Jane Dodds writes: Why UBI is the only way forward

Over the past few weeks, we’ve seen the spread of Corona Virus continue at a frightening pace. Countries around the world are taking increasingly more authoritarian steps to try and contain the spread before it is too late to stop it.

A consequence of this has been millions of people left in limbo, unsure of what they’re going to do as the lockdown increases. Across the UK schools have closed and many businesses are slowly shutting down due to concerns over staff/customer safety and lack of custom.

But as the UK grinds to a halt, people’s lives simply do not stop. People still have bills coming in, they still have a mortgage/rent to pay and they still need to be able to put food on their table. However, for many even funding these bare essentials will be difficult.

Many small and independent shops are having to lay off staff or close outright, this means for many thousands of people their source of income and livelihood disappears overnight. I welcome the recent moves by the UK, Scottish and Welsh Governments to support small businesses, but they simply haven’t gone far enough to support people themselves.

So, what happens if you lose your job due to Covid-19? You’re either forced to try and find a new job very quickly (almost impossible given the economic standstill) or apply for Universal Credit.

Universal Credit is an abhorrent system, one which lacks any compassion or grounding in reality. How is someone supposed to go five weeks without any support? How are they supposed to feed their families and keep up with their bills on just £80 a week?

The answer is they cannot, because our welfare system is broken and fails to address even a person’s basic needs. This is why something needs to change, why we need bold and radical action to support people during this global pandemic.

It is clear – implementing a Universal Basic Income is the only way forward.

Rolling out UBI would allow us to ensure everyone is supported, no matter their circumstances. It would restore fairness and compassion to our welfare system, ensuring no one is forced to go without or simply ‘get by’ on poverty level benefits.

UBI is an innately liberal idea. It empowers individuals to take ownership and control over their lives – giving them the freedom to make meaningful choices without having to worry about where their next paycheque is coming from. It is a hand up, not a handout.

I have long believed, and argued, that moving to a system of Universal Basic Income is the only way we can address the challenges of the future, namely automation and the increasingly digital global economy. However, due to this new pandemic the need for change becomes that much more urgent.

It’s heartening to see many of our MPs voice their support for this initiative, and that over half our Parliamentary Party have signed an Early Day Motion in Parliament calling for the Government to roll out UBI now – but warm words are not enough.

We need to be out there leading on this issue, giving it our full vocal support as the only meaningful way to support people during this pandemic.

This could be our one chance to get this meaningful change passed, so we cannot afford to squander the opportunity. I hope the leadership will take heed of this and join the growing ranks of parties who are backing the calls for UBI.

 

* Jane Dodds is Leader of the Welsh Liberal Democrats

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100 Comments

  • Wales, with a devolved administration and population of just over 3 million would be a good place to introduce and bed down a UBI initiative. The £80 per week Jane refers to is presumably the single claimant basic allowance of £317.82 per month. Joint claimants get £395.20 per month. Child tax credit (a family element and child element) and child benefit is paid to families with children.
    The welfare budget would have to be transferred to the Welsh assembly to run the program plus any additional funding required to put it in place. It would not be the first time that Wales has led the way.

  • Paul Chandler 20th Mar '20 - 12:36am

    As usual warm words about basic income but no facts and figures. The truth about UBI is that it is either inadequate or too expensive.

    A figure of £1000 a month has been mentioned. At that rate it would take up the equivalent of the annual NHS budget every two months.

    Some people can live on £250 a week. Many families cannot.

    The fact is that a one size fits all benefit is inherently inefficient. Rents vary across the country. Families vary in size. a Universal figure would either cost an enormous amount or be totally inadequate for some leading to the need for additional means tested benefits.
    Jane if you support this idea please give me a link to a costed proposal that can be genuinely evaluated.

  • Paul Griffiths 20th Mar '20 - 8:06am

    @Paul Chandler

    I used to be similarly dimissive. This article didn’t persuade me, but it did make me think there could be something in the idea.

    https://works.bepress.com/widerquist/75/

  • Hi Paul, totally understand the concerns about feasibility – there’s been a lot of work done by a number of organisations on it, the most recent one I’ve seen being from Compass: https://www.compassonline.org.uk/wp-content/uploads/2019/03/Compass_BasicIncomeForAll_2019.pdf

  • Paul Chandler,

    here is the link to a costed proposal https://www.libdemvoice.org/minimum-income-guarantee-63647.html.
    The Universal credit basic allowance increases to £5,200 per year (£100 per week). The same amount £5,200 is allowed as a tax and Ni reduction and replaces the tax personal allowance and National insurance threshold. The Universal credit work allowance is increased to the equivalent of 35 hours at minimum wage.
    Not the full Monty but coupled with job guarantees this would go a long way to mitigating the issues Jane identifies and can be tax funded by unfreezing fuel duty, limiting relief for pension contributions to basic rate and withdrawal of the Ni thrsehold allowance for employer Ni contributions when the economy has recovered.

  • Rif Winfield 20th Mar '20 - 10:21am

    I must endorse the comments made by Jane, and also agree with Joe Burke and William Francis. In the 1970s, I was a member of the Liberal Party’s Employment and Industrial Relations Panel (under Viv Bingham’s chairmanship), and we enthusiastically promoted this policy, which the Party then clearly adopted.
    While UBI would be a sweeping change for the whole of society, it would lead to a wholesale reduction in the costs of administering welfare benefits, state pensions and other ‘national’-originated income. It should apply to every adult, including those in employment as well as the self-employed, unemployed, disabled persons (who would continue to be eligible for PIP to meet their additional living expenses), pensioners, students (over 18), etc. Becoming universal, it would remove the stigma attached at present to those who have to claim welfare benefits for whatever reason. While state pensions would be subsumed into the scheme, private pensions (resulting from personal savings during employment) would be unaffected.
    We calculated that UBI on this basis would be funded by increasing the basic rate of income tax (on earned incomes) to 50%. However, since recipients in employment would receive the UBI in addition to their income from employment, this would actually benefit the low paid, and even those on moderate earnings would see little change on average; clearly those on higher incomes would be affected, but this fits in with Liberal views on redistribution of income.

  • There may be something in helping people out in the current crisis who might otherwise slip through the net, but I am not at all convinced by UBI otherwise. The Compass article attached shows the cost of even a modest UBI as eye-wateringly expensive. While this article correctly identifies problems in Universal Credit that need addressing it’s quite a jump to offer UBI as a solution.

  • @Paul Chandler.
    A significant, meaningful UBI would be expensive and would have to be paid for through progressive tax and higher marginal tax rates. Is that a problem for our party ? UBI would take a lot of people out of means tested benefits (savings there) and the UBI paid to the better off would be clawed back through taxation.
    The details would have to be worked out by those with access to tax modelling tools, so it seems inappropriate to dismiss it on the grounds of cost. Lets agree it’s a good thing in principle then go away and work out the fine details.

  • @Joe Bourke.
    Not sure about this idea of job guarantees. Jobs are created by the market. Does a “job guarantee” mean government or local authorities manufacturing “phoney” jobs just so that people have something to do ? Will people be allocated a job even though it does not match their skills, experience or aspirations ? Will people be offered training to take up the kind of jobs that our economy really needs ? (Nice idea but very expensive). If, God forbid, we are looking at a global recession, how can you promise jobs for all ?

  • Lorenzo Cherin 20th Mar '20 - 12:14pm

    Yes to this! But can we have no referring to sensible measures in China, Italy, France,Austria, Denmark, as authoritarianism! We are in a race against a virus, not a Civil liberties conference!

    Agreed on all this re: Universal basic income.

    And a job guarantee is nonsense in a society that has no provision of money for new businesses and organisation starting them, for the unemployed and in need.

    I worked as both motivator, lecturer, adviser, to the unemployed, and started my own company. Now there is not the help as in the New Labour era. I found out that the hard way, lost my work, no support to start up myself.

    No real need for a job guarantee. Much need to create jobs though and put money in the pockets of those in need.

    Coalition increasingly seems like conservatism, when this government in another crisis is at least more humane. But far , very, from where needed, in doing what is essential now, and must be done.

  • “Jobs are created by the market.” I’m afraid that comment illustrates the intellectual limitations of so called classical liberalism.

    These aren’t normal times….. the 500,000 Kitchener volunteers in training in 1914/15 weren’t created by the market.

  • It would be interesting to see a reasoned study of why Finland abandoned its trial of a universal benefit in 2018, which no-one has mentioned in this string.

  • Chris Cory 20th Mar ’20 – 11:48am,,,

    Your ‘market’ created the ‘hand-to-mouth’ economy of Amazon, Uber, et al…Billionaires living off workers on poverty wages with no security.
    I note that it’s rabid socialism to try and protect those at the bottom, or create so called ‘unnecessary’ jobs, but a different kettle of fish when billionaires demand government bail outs…

  • Peter Parsons 20th Mar '20 - 2:51pm

    @Tony Miller, as you say, Finland implemented a trial. Trials naturally come to an end and are then analysed. They didn’t abandon it. There are multiple analyses of the Finnish experiment available on the internet.

