Update 18 November 2023:
The Guardian asks: AI is coming for our jobs! Could universal basic income be the solution?
Update 27 October 2023:
Since publishing this article, a reader has responded with this critique:
“The LibDems produced a detailed consultation paper on UBI 145 – UBI Consultation. You can see there that a UBI of £75 a week costs about £50bn a year (2020 prices) on top of the tax increases brought about by abolishing the Tax-Free allowance and the National Insurance threshold. By the way, this means that people would pay income tax on every penny of their income and bring millions of people into the income tax system. There would be some savings on benefits but (for example) Housing Benefit would have to remain because of the huge disparities in housing costs across the UK.
There is a reason why true UBI has never been trialled – it is either too expensive or the income it offers is too little. That is also why, in spite of a lot of enthusiasm by rank-and-file Lib Dem members – it didn’t make it into the manifesto.”
In reply I can say:
I’m delighted that the article has stimulated discussion. These are good points, of course, but I don’t believe they are without counterarguments. Some research suggests, for example, that UBI could save the NHS up to £20bn.
It’s not just a tax and welfare issue, it’s much wider. If we consider broader implications of poverty, we might anticipate savings in other areas such as social care, crime, environment, and housing that would offset the proposed £50bn net cost.
As for tax reform, we know vast wealth exists, and that the income gap between the richest and poorest in the UK is among the largest in the world. What we lack here is the will to rebalance it with a truly progressive system. It may be politically costly in the short term, but we don’t yet know the long-term price of inaction.
Original article starts.
Universal Basic Income (UBI) could offer the stability we desperately need in these chaotic times.
So much has happened of late; March 2020 seems like an age ago. Back then, the Covid pandemic had just begun. Large swathes of our communities were shut down and most of us were confined to our homes. Now it would seem like a dream, if we weren’t still suffering the physical, social and financial consequences.
To mitigate the economic meltdown, the UK government introduced the Job Retention Scheme, or ‘Furlough’, paying grants to employers to retain workers on payroll at 80% of their salary, costing around £70bn.
For some, furlough demonstrated two fundamental truths about the nature of our lean, modern democracy. First, that some global shifts are so seismic, the only way to effectively respond is through competent, ‘Big Government’. And second, that sometimes there is a magic money tree.
It was around then that an old idea gained traction again: Universal Basic Income (UBI).
The relevance of UBI has not gone away with the hand gel and masks. When we look to our future, we can’t ignore the upheavals to come. How will the conflicts in Ukraine and the Middle East play out? How will the world respond to further pandemics? What happens when climate breakdown causes mass migration from huge, uninhabitable zones of the planet? What will become of the millions of workers who could be displaced by AI? What about those in the dying fossil fuel industry?
Can we rely on Messrs Zuckerberg, Musk and Ambani to have our backs? It feels like we need a plan B.
What is a Universal Basic Income?
The Joseph Rowntree Foundation describes Universal Basic Income as a regular payment to every citizen regardless of existing income and wealth. Everyone gets a sum of money from the government, no matter how much they already have or how little they work.
Visceral objections to UBI are not uncommon. Most of us are raised with a profound belief in an honest day’s work for an honest day’s pay. Giving money away isn’t just expensive, it feels morally wrong, too. Robbed of our incentive to work, what will become of humanity? And what good can come from subsidising the already wealthy with public money?
There are economic challenges to UBI. Where do you pitch it for income level that is both affordable and meaningful for those who need it? Even if the cost of a UBI is offset by scrapping the pre-existing welfare system, it would require increased taxation. Some argue that, while it’s the obvious solution, placing this tax burden on the wealthiest will disincentivise entrepreneurship and encourage capital flight.
Those who dismiss the idea of UBI should take an objective look at our current predicament. If someone were to propose a new financial system in which a handful of billionaires build moon rockets while nine million people die of hunger annually, how would it go down? How would workers left unable to feed their families feel about it? What about the sewage dumped in our rivers and fuel prices soaring because shareholders must be rewarded for their wealth? It’d be a hard sell.
