Benefits Should 'Ensure Work Always Pays'

1 February 2016, 08:10 | Updated: 1 February 2016, 08:12

The current work-related benefits system should be replaced with a new basic income guarantee to make sure that work always pays, according to a think tank.

Reform Scotland said there remains a disincentive to work - known as the "welfare trap'' - caused by what it said was a high level of marginal taxes faced by those moving into work or upping their hours.

It said the benefits system should act as a safety net to provide financial security for those out of work, but also act as a "safety trampoline'' to encourage more people to rejoin the workforce.

To achieve this, the think tank is proposing that a basic income guarantee is paid to all working-age adults and children, whether they are in or out of work.

All earnings would be taxed but the basic income would never be withdrawn, meaning that work would always pay, the body proposed.

Although not endorsing its proposals, the report published today takes as a starting point the Scottish Green Party's suggested levels for its citizen's income, which stand at #100 per week or #5,200 per annum for each adult and half that for each child.

The report also calls for a single department to be responsible for welfare payments, ending the current split between HM Revenue and Customs and the Department for Work and Pensions.

Report co-author James Mackenzie, former head of media for the Greens, said: "Basic income is one of those ideas that should appeal right across the political spectrum. When I was unemployed I remember having to think hard about whether to accept part time or short-term work because of the impact on my income.

"We should be making it easier for people to work who can and who want to, not penalising them. Basic income does just that, as well as helping those who have caring responsibilities, or who want to volunteer or study.''

Co-author Siobhan Mathers, a former Scottish Liberal Democrat policy convener, said: "There is a great opportunity for Scotland to design a welfare system that best suits its needs in the 21st century.

"We could leave behind the unnecessary complexity of the UK system and provide a fair basic income guarantee for all. This would make any transitions in and out of work more manageable and provide a clear, fair safety net for all.''

A Scottish Government spokesman said: "We will consider this report as we look at all ideas to help people in Scotland maximise their income.''

A  UK Government spokesman said: "We are already incentivising people to work through our flagship reforms of the welfare system which includes Universal Credit - a system designed to make sure work always pays and stop people being trapped on benefits.

"The introduction of the National Living Wage will also ensure millions of the lowest paid in Britain get a pay rise from April.''