Easy-peasy….for of course we’re going to abolish all corporate welfare (bye bye regional development agencies!) saving 10 billion a year. Shave 10 billion a year off education by making each school independent and thus closing down the LEAs.

Leave the EU, saving another 10 billion….you know, 10 billion here and 10 billion there and pretty soon it adds up to real money.

Anyone who thinks (even in the absence of dynamic scoring or Laffer effects) that we cannot shave 20% off a currently bloated budget just isn’t thinking.

Given that we’ve just abolished the pension, jobseekers, etc etc etc at the same time could be done.”

Citizens Income Trust figures show that abolishing all those benefits (plus removing all tax relief and allowances – which you might not be so keen on) would raise about £200 billion (2006/7 numbers). So there is still another £90 odd billion to be found by raising taxes or reducing spending in other areas – on top of the current deficit.

http://www.publications.parliament.uk/pa/cm200607/cmselect/cmworpen/463/463we03.htm

This strikes me as challenging.

A boon to anyone who finds dealing with bureaucracies less than exciting.

CBI is an entitlement paid automatically.

You wouldn’t have to attend a Jobcentre and converse with the kind of morons that find such a job life fulfilling.

I’ve been on the receiving end – they didn’t like the fact that I brought my two small children in. Couldn’t I leave them with someone? On a fortnightly basis for about two hours as a movable feast. If not, how did I expect to get a job? They obvioussly didn’t realise that I needed a proper job before I could AFFORD childcare.

Means testing has two flaws. The first is that as people earn money, benefit is reduced, so they are only slighly better off, or often no better off at all. This obviously reduces incentives to work. This can be fixed by having benefit withdrawn more slowly as people earn more money.

The second problem is much harder to fix. Imagine someone is unemployed and getting £100 in benefits. They are then offered a casual job paying £6 an hour doing a variable number of hours every week. The first week they do 10 hours and get paid £60. The next week 40 hours, and paid £240, the third week 20 hours, pay £120, etc. Under a means tested benefit system, they have to get paid a different amount of benefit every week (alternately the total amount of benefit could be adjusted every year, meaning they have to pay back a large amount at the end of the year. This is obviously going to be very administratively cumbersome, particularly if they have to fill in a form for their changed circumstances every week and spend two weeks getting it processed. In fact it’s going to be so much of a hassle they won’t bother doing the job at all.

I admit, I’m being a bit knee jerky, but the Citizen’s Income SEEMS to knock on the head the whole “from each according to their needs, to each according to their ability,” or something, that’s supposed to run deep in our veins. I’m a big fan of means tested benefit, and this seems to fly in the face. I’ll need to do more sneaky reading before I come back to it, though, and how this would affect existing taxes.

in a way we DO get a Citizen’s benefit – the 7K that we get to keep pre-tax, and that comes to the unemployed by way of JSA.

The trouble with any non coercive welfare state is balancing incentive vs starvation and crime, and short of selling the unemployed to corporations by way of indentured servitude, and passing the responsibility for paying their living costs to them, I can’t see a way forward.

CBI is redistribution, not an increase in aggregate real income. Even if it was such an increase, aggregate income increases continually, and the real price of goods sold by Tesco still falls. CBI isn’t an increase in the money supply either, which would be inflationary, all else equal.

DHP, if you object to CBI on these (mistaken) grounds, would you object to increase in existing welfare benefits and tax relief? Both cause redistribution toward the poor. Redistribution toward the poor causes an increase in demand for the goods that the poor consume. There might be an increase in the real price of those goods, if supply cannot respond. There’s no reason to think supply cannot respond, over the medium term. But any short-run price increase wouldn’t be down to Tesco, who is just a middle-man and whose price setting (choice of mark-up) behaviour is explained by competition with Sainsbury, Asda etc and I don’t see how shifting patterns of demand would noticeably change competitive behaviour.

It’s not obvious how redistribution toward the poor affects the exchange rate, re. your first point.

CBI might not even constitute much of a net change in redistribution, as Philip points out @49 – just a change in the terms on which redistribution takes place.

Net, few would actually earn substantially more, it’s just that *everyone* would have a gold-plated guarantee of a livable income without billions of hoops to jump through, forms to fill in and access to be denied, and, furthermore, the insane withdrawal rates that massively disincentivize claimants from working would be abolished.

No, because people won’t have more money. People on low incomes will on average have about as much as now, people on middle incomes will on average have about as much as now, and people on high incomes will on average have about as much as now.

