In normal times government expenditure takes up 40% – 50% of Gross National Product. Government has been allowed over the years to become over-complicated and ineffective. This paper discusses three separate proposals, linked only by how they are implemented, to simplify and make more purposeful, major parts of the government administration.
INCREASED AND SECURITY WELL-BEING FROM UNIVERSAL BASIC INCOME (UBI)
UBI has for some time been suggested as the most efficient means of addressing inequality and ensuring that benefits are paid where needed. The concept is simple: every adult British citizen receives a payment from the government sufficient to pay for the rent of a room and food – the “Basics”. No one need be homeless or hungry and everyone is free to work to earn more if they so choose.
The immediate hurdle with this proposal is that people will feel that it would be insupportably expensive. But this is not the case, indeed it is cheaper than the system of tested benefits operated by the Department of Work and Pensions. First, tax rates and thresholds would be modified so that those who do not need the payment effectively pay it back in tax. Second, payments would be made automatically by computer into specific bank accounts requiring very little human intervention – thus saving the cost of most of the clerical staff of the Department of Work and Pensions.
Note that UBI would not replace either the NHS or Social Services. These would continue to provide services based on personal need. In the longer term it might be that merging these two could also be helpful but that is not urgent.
UBI ensures that benefits are paid without question where they are needed. it can therefore address issues of inequality by reconsidering the quantum and the extent of basic needs. Importantly, it can also address the issue of potential loss of jobs as Artificial Intelligence and robotics advance. The quantum of payment can be adjusted as an economic management tool, so that the number of people seeking jobs is equal to the number of jobs available. In time the major advantage will be that, with everyone’s basic needs met, people will start to consider higher needs such as those in Maslow’s hierarchy with a consequent steady increase in well-being.
MUCH GREATER EFFICIENCY AND EFFECTIVENESS FROM A SINGLE CITIZENS’ DATABASE
Estonia has one of the most efficient governments in the world because, when it left the Soviet Union, it had no government machinery and picked best practice from around the world including a single register of Estonian citizens. Most UK government departments maintain a list of their “customers “with a unique identifier. For example, the National Insurance, NHS or passport number. Most administrative functions are now based upon computers, so we can achieve greater efficiency, accuracy and interrogative capability with a central database, maintained rigorously by the General Register Office, of all British citizens and separately all aliens with the right to reside in the UK whether temporarily or permanently.
UBI will require people to prove that they are British and to open a specific bank account to pay UBI into. This gives a unique opportunity to set up a comprehensive and accurate central Register of British Citizens. All government departments would be able tap into the central register to ensure that their departmental “customer lists” are up to date and co-ordinated. Examples of the use for such records include:-
o Allowing the NHS to build a comprehensive system of patients’ records.
o Using the patients’ records to allow data mining medical research (with huge potential).
o Keeping track of children who should be in school.
o Keeping records of children’s academic attainment to allow the lowest performers to be identified and helped.
o Allowing the NHS to charge foreign patients.
o Helping to identify illegal immigrants, maintain the electoral register, ensure accurate tax and benefit payments and much more.
Privacy issues would need to be addressed but the key safeguard is that the central register would only contain data that is already public such as name, date and place of birth, parents’ names. It is the individual departments’ “customer lists” that will hold sensitive details, as they do already, such as medical or financial data.
SIMPLIFYING THE TAX SYSTEM AND HUGELY REDUCING THE COST OF RUNNING IT
Our tax system is far too complex having grown without consideration of basic principles of economy and efficiency, neutrality, fairness, transparency and certainty. The political principle of low rates on a wide tax base is, at best, wastefully complex and, at worst, outright deceitful.
The purposes of taxation are: –
o To raise revenue for government spending
o To regulate the economy using the Keynesian tools of raising taxes to curb inflation and lowering them to curb unemployment.
o To address inequality by making taxes progressive
o In a small number of cases, such as alcohol or tobacco taxes, to modify behaviour.
We can meet the first three of these purposes with only a tax on personal expenditure, rather than income, and a Wealth Tax. And, because we tax expenditure rather than income, the tax can be collected automatically by the banks operating the accounts set up to receive UBI. In practice most people are likely to opt for having the tax deducted from payments into the account so that the balance can be spent without incurring further tax.
The Wealth Tax would be greatly facilitated by the data from the UBI bank accounts concerning payments to and from investments.
Over time we could eliminate the hugely costly collection and policing activities associated with Income Tax, National Insurance, VAT, Corporation Tax, Capital Gains Tax, Inheritance Tax and Stamp Duty.
We might choose to retain taxes on externalities such as fuel duty and other charges on CO2 emissions or on tobacco and alcohol duties. However, it would do no harm to review the need for these.