Jane Dodds writes: With a liberal basic income, we can invest in everyone

As conference season arrives we have a unique opportunity to pass a policy that in the 21st Century is part of the essential foundations of a more liberal future for our country – that policy is a Universal Basic Income.

Supported by both of our leadership candidates and pioneered by the late great Paddy Ashdown the time for the Liberal Democrats to take the step and be the main political party backing a Basic Income is now.

We know that Coronavirus has lifted the lid on the widespread financial insecurity that hardworking people and families have to deal within the UK. For many – from freelancers to those on zero-hours contracts – there is simply no meaningful safety net in place for times of crisis. This fundamentally undermines everything we believe in, and everything we want to achieve.

Our message is the Liberal Democrats can provide the basic financial security everyone needs in these testing times with a Basic Income. It would be a fair simple way to do what us liberal do best – empower people to dream big and reach their full potential.

As Liberal Democrats, we believe in the essential goodness of humankind – that, given the opportunity, in most circumstances, most people will choose to do good rather than harm. That’s why we believe putting power in people’s hands is the best way to a good society.

But when we feel insecure, when our livelihoods are threatened and we look to the future with fear, we all struggle to hold to these values. Fear leads to anger, and anger leads to hate. Liberal ideas can never thrive in a culture of fear.

That’s why Basic Income is the essential foundation for a liberal future: it is the best, fairest, and simplest way to eliminate insecurity. It reaches everyone. It stigmatises no one. It is easy to administer.

Together, if we champion a liberal Basic Income we can invest in everyone and free people from the shackles of poverty and insecurity that has plagued our nation for far too long.

* Jane Dodds is Leader of the Welsh Liberal Democrats

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26 Comments

  • Speaking as someone who works in film and TV one huge strength of UBI is that it lets people follow their dreams and work in creative industries. The long gaps in income which that often involves in the early years currently mean that it’s very hard for people to break in unless they have rich parents to subsidise them as otherwise the side-job to keep food on the table often turns into the only job. So we lose huge amounts of talent.

  • I am in favour of UBI but the first stage should be removal of fixed costs – so no council tax, no standing charges on energy and no TV licence. Then you have to tackle rents, they need to be a fraction of current levels. Once all that is sorted, get rid of welfare and replace it with UBI, otherwise you are giving out money with one hand and taking it back with the other!

    So plenty of positive policies to shout along the way to UBI.

  • Andy Hinton 25th Aug '20 - 1:43pm

    Martin: Most advocates of basic income generally do not intend that payments made for particular circumstances (e.g. disabilities) are removed, the main point here is to sweep away unemployment benefits and the conditionality and means testing which those involve.

    That basic income would involve a fundamental rebalancing of the taxation system at the same time is also widely accepted. That this policy could be far-reaching in its effects is one reason why it needs to be looked at properly by the party’s policy making machinery, hence why the motion at conference is merely a statement of intent.

    As far as low earners having an incentive to avoid tax, I don’t think that’s fundamentally different to the situation we have now. As someone who has for many years worked in a relatively low-pay industry on a mix of PAYE and freelance basis, I have plenty of incentive to avoid paying tax myself, and HMRC already have that issue to contend with. I’m not convinced that supporting low earners with a basic income is likely to make that more prevalent.

  • What is the extra cost to taxpayers?

  • Peter Martin 25th Aug '20 - 2:58pm

    What is the level of UBI which is being proposed? Of course “Peter’s” question of how much it will cost and the extent of tax increases necessary is important too.

    Of course it’s a nice idea to hand out free money to everyone to “provide the basic financial security everyone needs in these testing times”. But is that the extent of the argument? Too many of these articles are simply an expansion of one could be written in a couple of short sentences. ie ‘Wouldn’t it be good if everyone had a decent UBI? Yippee, let’s do it then!’

    More details, especially with more numbers, are required, please.

  • Sue Sutherland 25th Aug '20 - 3:39pm

    I’d just like to agree with Jane’s paragraph about the culture of fear. We as Lib Dems find it very difficult when people are unsympathetic to those in need, but for the last decade at least we have been told that there isn’t enough money to provide decent public services for our population. In other words we are all competing for scarce resources. Of course it’s then very easy to persuade people that we can’t help others because we ourselves may not get the help we need when we need it.
    As a party we have to work out how our public services can be improved and UBI may well be part of the package necessary for people to feel more secure.