    The UK has had UBI for certain groups of people for a long, long time. What is the basic state pension if not a UBI by any other name? Similarly, child benefit prior to it becoming means tested was also an example of a UBI.

    The debates to be had are around the level at which to set a UBI and the level at which someone should no longer benefit, but while Universal Credit taper rates leave someone with just 37p of every extra £ they earn, a UBI offers a mechanism for incentivising work by allowing someone to keep a far greater percentage of each extra £ than under the current (very expensive to implement and administer, and still nowhere near finished) system of Universal Credit.

  • UBI is not the only way forward and we would need to have confidence that this government could introduce a universal benefit quickly. I have no such confidence. I note that eight of our eleven MPs have signed the Early Day Motion – “That this House calls on the Government to introduce a temporary universal basic income or an emergency measure to help freelancers and the self-employed effected by the covid-19 outbreak”. I think this is a little surprising since two policy working groups have rejected a UBI.

    I think the priority should be ensuring no one lives in poverty by increasing benefits to the poverty level and for the government to makeup the wages to what people earned last month if they are on short-time or the company would otherwise make them redundant.

    Jane Dodd,

    Please can you state what the level of UBI you wish to have, how this relates to the poverty level of different household types and how much you estimate it will cost with details of the figures? (Yesterday I posted that £5,000 a year for those aged between 16 and 64 would cost £157.88 billion, I think this cost can be reduced by Joe Bourke’s £10.7 billion by reducing the threshold for the higher tax rate to £37,500 down to £147.18 billion.)

    Paul Chandler,

    Joe Bourke’s scheme is not fully costed nor are all of the costs I identified met.

    Rif Winfield,

    Please can you state what the level of UBI you wish to have, how this relates to the poverty level of different household types, how much you estimate it will cost with details of the figure, what tax changes you are proposing to cover the costs with an estimate of how much each would raise. (In my UBI articles on LDV I set out some tax changes which you might find useful.)

  • Callum Littlemore 20th Mar '20 - 5:07pm

    Great to see this idea being discussed. If we’re ever going to be relevant again we have to get out of our little policy silos and pitch big ideas to reshape our country and show people what a ‘liberal Britain’ and a ‘liberal Wales’ would look like.

    I’m naturally UBI-sceptic but find the argument from Jane here very compelling – if there’s ever a chance to shift away from our broken, outdated system then it’s now. With big ideas like this we can continue to rebuild in Wales and across the UK, building on the successes (namely our 1.5% increase in the vote in Wales and 4.2% increase in votes across the UK) from the last GE and take the party forward.

  • Julian Tisi 20th Mar '20 - 5:14pm

    @ George Kendall
    I agree. My question for those who propose UBI is what is the problem statement for which UBI is the most effective and efficient answer? If it’s the help the poorest then it’s a very expensive way to do it (as money goes equally to those who need it less). If it’s a temporary solution to COVID19 then fair enough, but is it the simplest, most cost-efficient way of helping people? I’m not sure it is.

  • Peter Parsons 20th Mar '20 - 5:18pm

    @Julian Tisi, money doesn’t go equally to those who need it less as, as part of introducing a UBI, things like income tax rates and bands are adjusted such that the UBI is progressively clawed back from those who earn the highest incomes from higher tax payments. Done right, those on the lowest incomes are those who benefit the most and those on the highest incomes don’t benefit at all.

  • @expats.
    It’s not “my” market. In a capitalist economy many, indeed most people work in the private sector and their employment depends on their ability to fulfill some kind of need, to provide some kind of service, in the broadest sense. You may mot like that. You may resent the employment practices of Uber, Amazon and others, and I would probably agree with you. However, that does not alter the fundamental reality of the point I make.
    @David Raw. Perhaps I should have said “private sector jobs are created by the market”, then it would have been a statement of the very obvious. Yes, we could create some kind of volunteer army at this time of crisis, but you will note that I was arguing in favour of UBI generally, with no specific reference to the present crisis. David, knowing of your deep felt concern for the disadvantaged, I would have thought that you would have shared my enthusiasm for a citizens wage/UBI (call it what you may) which would lift some people out of poverty without the need for means testing.
    It is interesting that the mere mention of the work “market” seems to have been so provocative to some.

  • James Fowler 20th Mar '20 - 5:50pm

    In theory, I like the idea of a universal basic income. However, I’d like to pose a question to readers: If someone proposed a flat income tax, would you support it? If not, and you support hypothecated taxation as a progressive measure, then it’s worth reflecting that the same arguments apply to hypothecating benefits. It’s an interesting dilemma. There is also the problem of moral hazard. Whether we like it or not, the wider public have a very keen sense of the difference between misfortune and improvidence. Targeted benefits dodge this particular moral bullet. After much agonising – and I admit influenced by the spectacle of winter fuel payments to wealthy pensioners – I don’t support UBI.

  • Peter Parsons is right. It is important to distinguish between a minimum income guarantee and UBI . Minimum income, is a system of social welfare provision that guarantees that all citizens or families have an income at least at the subsistence level, provided they meet certain conditions.
    The minimum income guarantee illustration linked above provides a minimum basic allowance to benefit claimants and relieves low-income earners of tax or national insurance deductions.
    The costs involved are estimated as follows:
    1. Replacing £12,500 Personal Allowance and £9,500 NI threshold with fixed tax reducer of £4,000 per person. Basic rate taxpayer – cost of relief: 26m taxpayers @ £360 totalling £9.4 billion. Higher rate taxpayer loss of relief £9.2 billion. Net Cost 0.2 billion.
    2. Increasing Universal Credit basic allowance from £3,414 per year to £5,200 per year i.e.£100 per week (replacing JSA, working tax credits etc) . Cost £4.6 billion.
    3. Increasing Universal Credit Work Allowance to £15,870 (i.e 35 hrs @ 8.72). Cost £16 billion.
    The total cost at introduction is £20.8 billion. Initially, this is financed by borrowing. As the economy recovers the following tax funding is introduced:

    1. Unfreezing Fuel Duty – £4billion
    2. Restricting relief on pensions contributions to basic rate – £10 billion.
    3. Employers NI on withdrawn threshold of £9,500 – Receipts £12.8 billion less ££6 billion employment allowance relief for smaller employers.
    Total Income is £20.8 billion to cover the cost of introducing the minimum income guarantee.

    Over successive budgets, the tax reducer of £4,000 would be increased to bring it in line with the Universal credit basic allowance of £5,200, such that benefit claimants and taxpayers both get either a minimum unconditional benefit of £100 per week or a tax credit of up to £100 per week. Those not paying taxes or receiving benefits would not receive a minimum income guarantee.

  • @Joe Bourke. Thank you for you full and cogent explanation of the job guarantee idea. I am a little troubled when you say “temporarily displaced workers take up public sector roles and can earn minimum wage until they can find more lucrative work in the private sector”.
    First of all, many unemployed people may have low skills and thus find that the private sector has nothing more lucrative than minimum wage work for them anyway.
    Secondly, such a policy will encourage government to fill the public sector with these minimum wage employees, a form of de-skilling, teachers replaced with TAs, etc. We hear so much about exploitation of workers in the private sector. Believe me, it takes place just as much in schools, hospitals and council offices, often kept going by low wage workers with a few professionals around to keep up appearances.
    Consequently, there is the danger that those employed under this scheme will find themselves there long term, a form of secondary labour marke,t unless there is a genuine commitment to well funded retraining. Infact , why don’t we forget the JOB GUARANTEE and replace it with a RETRAINING GUARANTEE ??

  • Chris Cory,

    When talking about unemployment, I find it useful to make a distinction between structural Long-term employment, frictional unemployment (which is a natural short-term time lag between leaving one job and taking up another), involuntary cyclical unemployment (i.e. the uptick in unemployment that accompanies an economic recession) and voluntary unemployment where a student or other individual not dependent on work would like a job if it is of the right kind, with the right pay, at the right time and in the right place.
    Structural long-term unemployment does indeed require training in both work skills and specific duties. Cyclical unemployment may not require retraining as individuals with recent work experience bring with them both work skills and specic specialisations.
    This is a one-pager from an economist that specialises in this area and may add a little further depth http://www.levyinstitute.org/pubs/op_55.pdf

  • The Chancellor has announced that the Universal credit standard allowance will be increased by £1,000 for this year to help the most vulnerable. He is also raising the working tax credit basic element by the same amount. The Government is to pay 80pc of wages for employees not working up to £2500 per month and defer Vat payments for business until June. He also declared £1bn of support for renters. So we are making some good progress.

  • What about those that are not in receipt of universal credit though?
    Universal Credit has not been rolled out to everybody.

    You know have people claiming Universal Credit standard rate at a higher rate than those receiving JSA.
    You also have people claiming Universal Credit standard rate at a higher rate than those receiving Employment and Support Allowance for people in the work-related activity group.
    That surely cannot be right.

    I know it is impossible for the government to protect everyone during this crisis, but surely you cannot have 2 classes of social security support.

    And if inflation starts rocketing because of the Governments bailouts, you will have those at the bottom end of the scale of social security support really struggling.

    Some retailers are already exploiting prices as we know.

