Can the Greens’ Universal Basic Income tackle poverty?

The Greens in this election are promising in their manifesto “a Universal Basic Income, paid to all UK residents to tackle poverty and give financial security to everyone”. They state that their Universal Basic Income (UBI) will replace the current benefits system. And they will phase it in over five years. The rates are £89 per week for working age adults, and £178 per week for pensioners. They will provide an unstated amount as a supplement for people with disabilities and lone parents. For families earning under £50,000 there will be £70 per week for each of the first two children and £50 for each additional child. However, it seems they are not paying Housing Benefit to new claimants once UBI has been introduced. Their manifesto states that they will, “Continue to pay Housing Benefit to those who received it before UBI was introduced, so that they can cover their rent (page 50).

For those in full time work the £89 a week is in fact only £40.92 a week because the Income Tax Personal Allowance of £12,500 would be scrapped.

They estimate the cost of the UBI, the supplements and free childcare at £86.2 billion. They state they will provide 35 hours of free childcare for all from the age of 9 months. This is more than we are promising because we are only providing free childcare for working parents for children aged 9 months to two years. This is estimated to cost £12.3 billion in 2024/25. Therefore the Greens are spending less than £73.9 billion to introduce their Universal Basic Income while abolishing Housing Benefit for new claimants.

The Greens benefit reforms will leave most people who would qualify for benefits today in poverty. Using the Joseph Rowntree Foundation’s figure in their
“UK Poverty 2018” updated by inflation for April 2019 the poverty levels excluding housing costs per week are:

Single person no children £157.62
Single person with two children £325.88
Couple with no children £271.58
Couple with two children £439.84

Turning to the Greens’ proposals these are what people would receive if not working:

Single person no children £89
Single person with two children £229
Couple with no children £178
Couple with two children £318

If they are paying rent and they are new claimants after the USI is introduced it seems that under the Greens they will get no help with their rent, this is even worse than the Benefit Cap. The greens reforms will remove no one from poverty.

To remove only a couple with two children with no housing costs out of poverty UBI would need to be £136 a week for each adult and £84 for each child.

We would not need as must as £73.9 billion to remove everyone in the UK out of poverty. We could implement our manifesto promises plus restore the National Council Tax benefit scheme, restore the link of LHA to the 50th percentile of local rents and increase the benefit levels to the poverty line and have I think 1.9 billion left over.

* Michael Berwick-Gooding is a Liberal Democrat member in Basingstoke and has held various party positions at local, regional and English Party level.

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22 Comments

  • Richard Underhill 10th Dec '19 - 11:08am

    Paddy Ashdown had Guardian economist Chris Huhne look at this, but did not adopt it.
    Recent news reports are that several countries have tried this, with results that the policy could be popular, but does not help people get jobs.

  • Because it is universal it takes away the stigma of welfare but does encourage everyone to do some work to supplement their income but without the mind bending complexity of universal credit. Not sure why a fifty percent rate is not extended to children instead of the current system. One disadvantage for pensioners, they would lose their UBI if they went abroad as no longer resident whereas the state pension does not stop if abroad.

  • Thank you for this carefully worked out detail, Michael.

    The Party clearly could do with you at the centre of things advising the leadership on the huge problems of poverty and inequality and encouraging them on giving it much more focus after the horrendous U.N. Report in May. Ignoring poverty(including those in-work poverty) does nothing to eradicate the legacy of 2010-15. It’s not enough just to say sorry…. a positive alternative should be campaigned for.

    I am concerned about the lack of a taper for the more prosperous. It seems nonsense that such as Wayne Rooney (if he’s back again ?) should receive UI.

  • Christine Headley 10th Dec '19 - 12:28pm

    If Finland can’t make it work, it is unlikely to get anywhere here.

  • No, it would not. Would probably make absolute worse.

  • Peter Martin 10th Dec '19 - 1:04pm

    If people need money and are able to work why not give them a job at say £10 per hour? That would set the minimum wage for everyone else at £10 per hour too.

    There could be an element of training involved and the expectation should be that anyone use the job as a way of finding a better job. The problem for many is that employers won’t offer jobs to those who don’t already one. So the idea that the unemployed can be used as a buffer stock of labour doesn’t actually work in practice.

