Reform Scotland proposes alternative benefits plan to remove ‘welfare trap’

The think-tank said the benefits system should protect the unemployed and under-employed but at the same time must reduce or remove any disincentives to take work, known as the ‘welfare trap’.

Reform Scotland said its basic income guarantee would give every working-age person a basic income from the state of £5,200 per year, and every child £2,600, regardless of income or gender.

It would be non-means tested and would not increase or decrease as someone’s income changes, thereby removing the need for the associated bureaucracy and would replace a number of means-tested work related benefits, as well as child benefit, and be a new way of providing a social safety net.

The guarantee would be free of tax, but would replace personal allowances and tax credits and would not be a disincentive to work, since it only pays enough income to cover the basics of life.

Crucially, however, a basic income would ensure that every additional hour worked would result in additional net income. In other words, it ensures work pays and there is a very real financial benefit for working more.

A Scottish Government spokesman said: “We will consider this report as we look at all ideas to help people in Scotland maximise their income.”