    Surly at some point we need to see action on price freezes

  • Matt,

    all new benefit claimants have to claim Universal credit, If its to your advantage, you can choose to move onto Universal Credit at any time if you want to. All benefit claimants should have transferred to Universal credit by the end of 2023.

    The Competition and Markets Authority (CMA) has assembled a team to monitor profiteering https://www.theguardian.com/business/2020/mar/20/new-uk-taskforce-to-crack-down-on-coronavirus-profiteers
    Andrea Coscelli, the CMA’s chief executive, said: “We urge retailers to behave responsibly in the exceptional circumstances of the Covid-19 outbreak. But if they do not, our taskforce is monitoring market developments to enable us to intervene as quickly as possible. We have a range of options at our disposal, from warnings to enforcement action to seeking emergency powers. We hope that such action will not be necessary but we will do whatever is required to stop a small minority of businesses that may seek to exploit the present situation.”

  • @joe

    I was not asking for myself I was curious in general as it would seem extremely unfair to have one group of unemployed receiving a lower rate of benefit to another for the same unemployment element.
    And the same for those in WRAG group of ESA now receiving less than those on the standard rate of Universal Credit.

    Surely the right thing to do would be to raise the JSA rate and the ESA Wrag rate to that of the standard rate of Universal Credit, otherwise, isn’t that discrimination and open to legal challenge?

    I am extremely concerned for those people surviving on JSA Rates and ESA rates in normal circumstances but in today’s climate when people are panic buying as they are and stripping the shelves bare, more often than not going for the value brands first, sometimes the only things being left on the shelves are the more expensive brands or the gluten-free range or free from all coming at premium costs and well out of the reach of someone who is in receipt of minimal support.

    It is not the people at the lower end of the income scales (out of work benefits) stockpiling at the supermarkets as I find it difficult to believe that benefits would stretch so far to be buying in bulk like that.
    The only resource for these people is then to go to local shops which in many cases are inflating prices.

    The government needs to get a handle on this and I do not know how it is going to happen, but we are only a couple of weeks into this crisis and this is how people are behaving already, what are they going to be like in another 2 weeks, 4 weeks, 2 months when the numbers are getting to really scary figures.

    More needs to be thought about how these people are going to be protected as well and we do not create a further subclass of welfare recipients

  • Matt,

    I think we will have to wait for the small print of the Chancellors announcement until we ca figure out the questions you raise.
    I heard on the news that the panic buying in Italy died down after a week or so from the lockdown measures. Hopefully, we will see a return to some common sense here to.

  • George Kendall,

    they are all valid points you make. Compass has done some good work. Their basic scheme proposes a UBI of £60 for adults, £40 for Children and £175 for pensioners. However, this requires 3p on each rate of income tax, a new 15p rate and additional national insurance levies. Raising taxes at this level when there are so many pressing demands on the NHS, Schools and local government services requiring higher taxation could be problematic.
    I agree with your assessment that “the easiest taxes to raise on the wealthy are wealth taxes, especially on high-end property. We should be raising those anyway – and using them to fund things like an increased pupil premium, better life-long learning, better social care, better mental health provision.”

  • I do hope so Joe, it is manic here.

    I already have 2 adults in total lockdown here and in a couple of weeks I have will elderly parents here as well who are vulnerable. I am worried about how I am going to feed 4 people, we cant get to the supermarket. there are no more online delivery slots for 3 weeks and even when you do get one, by the time they deliver to you, all the stock is gone and you don’t get all you delivered.
    My last order turned up consisted of Halls sugar-free sweets pot single cream and some jelly beans lol. I kid you not, I almost planted them in the garden to see if something magical would occur lol. None of the frozen or fresh meat and vegetables or cupboard items came as they were sold out.
    I am not so much worried about myself, but I do get concerned making sure my parents are properly fed if things have not calmed down by then I don’t know how we will manage it for a sustained period of weeks or months.

    The answer to the supermarkets is not just imposing 2 items per customer as some of us cannot get there due to lockdown, you cant even get neighbours to do it as they need to shop for themselves when supermarkets are now rationing everything, it is a nightmare.

    I don’t know what the answer is, but if it carries on like this and things do not calm down, then I think it is going to have to be draconian like ration books, which would seem ludicrous in this day and age.

    They are even stripping the shelves of baby formula.
    And if the stories are true tonight, they are now stripping the supermarkets of alcohol because of the pub closures, not that that one bothers me as I no longer drink.

    I don’t see things change without government intervention now im afraid, people are to frightened

  • I am probably going to get hammered for saying this, but here goes.

    I agree that the Government had to do something to protect peoples wages and it is most welcome that they are going to cover upto 80% of peoples wages to £2,500 a month I believe.

    But since the Government is essentially paying these peoples wages for the foreseeable future, shouldn’t the Government be able to utilise these people to work in much-needed areas.
    For example, there is a huge demand for chemists delivery drivers to get medication to people for home delivers who are in isolation and unable to get to the Chemist, there has been a massive spike in demand for home deliveries of medicines.
    The same for food deliveries and warehouses.

    I say this with trepidation as I was one that was very vocal about workfare for the unemployed, however, unemployed were and are made to jump through many hoops in order to get state support sometimes having to prove that they where job searching 8 hrs a day 5 days a week in order to receive there £75 JSA

    The Government is now going to be paying the wage bill up to £2,500 for many people, surely it is not a big ask for them to be “redeployed” in areas that the Government is struggling to cope especially in services to the elderly and those having to isolate??

  • @Joe

    I am confused by the term ‘furloughed worker’ wouldn’t an example of this be say
    A bar worker who was on a permanent contract earning £300, the government has urged the bar owner not to terminate their employment and the government will now pay £240 a week towards their wages as long as the Bar owner keeps their job open.
    That bar worker would obviously not be going into work as bars are now shut.

    So would it be so unreasonable of the government to say to that “bar worker” that we require you to be redeployed to “x” since the Government is essentially paying the wage and the business owner is applying for grants and loans to stay afloat during this period.

    Maybe I have missed something and am not understanding this government policy of protecting 80% of wages.

    Would appreciate your comments joe and info

  • I am so sorry that was rude of me I meant Joseph Bourke 🙁 I did not mean to shorten your name, apologies

  • Peter Parsons 21st Mar '20 - 4:08pm

    @George Kendall, I fully appreciate that something as radical as a UBI isn’t easy, but that doesn’t mean such proposals should not be fully developed and costed, whether that is on a revenue-neutral basis or with an intended shift in the overall level of tax raised (a decision in and of itself). Such proposals need to include details such as benefits for those considered to have extra needs, such as people with disabilities, and also to deal with challenges such as the huge disparities in housing costs across the UK and what that means. It has to be a complete package, it won’t work any other way, and I don’t believe that the fact that it might be difficult doesn’t mean that we shouldn’t try.

  • @Joe

    Thanks for the explanation that is most helpful.

    I do believe in the job guarantee, I always have even before this crisis has raised its ugly head.

    But if the Government is paying the wages of upto £2.5k a month for workers who are not having to actually go into work, is it really conscription in these circumstances to redeploy them to areas of need, i.e on the Vulnerable and Elderly who are having to totally isolate carrying out jobs that I mentioned earlier?
    Like I said, someone claiming universal credit, for example, has to sign a contract I believe with the DWP and commit so many hours of job searching in return for their weekly benefit.
    Would it really be so bad to require the people who are now going to have a majority of their wages covered by the Government to have to carry out a certain amount of hours of work in an area that is much needed?
    We have no idea how long this is going to go on for, by the sounds of things it looks as though it is going to be July at the minimum, no doubt there will be more and more employers/employees seeking out the same scheme as we have seen today with Topshop and John Lewis as high street stores decide it is more sensible to close down and seek the government support in wages.

    I think the Government is going to have to ask for something in return for the number of wages it is going to cover as it is essentially becoming the employer

  • Matt,

    I understand the point. We could call it national service rather than conscription, but it has to be voluntary. At the end of the day, this is still a free country and we want it to stay that way. We don’t need compulsion. As a party, we have already adopted a policy to scrap benefit sanctions and onerous conditions for claiming universal credit.
    My concern here is that there is a projected 1 million-plus newly unemployed who will not be getting paid any wages and who may be unemployed for a long-time to come. We should be prioritizing this group for immediate help and giving them paid work rather than overly concerning ourselves with protected furloughed workers who may well return to work to resume their duties in a month or two.

  • Katharine Pindar 21st Mar '20 - 6:20pm

    These are very interesting ideas, I think, Matt and Joe, about offering new paid work needed in the current crisis to people deprived of their usual employment. But it would to me be an infringement on their freedom, Matt, to demand that the workers whom the government is proposing to pay so long as their employers agree to take them back in due course divert from their existing careers to take up current shortfall jobs. It is surely the self-employed and the workers in the gig economy and the contract workers, not currently offered any government payment except the possibility of going on benefits, who should be first offered the possibility of a new though temporary paid job. But even then, there should be no compulsion. There may indeed be a ready work force available to take on jobs like delivering to people now self-isolating, if it can be organised on a local basis with proper safeguards.

