19 - Basic income: a powerful tax engine pulling a tiny cart

Summary

‘I fear that this latest plan will drain the energies of the left in social policy and will divert attention from so many other worthwhile policy alternatives.’

Yet another proposal for basic income, this time from the left. It is an evangelical, revolutionary idea (once hailed as ‘the capitalist road to communism’) but it is deluded and diversionary. The Compass scheme does set out how to pay for a partial basic income for all: a rise in all income tax rates of 5p, the abolition of the personal tax allowance and the extension of national insurance contributions to all employees. These will raise the bulk of the £210bn gross cost. What is achieved? A big cut in child poverty, yes, but tiny falls in pensioner and working age adult poverty, despite the latter being the basic goal of the policy. And the numbers reliant on means testing will be cut by only one-fifth.

Thus a powerful new tax engine will pull along a tiny cart (a partial and inadequate basic income). Why bother? The underlying belief or dream is that basic income will provide a mobilising theme to bring about radical change. There is no evidence anywhere in the world for this. Similar proposals have been made every few years for the last 50 years and they have got nowhere (and I do not mention Switzerland).

The problem is that it combines a radical vision with a naive or insouciant view of politics. Like all big-bang solutions it ignores contexts, politics and transitions. Somehow the fact that it is also advocated by neoliberals and Silicon Valley libertarians is seen as a plus.

I fear that this latest plan will drain the energies of the left in social policy and will divert attention from so many other worthwhile policy alternatives: the living wage, boosting trade unionism, free childcare, radical changes in housing policy, policies to reduce working time to limit turbo-consumption, green investment and so on.

Letter to the Guardian, 10 June 2016: theguardian.