more material problems both in the UK and the USA where for some decades now people have been working longer hours for effectively less reward whilst the rich have become increasingly richer despite the austerity measures imposed by governments. As the early proponents of Basic Income warned, the inabilty of government to be able to provide any form of meaningful  compensation or redress for these shortcomings now, or in the foreseeable future, presages social disorder and the possibility of violent social revolution.


And even without a third world war or global financial and social collapse, it is now widely accepted that present political system and welfare provision are no longer fit for purpose, and there must be some conception of what a fairer system would look like and how it might be achieved.


Some negatives....


Current basic income schemes generally suffer from trying to be too inclusive and want to include people actually in work (and sometimes their children too), and are consequently very complicated (and expensive)  to administer and that in turn generally infers only some kind of limited supplement to existing incomes.


Whilst a wholly unconditional universal Basic Income for everyone would in many ways be ideal,to promote this concept currently is both unrealistic and possibly counter-productive.The conditionality and gradualism inherent in Citizen's Credit would be ultimately more effective.


Additionally in recent times, from both the political Left and( particularly) from the Right,as well as in the mass media, there has been concerted  propaganda against welfare claimants with the idea of  employment (no matter what) being the solution to all individual and social  problems..


Consequently amongst the general public there has arisen a widespread hostility against what's seen as "something for nothing " welfare provision. Unfortunately this comes on top of  long-standing and consistent efforts from what could be called "forces of reaction" and " vested interests" to discredit the whole notion of the Basic Income concept.

 

My solution is a "Citizen's" or "Community Credit” scheme which would essentially involve the payment, as of right, of a “living allowance” calculated annually according to standardized formulae to reflect inflation and so on. Currently a figure of around £150 per week would appear appropriate.


Citizen's Credit payment and Local Government empowerment


This "Citizen's Credit” would be paid to every citizen on the local electoral register and would be credited to  an individual via the local council which already has relevant registration, collection and payment services available, established to deal with Council Tax and Housing Benefit.


The funds currently available via the D.W.P. and H.M.R.C.  for social and welfare benefits and payments (like Income Support ,Jobseekers Allowance and Working Tax Credit) should gradually be transferred directly to (reformed) local authorities. This, along with the responsibility for administration and payment of Citizens Credit would inject much needed cash into local government ( i.e. devolution and “localism” in action rather than mere rhetoric), and counteract Westminster's current blood-letting of local government.The result  might be the beginning of increased  confidence  and an altogether more dynamic, enterprising attitude  by local government , as well as  improving their  public image. 


Freedom to raise taxes and borrow money in order to invest in local infrastructure and housing are being increasingly recommended for councils along with the creation of regional banks.A recent (February 2015) report by the Independent Commission on Local Governmnet Finance has indeed emphasised that England's local authorities  need " urgent devolution of powers,funding and taxes".


Most importantly, local resident’s attention would increasingly focus on their local council and greater transparency and accountability would be required and demanded. The scheme would moreover encourage the much-needed upgrading and reform of the electoral register itself  and encourage electoral participation as well as help reduce false and fraudulent benefit claims.


At some stage, perhaps compulsory electoral registration and voting might well usefully be considered.


Eligibilty: not "something for nothing"...


Citizen's Credit, although primarily concerned to deal with the problem of eliminating "core" or long -term unemployment, particularly amongst the younger and older unemployed, would be a universal entitlement to all eligible citizens, with some adjustments for age and household structure; not means-tested but liable to tax.


The award of the Credit and the formal signing of the accompanying "Citizen's Contract" would imply some measure of achievement and consequently "status" or social recognition, unlike the actual social stigma currently associated with the recipients of unemployment and welfare benefits.


The participants could possibly at times operate in a way similar to Community Support Officers and this "Citizens Community Service" could provide much needed social contact and lubricant in our increasingly atomized and alienated society where people do not know their neighbours, and isolation and loneliness are increasing problems that local councils, with diminishing budgets,struggle to address.


Traditionally "volunteering" in the UK has typically been dominated by the middle class and consequently the working class can be somewhat deterred from participating.Citizen's Credit would help remedy this as well as providing extra funding for traditional volunteers.


Unpaid volunteering will continue to be important and volunteers will have a significant role in a "Citizens Service". Communities as a whole would benefit from the much wider participation and awareness provided by the "paid volunteering" inherent in Citizen's Credit.


Payment via the local council could avoid much of the current wasteful duplication and lack of accountability in means-testing by both the local council and the DWP. The eventual savings from integration and simplification of welfare payments would be immense and far exceed those of Ian Duncan Smith’s cumbersome Universal Credit, which will cost billions to implement and administer and like Working Tax Credit, remain much more vulnerable to  error and fraud.


Citizen's Credit would effectively supersede "Universal Credit" which increasingly looks unlikely to be implemented in any meaningful sense.The delays and prevarications  of Ian Duncan Smith continue and the recent further  postponement of the  introduction of his PAYE Real Time Information requirement from "micro- employers", is an indication of how  complicated and difficult  any realization of this  grandiose scheme is.


Citizen's Credit would not be "something for nothing", to qualify for their credit , an individual would have to register as being “available for community work”, and would be expected to be available to do the equivalent of say, at least one day's work per week, given reasonable notice. The local authority would thus be provided with a readily available pool of labour.

 

The scheme would entail a gradation of  participation, from the  actual direction of younger citizens - with perhaps as much as two days' commitment from them and a reduced credit of say, £100 ,where they were living at home, (which would be fair in terms of being roughly equivalent to two days employment at the minimum wage rate), to increasing flexibility and choice with minimal direction for older citizens,who in effect could be largely responsible for running the scheme.