  • Katharine Pindar 25th Aug '20 - 4:04pm

    I continue to think that the policy of UBI is mistaken, and I hope the motion at Conference will be referred back, and a working group perhaps set up to consider the amount intended and how that will be paid for, since it is such a popular notion. But this idea is IMO just too easy for well-meaning Liberals to take up, without considering the enormous costs and the difficulties of any practical application. It is all too typical that people want to pass ‘a statement of intent’. Yes of course we all want everyone to have enough to live on! But please let us aim for some real reforms.

    What I want is for us, under our new Leader, to commit to ending poverty as a first principle, and realise that the UBI idea simply sidesteps this. I want us to demand enhanced rates of benefit which can enable those of working age obliged to live on benefits part or all of the time to maintain a decent standard of living, and a chance to fulfil their potential like the rest of us who are more fortunate. I’d like us to commit to abolishing the need for food banks, that symbol of the gross inequality of our society, within a few years.

    Why don’t the proponents of UBI realise that such a system could help to create a permanent underclass of disadvantaged people to whom the powers- that-be could gratefully turn a blind eye in future? This is no policy for a radical and progressive Liberal Democrat party, which I hope will still rise Phoenix-like from our somewhat pathetic presence.

  • The problem is that most people don’t understand financial mechanics and belive UBI is a ‘cost’ to society. Through fractional reserve banking and Quantitative easing we effectively have UBI now, its just going to a handfull of people which lend it back to us at interest. The monetary constraints and scarcity we have today is entirely manufactured by central banks and the current debt system destroys liquidity in the system over time needing continous bailouts. UBI through new money issuance would allow the people to direct where the investment goes in a decentralized way alongside traditional employment and would encourage innovation and entrepreneurship. For it to work though we need to change a number of systems like having a tax border to prevent too much money leaking out into the developing world and distorting their economys like QE does currently (otherwise you could print money and bid up land in Africa which wouldn’t be right or end up only creating jobs offshore). We also need to stop QE/Asset puchase programs so that we are injecting liquidity into the bottom rather than the top of society, this would lead to a natural stock market recovery based on real world growth rather than the fake bull run we have today. Stopping the QE/APP and building homes would deal with the rent/house price spiraling problem and prevent them consuming the entire UBI so it goes into the productive economy. With Automation and AI consuming jobs it was inevitable we would have to deal with this problem at some point and the longer we delay, the worse the depression will be.

  • I can see why the idea of free income for everyone is attractive to some, but someone has to pay for it. As a tax payer, I want to know why it would be superior to a properly managed and targeted benefits system. UBI gives income to those who do not need it and would therefore be much more expensive with no obvious justification.

    Ed Clarke claims to have a solution but the chances of changing the entire financial system in order to accommodate UBI are zero. Frank West suggests that UBI requires the removal of all costs such as taxation of every description. This highly attractive suggestion would compliment the idea of wages for nothing.

    Unless someone can find a very convincing benefit that cannot be achieved by a targeted system then present fully costed justification and costs, UBI is a pipe dream that could easily attract ridicule from voters and damage the party.

  • Peter Martin 25th Aug '20 - 6:29pm

    Katharine makes a good point when she says “…such a system could help to create a permanent underclass of disadvantaged people”.

    Of course it will. The most difficult job for anyone to get is their first one. This is just as true for university graduates as anyone else. Providing they turn up regularly, do what they are asked and don’t fall out with their boss they’ll be well under way. They’ll be learning and gaining experience as they go. They’ll become much more employable as a result. This nearly always will translate into higher wages and salaries.

    The key to the prevention of an underclass is to keep as many people in worthwhile work as possible. Of particular importance is getting people of the dole, off mini jobs and into genuine employment.

    That’s where the Job Guarantee can be much more useful than a UBI.

    @ Ed Clarke,

    “The problem is that most people don’t understand financial mechanics and belive UBI is a ‘cost’ to society.”