  • @Joe

    I do mostly agree and I do agree that the newly unemployed should be prioritised with a job guarantee scheme.
    I was just thinking in the long term about the furloughed workers if this is a situation that is going to be ongoing for many months as I fear it will be and as many more employers make use of the scheme.

    We cannot have a situation where you have a subclass of those on welfare i.e the sick and disabled receiving minimum income ESA Benefits which is what £73 a week and then another class of what is technically unemployed being paid 80% of their wages by the government.
    I know this is a global emergency and we have never faced anything like this before but it has to be done as fairly as possible.
    Especially when there are now going to be even more huge pressures on sick and vulnerable people on limited incomes who cannot afford to stockpile food in the first instance and are finding their choices are limited when food lines are now going to be reduced and more often than not it is the cheaper branded food that is being taken from the shelves first by the hoarders, these groups are not in a position to buy the more expensive brands. It is a worry

  • Matt,

    furloughed workers may work from home where possible to maintain social distancing or alternatively go on short-time working. They are being furloughed as a consequence of government decisions aimed at combatting the virus i.e. it is not a decision people have made themselves. It has been imposed by the state.
    This is equally the case for the newly unemployed who have been let go as a consequence of government-ordered shutdowns and social distancing policies. The government is subsidizing employers to maintain their workforces where possible so that the economy has a chance of recovering quickly once the virus infection rate has subsided. If this is not done many businesses would close permanently and the economic infrastructure would not be in place in a few month’s time for the economy to make a quick recovery.
    Welfare payments are being increased. The UC standard allowance and the working tax credit basic element is increased by £1,000 a year (a little under £20 a week). The minimum income floor has also been suspended. This essentially helps self-employed people, whose Universal Credit payments are usually based on a calculation set at the national minimum wage times the number of hours they are expected to work depending on their circumstances (in order to assume your earnings are similar to those of a low-income employee). As a consequence, self-employed UC claimants will be entitled to payments at least equivalent to statutory sick pay for employees (£94.25 a week). Local housing allowance is also being uprated to cover properties available at 30 per cent level of market rents in local area. While these changes provide more relief for current and future benefit claimants, there is still a five-week wait for the first Universal Credit payment.
    Those who earn less than £118 a week are also still in a difficult situation, as they are not eligible for statutory sick pay or the contributory branch of Employment and Support Allowance. These low earners, employees having to live on statutory sick pay ­and self-employed people living on the Universal Credit equivalent, continue to face tough circumstances if they can no longer work. This is the group that most needs our help.

  • George Kendall,

    Most UBI schemes do little for those on benefits (usually keeping their benefit level the same and sometimes reducing them) and the group of people who benefit the most are those who currently are not working and are not receiving any benefit because they don’t met the criteria of the means-test. The first objection can be overcome by keeping the existing benefit scheme and having a UBI to enhance the benefit system or ensuring that no one currently on benefits is worse off (and no one meeting the conditions to receive the current benefit would be worse off on UBI).

    As I pointed out a UBI of £5000 for those aged between 16 and 64 would cost £147.18 billion if the income tax personal allowance was abolished and the higher rate income tax threshold reduced to £37,500. This is why I advocate introducing a UBI at the Income Tax Personal Allowance rate (£2500) one year group at a time and taking about 50 years to introduce it fully.

    Julian Tisi,

    UBI is a liberal measure because it reduces a person economic dependency on having a full time job and so opens up opportunities to study, train or do some other non-economic productive activity. However, for me having a new Beveridge social contract to deal with the current ills of society is more important.

    Peter Parsons,

    Please can you state what the level of UBI you wish to have, how this relates to the poverty level of different household types, how much you estimate it will cost with details of the figure, what tax changes you are proposing to cover the costs with an estimate of how much each would raise. Also please state how you would deal with those people who have no income but get support from their household so they don’t currently receive any means-tested benefits?

    Joe Bourke,

    Please can you provide the basis for your figures?

    It is good to read of your commitment to the voluntary principle in the social security system.

    Perhaps instead of the government trying to set up a Job Guarantee scheme it could offer shops and chemists 80% of their normal pay towards the extra drivers and retail pickers needed to supply the extra demand for home delivery if they employ someone unemployed rather than one of your “furloughed workers”.

  • Michael BG,

    1. Replacing £12,500 Personal Allowance (@ 20% = £2500) and £9,500 NI threshold (@12% = £1140) with fixed tax reducer of £4,000 per person i.e increase in relief for basic rate taxpayer of £360 and decrease in relief for 4.28 million higher rate taxpayers of £2,140.
    Basic rate taxpayer – cost of relief: 26m taxpayers @ £360 totalling £9.4 billion.
    Higher rate taxpayer loss of relief £9.2 billion. Net Cost 0.2 billion.
    2. Increasing Universal Credit basic allowance from £3,814 per year to £5,200 per year i.e.£100 per week (replacing JSA, working tax credits etc) . Cost £4.6 billion for 2.5 million households not in full-time employment or job guarantee and therefore claiming tax and NI relief.
    3. Increasing Universal Credit Work Allowance to £15,870 (i.e 35 hrs @ 8.72). Cost £16 billion (based on Onward paper estimate of £5 billion cost per £3k increase in work allowance, reducing higher it goes as many will not use the full allowance).

    Job guarantee schemes are voluntary. The government already subsidises the hiring of part-time minimum wage workers with Universal credit or working tax credits and housing benefit. Unemployed workers can utilise work allowances to work as extra drivers and retail pickers without losing their existing benefits.

    Housing benefit is particularly important for many low income or unemployed. It is notable that a large proportion of those classed as in relative poverty are homeowners http://news.bbc.co.uk/1/hi/business/4081596.stm
    “According to official government statistics nearly six out of 10 people defined as in poverty are homeowners. In this instance being in poverty is defined by social scientists and the government as earning below 60% of average incomes.”
    “People normally think of people in poverty being single mums on council estates or people living in a rented bed-sit but this is a stereotype.”
    “By far the largest number of people in poverty are homeowners, many of them young first-time buyers.” Professor Roger Burrows of the University of York’s sociology department, an expert on UK poverty, told BBC News.
    This illustrates why house costs and land reform are such an important element in addressing poverty.

  • Dilettante Eye 22nd Mar '20 - 10:19am

    UBI is one of those fascinating ideas that look good on paper but don’t account for human behavior. It’s also impossible to trial UBI and gain any useful information from the results.

    As a thought experiment, imagine :

    ~ For a two year trial all the residents of Leeds will get a UBI of £600 per month

    ~ For the rest of their lives all the residents of Leeds will get a UBI of £600 per month

    The two year ‘trial’ would have a very different social behavior outcome to a lifetime cash injection The two year trial would fail to indicate any interesting data, other than it induced a behavioral response of Fill your boots while you can, until the free cash ‘spigot’ ends in two years

    Interestingly, if the residents of Leeds got a lifetime £600 per month while the rest of the UK didn’t, that would create a massive change of mindset for those eager to migrate their home base to Leeds whilst keeping their business and financial bases effectively ‘offshore’ outside Leeds. And that is just for starters. With a bit of thought I’m sure you can foresee a myriad of ways to ‘game the system’ of UBI ?

    I’m afraid UBI is like one of those academic laboratory studies of ‘what if we… ?’, which is unworkable in the real world because it doesn’t take account of the one most important variable which is human behavior.

  • Dilettante Eye 22nd Mar '20 - 10:53am

    Simply out of curiosity, and whilst we have a few ‘UBI geeks’ in the room, can someone explain the financial changes, for state pensioners in the categories below?

    1. A UK pensioner who lives in the UBI zone of Leeds and gets a £600 per month

    2. A UK pensioner outside the Leeds UBI zone in (say) Blackburn who is not eligible for the £600.

    3. A UK pensioner ex-pat now living in France or Spain

    Can anyone who claims to understand UBI intimately, give us the monthly (£) figures for the income of those three categories of state pension.

  • Dilettante Eye.

    £600 a month is a non-starter for pensioners. on the full state pension of £175.20 per week (£730.60 per month)
    Jane Dodds Wales (with a devolved administration and population of just over 3 million) would be a good place for a trial of a minimum income and job guarantee scheme. The welfare budget would have to be transferred to the Welsh assembly to run the program plus approximately £2 billion (5% of the total for the UK) of temporary funding to put it in place until taxes could be raised.
    Wales has the worst rate of child poverty in the UK outside of the more deprived London boroughs https://www.poverty.ac.uk/report-wales-child-poverty/wales-has-worst-child-poverty-uk.
    “Approximately 600,000 children live in Wales: of those, one in three, or 200,000, are in poverty (in households at or below 60 per cent of median income). 90,000 (14 per cent) are living in severe poverty (in households at or below 50 per cent of median income).”

  • Dilettante Eye 22nd Mar '20 - 12:52pm

    Joe Bourke

    “£600 a month is a non-starter for pensioners. on the full state pension of £175.20 per week (£730.60 per month) “

    Ok, then feel free use £900 per month UBI, or whatever (£) figure you choose to be about right?

