Labour should back a Basic Income


This morning it was announced that Finland is to pilot a Basic Income as part of a far-reaching reform of tax and benefits. During the 2015 election, the Green Party of England and Wales were widely ridiculed for their policy of a ‘Citizens Income’ – more commonly known as a Basic Income. Their ridicule was, in large part, deserved primarily owing to their own obfuscation on the matter and basic failure to mount any defence of it. However, the Basic Income isn’t as absurd an idea as it first appears – which might be why the Finns (not renowned for their radical Communism) – are seriously considering its implementation.

A Basic Income is essentially money given by the state to everyone, regardless of means or need. This was ridiculed as outlandishly expensive in the run up to the 2015 election, however some back-of-the-envelope calculations demonstrate that it could actually be implemented as a relatively modest reallocation, but radical simplification, of the existing tax and benefits systems.

A basic income would simplify the tax and welfare systems, remove the stigma attached to benefits, incentivise work, and redistribute wealth (even if only modestly).

It is a reasonable surmise that most people resident in the United Kingdom will either pay income tax, or else will be living on benefits. Very few people live off savings alone – and you would expect those with sufficient resources to be able to do so to have structured their considerable finances in such away that it generates income.

The purpose of both the personal allowance for Income Tax, as well as of benefits, is to provide people with the basic means of subsistence. This is reflected in their levels. Standard Jobseekers’ Allowance + the average Housing Benefit payment = approximately £8,500, which, when you consider that Council Tax Reduction would also likely be applied, isn’t that far removed from the £10,295 someone earning exactly the personal allowance would take home.

The level at which it was proposed by the Greens – £72 a week – is approximate to Jobseekers’ Allowance. A basic income set at the level of Jobseekers’ Allowance would amount to £3,800. Abolishing the personal allowance and paying everyone, instead, this Basic Income would be equivalent to increasing the personal allowance to £19,000. This, of course, would need to be off-set by a re-calibration of rates and bands. For example – assuming that National Insurance Contributions remain constant – in order to ensure that someone earning the average salary of £26,000 takes home the same amount of money after scrapping the personal allowance and paying him or her a Basic Income of £3,800 on top of their present net salary, a rate of income tax of 26% would have to be applied to their income. Given that the present basic rate of income tax is 20%, this represents a relatively minor shift, approximate to the 25% level that existed in the 90s. In any event, they would still be taking home the exact same amount of money.

Someone earning less – for example £20,000 per year, would be £480 a year better off; someone earning slightly more, for example £30,000 per year, would be £120 a year worse off. Someone earning £7 an hour working 30 hours a week would be about £1,000 better off. This might seem like a lot, but given that that person presently pays almost no tax and is entitled to receive about £2,800 a year in working tax credit – a Basic Income actually looks quite miserly by comparison. Expressed in these terms, a Basic Income begins to look less like an incredibly generous giveaway, and more like the sort of tinkering with rates and bands that is commonplace in every budget – and exactly the sort of shift in the burden of taxation that you would hope that a Labour Government would pursue.

A basic income could remove benefits as a social wedge. Rather than being something that only certain kinds of people get, it would be something that everyone gets. While, of course, there would remain the usual grumblings about people who aren’t working, it is arguable that the basic income would greatly incentivise work.

David Cameron, arguably rightly, identified the “benefits merry-go-round” – whereby people are taxed on their income and then handed it back in the form of benefits. This is certainly the case, as someone earning above the personal allowance but still on a relatively low income will pay tax on their income and then potentially be entitled to a litany of in-work benefits: income support; working tax credits; Local Area Housing Allowance; Council Tax Reduction. Many of these benefits are designed to ensure that working is financially more attractive than not working – however knowing whether or not you will actually be entitled to them feels like guess-work to most of us. The certain knowledge that your basic income continues whether you work or not would greatly incentivise work. No longer would people fear that by going to work they’d be no worse off.

