What work has HM Treasury done around the proposed UBI pilot in Scotland?
Image credit - Her Majesty's Treasury by Kurayba
In December 2020, we submitted a Freedom of Information (FOI) request to the Treasury. We asked them to send us any documents from 1 January 2020 to 7 November 2020 that refer to Universal Basic Income.
The Treasury acknowledged that they held documents on Universal Basic Income but claimed they were exempt from FOI because of a “strong public interest in protecting the information from release as it would be likely to have a detrimental impact on the ongoing formulation and development of policy.”
We asked for an internal review of this decision. The Treasury then agreed to send us a heavily redacted version of one of the documents they held that mentioned UBI. This was a ministerial briefing produced by HMRC about the Scottish Government’s feasibility report into a UBI pilot that was published in June 2020.
The text of the ministerial briefing is below. Some parts of it have been redacted, and we believe these could contain information about the barriers that the Scottish Government would face from Whitehall if they tried to launch a pilot. We call on the UK government to release a redacted version of this document.
From: [HMRC – section 40(2)]
Tel: [HMRC – section 40(2)]
Approved: [HMRC – section 40(2)]
Tel: [HMRC – section 40(2)]
Date: 8 June 2020
TO FINANCIAL SECRETARY TO THE TREASURY
SCOTTISH GOVERNMENT REPORT ON CITIZENS BASIC INCOME – FOR INFORMATION
Summary
This note is to inform you about a draft report that Scottish Government’s Citizens Basic Income (CBI) Steering Group will publish this week.
CBI is a form of universal basic income (UBI) for Scotland. A UBI is a minimum income, paid to everyone each year by the government. The Steering group has discussed piloting a model where everyone in a town in Scotland is given £12.5k p.a.
HMRC and DWP met the group to discuss the interaction of a hypothetical CBI scheme in Scotland with the existing UK tax and benefits systems. [section 28(1)]
The Scottish First Minister has publicly said she will continue to ask the Prime Minister to introduce a UBI. Scottish Government expects significant publicity for this report. Their ministers plan to write to HMT and DWP ministers to ask for UBI discussions.
Detail
1. This submission is for information only, to make you aware of a potential policy that is being considered by Scottish Government, and HMRC’s limited involvement in their considerations so far.
2. In 2017, Scottish Government agreed to provide funding for an independent report on how feasible it might be to pilot a Citizens Basic Income (CBI) in a small area of Scotland, say, a single town. CBI is a universal basic income proposal that governments should give every citizen an annual allowance which would guarantee a basic standard of living. CBI entitlement would be universal from birth with no means testing, or restrictions of any sort. The theory behind CBI has been around for some years and partial pilots have been attempted elsewhere, for example in Finland. The pilot was withdrawn before it concluded, following a change of government. There is also a campaign to pilot a scheme in Hull.
3. The independent report is being produced for Scottish Government by a steering group made up of members from Fife, North Ayrshire, City of Edinburgh and Glasgow City Councils working together with NHS Health Scotland and the Improvement Service. Scottish Government has provided £250,000 over two years to support the feasibility work. An interim report was published in November 2019.
4. The independent group says the aim of a pilot would be to test the contribution of CBI to reducing poverty and providing a possible route to a fairer and simpler welfare system. The group are considering various models but seem to prefer a version where each citizen would receive £12,500 p.a. from Government. Some other benefits would continue. The preferred model is likely to involve the suspension of child benefit and possibly tax credits for those in the relevant area – as well as a number of DWP benefits (but not the state pension).
5. Depending on its design the pilot may have a relatively limited impact on tax and welfare systems, although delivery would be challenging. If the scheme were rolled out across Scotland a major redesign of the personal tax and benefits systems would be required, with consequent changes to legislation, IT system and internal processes.
6. Scottish Government have told us that the group expect to publish a draft of their report for comments on local authority websites on around 11 June, and final version around 26 June. They expect significant interest in the report. [section 28(1)]. The Chancellor has already said publicly that he does not think a UBI is needed as a Covid support measure as Universal Credit is sufficient.
7. HMRC and DWP jointly met with the independent steering group in February 2020 following a very early discussion in March 2019. DWP officials discussed Scottish Government’s vires for piloting or introducing a CBI. [section 28(1)]
8. [section 35(1)(a)]
9. Neither department commented on the merits of a CBI or gave a UK government view.
10. [section 28(1)]
11. [section 28(1)]
OFFICIAL – SENSITIVE
Table of impacts
Covid-19: No impact. There has been some interest in UBI as a Covid support measure, but Scottish Government is likely to support longer term reform.
Exchequer impact (£m): There is no proposal to assess at this stage.
Funding for measures: There is no proposal to cost at this stage. This submission carries no costs to HMRC at this stage. Any future work on this policy would require funding.
OBR: NA
Economic impact: NA
Impact on individuals, households and families: This submission is for information only and discusses potential policy that is being considered by the Scottish Government, and HMRC’s involvement in their considerations so far. There are no impacts on individuals at present. There is no impact on family formation, stability or breakdown.
Equalities impact: Further analysis would be carried out if UKG agreed to become involved in further policy or delivery.
Customer costs impact: As this is for information only, this is not expected to increase customer costs.
Impact on businesses and civil society organisations: This submission is for information only and discusses potential policy that is being considered by the Scottish Government, and HMRC’s involvement in their considerations so far. There are no impacts on businesses or civil society organisations at present.
Operational impact (£m) – [HMRC or other]: Further analysis would be carried out if UKG agreed to become involved in further policy or delivery.
Other impacts, including OGD costs: Other impacts have been considered and none have been identified at this stage.
Communications/ Reputational Risk: We do not expect this to create any handling or reputational issues for HMRC. Treasury and DWP ministers are likely to be asked about adopting UBI policies.