L'Ombre de l'Olivier

The Shadow of the Olive Tree

being the maunderings of an Englishman on the Côte d'Azur

19 January 2007 Blog Home : January 2007 : Permalink

Revisiting the CBI

Last year I wrote a couple of posts outlining how a Citizens Basic Income of £100/week would be affordable for the UK economy. Interestingly, via TimW, I see that the Torygraph reports on a release from the Office for National Statistics about family spending in the UK. For reasons that seem bizarre the Torygraph goes on about the amount the average family spends on gambling, what is more interesting to my mind are the averages for different houshold sizes (XLS file).

The table below has its raw data taken from the ONS Excel sheet (with one correcttion) and is rounded to the nearest 10p or %
Household Type Number Average amount
Average amount
Pensioner (state) 1 £134.60 £134.60 74% £100
Pensioner couple (state) 2
£244.50  £122.30 82% £200
Pensioner (private) 1 £175.70 £175.70 57% £100 57%
Pensioner couple (private) 2
£350.30 £175.20 57% £200 57%
Single Person
£288.20 £288.20 35% £100 35%
Couple 2
£527.30 £263.60 38% £200 38%
Sinple Parent single child 2
£293.30 £146.60 68% £150 51%
Single Parent multi chuldren 3.5
£349.80 £101.10 99% £275 79%
Couple plus child
£559.60 £279.80 36% £250 45%
Couple plus two children
£641.60 £160.40 62% £300 47%
Couple plus more children 5.3
£669.70 £125.20 80% £315 47%
Multi Adult 3.4
£645.90 £191.30  52%
£340 53%
Multi adult multi children 5.1
£744.40 £144.60 69% £350 47%
Key to columns:
The number column is the average number of members of the household (and hence this is a fraction for the multi cases)
The CBI% column calculates percentage of expenditure covered by the CBI using a raw CBI based on the idea that every man, woman or child gets a flat £100/week each.
The CBI(v) is the amount a family receives when each child's contribution is split 50% cash, 50% education voucher and the CBI(v)% column calculates percentage of expenditure covered by the CBI using the CBI(v) option.

As you can see even the poorest class (state pension couples) would either require something other than a CBI in order to survive at their current expenditure level or would be forced to economise somewhat. On the other hand it also shows that most households would need little more than a 20 hour/week job at a post tax £10/hour for each adult in addition to the CBI to cover all their expenses - alternatively each adult could work 39.6 hours at the statutory minimum wage (£5.05). In fact by my calculations the only non-pensioner household type that would not be able to meet their obligations in this manner would be the single parent multi-child version if the chldren get 50% of their CBI in voucher form (and possibly the multi adult households where some of the adults are non-working pensioners).

Since, as the Torygraph bemoans, a good deal of the expenditure is on luxuries and frivolities I think it is fairly clear that the CBI would be a successful substitute for almost all state benefits as those who had no other source of income would simply be forced to cut back on discretionary spending. Where it could be a problem of course is for pensioners who have no other savings bar the state pension and who therefore would be forced to cut down on those pub meals and other "discretionary items" that probably aren't terribly discretionary. As far as I can tell this would affect about 1.5M people or about 2.5% of the UK population. I'd welcome some thoughts on how to deal with this shortfall of about £30/state pensioner/week or £50m/week or around £2500 million in total each year. A £2/worker/week additional tax on all workers might do the trick but I'd prefer a non-governmental solution that doesn't also involve the pensioners starving or freezing to death.

PS Kudos to the ONS for their website and availability of the data. I'm not sure we need this data but it is at least readily accessible and the PDF helpfully contains links to Excel spreadsheets for each table. The one correction noted above is that the Excel sheet thinks that "a couple plus child" consists of 2 people not 3.
Non-kudos to the Torygraph for not linking to the ONS page.

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