Universal Basic Income: The bold solution to battle pandemic poverty – Labour Article
In the space of a few short weeks, entire sectors of the economy have evaporated. Through no fault of their own, millions of people are now out of work and without income. It will also continue to stay this way in the valiant effort to stop the spread of the virus.
Facing these uncertain times, the government has stepped in with an unprecedented response. Over £30bn has been made available to businesses to subsidise worker’s wages. This policy has the right intention but the wrong implementation, in ways that are rapidly becoming clear.
The task of bankrolling an entire economy is colossal, and government roll-out was rapid. I recognise this. But in the haste, Rishi Sunak’s scheme is a patchwork of protective measures. Small business owners and the self-employed, who supposedly represent the backbone of the economy, are not receiving the help they so desperately need. Even for those do, it will likely be too late – the five-week wait for Universal Credit means most won’t get their money until the end of May.
In the face of these faults, what can be done? There is an answer: universal basic income (UBI).
The premise is straightforward. Instead of just paying money to businesses, the government would make frequent financial payments to every adult individual. Businesses would top up the remainder as required, whilst existing supports would supplement that income for those with difficulties like the disabled.
The immediate advantage is twofold. Sufficient payments mean a level of security that is sorely lacking for many at the present moment. Additionally, the new safety net would catch everyone as payments will be made to everyone. As Labour MP Alex Sobel outlined, the process could be implemented through both HMRC and the Department for Work and Pension, whilst using National Insurance numbers to ensure one payment for one person. Over 170 MPs and Peers agreed with him.
He also argued that the government should look to borrow to finance it. I’d be the first to admit that cost is one of the biggest sticking points of this policy, and rough estimates suggest it would run a bill of around £150bn for this period, around five times the current approach.
But consider this: the government would save the vast majority of existing benefits payments, drastically cutting the cost. Payments to those wealthy enough to support themselves could also be returned through the tax system, further reducing the total figure.
Critics, like Universal Credit’s creator Iain Duncan Smith, also argue that such a scheme would be a ‘disincentive to work’, which is indicative of the Tories’ real issue with the idea. The irony here is that the Institute for Economic Affairs has said the same about Sunak’s scheme.
Moreover, discouraging people from unnecessary or unsafe work is exactly what we should be doing to break the chain of transmission. No-one should be forced to choose between destitution or disease. This is why we must give people enough to survive.
Changes that arrive in times of crisis often seem drastic, but they can go on to become commonplace. In 1942, during the depth of World War 2, William Beveridge wrote the report that would lead to the foundation of the NHS. Without it, our current situation would be unthinkable.
So whilst I and many others are arguing for a form of UBI to meet the urgent needs of today, take a moment to think about how it could also meet those of tomorrow. In a post-pandemic society where automation and the climate crisis will change the world of work beyond recognition. The need to put people first will be even more pronounced.
Written by Chief Labour Writer, Evan Saunders
Point of Information
An interesting concept, but lacks proper ability to work – a Liberal response
A universal base income is a great idea. It would mean that those who struggle to cover their everyday expenditure would be under less financial pressure. It would also create a more equal spread of wealth amongst the population.
However, it does undermine the values of capitalism, the financial system that British democracy is built upon. I believe it would be wrong to meddle in the financial sector, even if it is unfair for some. We understand that in capitalist theory, those who work hard, reap the rewards. It would create a less efficient workforce, as working hard would not provide as much extra benefit if the government were to fund daily living costs.
Secondly, there is the issue of how the government will afford it. There are already shortages of cash inflow in important areas such as healthcare, infrastructure and in my opinion, military. Where would the government find the extra money? Taxes would be the obvious answer. But what is to stop the super-wealthy from packing up and leaving for a tax haven?
Thirdly is the comparison to the benefits system in place and how that is exploited. The government already has a benefits system that “works”. The problem is the current exploitation of that system. Many people claim benefits, for example, unemployment benefits. But then rather than looking for a job, they simply live off of the money they receive. What is to stop those who are already exploiting the current system from exploiting the new one?
Overall I think the system is a good idea, but in practice, it doesn’t work. We don’t live in a society where there is complete transparency and trust. I don’t believe that everyone who would need the income would use it effectively, and some will try to cheat the system.
Written by Liberal Writer, Charlie Papamichael
Changes to welfare benefits may be needed but this is not the way to go – a Conservative response
This is a well-presented argument by Mr Saunders, yet unsurprisingly I do not agree with its conclusion. UBI is an interesting concept but is flawed. This article mentions countries that have implemented systems of UBI. However, most have been experiments and its clear to see why they just that. The UK system of welfare benefits does need drastic changes, but this is not the way.
There is a situation in which I believe this could work. This is if the basic income replaced the welfare system completely and there are no added payments on top. However, it is unnecessary for the government to ultimately pay those who are in work back their tax in the form of an income.
If the aim is to help those worst off, why do those who earn a good wage require this payment? Is it not best to just improve the current system, support the worst off through benefits without funding the majority that doesn’t need it?
The cost of such a universal basic income would be extortionate and increases in tax are not the way. This would raise tax for many that have worked hard to be financially where they are; funding a universal income that accommodates others not working. I admit, this system would help those who do continue to work but earn very little and are struggling.
Nevertheless, this basic income comes without conditions. This allows many who in the current system have to at least be looking for work, income for nothing. Although discussed, the significance of the disincentive to work is underplayed.
Mr Saunders all but admits there would be less incentive when he says that this would be positive during the pandemic. What about afterwards? This is advocating for this to replace the current system. We live in a society where you are encouraged with rewards to work hard and be productive. UBI won’t just disincentive those not in work but those in it too.
To add to this, when people do go for a job they are likely to hold out for higher pay as they have a higher reservation wage. How can small businesses afford to pay this?
An expensive concept that leads to a less efficient society.
Written by Chief Conservative Writer, Fletcher Kipps
I’m a third year University of Manchester student, currently studying in Lyon on my Erasmus year (by sheer coincidence I’m writing this hours after parliament has voted to end British involvement in the 30 year programme, so just to be on the safe side I promise not to use the NHS/European Declaration of Human Rights/anything at all anytime soon).
I am an incoming third year undergraduate currently studying Politics, Philosophy and Economics at the University of Exeter. I am socially liberal, fiscally conservative editor here at POI. I have been fascinated by politics for many years, from PMQs to late night election results all which has led to the desire to study this at university.
I am a second year student currently reading International Relations and Modern Languages at the University of Exeter.