Citizen's Credit plus a bit more?


Pensioners could register for the scheme on a purely voluntary basis and at some future date the Credit might replace or complement the State Pension. In any event a new approach to “retirement” and part-time working and volunteering is urgently needed.


Ultimately the scheme, should be self-regulating and  it would be up to the local or regional authority and the citizens themselves to define what constituted  appropriate "work" and "participation" as well as eligibility, which would typically include the unemployed, the disabled, students, carers, part-time workers and some self-employed  and retirees. 


Citizen's Credit, while providing for  adequate subsistence in itself, would also be flexible  enough  for people to do further part-time work ,by arrangement, but subject to capping , possibly at the level of the national minimum wage ( or better still a "living wage"). The effect would  be similar to the current Working Tax Credit, only much less bureaucratic, a lot less expensive,and fairer. It would also help counter those arguments that suggest Basic Income acts as a "disincentive to work".


In passing, it's worth mentioning that although desirable in themselves, minimum wages and living wages are not solutions to the problem of unemployment and "job extinction", in that they make it more difficult , particularly for the smaller employers, to hire more staff, whereas Citizen's Credit would allow someone,for example, to undertake an unpaid internship.


The abolition of "unemployment" and other benefits...


The introduction of Citizen’s Credit would allow the designation “unemployed” to be removed at a stroke. Those who chose not to participate, (and those breaching C.C. conditions), would continue to have to claim their benefits and suffer the privations and social stigma that have always accompanied "unemployment" and "signing on". People who are genuinely "socially challenged " or "dysfunctional" should be recognised as such and given the requisite training and/or care.


With the success of the scheme, “unemployment” could eventually be abolished altogether, with “citizen's community service” being the default occupation of all those who needed or wanted it.


The benefits arising from the Citizens Credit scheme are potentially myriad: the free labour of participants, almost instantaneously available to councils, would transform their social and environmental and emergency services. Moreover there is no reason why a Local Authority should not become, (directly or indirectly), the main training and “job centre” for the public, private and voluntary sectors in their area. 


Importantly, particularly amongst the more deprived members of the community, it would also not be unreasonable to expect a diminution in crime levels and anti-social behaviour, given the "carrot"  of an assured and adequate income and the "stick" of  suspension from the scheme.


Similarly,the sense of security provided by the Citizen's Credit payment would relieve much of the anxiety and unhappiness amongst the poorer sections of society and consequently reduce the dependency on and abuse of, alcohol and drugs (including prescription drugs), with enormous savings in the cost of state health provision .The unacceptable levels of mental health problems and suicides amongst  the unemployed would also surely improve under a Citizen's Credit scheme.


Citizen's Credit would help boost the resources of charities; moreover the pooling of Credits or their “free" labour could also help small groups undertake environmental projects as well as helping to establish social and business enterprises. Areas such as cooperative childcare, care of the elderly, recycling household waste etc , could all benefit and the foundations of a truly "Big Society" begin to be established.


A future with a more secure and satisfying life-style?


Already there are signs that people yearn for real change, and the recent RSA report on the surge in self-employment showed that while "escaping unemployment" remained an important factor, "greater freedom" and the ability to develop their own ideas were  more common reasons given for becoming self-employed. 


However, notwithstanding the success of grass roots movements  like LETS and "Transition Towns" ,in the short and medium term we will continue to rely on modern consumer capitalism, (hopefully significantly reformed and regulated), and traditional patterns of employment.


Clearly, in itself, Citizen's Credit is not  "The Revolution"  but it will address some of the serious shortcomings in our present system.Moreover it will be the beginning of a radical change of attitude to employment and community and along with the devolution of government to the more local level, will allow our society not just to survive but  be revitalized.


For me, in the longer term, everybody should be able to become increasingly involved in responsibly running their own lives and communities and should be rewarded adequately for doing so in the form of a Guaranteed Basic Income.


Democracy means government of the people by the people and especially now in the age of I.T. and the Internet , the emphasis can and should be increasingly on local rather than over-powerful, inefficient and yes, thoroughly discredited , central government. Significant advances in science and technology seem too often utilized for increased monitoring and control of the population or for military use, rather than for the benefit of the people as a whole.


Citizen's Credit would begin to redress the imbalance between the excessive power of central government ,with its demands for cash and compliance, and the rights and entitlements appropriate to the status of "citizen". I believe in a true Democracy, politics is the business of the people,and in future they should be  paid by means of Citizen's Credit or Guaranteed Basic Income, for exercising this responsibilty, in the same way M.P.'s are today.


Unfortunately implementation of Citizen's Credit would involve such an enormous transfer of cash and power from central government to local government that its achievement would meet enormous resistance by the current political establishment and require something of a revolution in mass political thinking and attitudes. Such changes may however prove inevitable in any case.


Recently there has been progress in recognising the need for devolution of spending and taxation to local authorities - local spending creates local jobs - but attitudes to welfare reform and Basic Income have possibly hardened despite Ian Duncan Smith and his Universal Credit and Work Programme schemes being increasingly seen as a disaster.


Citizen’s Credit will provide a secure platform for the unemployed and disadvantaged but also could initiate a turning away from environmentally damaging and socially alienating consumer materialism towards an emphasis on quality of living, with perhaps a simpler, but ultimately more relaxed and satisfying life-style -  something which has so long been promised by technological advances, but  for most people, never delivered.



 VICTOR  COCKERILL     [email protected]          07923481630


Victor Cockerill is an independent writer and researcher and former market research consultant and

lecturer.



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