Ben Wray, Common Weal Head of Policy & Research, looks at the evolution of the idea of a Universal Basic Income in the UK, as a new paper making the case for a UBI is set to be launched by Labour’s Shadow Finance Minister John McDonnell
UNIVERSAL BASIC INCOME (or ‘Citizens Income’) is gaining currency as an idea worthy at least of serious discussion when it comes to welfare policy. One would have to be deliberately looking the other way not to notice the increase in the number of organisations and political parties in the UK and abroad willing to stick its flag on the UBI turf over the past couple of years. When Common Weal advocated it as part of its vision for social security in an independent Scotland at the start of 2014 we were still at that point outliers, and to be fair the details of how it would be implemented and paid for were sketchy. It was firmly in the category of big idea for some unspecified time in the future.
There is still no agreed upon, costed plan for the implementation of UBI in the UK (of which more later), but the launch this evening [6 May] of a new paper by Compass, UK think-tank and campaign group, marks a noteworthy moment in the evolution of the idea from utopian concept towards pragmatic policy implementation. Not least because shadow Finance Minister, John McDonnell, will be speaking at the event, suggesting Team Corbyn have a genuine interest in looking at whether UBI could be a corner stone policy of their 2020 General Election manifesto.
The paper, written by economists Howard Reed and Stewart Lansley, is a serious attempt to model UBI in the UK; warts and all. The authors are clear that they do not believe a full UBI policy – one universal sum for the purposes of all (or almost all) welfare needs that would be sufficient to lift everyone out of poverty – to be within reach due to the huge expenditure involved and the problem of ‘losers’; the substantial losses of income some people currently receiving welfare support would suffer.
“While it can be tempting to say that the national income of the UK is by far sufficient to pay for such a policy as long as the super-rich coughs up, it is also a limited and non-strategic argument”.
These are not fringe issues that UBI supporters can dismiss out of hand. While it can be tempting to say that the national income of the UK is by far sufficient to pay for such a policy as long as the super-rich coughs up, it is also a limited and non-strategic argument: social justice activists have to pick their battles carefully to maximise impact, and no hope policy campaigns that can’t be realistically costed have, well, no hope.
The second concern is even more important: as Social Policy expert Professor Paul Spicker has pointed out, a small loss of income for those on welfare support can be much more devastating than a small increase in income for others can be liberating. Concerns over eg the impact of UBI on those receiving disability benefits are understandable. The argument can also feed a broader wariness towards UBI: because one of the origins of basic income ideas can be traced back to the libertarian right, some feel that UBI could be used as cover for further cuts to welfare funding, leaving the most vulnerable worse off. In Finland, where UBI is being trialled and is anticipated to be the first country to legislate for it, this fear has emerged as an important part of the debate.
Reed and Lansley should therefore be congratulated for devising a policy proposal that is willing to forego any preciousness about the sanctity of UBI and instead develop a pragmatic, albeit more limited, UBI that could be implemented now. There can be a tendency among supporters of UBI to see it as some sort of anti-poverty magic bullet; this paper helps move the debate beyond that point.
Their most ambitious proposal is for a “partial” UBI that would maintain the key principle of every person in the UK receiving UBI as right of citizenship, but would: a) be a sum that, in and of itself, would not allow one to escape poverty, b) would be integrated into the current means-tested welfare system, and c) would only replace a limited range of current welfare benefits. They argue that one way to pay for this would be a 2p rise in income tax on all bands, plus an extra £8bn on top of that from existing revenue.
“[Reed and Lansley] argue that one way to pay for this would be a 2p rise in income tax on all bands, plus an extra £8bn on top of that from existing revenue.”
Reed and Lansley show that the proposal is progressive (the richest lose most while the poorest gain most); would therefore lead to a small reduction in inequality in the UK; would reduce the extent (though not all) means-testing in the welfare system; would lead to very few ‘losers’ in the welfare system; and, most importantly, would be a major anti-poverty measure, reducing child poverty by “around half”, adult poverty by one-sixth and “a small reduction” in pensioner poverty.
The authors argue that, once implemented, it would then be easier to evolve into a full UBI, gradually taking away the means-testing aspects of the welfare system without causing any nasty shocks.
The proposal is partial and therefore not ideal (something the authors themselves note): it doesn’t eradicate the complexity of the welfare system which is a real downside; one of the major benefits of the basic income idea is its simplicity of concept and of access. It doesn’t in itself provide sufficient financial support to eradicate poverty; one of the most obvious goals of UBI supporters. (Additionally more than one welfare expert have identified design flaws in the proposal too technical to go into here.)
Some will argue that these limitations are a step too far and could therefore undermine rather than enhance UBI’s popularity in the long-term (especially if it gets into the hands of the wrong legislators). I understand that perspective, but I think it misses the big picture when it comes to the politics of welfare in the UK: we are losing the argument and only by re-inserting the principle of universalism at the heart of social security can we start winning again.
“One of the cornerstones of Blairite neoliberalism was re-regulation of the welfare state to instil market principles. Nowhere has this happened more than the area of means-tested welfare benefits, which has inevitably led to an increase in social division”.
One of the cornerstones of Blairite neoliberalism was re-regulation of the welfare state to instil market principles. Nowhere has this happened more than the area of means-tested welfare benefits, which has inevitably led to an increase in social division: once the debate around welfare is framed as who is worthy and who isn’t, the right have already won the argument. No wonder it has not been difficult for Cameron to pick up where Blair and Brown left off: once the means-testing principle has been instilled into welfare policy, the Tories natural instincts towards divide and rule politics – pitting the poor against the poor – are given a green light. The reality is that while Milton Friedman may have proposed a tax dividend idea that had some similarities with UBI, the real Right in the UK (eg The Daily Mail) despise the idea of a basic income for all because it breaks with one of their fundamental ideological tenets: ‘the deserving and undeserving poor’.
The key argument for UBI is maintained within the Compass’ proposal and remains incredibly simple: in the age of ‘the precariat’ – where financial insecurity is increasingly a fact of everyday life for millions in and out of work – UBI provides a basic level of permanent financial support as of right. It does not take a great leap of imagination to think of a time where UBI could be alongside free healthcare and free school education as an obvious and indispensable part of the universal welfare state. In a global economy increasingly defined by ‘financialisation’, access to a basic level of finance as a universal right should not be too much to ask.
UBI, even in a partial form, could also have an obvious beneficial effect on more organic opposition to the power of global finance: less fear of unemployment would surely increase labour power, and the ability of those who wish to work fewer hours could enhance the power of activist communities.
The Compass’ paper will, I anticipate, be a new phase (rather than the end phase) of the debate around UBI policy in the UK among its advocates. With a motion passed at SNP conference in favour of the idea in principle, perhaps Reed and Lansley’s partial UBI proposal could be piloted north of the border first.