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Basic Income Guaranteed?

The Programme for Government committed to the introduction of a universal basic income pilot within the lifetime of the Government. The Report of the Arts and Culture Recovery Taskforce relied on this commitment when it put forward its proposals for a 3-year universal basic income pilot for workers in the Arts sector. Universal Basic Income is widely defined as an unconditional payment, something lacking in the commitments under the Pathways to Work Strategy 2021-2025 to deliver a basic income guarantee modelled on the Working Family Payment. 

The commitment made in the Programme for Government was that Government would "request the Low Pay Commission to examine Universal Basic Income, informed by a review of previous international pilots, and resulting in a universal basic income pilot in the lifetime of the Government" (p.76) (emphasis added).

In its Report, the Arts and Culture Recovery Taskforce rely heavily on this commitment, referring to its own proposed mechanism for implementing a universal basic income for Artists and Arts Workers "could be through the establishment of a pilot project as envisaged in the Programme for Government which would last three years" (p.42). This proposal was supported by Minister Catherine Martin T.D. in her speech launching the Report.

At no point did either the Programme for Government or the Report of the Arts and Culture Recovery Taskforce refer to a Basic Income Guarantee. The proposal set out in the Pathways to Work Strategy is a backwards step.

What's in a name?

The Basic Income Earth Network (BIEN) define a basic income as "an income unconditionally granted to all on an individual basis, without means test or work requirement" (emphasis added). The Report of the Arts and Culture Recovery Taskforce refers to it as "an unconditional state payment that each citizen receives. The payment is designed to provide enough to cover the basic cost of living and provide a modicum of financial security. All other income would then be earned separately and subject to taxation.".

The main characteristic of a basic income is that it is unconditional. It is not tied to employment activation; household or relationship status; or means-testing. It guarantees a minimum floor of income below which no one should fall.

A basic income guarantee, along the lines set out in the Pathways to Work Strategy 2021-2025 refers to "A basic income guarantee modelled on the working family payment to ensure that the system of welfare payments supports people, including people on non-jobseeker payments, to make the transition to work" (p.10). Even without any understanding of the difficulties that have plagued the Working Family Payment (formerly known as Family Income Supplement or FIS), one can clearly see that this "basic income guarantee" has strings attached. And those strings are jobs activation.

What's wrong with the Working Family Payment?

It doesn't work. Consecutive studies of the Working Family Payment, and its predecessor FIS, found that low take-up of this payment was a serious issue when it came to meeting its goal of alleviating family poverty. A NESC Report from 2007 indicated that there were other issues, such as the stigma associated with asking employers for verification details, a complex application process and the difficulty of calculating the amount a household would be eligible to receive which may partly to blame for this. A study by the Advisory Group on Tax and Social Welfare, published in 2013, cited similar issues, such as the exclusion of the self-employed; a lack of joined up thinking when it came to FIS and other social welfare payments; the application process; and the complexity of calculating the payments households may be eligble for. 

In the context of Basic Income - it is conditional.

The Working Family Payment is a weekly payment available on application to the Department of Employment Affairs and Social Protection to employees (not self-employed) with children at work on low pay. To qualify for the Working Family Payment, the average weekly household income must be below a certain threshold for the household. If the application is successful, the payment received by the household is 60 per cent of the difference between the average current household income and the income threshold that applies to the household type. 

To qualify for the Working Family Payment, you must:

  • be an employee, in paid employment;
  • have at least one qualified child who either normally resides with you or is part of a family that you support. A qualified child is any child under age 18 or aged 18 to 22 if in full-time education;
  • work 38 hours or more over two weeks. Cohabiting spouses, civil partners, or cohabiting couples can share their hours to meet this condition;
  • expect to be employed for at least three months;
  • meet a means-test.

Once an award of the Working Family Payment has been made, it will last for 52 weeks, unless the recipient loses their job and notifies the Department, at which stage the payment is stopped.

The Working Family Payment has consistently failed to meet its own objectives. Modelling a new basic income guarantee on a failed policy expecting a different result makes little sense and will likely cost the Exchequer more in administering the guarantee in the process.

How could a real Basic Income pilot be delivered?

In May 2021, Social Justice Ireland released our study showing how the Government could honour its commitment to pilot a Universal Basic Income by introducing a Basic Income for artists and arts workers.  This initiative would have minimal costs to the Exchequer and could be implemented from 1st January 2022. The main points from this study include:

  1. Eligibility

Eligibility criteria are derived from the Social Welfare Scheme for Professional Artists on Jobseeker's Allowance.

  • Be aged over 18 and under 66
  • Meet the habitual residence condition.
  • Be a member of one of the listed certifying professional organisations and provide a certificate or declaration from a professional body as to their status as a professional artist. 
  • Be registered as self-employed with Revenue.
  • Have at least 50% of their income derived from work as a professional artist in the previous year.
  1. Universal Basic Income Payments

As part of the Pilot, payments are secured for the full four-year duration of the pilot at a rate of €203 per week.  Eligibility would be retained for other Social Welfare entitlements e.g. Back to school clothing and footwear, Rent Supplement, Child payment, Domiciliary Care Allowance.

UBI would be withdrawn from high earners gradually through the tax system, as market income grows from €170,000 to €250,000

  1. How would UBI interact with the Taxation System?

Income Tax/PRSI/USC would become a Single Composite Tax

UBI would be included in Total Income and be part of the tax base.

Initial tax rate would be very low and would not be levied when only income is UBI.

  1. Number of Participants and Exchequer Cost

Option 1: All eligible applicants are included in the Pilot. 

A key benefit of this option is that all artists/performers would be able to avail of the advantages of UBI. If 14,200 eligible participants apply and are accepted into the pilot, the annual Exchequer cost could be c. €27m.

Option 2: Limit the number of participants. 

The Pilot could be limited to 3,000 participants for example.  Quotas for age and gender could be applied so that the pilot is representative of the population per the Census of Population.  A matched comparator group would also be selected.  A benefit of this option is that comparisons would be possible between those artists/performers on UBI and those artists/performers who are not. If the pilot had 3,000 artists/performers, the annual cost would be c. €5.7m

  1. Proposed Timeline

May – July 2021: A Steering Group is appointed and commences work. The proposal is discussed/modified by the Steering Group and a Memorandum goes from the Minister of Media, Tourism, Arts, Culture, Sport and the Gaeltacht to Government by the end of July.

August-October 2021: The Revenue Commissioners and the Department of Social Protection prepare legislative amendments that will be required in the Finance Bill and Social Welfare Bill.  Revenue establish a Unit to implement the pilot and commence IT preparations. 

November-December 2021: Applications are invited from artists/performers and their eligibility is assessed.

1st January 2022: Pilot UBI for Artists/Performers is fully operational.

It's time to guarantee a Universal Basic Income, not for a Basic Income Guarantee.