    The discussion is often framed in terms of either a UBI or a Job Guarantee. It’s possible we could have a mixture of both.

    https://www.prospectmagazine.co.uk/economics-and-finance/how-ubi-and-a-job-offer-scheme-could-end-poverty-and-help-the-public-sector-too

  • Joseph Bourke 10th Dec '19 - 1:23pm

    Other parties have historically tended to pick up certain policies initially developed by the Greens. I expect the Universal basic income proposals will become mainstream over time and proposals developed by both Labour and LibDems https://www.libdemvoice.org/minimum-income-from-finnish-trial-to-lib-dem-policy-60189.html
    Eliminating means testing with Universal benefits is an admirable objective.
    The Greens policy on housing benefit and Land Value Tax needs further development and may be trialled in Scotland by the SNP/Greens cooperation arrangement.
    As shelter has commented “Local Housing Allowance (LHA) – the housing benefit for private renters – isn’t working. In fact, LHA rates now fail to cover the cheapest third of rents in 97% of the country, and in a third of England the LHA rate doesn’t even cover the bottom 10% of the market.”

    While the Green Party does commit to replacing ‘Universal Credit and the cruel benefit sanctions regime’, it makes no comment on how this would be achieved or what it would be replaced by, so it’s hard to explain their solution to the issues around LHA. In addition, it is noted that following their commitment to introduce a Universal Basic Income, they say all those in need of housing benefit would continue to receive it. But it is not clear whether anything would be done to rebase rates for those renting privately, which we have said should be to cover at least the 30th percentile of market rents.

    For those currently struggling to find and stay in a home they can afford, further detail around these issues is vital.”

  • James Baillie 10th Dec '19 - 1:27pm

    As a reminder, the Liberal Democrat policy on this is to pilot a minimum (but *not* a Universal Basic) income, by making the standard element of UC unconditional on work-seeking. I think unconditional benefits are absolutely the right move, and have huge potential liberal advantages in freeing people from the uncertainty and income insecurity caused under the present system. Whilst the raw numbers are hugely important, stability and reliability and lowering bureaucratic barriers to claiming social security, not to mention destigmatising it more generally, are all also things we need to be concerned about which reducing conditionality would start to help solve.

    The biggest issue with a true UBI, as this article correctly shows, is the pressure to cut elsewhere to make room for its payments to middle and higher earners – in this case, that’s most noticeable with the Greens’ proposed housing benefit cuts. HB needs to be a separate credit element due to its heavy regional variation. If a true UBI were large enough this would be less of a problem, but the tax levels needed for that are high enough that even the Greens seem to be balking at them. We shouldn’t, however, conflate all minimum income guarantees with the Greens’ specific proposals.

  • Laurence Cox 10th Dec '19 - 1:40pm

    A Citizen’s Pension has been party policy since 2004.

    https://www.standard.co.uk/news/lib-dems-pledge-on-citizens-pension-6959496.html

    This is a UBI for the retired. We should be asking if we as a Party think this is right for pensioners, why we don’t think it is right for those of working age.

    [Disclosure: I was a member of the working group, led by Ben Stoneham with input from, among others, Steve Webb and Ros Altmann (then at the Pensions Policy Institute), that developed this policy].

  • “I am concerned about the lack of a taper for the more prosperous. It seems nonsense that such as Wayne Rooney (if he’s back again ?) should receive UI.”

    To pay for it limited tax relief on pension contributions, for instance, would hit Wayne a lot harder than the loss of UBI, not to mention higher tax rates that can’t be avoided by using companies etc etc. Have to get away from the Labour idea that the rich have no rights because they are better off than MP’s.

  • marcstevens 10th Dec '19 - 3:23pm

    Peter, adult training is very much a hotch potch, poorly funded and much of it run by the private welfare to work sector providers. This is an area where we need a uniform national system brought back into the public sector. I would like to see local authority involvement here and add to that the Careers Service/Connexions service for young people which has been decimated by the tories and hardly anyone mentions that these days.

  • Thank you everyone who has commented so far.

    Frank West,

    I expect it would be possible to just increase the pension to £178 a week and scrap the relationship with a person’s National Insurance contributions rather than having two adult rates of UBI.

    David Raw,

    Thank you for your suggestion for the party. I think we look at each policy area between each general election if there is time. Therefore we should have a policy working group on benefits before the next general election. I will apply again and maybe this time I will be selected.