Since CI would be funded by taxation (and not printing money) the total amount of money in the economy will be about the same, and aggregate demand will thus also be about the same.

and will make us a more expensive country for tourists and importers

Not at all. (Were you trying to see how many economic fallacies you could get into one sentence?) If there was an overall increase in prices, this would cause the exchance rate to move, therefore tourists, importers, and foreigners generally would be unaffected. Just as we are unaffected by inflation in Zimbabwe.

You’re Mr Tesco. All of a sudden your customers have an extra £50 per week in their pocket. Do you

a) slash prices. After all, you’ve got more money in your pocket, too.
b) keep prices the same. It’s not fair on them to charge more for the same products
c) Raise prices – those pips can be squeezed for a bit more juice; just blame inflation.

We won’t be any richer, because everyone is. I don’t wake up and think “My, I’m earning so much more than a ship breaker in Bangladesh,” because the cost of living and my conspicuous consumption habit deludes me into thinking I’m one of the worst off. I’m defined, both sub and consciously, by my environment, my living costs and the success of my peers and neighbours, not how many pennies I have to swim in like Scrooge McDuck

I trust this is intended as irony…..

Minor nitpick. Pretty sure the JRF numbers include housing costs in social or council housing.

As a political matter, CBI would have to be at minimum pension guarantee at least, 113 a week isn’t it? 288 billion a year.

Given that we’ve just abolished the pension, jobseekers, etc etc etc at the same time could be done.

As to the high paid, well, nick an idea from Charles Murray why not (even though he is a racist about IQ) and tax it back from incomes over 50 k.

This is indeed the difficulty with sweeping welfare reforms or changes to the tax and benefits system.

The 2007 budget made most poor people better off and had millions more winners than losers. It is remembered as an attack on the poor and one of Labour’s greatest betrayals.

“My suggestion would be to set it at the current level of the basic state pension and no other benefits would be retained.”

Seems a bit harsh on poor pensioners with no savings who would lose more than £20 per week.

What about people in private rented accommodation who receive housing and council tax benefit?

Penny on the OP: while your ‘praise’ of the Tories plans are a rhetorical way of getting you into the main Labour bashing – I’ve no problem with that in itself – even to suggest that the Tories’ perversion of ‘localism’, encapsulated both in the benefit proposals set out at the weekend and more broadly by the aformentioned GPC legislation-to-be, is a serious mistake, I’m sorry to say.

These plans, which will bring US-style soup kitchens to the streets of the UK (and I can show you the Tory plans to facilitate that if you like) need combatting, not supporting because you don’t like Labour.

For further detail on the General Powers of Competence, see http://thoughcowardsflinch.com/2009/09/04/a-dismal-prospect-for-local-government-the-local-the-logic-the-legal-the-left/

It would cut mobilty. There is currently a problem with NHS localism cutting mobility for expensive patients. No PCT wants another’s expensive patients to live in their area. It makes artificial boundaries of London Boroughs.

In practice I think localism would stop the poor moving to areas of higher employment as receiving areas would do what they could do avoid paying.

Not only that, because everyone’s rent would be different, being based on their own circumstances, there would presumably have to be some kind of appeal mechanism for when people thought the council had calculated the rent wrong. My gut is that this would happen with much more frequency than happens with tax credits.

It’s complicated but I’d refer you to a paper by Mark Wadsworth ” Social Housing, Housing Benefit and Council Tax Benefit.”

His solution is neat.

Set net rents (i.e. rents plus Council Tax less Housing Benefit and Council Tax Benefit) in the social rented sector at 20% of a tenant household’s earned income.

The “better off poor” will no longer be able to exploit the below-market rents in social housing. Once income approaches average income, social rents will approach market rents, so such households will be more likely to move into the private-rented sector or owner-occupation. As a result, there will be a higher turnover in social housing, those on waiting lists will not have to wait as long and the cost of Housing Benefit and Council Tax Benefit paid to claimants in the privately rented sector will fall.

http://www.citizensincome.org/filelibrary/doc/Housing%20Benefit%20Discussion%20paper.doc

pagar, same question to you – at what level should the Citizens’ Income be set, and which other benefits should be retained?

My suggestion would be to set it at the current level of the basic state pension and no other benefits would be retained.

With CI, people starting a job would continue to get it, so there would be no need for interest free loans or the bureaucracy that goes with them.

If you redistribute the national cake, it’s inevitable some people will be winners and some losers. But CI allows over time for the vast majority to be winners. It does this by ending disincentives to work, and reducing bureaucracy, both of which make the economy more efficient.

The only way for everyone to get a bigger slice is to bake a bigger cake, which is why CI is a good idea.