Obviously costing such a reorganisation would be a considerable undertaking – and the levels at which a Basic Income would become revenue neutral might vary wildly from those discussed above. But considering that a litany of benefits could either be substantially reduced in scope, or else scrapped altogether – and the associated costs of administering such benefits (we spend £8bn a year simply administering benefits) – it may well transpire that a Basic Income of £72 a week was actually pitched much lower than necessary.

10 Questions for Nationalists

If the SNP can adequately answer these I’ll sign up tomorrow:

  1. We know you’re anti-austerity, but you still prefer it to raising taxes, right? You may not have the power to curb austerity through borrowing, but you do through taxes – which you steadfastly refuse to do.
  2. How do you propose to redistribute wealth from some of the world’s richest people in London to our poorest people in Glasgow by throwing up sovereign boundaries between them? Does independence really make the world a more equal place? Or are you only concerned about equality within our borders?
  3. You don’t really want full fiscal autonomy, do you? I mean, even those of us who are opposed to independence accept that it’s not entirely without any merit. But FFA is all of the drawbacks of independence without any of the advantages.
  4. What have you actually done with the powers the Scottish Parliament already has to redistribute wealth from richer people to poorer people? I can think of plenty of examples to the contrary – the Council Tax freeze springs to mind.
  5. You know perfectly well that there’s no actual way in the British Constitution to make anything, permanent, right? You also surely know that if the UK ever did try to scrap Holyrood, Scotland would be independent inside a month? Isn’t this the sort of “scaremongering” that you accused unionists of?
  6. You accuse others of “breaking promises” to the people of Scotland. Whatever happened to scrapping Council Tax and paying off my student debt?
  7. You do know that a LOT of your supporters are fundamentally horrible, nasty people, right? I know, I know – there are unpleasant people like that on both sides, but there’s WAY more on yours and you do relatively little to stamp it out.
  8. You really did want the Tories to win, right? Not because you like them, but because you know perfectly well that a Tory PM is a far more frightening bogey man than a Labour one.
  9. You do accept that Alex Salmond is a proven liar and at least a bit of a sexist? Contrary to Alex Salmond’s attempted excuse, it is NOT a “Scottish saying”.
  10. Independence in Europe – bit of a logical inconsistency, no?

The Problem of Perception for Scottish Labour

The Scottish Labour Party has an image problem. That is not to say that the root of the problem is our image. At this moment in time I cannot begin to count the various problems that the Scottish Labour Party has, but one of them is undoubtedly our image – how we are perceived by the people we want to vote for us.

Perceptions are difficult to manage in politics, because they can often have little grounding in reality. This, you might think, makes it easy to change people’s perceptions, by simply directing their attention towards reality. However, in politics, perceptions are far more difficult to change than reality.

The perception that we are fiscally profligate hurt Labour badly in England. No matter what the two Eds said or did to demonstrate their prudence, their long association with Gordon Brown’s Treasury meant that they were perceived by the electorate as untrustworthy with the public finances.

In Scotland, we are perceived rather differently. Lord Ashcroft held a focus group in Paisley, and he discerned three problems perceived by voters. The first, is that we are conservative – and virtually indistinguishable from the Tories. The second, is that we are a “branch office” of the Labour Party in London. The third, is that we “betrayed” our supporters by joining with the Conservatives to promote a homogenous establishment defence of the Union.

These perceptions are all, in part, rooted in reality. However, changing the reality does not necessarily change the perception. Once a perception has been formed in people’s minds about a party it is extremely difficult to exculpate it. We have witnessed the difficulties the Conservatives have had dispelling the ghost of Thatcherism. Labour may find it difficult to shake the perceptions that have formed in the public’s minds. Those trained in philosophy or jurisprudence will be familiar with the difficulties in proving a negative. In this instance, that we are not what they perceive us to be.

A new approach to communications

We are bad communicators. This is not to criticise the staff who work in communications. The fault is a systematic one.