    On the doorstep any novel policy idea will be met with ‘How will I be affected by this… { novel idea }? So, please sell the idea of UBI to those 3 categories of pensioners, by telling them how your UBI affects their monthly income from the state.

  • Dilettante Eye,

    under the minimum income guarantee state pensions are unaffected. Benefit claimants who work can earn up to minimum age without losing benefits. They will be offered a guaranteed job administered by the local authority at minimum wage. Taxpayers, both basic rate and higher rate have the same tax reduction on their income – £2500 and £1500 off any National Insurance payable @ 12% on earned income.

  • Dilettante Eye 22nd Mar '20 - 4:07pm

    Joe Bourke

    “under the minimum income guarantee state pensions are unaffected. [by UBI] ”

    That isn’t as clear as it first appears to be.

    Are you saying that state pensioners are excluded from receiving this monthly UBI, in which case its not a Universal BI ?

    Or are you saying that pensioners are given the (x monthly figure) of UBI with ‘one hand’, and another ‘hand’ takes away (x monthly figure), from their state pension leaving them with the same amount of monthly income.
    It matters.

    If future pensions are going to be part UBI and part state pension, there are a myriad of questions to be clarified. Just two here.

    ~ Will UBI be raised annually by CPI, RPI, average wages etc., so that the UBI component of their monthly income doesn’t fall behind what it would have been if classed as a state pension?

    ~ If a pensioner decides to live abroad, would they get both components of a fixed state pension plus the UBI component?

  • Dilettante Eye,

    a minimum income guarantee scheme coupled with job guarantees is a system of social welfare provision that guarantees that all citizens or families have an income sufficient to live on, provided they meet certain conditions. In the scheme referenced above it is based on ensuring that working age adults who are registered for Universal credit and working taxpayers are guaranteed a minimum income. State pensions and pension credit, Child benefits, disability benefits and housing benefit are unaffected. The state pension would continue to be uprated in accordance with the triple lock.
    A comprehensive Universal basic income such as that proposed by Compass seeks to consolidate pensions, child and adult benefits into a single universal benefit. The Compass model proposes a UBI of £60 for adults, £40 for Children and £175 for pensioners. The pensioner UBI replaces state pension and pension credit. However, the scheme proposes 3p on each rate of income tax, a new 15p rate and additional national insurance levies. The estimated total cost of £28 billion is roughly equivalent to the amount taken out of social security budgets by legislative changes since 2010. Details can be found here https://www.compassonline.org.uk/wp-content/uploads/2019/03/Compass_BasicIncomeForAll_2019.pdf

  • Peter Davies 22nd Mar '20 - 7:23pm

    The big decision you need to make is on housing benefit. You clearly cannot include actual rent paid in UB. Paying the rent of a high earner on their penthouse in the city is nobody’s idea of fair.

    A fixed amount intended to cover housing costs would make a lot of homeowners better off while renters in the South East would be unable to meet the rent.

    I think we need to take housing costs out of any proposed UBI. Ideally, housing benefit should be devolved to the nations and regions along with the responsibility for housing. They could get the bill down by building more houses to bring rental prices down.

  • Peter Davies.

    you make an important point about housing benefit and UBI. The variability of rents across the country was a problem Beveridge grappled with but never resolved.

    The Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) published its detailed proposals for a basic income in 2015 based on the Citizen’s Income Trust ‘pure Basic-Income’ model. Disability support and housing costs are not included in the RSA scheme.

    An option which the RSA proposes for further exploration is the introduction of a ‘Basic Rental Income’. The Basic Rental Income would not be income-contingent and therefore does not create the same poverty traps as housing benefit.

    I wrote about this issue in 2017 https://www.libdemvoice.org/basic-rental-income-55014.html
    A Basic Rental Income based upon local market conditions would be granted to every individual who rented rather than owned a property. Local authorities would retain their statutory duty to house the homeless and would be given freedom to borrow and invest in new low-cost housing.
    A Basic Rental Income would have cost implications. The source of funding for additional cost should be those who have gained the most from increases in housing equity. Philosophically, the justification for this has roots in Thomas Paine’s argument in favour of a ‘basic endowment’. The reason that there have been large gains for some in the housing market whilst others struggle is because our common institutions have failed to provide enough housing to enable affordable rents and housing ownership to be even more widespread. The introduction of a land value tax or similar to fund any shortfall in the Basic Rental Income is warranted on the basis of gains received by a few from the institutions of society and its collective action and failures rather than through the individual’s endeavour.

  • Katharine Pindar 22nd Mar '20 - 8:48pm

    Joe. thank you for referencing the Compass proposal for universal basic income. I note that its Model 2 proposal is for financing via a Citizens’ Wealth Fund, and I recall that creation of such a Fund was made party policy in 2018, part of the policy motion F27 actually proposed by Jane Dodds. I wonder why you have not suggested developing that as a source of income (Compass spelling out how it could be built up over the years) in your own advocacy of a basic income scheme?

  • Dilettante Eye 22nd Mar '20 - 10:41pm

    There seems to be a great deal of deliberate obfuscation and monetary sleight of hand, when discussing the details around UBI. What we have seen, is that legitimate questions never get a sound answer in a ‘digestible’ form which voters require to know, in order to understand how UBI would affect their lives.

    Voters are not stupid, and they will never buy-into anything with this kind of inherent vagueness; indeed UBI is a bit of a policy cul-de-sac, if you cannot answer the very basic voter question: ‘Will I be better off,.. or worse off?’

  • Katherine,

    the Compass Citizens Income Fund seems to be a longer term proposal that would build on their basic proposal. I have bot discussed it for the sake of Brevity.

  • Dilettante Eye,

    the Welsh assembly leader has called for a UBI. Labours election manifesto called for a trial of UBI as did the Greens and Plaid. Our recent policy paper, A Fairer share for All, called for pilot of a minimum income guarantee. Jane Dodds, as leader of the Welsh LibDems is calling for a UBI in this article.
    Last year the RSA held an event -Basic Income for Wales https://www.thersa.org/discover/publications-and-articles/rsa-blogs/2019/06/basic-income-in-wales. As regards communicating the idea behind basic income the recommendations were:
    “…storytelling in all forms to spread the word; seek links in civic society; keep talking about it; connecting on social media; ask people what UBI would mean to them; create a wiki; more debates/talks; talk to teachers/educators; connect to global discussion; make sure the conversation is informed; share resources – http://www.Basicincome.org and http://www.citizensincome.org; how to include all areas of society in debate and conversation; involve town/local council; place-based saturation experiments to reinforce the ‘universal’; and emphasise the fit with Wellbeing for Future Generations Act allows a lot of freedom.”

    The detail is there in the reports for those interested in the financial information. Voters are indeed not stupid. They understand that greater equality means there will be winners and losers in monetary terms and that most people alive today in the UK have been the beneficiary of universal benefits like Child benefit for themselves, their children and their grandchildren.

  • Joe Bourke,

    1. Where did you get the 4.28 million from?
    2. There are between 7 (figure I was using last year) and 8 (figure Katharine used last week) million households claiming Universal Credit and the legacy benefits. If you just increase the current benefit levels for each group by the same amount £1386 a year and assume 7.5 million households that is £10.395 billion. (If you increase the under 25 rate and the couple rates by more it will cost more.)
    3. As I explained last week you are forgetting that couples and single people without children or not having limited capability for work have no work allowance at the moment and that the Onward figure is based on the increase for 2019 which still didn’t provide any work allowance for these people. (Do you not understand the points I was making?) You quoted last week, “as a cautious estimate, a further £3,000 increase in work allowances would cost £5 billion a year after five years”. This is £1.67 billion per £1000. You are increasing the work allowance to £15,870 – 6036 [£503 x 12] = 9883. 9.8 x £1.67 = £16.366 billion. I suggested using the government figure of £1.1 billion per £1000. 9.8 x £1.1 = £10.78 billion. However, for those who receive housing costs this would only increase it to £13,244 [(287 x 12) = 3444 + 9800] which is £2,626 [15870-13244] short. More people claiming Universal Credit claim for their rent than don’t. So assuming 70% do, we have 2.6 x (1.1 x 0.7) = 2 billion. If we assume that 2/5 of those claiming Universal Credit do not have any Work Allowance we can assume that £1,000 cost 0.44 billion [2/5 x 1.1]. Therefore we can assume the cost to raise their work allowance from nil to £15,870 is £7 billion [15.87 x 0.44]. The total is £25.4 billion [16.366 + 2 + 7]. This is likely to be an underestimate because with a higher benefit level more people in work will be eligible for it.

    So not £20.8 billion but at least £36 billion. Which is cheaper than a UBI. Assuming there are 8 million claimants this could be used to increase benefits by £4500 a year, £86.54 a week, or £2769.23 per adult, making the weekly rates £146.01 for a single person and £223.59 for a couple.

    It is interesting to know that research shows that 60% of people living in poverty are homeowners. One should assume because of their mortgage costs.

