A Minimum Income Guarantee – income security for women?

A Minimum Income Guarantee – income security for women?  

Experiences of poverty and destitution during the COVID-19 crisis have prompted demands for improved social security provision. One type of proposal is a Minimum Income Guarantee (MIG).  Some MIG ideas have developed in opposition to Universal Basic Income (UBI), and confusingly, proponents of UBIs and MIGs sometimes use similar language to describe dissimilar things; whilst both mention a ‘guaranteed minimum’, the mechanisms for achieving this are very different.

Advocates of MIG propose that individuals and families should have a minimum amount to live on, relating to Minimum Income Standards research, which would currently be higher than Universal Credit and closer to Pension Credit thresholds.

The key issue considered here is means-testing involved in MIGs.

MIGs imply a ‘household’ means test

MIG proposals vary and are not always detailed enough to assess; but for many, in principle, a means test is deployed to calculate whether income is below the guaranteed threshold, and if so the amount of top-up that is payable. In one scenario, a MIG would replace Universal Credit (the Commission on Social Security’s proposed ‘Guaranteed Decent Income’). The New Economics Foundation proposes non-means-tested access at the point of need (with income over the threshold later clawed back through taxation), apparently delivered largely through increasing existing benefits (including Universal Credit). (Some MIG proposals are intended as emergency measures so may differ from longer-term schemes.)

Means testing here implies a household benefit unit. This involves assessing each partner’s income (and potentially also savings), as with existing means-tested benefits such as Universal Credit, for which entitlement is linked to a partner’s presence, resources, needs and behaviour. But this ignores the position of individuals within the household, potential unequal sharing of family incomes and the desire for autonomy. This particularly affects women as they are more likely to have lower incomes, lower pay and greater caring responsibilities.

The table below highlights aspects of the MIG examples considered in this blog which relate to couple means testing.   

	New Economics Foundation Living  Income	Commission on Social Security Guaranteed Decent Income	IPPR Scotland Minimum Income Guarantee for Scotland	Social Renewal Advisory Board Minimum Income Guarantee for Scotland
Couple Assessment	Unclear – access through benefits uplift (some already means tested). Recouped via (individual) taxation if not receiving means-tested benefits.	Yes, income of both partners (savings and child and disability benefits ignored).	Yes	Unclear – couple assessment implied.
Payment Proposal	Unclear – as now?[i]	Split equally and paid separately.	Individually paid, child elements to main carer.	Either one payment, to primary carer, or split.
Source	Winter plan for jobs, Nov 2020	Commission on Social Security Consultation 2020	Securing MIG for Scotland, March 2021	Social Renewal Advisory Board, January 2021

One payment per couple?  

MIG proposals imply that the top-up is delivered via one benefit, suggesting mainly payment into one bank account – or possibly two, in undefined circumstances (see table).

This could be similar to Universal Credit, which for couples means that payment is usually made into one bank account; arrangements for split payments are discretionary, time-limited and ‘exceptional’ (though there are potentially different approaches in Scotland and Northern Ireland).  The Universal Credit single payment for couples has generated concerns such as making financial coercion easier, and potential financial and power imbalances, risking relationship instability and exacerbating rigid gender roles. MIGs could raise similar issues.

Separate payments can also be complex to assess and deliver in the context of an integrated benefit with joint assessment, where entitlement can be reduced by the income of one or both partners, making it complex to calculate each partner’s entitlement.

Gender

Gender issues underlie concerns about couple means testing, and gender equality considerations should be built into any new system design from the outset. Many proposals are silent on this; the Scottish reports from ippr Scotland and the Social Renewal Advisory Board do note the gendered nature of financial insecurity, and intra-household dynamics – though with few details to date about how this might affect specific design choices.

Other social security objectives?

By framing MIGs as improving the ‘safety net’, attention is directed to targeting resources through means testing, rather than achieving other social security objectives, such as:

• mutual insurance against risks and contingencies such as sickness, unemployment or maternity;
• economic security across the lifecycle;
• meeting additional needs, which includes targeting without means testing (such as disability benefits for extra costs).

Means-testing can alleviate poverty for people who can show that their resources are low enough to qualify; but social security can also help to prevent poverty. Non-means-tested benefits can have higher take-up and offer income security when circumstances change; for women, benefits based on individual entitlement can give greater scope for economic security and autonomy.

Whilst COVID-19 highlights weaknesses in current social security arrangements, and MIG proposals recognise the unacceptability of present levels of poverty and destitution, there is a case for a wider review of social security objectives during the pandemic and beyond, and the most appropriate mechanisms for achieving them.

MIG proposals considered in this blog are based on outline information available, not necessarily fully worked-up plans.

So Marilyn would be keen to hear from you with any questions, critiques, specific proposals, ideas for incorporating gender equality into MIGs, or for general discussion: Marilyn.Howard@bristol.ac.uk

[1] if via Universal Credit, one account; within separate means-tested benefits and tax credits the account nominated varies, e.g. Working Tax Credit – full time earner, though childcare element, main carer; Child Tax Credit – main carer.