‘I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.’ Martin Luther King Jr, 1967
What is a Universal Basic Income?
The Basic Income Earth Network definition says ‘A basic income is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.’
In Labour’s 2019 manifesto, we promised to scrap Universal Credit and design a system which ‘end[s] poverty by guaranteeing a minimum standard of living.’ We also promised to trial Universal Basic Income (UBI).
The rate of UBI
To determine the level of UBI we would first have to draw up a budget which meets an individual’s needs. It is important that this figure be acknowledged and accepted as legitimate by everyone. The budget would need to factor in all basic household expenditure costs and utility costs. These would include figures for broadband plus a modest smart phone and computer. These are essential needs in a world which depends on connectivity.
As a guide, the 2019 minimum income standard estimated by the Joseph Rowntree Foundation is £221 per adult per week.
It is important to note that it cannot be set too low – otherwise there is a danger it would operate as a subsidy to predatory businesses, who would lower wages accordingly. This has been cited as one of the downsides to the old Tax Credit system.
Help with Rent
There should be no help for rent built into UBI – country-wide disparities would render a single UBI amount for housing costs unworkable. Means-tested help would need to remain for rent in the form of Housing Benefit, albeit without the current limit on payments in the form of the Local Housing Allowance (LHA). The LHA is set at the level of the lowest third of market rents in an area and has the effect of perpetuating discrimination against benefit claimants in the private rental market. In our 2019 manifesto, Labour promised to raise the LHA.
Additional non-mean tested benefits
Those who are disabled need to meet the additional costs which disabilities bring. A reform of Personal Independent Payment and Attendance Allowance could make them less humiliating and difficult to claim. These are non-means tested benefits and would be paid in addition to UBI. Similarly, a means-tested contribution to child care costs would need to remain.
Re-purposing the Department for Work and Pensions
Changing from Universal Credit to Universal Basic Income will considerably reduce the infrastructure needed to administer Welfare Benefits. Much of this work is concerned with checking and re-checking eligibility as people change jobs and policing behaviour – it is time consuming and costly. The mechanism for payment of UBI would be through HMRC.
Job Centres could be re-purposed. There is no reason why work coaches shouldn’t adopt a proactive approach to helping unemployed people into work, providing IT and skills training, coaching for interviews and building a genuinely supportive service.
The moral case
100 years ago, the Labour couple Dennis and Mabel Milner argued for an unconditional weekly income for every citizen. Their view was that everyone should have the moral right to the means of subsistence, and the basic income should not be conditional on work or willingness to work. As a socialist, this seems self-evident to me. However, the moral argument for UBI is a difficult one to win in the present. The main enemy is a mean-spirited moralism, based on a fiction that society functions as a natural, market-driven meritocracy.
Welfare Benefits have been historically defined by the means test – the measure whereby the income and spending habits of the working class are scrutinised and judged and then an amount calculated to bring them up to the bare minimum required to sustain life. This humiliation is a disincentive to claiming entitlements. The media have collaborated with conservative thinkers in painting a picture of benefit claimants as ‘skivers’ and ‘scroungers’ over the last half century. This has driven a wedge through class solidarity, often pitting the working poor against the unemployed and building distrust between communities.
This narrative has informed welfare reform under the present government, who since 2010 have reduced the amounts of benefits overall, especially for disabled people and people who have ‘too many’ children. The regime of sanctions is designed to force people into work, however unsuitable, badly paid and precarious it might be. In May 2019, the United Nations Special Rapporteur on extreme poverty and human rights conducted a report into conditions in the UK which concluded that our social safety net ‘has been deliberately removed and replaced with a harsh and uncaring ethos’.
Tied up with the moral objections to unconditional payments are myths about the moral deficiencies of the working class, long a prurient concern of commentators. An argument made against UBI is that it encourages people to ‘do nothing’. However, experiments in Canada, Finland, India, Namibia, Kenya and Alaska demonstrate, across the board, that the disincentive assumption is a false one. Equally the supposed temptation to ‘bad behaviour’ is not born out. A review of 30 scientific studies by the World Bank in 2014 concluded: ‘Concerns about the use of cash transfers for alcohol and tobacco consumption are unfounded.’