  • Dilettante Eye 23rd Mar '20 - 8:51am

    “ask people what UBI would mean to them”

    People haven’t a clue what it would mean to them, because UBI is such a complex and convoluted system. To get the money to hand out in UBI payments, you are proposing a range of budgetary measures which will ‘give’ with one hand and ‘take’ with the other.

    One example : Unfreezing fuel duty has been proposed as one government income stream to put money into this UBI pot.
    So, are you saying that pensioners will get roughly the same amount of pension (£175.00 instead of £175.20) per week, but,… you will find that filling up your car is far more expensive?

    Your UBI is such a ‘snakes and ladders’ of complex financial losses as well as gains, that it is impossible for people to work out how their finances would pan out.

    After every budget, the media often do the calculations to aid peoples understanding of the changes. Such as :

    A single pensioner
    A pensioner couple
    A married couple with no children
    A married couple with two children

    People need financial specifics, not hand waving vagueness, surely you can understand that?

    And as for :

    the Welsh assembly leader has called for a UBI. Labours election manifesto called for a trial of UBI as did the Greens and Plaid. Our recent policy paper, A Fairer share for All, called for pilot of a minimum income guarantee. Jane Dodds, as leader of the Welsh LibDems is calling for a UBI in this article.

    I haven’t a clue what point you are making, other than a lot of people can get drawn into a fashionable idea, no matter how crazy it is?

  • Michael BG,

    1. HMRC pubiishes data on number of taxpayers by marginal rate https://www.gov.uk/government/statistics/number-of-individual-income-taxpayers-by-marginal-rate-gender-and-age.

    2. As you will know the Chancellor has now announced that the UC basic allowance has been increased by £1000. The model for a minimum income guarantee above is coupled with a job guarantee and a work allowance equal to a full-time job at minimum pay. The estimate for those remaining on UC or legacy benefits rather than taking up some form of earning (whether full-time or part-time) is 2.5 million households. You do not get both a basic allowance and tax relief. It is one or the other or a split allowance. Some households will work full-time others part-time and will their minimum income guarantee partly as a basic allowance as partly as tax relief on earnings.
    3. As noted by onward modelling of changes i work allowances is not straightforward, the cost of providing the work allowance decreases the higher it goes. This is because for part-time work the full allowance is not used.

  • Dilettante Eye,

    “…a range of budgetary measures which will ‘give’ with one hand and ‘take’ with the other.”
    Isn’t this what all budgets do? It is called redistribution.

    “…you will find that filling up your car is far more expensive? Taxes on alcohol, tobacco and fuel are not simply revenue raising exercise. They are incentives to cut down on use. With climate change an impending catastrophe reducing the use of petrol fuelled cars is a primary objective.

    The compass illustration is straightforward – £60 for adults, £40 for Children and £175 for pensioners.
    A single pensioner – £175
    A pensioner couple = £350
    A married couple with no children – £120
    A married couple with two children – £200.

    The point being made is voters understand that greater equality means there will be winners and losers with any budget/tax/benefit changes.

  • Dilettante Eye 23rd Mar '20 - 1:13pm

    Joe Bourke

    So we have finally established that pensioners will be worse off under UBI.

    That alone should tell you this is a complete non-starter, and if you are in any doubt, ask Theresa May how her GE of 2017 worked out when she slammed her campaign into the brick wall of ‘dementia tax’ on pensioners ?

    You said earlier that ‘ The state pension would continue to be uprated in accordance with the triple lock. ‘, but that cannot be true.

    Under your UBI ‘state pensions are to be abolished’, so it follows that the triple lock which appertains only to state pensions will also be abolished? Unless you are saying that the £175 {UBI} which replaces the £175.20 {state pension}, will increase by the triple lock?

    There is nothing in the Compass document which states that the pension replacement of a flat rate of £175 UBI would increase by the triple lock, or indeed by any measure to compensate inflation? If I’ve missed it in the Compass document, then feel free to point me to this triple lock guarantee on UBI?

    So we can say clearly that UBI is bad for anyone on state pension, because the initial replacement UBI sum is less per week than they get now,.. they will also be priced off the roads by fuel increases,.. and annual inflation will slowly take its toll on their flat rate allocation of £175.

    Also if you are a pensioner who tries to improve your income with any investments which involve capital gains, you are even worse off.

    So in conclusion, I think that for those Lib Dems who were woefully on the wrong side of the public re-Brexit, the pursuance of UBI is a perfect stepping stone to political oblivion at the next GE.

  • Dilettante Eye,

    we are discussing two possible models for improving the social security system here. The first is a minimum income guarantee coupled with a job guarantee program that is directed at working-age adults only and has no impact on existing state pension entitlements. State pensions would continue to benefit from the triple lock in this model.
    The second is a wider scheme proposed by Compass that seeks to combine child allowances, working-age benefits and state pension entitlements into a universal basic income. The initial rate is equal to the current full state pension. Benefits will be uprated by the rate of inflation annually. Pensioners’ income from investments or capital gains is unaffected in either model. Fuel duty will be going up in the future regardless of whether a UBI scheme in brought in or not as will other taxes on fossil fuels and carbon emissions.
    The reason Universal Basic Income is being widely discussed is that so much of the public feel that the social security safety net is full of rips and holes.
    As Jane Dodds writes in her article “UBI is an innately liberal idea. It empowers individuals to take ownership and control over their lives – giving them the freedom to make meaningful choices without having to worry about where their next paycheque is coming from. It is a hand up, not a handout. I hope the leadership will take heed of this and join the growing ranks of parties who are backing the calls for UBI.”

  • Peter Martin 24th Mar '20 - 12:29pm

    @ Jane Dodds,

    A UBI is one possible way forward but it isn’t the only way and it certainly isn’t the best way.

    The alternative to a UBI always has to be a Job Guarantee. This is problematic at the moment because people are confined to their homes unless there is good reason for them to leave.

    However, if Govt utilises all the presently unused labour – including the not working self-employed – you can make to staying at home their main job. Possibly we can recruit some of them as wardens to ensure wider compliance of rules in their communities.

    It just needs a little lateral thinking. Almost anything is better than “helicopter money”.

  • Peter Davies 24th Mar '20 - 4:54pm

    A Job guarantee does nothing to address the problems that UBI addresses. Prior to the current crisis, it was not that difficult to find a meaningless job.

  • Peter Martin 24th Mar '20 - 7:37pm

    @ Peter Davies,

    A UBI does nothing to address the problems that a Job guarantee addresses.

    Some examples:

    1) A JG sets a floor for minimum wages and conditions.

    2) A JG can be used for educational and training purposes. A Job can be defined as attending a particular training or educational course. Even ones at Oxbridge if we like. If anyone drops out their JG stops until they choose something else.

    3) A JG prevents the slide into long term unemployment, and ultimately unemployability, starting from short term unemployment.

    4) A JG would apply to everyone. Including those with intellectual and physical disabilities who are nearly always overlooked when they are competition with the able bodied. It brings everyone into the mainstream

  • Peter Davies,

    I welcome your attempt to set out how a UBI might work. In my 2018 LDV article (https://www.libdemvoice.org/can-we-afford-a-universal-basic-income-56572.html) I stated that it would cost £26.75 billion to provide a UBI at the Income Tax Personal Allowance rate. This would be on top of existing benefits. I stated that income tax could be increased 5p to fund an adult UBI of £73.08 a week for adults and child benefit of £45.70 and £38.70.

    Joe Bourke,

    I am not convinced you understand the points I was making regarding the work allowance and the fact that a large section of the population would have no work allowance currently. As the work allowance is increased it would bring into the system more people. For example under the current system a couple is entitled to £115.13 a week. So if they earn more than £182.75 a week they receive no benefit. For each pound of the work allowance the amount that needs to be earned is increased by the same amount. If the work allowance was £305.19 a week then a person would receive no benefits when they earn more than £487.94. If this couple have two children and pay £302.33 a week in rent this amount increases to £1137.54 a week (59,152.08 a year).

    Dilettante Eye,

    Current pensioners do not have to be worse off if a UBI is introduced. When I was more enthusiastic for a UBI than I am now I suggested paying for its introduction by increasing the National Insurance higher rate to 12% and applying it to all forms of income and restricting tax relief on pension contributions to the basic rate.

    The Greens advocated a UBI and increasing fuel duty in their 2019 manifesto and their vote increased from 1.6% to 2.7%.

  • Michael BG,

    yes I understand the points you are attempting to make, but it makes assumptions that don’t hold as it takes no account of cost offsets, in particular the effect of taking up an offer of a guaranteed job. For example, a single UC claim with no Children taking up a full time minimum wage job will no longer be eligible for UC and will receive a tax and NI allowance against his or her earnings instead. The full amount of their current UC standard allowance or working tax credit allowance will fall away. This reduction offsets the impact of those moving from legacy benefits to UC and those that had no work allowance previously. Additionally, many claimants will not make full use of the work allowance opting for part-time work instead so the full potential cost is not incurred.
    The estimates for the minimum income guarantee are a simplified model that uses composite figures as a proxy for these additional costs and cost offsets.
    As time proceeds the cost of the employment allowance against employers NI for medium size employers will also reduce in size.
    An increase in the UC basic allowance and increasing the work allowance is clearly deliverable as are tax increase (when the economic recovery is bedded down).
    The job guarantee in a recession is self-financing as discussed above and provides addressing long-term involuntary unemployment when the recession is over. The immediate need is for the deployment of additional emergency key workers (deliverers, warehouse and supermarket workers, cleaners, hospital porters, ambulance drivers, factory and construction workers, IT and admin staff etc), during this public health crisis.
    Many of these newly engaged essential workers will have been previously self-employed or working on zero hour contracts. As the crisis subsides, the job guarantee provides the manpower required for the delivery of much needed public services which have been run down across every local authority in the country over the past decade. The greatest need for enhanced public service provision is typically in the most deprived area and will be of greatest benefit to the most vulnerable in society.

