Call for full employment strategy

Austerity policies have increased 'idleness' and given rise to the additional problem of disguised underemployment, according to a think-tank report.  The authors call for a fiscal policy designed to promote employment, coupled with a complete redesign of the income tax, national insurance and benefits systems. 

Key points

  • The inequality of economic treatment between those in and out of work imposes a social cost, both on those suffering the impact of inequality directly and on society at large.
  • Fiscal policy should maximise the multiplier impact of public spending. This means tax cuts should have a low priority; benefit cuts should be avoided; and a programme should be created of rapid and large-scale investment in public works.
  • All families should be given an unconditional, tax-free basic income payment. This 'citizen's income' would be designed to ensure families (including single-person households) have at least 60 per cent of average earnings on which to subsist each week. This would eliminate poverty and remove all disincentives to work at the same time. The total cost would be around £467 billion a year.
  • The citizen's income would be financed through a complete overhaul of the existing systems of income tax, national insurance contributions and capital gains tax. These would all be replaced by a new, progressive universal income tax structure. The tax would start at a rate of at least 25 per cent, have a standard rate of around 45 per cent, and have higher rates of up to 70 per cent on annual incomes in excess of £150,000.

Source: Richard Murphy and Howard Reed, Financing the Social State: Towards a Full Employment Economy, Centre for Labour and Social Studies
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