    As the Income Tax Personal Allowance is clawed back when someone earns over I think £100,000 and child benefit when they earn over £50,000 it would be possible to claw back UBI in the same way.

    Peter Martin,

    It is good to see you coming round to seeing UBI as acceptable. I like the idea of a job guarantee scheme, but I wouldn’t pay an hourly rate. Instead I would pay an addition to a person’s benefit plus their traveling expenses and limit their working hours to 6 hour a day and 30 hours a week. This should ensure that such a scheme would not cause wage inflation and that those on it are not exploited as cheap labour. The devil is in the detail and it should not be used to as a way of filling employment gaps in the NHS or social care or council cleaning and maintenance services.

    Joseph Bourke,

    It is a shame that our party does not accept the problems with Local Housing Allowance since the 2012 cuts. This is why I advocate restoring the LHA to the 50th percentile of local rents where it was in 2012 before the Coalition government cut it to the 30th percentile and the Conservative government broke even this link with a freeze in rates.

  • Peter Davies 10th Dec '19 - 9:28pm

    The only real problem here is housing benefit. Keep that as a tapered benefit and you can easily produce a universal basic income for working age people at about the same value of the personal allowances (income tax and NI) that’s a bit over 60 pounds a week. JSA for couples and under-25s and UC base rate are quite similar. You would still need a small benefit for unemployed singles over 25 if you didn’t want them to lose out. Raising the basic income to the level of the single person’s base UC would be more expensive but still well within the margin of error of the current Labour and Tory manifestos.

  • James Baillie,

    Our policy is to “introduce a pilot scheme that involve(s) an unconditional payment of the standard Universal Credit allowance (currently £319 per month for a single adult over 24)” sic (page 10 “A Fairer Share for All’). I assume this would mean a single person not receiving housing benefit and living with their parents.

    I am in favour of a UBI once we have increased the existing benefit levels to the poverty line. Then the means-tested benefits could be reduced as the UBI is increased to ensure no one lives below the poverty line. I can see no way that UBI could be large enough to cover everyone’s housing costs, therefore Housing Benefit would still be needed.

    Laurence Cox,

    Just because we had a UBI for the retired in 2004 does not mean it is still party policy. Can you point out where it is in our current pensions’ policy paper?

    Frank West,

    It has been suggested that abolishing the higher tax reliefs on pension contributions would help pay for a UBI. Plus raising the higher National Insurance rate to 12%, extending National Insurance to all earnings and increasing all Income Tax rates by 3%.

  • Peter Davies 11th Dec '19 - 8:52am

    The problem with a pilot scheme is that any real scheme involves tax rises. The random group of taxpayers chosen to have their tax rate on earned income raised from 42% to 55% or 47% to 60% as in Michael’s suggested example would have a serious case that their human rights were breached. A trial that involved nobody losing out would tell you nothing.

  • @ Michael BG You know I’m very sympathetic to the need to improve benefits, but there is no way am I willing to pay 3% higher income tax in order to pay universal benefit to the likes of Wayne Rooney.

    This is a huge political hole. It would be ruthlessly exploited by other parties if it becomes a formal advocated policy. There has to be tapering and a cap.

  • That’s a well-argued article from Prospect Magazine that Peter Martin has linked. The concluding paragraph provide a good summation under the sub-heading A holistic approach:
    “A job offer implies no compulsion—as is sometimes claimed—but should require adequate performance, so it is not an unconditional job guarantee. However, good working conditions and regular, full- or part-time hours under such job offers would mean that private employers must offer at least similar pay and conditions to retain their workers, so common current abuses such as zero hours, excessive pace of work to meet unreasonable targets, or demanding unpaid overtime to undermine hourly minimum wage legislation would no longer be viable. Self-employment as a voluntary choice would also be encouraged by UBI, while job offers could replace involuntary self-employment with inadequate earnings.

    Of course, the current crisis in the NHS, with substantially lower funding and staffing compared to many EU countries, as well as decades of neglected public infrastructure investment, also imply an urgent need for substantially greater public spending. A “Green New Deal,” including major investment for rapid transition to a sustainable, low carbon economy, is essential to meet long term climate goals and has been proposed by Democratic Presidential candidates in the US. Disability-related benefits also need to be improved for those unable to work and needing care, and housing benefits should be augmented in view of Britain’s dysfunctional housing and rental market, which requires major long-term investment to overcome current shortages and catch up with European standards.