  • Joe Bourke,

    When discussing the costs of implementing your Minimum Income Guarantee and in particular the costs of increasing the Universal Credit work allowances you should not be making reference to a Job Guarantee scheme. We need first to be clear what the costs are and then separately calculate the financial benefit to the government of a Job Guarantee. In the same way as you did your point 1 of 22nd March at 1.16am.

    It was you who stated your Minimum Income Guarantee included a work allowance of £15,870. It was you who wanted to use the Onward figures for how much it will cost. Therefore you should either accept my calculation of the cost of £25.4 billion or produce your calculations for a different figure setting out you assumptions with regard to the Onward figures as I have done.

    I think I have understood that those who qualify will receive your £5200 income and that the thresholds for Income Tax and National Insurance are abolished so when a person is earning £12,500 they pay £4000 in Income Tax and National Insurance. You also talk of a work allowance of £15,870. If the taper applies to income over this and the taper is still 63% then for the whole £5200 to no longer to be paid a person needs to earn an extra £8253.97 (making £24,123.97). If the rent they pay of say £302.33 a week, £15,721.16 a year is also included and the 63% taper applied a further £24,954.22 has to be earned for all of it to be withdrawn.

    I don’t think you have considered these aspects.

  • It would be easier if you considered your scheme more like UBI is considered. You would then have a cost of £5200 x the number of people receiving it minus the current benefits paid them and the increase in taxation by abolishing the lower thresholds for Income Tax and National Insurance and the £12,500 reduction for the Higher Rate tax payers. And there would be no withdrawal. Assuming there are 36.5 million people who would be eligible for your Minimum Income Guarantee. If we assume that all of the 8 million will receive £1386 a year that equals £11.1 billion. If we assume that the rest (28.5 million) receive £5200 that equals £148.2 billion. If we assume that 31.1 million pay Income Tax and National Insurance the government will receive (31.1 million x £2500 [Income Tax] + £1140 [NI] =) £113.2 billion plus the higher rate amount we have discussed before (3.85 million x £2500 =) £9.63 billion. If these assumptions are correct then your scheme would cost (11.1 + 148.2 – 113.2 – 9.63 =) £36.47 billion. What catches my eye is that only 30% of this ends up in the pockets of those currently on benefits.

  • Michael BG,

    the article on Minimum Income Guarantee https://www.libdemvoice.org/minimum-income-guarantee-63647.html makes the important point that income support is provided to lower and middle income earners via both tax and NI allowances and benefits. There are 26m basic rate taxpayers that benefit from such allowances.
    The proposition is a simple one. Firstly, that any employed or unemployed working age adult will have a minimum guaranteed income of £100 per week and secondly by offering a full time job guarantee most single claimants without limited capability to work or children will come off benefits altogether and simply benefit from the tax and Ni allowances available against all earned income as do other taxpayers.
    For those who have a need to remain on benefits even with a full-time minimum wage they will benefit from the ability to earn a minimum wage without withdrawal of benefit, but will pay tax and NI of 32% on their earnings i.e,. half the current withdrawal rate on this slice of their earnings. The onward figures are a proxy for the entire cost of increasing the work allowance for all claimants for the reasons previously stated.
    The UC taper rate applies to income after tax and NI. If you are a benefit claimant any income over a full time minimum wage will be be subject to deductions of 32% tax and NI first before the 63% taper was applied.
    If a benefit claimant is earning an average wage of 26k they will have tax and NI deducted of 32% i.e. £8320 and receive net pay of £17,680. The taper will be applied to their net income over £10,792 (15,870 less 32% i.e. their benefit payments will be reduced by £4339.The work allowance is the same for a single parent or a couple i.e. it is not doubled. A couple working full time at minimum wage would have combined net earnings after tax of £21,583 and their benefit payments would be reduced by £6,798 (10791 x 63%). Couples would come off benefits when it was in their interests to do so i.e. when the tax allowances of £4k per person (£8k for a couple)available were greater than the benefits they continued to receive.
    Increasing the work allowance is a key element in reducing in-work poverty as the JRF campaign notes https://www.jrf.org.uk/report/keeping-more-what-you-earn?gclid=EAIaIQobChMI6rKzp7G56AIVGODtCh1ZVgoBEAAYASAAEgKUxfD_BwE writing: “working poverty is highest among lone parents and couples with children with only one earner or where no one works full time.”

  • Joe Bourke,

    I am only considering your Minimum Income Guarantee and how much it will cost. You should be able to supply a realistic estimate for this. I think I have. The cost of your Job Guarantee scheme is twice the cost of mine.

    Do you understand that the Onward figures only apply to increasing the work allowance for those people with children and/or in the limited capability to work group?

    Looking at a single person earning £26,000 under the current system they would receive no benefit because if they had been receiving £5200 earning £8253.97 with a taper of 63% would mean all of it would be withdrawn.

    Looking at your amended scheme which seems very complicated (26,000 x 0.32 = 8320; 15,870 x 0.32 = 5078.40) (15,870 – 5078.40 =10791.60) 26,000 – 8320 = 17680 – 10791.60 = 6888.40 x 0.63 = £4339.69. You have moved away from the current system which applies the taper to the gross income to applying it to the net income. You could have made it clear that the work allowance is £10791.60 not £15,870 and applies to net earnings not gross.

    Did you think that I thought the work allowance under your scheme changed? If so, how did you get this impression?

    £21,583 / 0.68 = £31739.71 / 2 = 15,869.85? (15870 /52) / 8.21 = 37.17 hours a week? (15870 /52) / 8.72 = 34.999 hours a week.

    21,583 – 10791.60 = 10791.40 x 0.63 = £6798.58

    Now you seem be to saying couples have a choice. I assume that the couple receive the current level of benefit plus £1386 which is the difference between the current level (317.82 x 12 = 3813.84 rounded up to 3814 and £5200). 498.89 x 12 = 5986.68 + 1386 = 7372.68. I therefore assume the £6798.58 would be the amount the benefit would be reduced by. 7372.68 – 6798.58 = £574.10.

  • Joe Bourke,

    I would like to see no one in the UK living in poverty, which is why I don’t focus on those in work, but focus on raising the benefit levels. Once a person is not living in poverty when on benefits they can’t be living in poverty if in work assuming that the taper rate and the income tax and national insurance rate equal less than 100%. I call for a basic work allowance of £50 a week (£216.67 a month) to be given to everyone who doesn’t currently receive one, so a couple would have two work allowances if they both went out to work. The reason is because going to work costs money and the cost increases for each adult in work. £216.67 a month is more than the merger £111 a month single people and coupes had from 2013 to 2016.

    To increase the single person’s benefit to £160.30 a week would cost [(160.30 – 74.35) x 52 x 2.7 million)] £12.07 billion. To increase the couples rate to £276.20 would cost [(276.20 – 116.80) x 52 x 5.3 million] £43.93 billion and increase the child rate to £68.07 a week would cost [(68.07 – 54.42) x 52 x 5 million] £3.55 billion. To increase the work allowance to £2600 for single people and couples and to have a second income allowance would cost about £1.72 billion (2.6 x 0.44 + 2.6 x 0.22 (for the second earner). The total cost would be about £61.27 and could be achieved in less than 11 years if spending on benefits was increased by what we said we wanted to do in our manifesto (£6 billion each year). If the benefit cap was abolished and the LHA restored to the 50th percentile of local rents and the pre-2012 national council tax benefit scheme was restored then no one in the UK would be living in poverty.

  • Joe Bourke,

    On the Government’s website it states, “for every £1 you earn your payment reduces by 63p”. I have always thought that the taper was applied to gross earnings unlike the old system where net earnings were considered. It is good to know that the taper is applied to net earnings. I assume this means that the work allowance applies to net earnings as well.

    This is the first time that you have stated that your work allowance of £15,870 is just a way of calculating the costs of increasing the work allowances which covers those people who are not eligible for a work allowance and to bring both current rates to the one rate. You have provided no justification for your belief this is a realistic way of estimating the cost. (I set out my assumptions for how I calculated it, which means that evidence if it exists can be provided to prove my assumption are wrong, if they are.) Can you provide any assumptions on the numbers of people on Universal Credit who pay rent? Or have no children and are not in the limited capability for work group?