No alternative model will ever be perfect, but it doesn’t have to be. It just has to be better than the one we’ve got.
Quality and Equality
UBI has potential for wider benefits to society and the economy. If taxation to pay for it was introduced rationally, we can assume a net benefit for those with the least, no change for those in the middle, and the larger burden at the highest end of the wealth scale. Any extra income at the lower end is more likely to be spent on core goods and services as opposed to saved or moved abroad, having an overall positive economic impact.
As a mechanism for fairer wealth distribution, UBI could tackle hardship both directly and indirectly, by ensuring work pays a living wage. Workers receiving £1,000 a month unconditional income will be less likely to work for poverty wages.
Then there are the wider societal advantages associated with equality: lower crime, higher life-satisfaction, and better health outcomes. We might see greater social cohesion and participation in community. Pursuing creative work or sport would become an option for so many more, propelling diverse representation and contributing to better quality of life for us all.
UBI would be a huge boost to gender equality, supporting those who provide unpaid care, an overwhelming majority of whom are women and girls. It could also empower those subjected to domestic abuse, which is so often enabled by financial control.
While it may seem nonsensical to hand a UBI to the wealthy, traditional means-tested benefits often lead to cliff-edge economics. Benefits are lost at certain levels of income or hours of employment. Removing this disincentive could stimulate just the ambition and entrepreneurship some fear will be quashed.
There are many examples of where UBI has been tested. Though mostly small in scale, trials refute the counterarguments with remarkable consistency.
In 2017, the Finnish government piloted a UBI of €560 a month for two years with 2,000 people. The preliminary data showed a marginal increase in employment participation and a significant improvement in self-reported well-being.
A 2011 trial in Iran transformed bread and oil subsidies into cash transfers to citizens and found an average increase in work participation by 36 minutes a week.
In Kenya, a UBI scheme born of Covid eliminated food insecurity for the most vulnerable, protected recipients’ physical and mental health, and sustained innovation and entrepreneurial businesses that would have otherwise been lost.
Closer to home, Ireland are currently running a Basic Income for the Arts pilot from 2022 to 2025 that will test the individual and wider benefits of enabling creative pursuits for 2,000 people. In Scotland, a 2020 feasibility study concluded a pilot of the Citizen Basic Income was desirable. The recommendation was for trialling two levels of universal, unconditional payment in different populations—a higher level at Minimum Income Standard (MIS) and a lower one aligned to current benefits.
No state has yet implemented a nationwide scheme, so it’s difficult to assess the risk of capital flight by the wealthiest in response to UBI. However, the fear of such an exodus is too easily manipulated to sell neoliberal policies, so scepticism is advisable until there is evidence either way.
The Genie’s Out
Covid transformed many things about human society—work, education, scientific debate, global politics, and economics. In a moment of collective trauma and forced introspection, certain vulnerabilities of our way of life were laid bare. It’s clear we were unprepared for a health crisis of this magnitude; our ethical checks and balances have breaking points; politics and science make for uneasy bedfellows; we exploit the natural world at grave risk.
For me, it also crystallised a feeling that the form of capitalism we have long nurtured, for all its selective success, leaves us ill-equipped for the challenges to come. If we’ve reached a new age of global instability, then we urgently need to build stronger societal foundations.
For people fleeing conflict and climate breakdown, and all those who wonder whether they will have a roof over their heads tomorrow, surviving today is a twenty-four-hour occupation. We must decide if we are willing to abandon them to their fate in the knowledge it will make us all the poorer.
As American psychologist Abraham Maslow suggested back in 1943 in his ‘Hierarchy of Needs’, those who have their basic physiological and safety needs met are free to move up the hierarchy, exploring the extent of their capabilities. That applies to every one of us, not just the rich. On a global scale, imagine the level of human potential we’re sitting on, the capacity that could be unlocked with a sturdy safety net. How’s that for the politics of aspiration?
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