Fundamentally, communications staff ought not be necessary. Communication is a core-skill of the politician. However, communication must not be one-way. While, of course, it is a tremendous advantage to have the oratorical skills of Michael Foot or a caustic wit like William Hague – but one of the key failings of these great communicators was that they were transmitters, rather than receivers. Over the years I have known many Labour politicians who are brilliantly attuned to the public mood, but they have been sidelined either through our recent electoral misfortunes, or a succession of leaders who have failed to appreciate the value of such a skill.

As a tarnished brand, and an unpopular product, the party should look to business practices for solutions to our present woes. In recent years, the Scottish Labour Party’s approach to political communication has been more akin to 1950s methods of selling products than modern methods of marketing. Prior to the development of more consumer-oriented marketing techniques, the predominant approach to driving profits was selling and promoting goods and services – the “hard sell” –  rather than determining new customer desires. In effect, selling people something they don’t really want to buy. By contrast, consumer-oriented marketing methods feedback from consumers and attempt to create a product that customers actually want to buy.

It was this approach to political marketing that the late Philip, later Lord, Gould brought to the modernisation of the Labour Party in the late 80s and 90s. It is this responsiveness to public mood that has been sorely lacking in the Scottish Labour Party since the inception of devolution.

For too long we have relied upon opinion polling and canvass returns to gauge the public mood. These have consistently let us down in recent years. In 2011 we fought an offensive election – targeting gains like Livingston and Stirling – when, we should have been defending seats like Shettleston and Cunninghame South. Up until a few months ago, Labour’s key-seat list in Scotland comprised of Argyll and Bute; Dumfriesshire, Clydesdale, and Tweeddale; Dundee East; East Dunbartonshire; and Edinburgh West – our average share in those five seats was less than 15%. These seats were targeted because of both local polling and uniform national swings.

We saw in this election the dangers of relying on opinion polling (and those of us who are political punters paid the price!) Outside of an election cycle there is a tendency for voters to simply provide the answer that they always do – which would explain how Labour’s massive opinion poll leads in the run up to the 2011 election translated into a massive defeat. We failed to detect that “our voters” are no longer “our voters” until it was too late to stem the flow away from us.

Labour needs to make better use of focus groups and modern marketing techniques in order to adequately craft our message to suit the public mood. This might sound frightfully Mandelsonian to some, but it does not mean simply telling the people what they want to hear. In many areas of policy, the public mood appears to be far closer to our core values than we are. If Labour values are what the public wants, then it is utterly incredulous that we appear hesitant to embody them.

I do not believe that our product is fundamentally flawed, we just need to stop trying to flog the people’s last year’s model.

A new visual identity

Aschroft’s focus group discerned that the Scottish Labour Party is perceived as being a mere ‘branch office’ of the Labour Party in London. When even our leader shares that view, there’s bound to be a lot of truth in it. Jim Murphy, at least, recognised that that is a perception that needs to change, and made some attempts to dispel it.

Visual identity is hugely important. Tarnished brands frequently seek to change perceptions of themselves by updating their visual identity. McDonald’s responded to the perception of tackiness by ditching red and yellow in favour of earth tones in their restaurants. BP sought to bolster their environmental credentials by updating their logo. David Cameron did nearly the exact same thing when he changed the Conservative Party’s branding in 2006. And Peter Mandelson, too, sought to renew Labour’s brand by ditching the red flag in favour of the rose in the late 80s.

As a tarnished brand, the party’s visual identity needs to be renewed – urgently – to distinguish ourselves from the failings of the past, as well as the UK Labour Party of which we are perceived as being a branch.

This involves more than merely throwing a few saltires around the place. Name, shape, and colour should all be up for debate.

Of particular focus should be the name. It is arguable that the name ‘Scottish Labour’ evinces a sense that we are the Scottish bit of the Labour Party, rather than being the Labour Party of Scotland. The starting point for any rebrand ought to be the question ‘what would we call ourselves if we were starting from scratch?’ The answer, I suspect, would be ‘Labour’.