    Until April 2018 the government would pay money towards the interest on a mortgage for people on benefits such as the unemployed and long term ill. Now they only provide a loan. Under the old scheme c. 1995 the true interest on the mortgage (caped at the level of the original loan) was the basis for payments and there was a waiting period of 13 weeks. I think some changes were made before 2009 including increasing the waiting time to 39 weeks for mortgages taken out after a certain date. From January 2009 the waiting period on all mortgages was reduced back down to 13 weeks and the maximum amount of mortgage covered increased to £200,000. Sometime around this time the payments were based on the “standard rate” which is an average of the rates charged and no longer at the interest rate a person was being charged. From April 2016 the waiting time was put back up to 39 weeks. Therefore it would be possible for the party to decide to change the current loan scheme back into a payment scheme as it was before April 2018. It would be usual for the mortgage provider to roll up a person’s interest payments during the waiting period.

    Universal Credit is available for everyone in work. Therefore if the standard payment rates were increased as I suggest then more people would be eligible for Universal Credit and more people with mortgages would be eligible too.

  • Joe Bourke,

    Now you wish to use my £1.1 billion per £1000 for those who currently receive a work allowance! You should not be criticising me for basing my figures on your statement that you want the work allowance to be £15,870 and you want to use the Onward cost of £1.67 billion per £1000 for those who currently receive a work allowance.

    You haven’t shown where you get your £5.2 billion from! Where did you get £4.8 billion from? Where are you getting £10,798 from? I am glad you have accepted by £2 billion figure to equalise work allowance for those who receive housing support.

    My system would have fewer people living in poverty than yours, because my system takes people out of poverty when they are on benefits and yours only once they have some earnings for example a single person paying no rent would have to earn £3135.60 a year to be living at the poverty line under your system (working about 7 hours a week).

  • Joe Bourke,

    I think it is unreasonable for you to assume the reader of your comment can work out what calculation you did to get to your figures. I know where the £1.1 billion per £1000 increase for those already with a work allowance comes from as I gave the information on this thread on 23rd March after posting it in another thread a week before that.

    I think you are trying to say that the difference between £6036 (current higher rate) and £10,798 your target is £4,762. You haven’t said why you have increased the rounded up figure of 10792 up to 10798. 32% of £15,870 is £5078.40 and if we take that away from £15,792 we get £10,791.60. I think you are saying 4.762 x £1.1 billion equals £5.2382 billion and you have rounded it to £5.2 billion. I don’t understand why you have such a problem with making this clear. I also find this even more surprising as I believe you do some lecturing.

    You still haven’t said where you got £4.8 billion and £10,798 from.

    What I found interesting was that at all levels of income a person or couple would have more income under my system than yours and that the cut off point for mine is about £71,300 a year and yours about £79,000.

  • Joe Bourke,

    I don’t understand why you don’t agree with Adrian Sanders (page 10 Liberator 400 April 2020), “Our preamble starts with the eradication of poverty as the first action point in the first paragraph. What more could you want to attract public support than a primary purpose to ensure none are enslaved by poverty?”

    I don’t understand why you think it is acceptable for anyone in the UK to live in poverty. By increasing the benefit levels to the poverty line no one should live in poverty in the UK. However, you think it is acceptable for a person to live on £5200 a year, £3,135.60 below the poverty line and for a couple to live on £7,372.84, £6,989.56 below the poverty line. Please explain how it is liberal for us to adopt your suggestion that we allow some people to live in poverty?

    As you have abolished the lower thresholds for National Insurance and Income Tax there is no £4000 which they don’t pay National Insurance and Income Tax on. You haven’t explained why recently you were using £10,798 instead of £10,792.

  • I do not accept that liberalism includes the idea that people should only be assisted by the state if they do certain things. This is why our party opposes the sanctions regime and wants there to be no conditionality for benefit. You quoted the preamble of the constitution a few days ago, we “exist to build … a … society … in which no-one shall be enslaved by poverty …”. The only way no-one will be enslaved by poverty in our society is to eradicate poverty in our society. Your system will ensure some people will still live in and be enslaved by poverty, mine will not.

    I have assumed that you have abolished the Income Tax and National Insurance thresholds so everyone pays these on every pound they earn and once a person earns over £16,250 they will be paying more in tax and NI than they receive in benefit under your scheme. So everyone earning less than £18,672 will gain from your system (at this level they will have £1904.96 more than 10792 and 63% of it is £1200). If this isn’t how your system works then you have failed to explain it clearly enough.

  • Joe Bourke,

    I think the Liberal Party in the UK before 1987 had included within the preamble of its constitution the aim to build a society where no-one is enslaved by poverty and that is where we inherited our commitment to do the same comes from. (I read that the preamble was written after the Second World War.) I still don’t understand why a member of our party which has this commitment thinks it is acceptable that some people in our society live in poverty and are therefore enslaved by poverty.

    I agree that ensuring everyone who wants a job has one and everyone who wants a home of their own has one are important objectives, however ending poverty is more important, because we state that a person living in poverty is enslaved.

    Debating what we mean by poverty is a red herring. Philip Alston of the UN didn’t do this, he just stated 14 million people in the UK live in poverty. It is not putting a sticking plaster on poverty to end it by raising the benefit levels to the poverty line it is a long term solution which doesn’t accept that it is fine for someone living on benefits to be living in poverty.

  • Joe Bourke,

    A few weeks ago Katharine Pindar pointed out in a comment on LDV that benefit levels where much higher when they were introduced than they are now. (She was quoting from a newspaper article, maybe by Jenni Russell in the Times c. 19th March. I couldn’t find the comment.) According to I think Rodney Lowe in ‘The Welfare State in Britain since 1945’ only 4.8% of individuals were living in relative poverty in 1953/54. I assume that when UK governments were pursuing full employment they believed that those temporary not in work should not live in poverty. According to a House of Commons briefing paper the value of unemployment benefit has fallen compared to average earning by about 40% compared to the 1970’s. I think we are the only political party committed in our constitution to building a society where no-one is living in poverty. At the last general election the Labour Party promised only to end in-work poverty not all poverty.

    We have been discussing changes to the benefit system. As I have repeatedly stated under your system you allow those of working-age not working to continue to live in poverty, while I ensure they live at the poverty line. I have also suggested other changes to the benefit system which help towards this aim. I still don’t understand how a liberal can accept that some people should continue to live in poverty. I expect you are not the only party member to accept this. I find this surprising as most members are familiar with our aim to build a society where no-one is enslaved by poverty which must mean there can be no poverty in our society.

    I hope that Ed Davey agrees with me as he proposed on 20th March to increase the benefit levels to £150 a week for a single persona and £260 for a couple (these are above the Joseph Rowntree Foundation 2016/17 poverty levels).

  • @Michael BG “As I have repeatedly stated under your system you allow those of working-age not working to continue to live in poverty, while I ensure they live at the poverty line. ”

    I’m guessing that you’re not a proponent of absolute poverty. In which case, if you bring those below the poverty line up to it, you simply redraw it higher up. Repeat ad infinitum. And the reducto ad absurdum of pursuing that is absolute equality of outcome. Which may be many things, but Liberal it is not.

  • Daniel Walker 8th Apr '20 - 5:49pm

    @TCO “I’m guessing that you’re not a proponent of absolute poverty. In which case, if you bring those below the poverty line up to it, you simply redraw it higher up.

    TCO, this simply isn’t true. Relative poverty is when households receive 50% less than average household income¹. It’s possible to have 25% as the lowest. Consider ten people, with incomes of 1,2,3,4,5,6,7,8,9, and 10² Mean³ income is 5.5; the relative poverty line is 2.75 (being 50% less than 5.5)

    If we redistribute 2.5 from the top to the bottom, we have incomes of 2.75, 2.75, 3, 4, 5, 6, 7, 7.8, 8.2, and 8.5.

    Average income 5.5, relative poverty line 2.75, number below relative poverty line, zero.

    Obviously this is only an illustrative example, and the real world is more complex. But it’s not a mathematical impossibility.

    1. Definition from https://www.habitatforhumanity.org.uk/blog/2018/09/relative-absolute-poverty/
    2. This is far more even than incomes actually are distributed, of course.
    3. And median in this case.

  • Daniel Walker,

    Thank you for your explanation.

    TCO,

    The example Daniel Walker gave you was about the mean average, but when talking about average wages we are talking about the median average. The middle value does not change if the lower values are increased even if the top values are not reduced. 1,2,3,4,5,6,7,8,9, middle value 5. 2.75, 2.75, 3,4,5,6,7,8,9, middle value still 5.

    I would expect all members of the party to agree with most of the aims in the preamble, one of which is building a society where there is no poverty so no one is enslaved by poverty.

    Joseph Bourke,

    The National Assistance Act was passed in 1948 to provide benefits to those not covered by National Insurance and provided money for rent (and abolished workhouses).. The figures of £160.30 a week for a single person (£8,335.60 a year) and for a couple of £276.20 a week (£14,362.40) are not 60% of £30,420.

  • Daniel Walker 9th Apr '20 - 9:25am

    @Michael BG “The example Daniel Walker gave you was about the mean average, but when talking about average wages we are talking about the median average.

    I fell I ought to point out that, in my example, the mean and the median are identical 🙂

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