The future of welfare

The future of welfare: Universal Credit or Citizens Basic Income? asks Susan Rae.

This time next week many of the city’s children will be reaching peak excitement as Christmas beckons. In some homes, however, the peaks of excitement will be matched by deep wells of anxiety as parents wonder how they will navigate through the holiday period intact.

For those residents receiving Universal Credit the anxiety will be ten-fold. Originally billed as a simplification of the benefit system by bringing together six income, child and housing-related benefits into one, the system is now so scarred as to have brought the condemnation of the United Nations. With housing payments part of the overall package, extra onus is placed on households to budget for rent payments, with rent arrears often a result. In turn, private landlords cite benefits as a reason for not providing accommodation to households. This matters more in Edinburgh because there are far fewer socially-rented homes and so many more privately-rented homes.

Then there is the rate at which benefits are withdrawn if income rises. This so-called “taper rate” is 63p in every pound. Compare that to the top rate of tax in Scotland at 46p in every pound for earnings above £150,000 a year.

But one of the main criticisms of universal credit is more practical. It is the long time-lag for payments: 5 weeks in total for the first claim. So, for families coming to Universal Credit on 28 November, that means 3 January before getting the first payment. At the most expensive time of year that is appalling and will tip many people into debt, fuel and food poverty and the risk of homelessness.

That is why some of the staunchest critics of Universal Credit have been foodbanks. Here in Edinburgh, the foodbanks, mostly run by volunteers, have braced themselves for an upsurge in demand as Universal Credit spreads. Homelessness charities too have pointed out that Universal Credit comes on top of critical shortages of accommodation and record levels of rough sleeping. The city council is already spending over £17 million a year on the sticking plaster of homeless temporary accommodation, including bed and breakfast hostels. Across Scotland as a whole Edinburgh stands out for the number of times it breaks its legal responsibility over how long families can stay in B&B hostels. And just last week, the council agreed to fund Streetwork to provide some more emergency accommodation to get rough sleepers off the streets and out of the cold: vital short term work but a sign of the times as well.

Is there another way? Is the future inevitably one of foodbanks, bed and breakfast hostels and loan sharks?

For many years a core part of Green policy has been the introduction of Citizens Basic Income. A truly radical approach to social welfare it allocates to every citizen a sum of money to meet basic needs. It is unconditional – in other words, you get it irrespective of other income or employment. It would roll up existing payments such as tax allowances, credits and benefits, although most versions allow for separate housing payments and for money to reflect disabilities or caring duties. Several countries have trialled this approach and here in Scotland Edinburgh is one of four councils – the others being Glasgow, North Ayrshire and Fife – working with the Scottish Government on the scope for the first-ever trial in the UK some time after 2020. There is a lot of fantastic work going on behind the scenes to look at how such a trial would pan out.

It is hard to over-state just what a shift Citizens Basic Income would be. For far too many people, struggling with the soul-destroying benefits system is literally life or death. A system which puts dignity and choice at the heart of welfare is surely the right starting point.

That is all on the horizon. Meantime, I hope all readers have a great Christmas and New Year, especially those wrestling with Universal Credit.

This blog first appeared in the Edinburgh Evening News on 17 December 2018