A right to a Universal Basic Income would remove the means-test at a stroke. To argue that people should be given ‘something for nothing’ is deeply threatening to a capitalist society. However, the pandemic has shown us that people might be persuaded – the shock experienced by those suddenly without work and the means to support themselves has been profound and exposed the deficiencies of the benefit system. We should use this moment to argue for universalism.
A UBI also wipes out the poverty trap, where the marginal gains of entering the work force are offset by the taxation effect of taking work. In the present system, Universal Credit removes 63% of every pound that a recipient earns, which is a high marginal tax rate for someone considering taking up a part-time job. With UBI, any additional pay is a 100% gain.
The social case
One of the most immediate effects of our punitive welfare state is that claimants are invariably forced into debt. The system does not build in any capacity for people to save for an emergency – a broken washing machine, a larger than average bill. The stress of poverty and debt is now widely acknowledged. It is a leading cause of family breakdown, physical and mental illness, addiction and suicide. With UBI we would hope to remove the worry and anxiety of constantly struggling to make ends meet. Social mobility might become more of a possibility; UBI would give people a basic security on which they can build; to realise their aspirations and achieve their potential.
From a socialist perspective, Erik Olin Wright has pointed out that a UBI increases the bargaining power of workers. Without the conditionality of remaining in a job (those who leave a job voluntarily are currently ‘sanctioned’ within Universal Credit), employers might be incentivised to observe employment laws and may even go further, improving terms and conditions to attract workers.
There is also a case to be made for UBI’s role in a changing workplace. Bertrand Russell said back in the early 20th Century that UBI and public ownership would lead to a shortening of the working day and full employment: two aims with which we can all agree. Andrew Yang has recently argued that a basic income would counter the job displacement which is likely to occur with increased automation. This job displacement is currently taking place, he has acknowledged, brought about by the pandemic.
Cultural & intellectual gains
One of the greatest losses to humanity is potential unfulfilled. UBI would bring enormous benefits to our cultural life – would Harper Lee have written ‘To Kill a Mockingbird’ if she hadn’t been given the gift of a year’s wages and taken a year off her job as an clerk to write it? The gift of time out of wage slavery will free up our artists, authors and musicians, as well as our entrepreneurs.
Making the case
Previous trials of UBI show that the populations who receive an unconditional set amount of money per week (which meets all of their basic needs) are healthier and happier; they work similar numbers of hours, only choosing to work less if they can take up educational opportunities or want to spend time looking after small children; they invest spare income to improve themselves through training; they set up businesses and they contribute more to their communities.
Making the economic case for UBI is difficult within our present ideological framework. Countries are largely run on a cost-benefit analysis which downplays social costs and over-values economic measures, some of which are increasingly obsolete: GDP for one. Nevertheless, this is the framework within which we must win the argument.
A modest UBI of £48 per week would cost £150 billion a year. It’s expensive. With a society used to austerity and a persistent perception that public finances must be managed like a household budget, we will need to make a robust argument against the hegemony before we can even start to make the case for UBI.
Further, this amount is not enough. A UBI’s entire remit is undermined if it has to be topped up with means-tested benefits to meet basic needs. It must supersede the means-tested benefit system. A UBI of £1000 per month – a realistic figure – brings the total up to approximately £641 billion a year
The basis for an economic argument needs to include:
- Large savings from benefit payments and administration.
- Evidence that UBI would be ploughed straight back into boosting local economies, as it is spent.
- Those in higher tax brackets will pay back their UBI through progressive taxation.
- Financial savings resulting from social investment in the population – the effects of poverty will diminish and with them, so will the costs to society; of crime, homelessness, mental illness, addiction, domestic violence and so on.
Theorists have advocated additional methods of contributing to the considerable cost: James Meade has proposed social dividends be paid from profits of publicly owned business and Guy Standing has suggested a social dividend from a levy on rentier income from assets.
As a conclusion to the economic arguments for UBI, we should acknowledge the short-comings of the emergency measures brought in by the government to support the populace during the COVID-19 crisis. Owen Jones has written a critique of the measures – the link to his article is below – many people are falling through the gaps. A UBI, introduced now, would simplify the administration of the response and fill those gaps.
Rutger Bregman `Utopia for Realists’
Basic Income Earth Network https://basicincome.org/basic-income/
Secretary, Guildford Labour Party