Citizen's income scheme could make impact on poverty rates, report suggests

20 December 2017, 06:40

Wallet

The introduction of a citizen's income scheme could have a substantial impact on poverty rates, a new report suggests.

Research by NHS Health Scotland looked at the potential effect of a range of policies on income distribution, including increasing the carer's allowance by £10 a week, introducing a citizen's income and replacing council tax with a local income tax.

The Scottish Government is currently working with four councils to fund research into the feasibility of a citizen's basic income.

The health board used a "simplistic" model for a proposed scheme that would set the working-age adult citizen's income at £60 a week.

Modelling found that the policy made a substantial impact on poverty rates, removed nearly one in five children living in Scotland (19%) from poverty and resulted in the largest reduction in income inequality.

Low-income households experienced the largest rise in disposable income (21.6%) but wealthy families also experienced a marked increase (7.1%).

At the same time, poverty rates among those in work and the elderly rose as a result of a rise in median household income.

The report cautioned that the findings were illustrative only as they do not include changes to the tax and benefit system that would probably be necessary, with a separate briefing from the board noting that the policy would require "very substantial tax increases".

Of the other policies examined, replacing council tax with a local income tax reduced the overall rate of poverty in Scotland but was also, alongside the citizen's income, the most expensive.

The move could also move children into relative poverty, with households where both parents are working likely to experience a loss of disposable household income.

The modelling also found that increasing carer's allowance payments did not make much of an impact on poverty rates or inequality but did appear to be a policy better targeted at low-income households.

Dr Gerry McCartney, head of the public health observatory at NHS Health Scotland, said: "For wealthy countries like Scotland, socio-economic inequalities are the most important factor in determining the extent of health inequalities.

"Reducing income and wealth inequality in Scotland is therefore a crucial part of any approach to achieving improved health for all. I'm delighted that we're publishing these two important resources today to inform how that is done."

A Scottish Government spokesman said income inequality is at the root of "the deeply ingrained inequalities" across Scotland which the government is committed to tackling.

He said: "We recently published a Fairer Scotland Action Plan, with 50 actions we will take over the course of this parliament to tackle inequality, while we are also exploring the idea of a basic income for every person in Scotland.

"The citizen's basic income is a bold proposal that is currently untested in an advanced economy. Four local authorities are interested in testing this policy in Scotland and we have offered funding and support to help them scope their potential pilots."