    Thus higher taxes on the highest incomes, which do not reduce growth according to many studies, are essential both to reverse growing inequality and fund increased public spending, as in the more egalitarian Nordic economies which enjoy top rankings for entrepreneurship, happiness and life satisfaction—as George Lakey’s 2016 book Viking Economics argued. Since adequate care services are an essential part of the welfare state, the additional cost of UBI, job offers and expanding services to cope with an ageing population cannot be avoided in the long run.”

  • Peter Davies,

    You have missed the point of my article. If a UBI of £89 per week is not enough to lift someone to living on the poverty line, then £61.36 as you suggest is not going to do it. The current benefit levels are well below the poverty line. For example a single person 25 or over is £84.52 a week below the poverty line while a couple is £131.71 a week below.

    To provide a UBI at the current level of benefits will lift no one of working age not working out of poverty. It would not provide security against taking a bad job. The majority of people it would help are those who don’t claim benefits, especially the large group of people who are economically inactive and do not claim any benefits.

    Joseph,

    I am glad that you support higher taxes on the highest incomes. However, as I argue in my article the first priority before the introduction of a UBI is increasing the benefit levels so no one lives in poverty, because a UBI does not remove everyone out of poverty unless set at the poverty line and is it not so basic.

  • Michael BG

    I was delighted to see your piece appear, and get such a good response. But oh, I did wish you had held it over until the New Year, enmeshed as I am now in the duties of Family Christmas, now the leafletting is done! I shall try a.s.a.p. to offer a different approach to UBI, after a closer look at the discussion you’ve begun — or begun again — because I am encouraged to believe that at last the kindling has caught, thanks to the Greens, and we shall be serious losers if we do not join the race to lead on it. It needs a better name, for one thing.

    I was disappointed, but also much relieved, that Labour seem to be turning their back on it, despite the excellent Report on UBI written for the Shadow Chancellor by Professor Guy Standing of the Progressive Economy Forum and published in mid summer. I think he is the foremost exponent and proponent of the idea; and the Report is very readable; and I hope every Lib Dem will at least read his concluding chapter. I was surprised to notice no reference to its existence, even, in the responses to your opening.

    I believe there is something amiss in the Lib Dem approach to UBI, and hope to suggest an alternative soon. Meanwhile, I consider study of ‘pilot’ schemes, quite often dismissively reported, to be missing the point. It is rather as if the Independent Republic of Yorkshire were to attempt a useful ‘pilot’ scheme of changing the traffic to drive on the right, when it was known to be time-limited, and confined to Heckmondwike or York.

  • Peter Davies,

    I don’t think there is a human right which states that a person has the right to keep a certain percentage of their marginal income. If there was I wonder why a case was not taken against the government for those people in work who had a marginal ‘tax rate’ of 97% in 2010 because of the withdrawal of their benefits.

    David Raw,

    The issues with a UBI are big and as my article points out would not end poverty in the UK.

    It would be possible to ensure those earning over £100,000 paid back their UBI as they currently pay back their £12,500 Personal Allowance. (At the moment someone earning £125,000 has paid back the whole of their personal allowance.) Therefore if Wayne Rooney was earning more than £100,000 he would not end up with the full amount of UBI. I have more of an issue with Coleen Rooney with getting the UBI if she is not working and her husband is earning say £250,000 a year. I can see no easy way to resolve this.

  • Peter Martin 12th Dec '19 - 9:48am

    @ Michael BG,

    “It is good to see you coming round to seeing UBI as acceptable”

    I’ve come around to thinking that we could start with a mixture of both and let public opinion decide on how much of each we could have. The “Wayne Rooney” effect will probably push public opinion towards the JG. I don’t think he’d be too interested in working for £10 ph!

    The UBI will simply everyone getting their own personal allowance in cash so it won’t make much difference to those who are working.

    Incidentally MMT has been given a write up on the BBC website. It is much oversimplified, and they don’t get everything right, but its a start!

    https://www.bbc.co.uk/news/business-50579897?fbclid=IwAR3Xn4HIM4dwnQJSG5MET_PLzMXUQ1hBtIfC1QBTQNlEGPWcTalLV8NC7p8

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