The Citizens’ Income will cost £12.3bn and require huge tax hikes – so why is it even being proposed, asks Bill Jamieson.
Delusional? Machiavellian? Or plain thoughtless? What are we to make of the “Citizens’ Basic Income” plan prepared by Scottish Government civil servants sent to the desk of the First Minister – and which has only now, months later, come to light?
The Citizens’ Basic Income – it sounds straight out of the mouth of the left-wing student in the hilariously bleak 1970s sitcom Rising Damp – has been costed at £12.3 billion and could lead to an income tax rate of 50 per cent across all bands to fund the scheme. The report also suggests that the tax-free personal allowance would have to be removed in order to pay for the multi-billion-pound scheme to give everyone cash regardless of their wealth.
Is this a serious policy proposal? A cunning political plan? Or the shortest suicide note in history?
The paper itself is under no illusions as to it ever being enacted as policy.
The document – compiled by Liz Hawkins, the Scottish Government housing and social justice director and given to Ms Sturgeon, Finance Secretary Derek Mackay and Social Security Secretary Angela Constance – itself admits that it is “a very costly policy that is unlikely to gain public acceptability and ultimately may not have the desired transformative effect”.
Unlikely? That’s putting it mildly. It would be the shortest political suicide note in history.
As there is not a snowball’s chance in Hell of such a scheme ever being put into practice, it invites the question of why time was ever spent drafting it in the first place. Were there other motives?
It could be seen as a genuine attempt to redress the gross income inequalities that have grown in recent years.
The bulging pay packets of the elite are far from confined to hedge fund managers and bankers but have spread out across the public as well as the private sector. Sinecures in quangos and regulatory bodies as well as universities can now command salaries in the high six figures, while millions of others have had to make do with little or no pay rise for years.
Little wonder that when these high salary levels are disclosed there is public anger and resentment – and an urge to promote a more equitable distribution. But there are other ways of addressing this than seeking a wholesale alternation of the tax and benefits system and penalising millions of middle-income earners in the process.
Alternatively, it could be a softening up for smaller tax increases that would then be hailed as sensible and moderate by a deeply relieved electorate.
The very possibility that such a drastic proposal would ever get close to adoption would be enough to spark a wholesale exodus of people, savings and businesses out of Scotland.
Yet Ms Sturgeon has said the idea merited “deeper consideration” when she unveiled her Programme for Government last month, and said that it would be trialled by several local authorities.
Several explanations present themselves as to why this proposal has got as far as it has. One is that it is a desperate attempt by senior figures in the SNP to outflank the appeal of Corbynism in Scotland and retain the support of the Far Left in the SNP, lest it defects back to Scottish Labour under a potential Richard Leonard leadership. Many might have thought it impossible to outflank Jeremy Corbyn on the Left. They have reckoned without the SNP.
Another is that it is a “cunning plan” to allow a far Left confiscatory tax policy to gain wide credence and circulation, only for less swingeing tax rises to be introduced amid a public swoon of gratitude and relief that they were not as bad as feared.
A third is that there is a rogue cabal of Scottish civil servants in Leith who seriously believe such policy would be a good idea and that preparation of the “Citizens’ Income” proposal helps move the needle of policy debate in their direction.
There is, of course, another possibility: that the First Minister and several members of the Scottish Cabinet have taken leave of their senses.
A perverse benefit of the briefing paper is that it sheds an unsparing light on the realities of SNP thinking on tax policy if ever given full rein. This has been cloaked for now in a series of small, incremental proposals working to lull middle-income voters into a false sense of security.
And it could be seen, if a positive case for it could be made, that at least policy thinking has moved away from the idea that a major reduction in wealth and income inequality could be achieved by resort to ever higher government borrowing and debt. Were this the case, the printing presses of high-denomination Scottish groats would have to be running 24/7 to deliver on Ms Sturgeon’s £12.3bn a year dreams.
So if the money is not going to be simply printed to order, where does the First Minister imagine the £12.3bn will come from? And how will she explain to taxpayers, including those on low incomes, that, as Conservative social security spokesman Adam Tomkins sharply put it, “they will have to give back half their pay packet to bankroll this vanity project”?
“The government” itself does not create wealth, it never has done. Wealth comes from industry and the savings of the public.
One reality at least is plain from this tawdry document: that radical change of this type and scale cannot be achieved without substantially higher taxes, not just on those “with the broadest shoulders” but those with little by way of shoulders at all.
Whatever explanation is forthcoming, the existence of this document will have done the SNP no favours and will certainly do nothing for business confidence. Indeed, it is highly damaging for Scotland, and its ambitions to encourage business expansion and attract inward investment.
It is not enough to say it is “unofficial work” or that “ministers have not approved it” or that it is not in the Scottish Government’s current plans. If that is the type of explanation put forward, why has civil servants’ time been spent on it and why should taxpayers have to fund “blue sky” policy fantasies of this sort? Should not such a paper been more appropriately undertaken privately and paid for by the SNP?
The ball is now firmly in the First Minister’s court. She must act swiftly to make unambiguously clear that a £12.3bn “Citizens’ Income” forms no part of SNP policy – now or in the future. If she allows it to fester it will be a gift for Scottish Conservative leader Ruth Davidson. Altogether more worrying for our prospects would be for this to remain on file and be perceived as a credible statement of SNP long-term thinking. The Citizens’ Income would be preceded by the great Citizens’ Exodus as we flee from the most punitive and wealth destroying tax engineering ever devised.
For Nicola Sturgeon to do nothing would be a dereliction.