TORCUIL CRICHTON
Projects all over the world have shown that giving poor people cash without conditions works
LIFTING almost one million children out of poverty was the crowning achievement of the last Labour government, who planned to end child poverty within a generation.
Well, they didn’t get that long but Labour’s anti-poverty policies – from the Minimum Wage to Sure Start – made a big difference.
One of the biggest factors was Gordon Brown’s tax credit system, giving working families tax breaks so their earnings kept them afloat.
The system was fiendishly complicated, perhaps to stop critics from recognising what tax credits actually did, effectively transferring wealth from the rich to the poor.
From each according to their means to each according to their needs. It was Labour’s founding totem, but without the obvious tax hikes that would have turned off the middle-class voters. Indeed, people who considered themselves middle class benefited from tax credits.
No wonder Gordon Brown was back this week (did he ever go away?) arguing Conservatives’ cuts to tax credits and benefits are reversing this progress.
Using Scottish Government statistics, Brown mapped out how child poverty will double in a decade. It’s frightening. Brown said: “In East Kirkcaldy, 40 per cent of children are in poverty but soon every second child will be in poverty. In the Cottage Family Centre that serves this area, there were 100 children in need of Christmas parcels in 2011. Last year, it was 900.”
Brown warned this trend is “accelerating out of control with child benefit and other child support still frozen or falling in value”.
His proposal is for Holyrood to use devolved powers to top up tax credits, re-inventing his own wheel.
The money would bring the numbers floating above the plimsoll line of poverty up, no doubt about it. But keeping people’s heads above water is not a rescue plan.
By definition, families are in poverty because they do not have enough money. What about just giving them some? That’s right, giving poor families a cash lump sum to transform their lives.
Numerous small-scale projects across the world have shown that giving poor people cash transfers without conditions attached works.
Overwhelmingly, people use the money to feed and clothe their families and give themselves and their children a better future in education or work. These schemes are demonstrably effective in countries where people are visibly in poverty. In high-income, western countries, we are more judgmental about handing out cash without strict conditions.
The fear of politicians, of course, is that a free money scheme would amount to nothing more than a run on flat-screen television sales wherever a project might be run.
Any system involving cash transfers is open to abuse.
But the alternatives – housing benefit, meal vouchers, summer school canteens – are inefficient, cumbersome and lack big outcomes. Benefits may not lead to dependency, but they do not change lives.
This is not an argument for a universal basic income, the idea that means-tested benefits be replaced with a flat-rate payment to everyone, regardless of their income or status.
That is an idea for a highly robotic future whose time has not yet come.
The Scottish Government have given four councils a £250,000 grant to pilot the basic income concept.
It’s great to be open-minded about new ways the economy and society might work so why not try a much more radical scheme of cash transfers to the poor?
When dealing with the root causes of poverty, rather than alleviating it, some out-of-the-box thinking is required. A third of Scotland’s children will need a lot more than reversing benefit cuts or the gift of a baby box to escape poverty.