    Just the opposite. They understand perfectly well that it will be a cost. Anyone who is drawing out but isn’t putting in is a cost. By definition. It’s not that difficult. Children and old people are a cost. Those who are sick are a cost. They are a worthwhile cost – in most people’s opinion. However, anyone who is capable of making a contribution but is taking out instead isn’t a worthwhile cost. Again in most people’s opinion. This is why there has been a backlash against previously available more generous social benefits and why there is such opposition to increasing them now. However, jobs may not be available for all, so we are unjustly condemning people who may wish to make a contribution to a poverty level income. This is particularly true for disabled people. They’ll always be at a disadvantage in the jobs market.

    These problems can also be solved by means of the Job Guarantee. It’s something the Lib Dems should be looking at. Please consider inviting Dr. Pavlina Tcherneva to your next conference 😉

    https://blogs.lse.ac.uk/lsereviewofbooks/2020/06/29/book-review-the-case-for-a-job-guarantee-by-pavlina-r-tcherneva/

  • @Peter Martin – Well said. Your comment made me feel ashamed. The idea of replacing targeted benefit with universal benefit is so illogical that I’m afraid I just concentrated on that and did not even contemplate the consequences of introducing such a scheme.

    It could create work shy utopia, a magnet for immigrants, a deterrent for people to take low skilled, low paying jobs. All of this may sound welcome to some left thinking people but if we reward those with low expectations and encourage them to drop out altogether then we are destroying our society.

    Katharine is right, we should be increasing the rewards for productive activity and lifting people who are capable of contributing out of poverty. UBI has the opposite effect and should have no place in a positive policy.

  • John Marriott 25th Aug '20 - 7:23pm

    I agree with Katharine and ‘Peter’. UBI sounds great, after all it’s FREE money. Unfortunately I don’t believe you it would work as I subscribe to the view that people need incentives.

    Peter Martin is right when he writes that the best way to prevent an underclass is to keep as many people in worthwhile work as possible. I would go further I say that they should be paid decent wages as well.if that means our having to pay more for stuff then so be it.

    If I were the Lib Dems I would kick UBI into the long grass pronto. As they say in Yorkshire; “You don’t get owt for nowt”!

  • I can see where you guys are comming from, ‘Free Money’ has a cost if it is directed into areas which do not add value to society. Can I ask you guys, what was the ‘cost’ of the bank of england / the fed / european central bank of dumping trillions of ‘Free Money’ into the stock markets and property market? I didn’t see the Lib Dems protesting about that enormous sum of money which devalues the wages of people, particularly young people who are not asset holders.

    Personally I think we should pay more for things especially luxurys and we can afford to, UBI wouldn’t create an underclass it would remove it as companies would have to pay workers a living wage and provide a decent working environment. The current system where 0.1% of the world has 50% of the wealth is ludicrous and unworkable, its not Marxist to suggest that this needs to change. Additionally people who are disabled or have mental health difficulties can contribute even if its a few hours which is better for society and there own personal development.

    The idea that we have to force/starve people to work is medieval nonsense that doesnt have any place in the modern world. I’ll caveat that by saying I’m an older Millennial and most of us have strong sense of social responsibility and want to better our society. The Job guarantee is interesting but it would be far more complex to administrate than the few financial changes for UBI, under UBI the people decide what jobs need to be invested in, when you get a haircut you are investing in that business and that persons time. That is a far better system than the overly administrated debt driven mahem we have today, too many people are falling through the cracks because it cannot be administrated.

    Most people want to work, for there own sanity at least, lets dump the poorhouse politics of 1850 and build a country that works for everyone (including the under 40’s)

  • Peter Martin 26th Aug '20 - 2:58am

    @ Ed Clarke,

    “Can I ask you guys, what was the ‘cost’ of the bank of england / the fed / european central bank of dumping trillions of ‘Free Money’ into the stock markets and property market?”

    Trillions? Maybe if you add up the QE everywhere in the world. QE is an asset swap. Just like if you or I buy or sell a Premium bond or a Govt gilt. We’re neither richer nor poorer afterwards so the “cost”, technically, is zero.

    “……..that enormous sum of money which devalues the wages of people, particularly young people who are not asset holders.”

    Wages are not a fixed amount. If the economy is buoyant, and work is plentiful, they will be higher than when it is depressed. If taxes are higher then real take home wages are lower and vice versa. If Govt spending is higher the economy will be more buoyant, but at the risk of higher inflation which will reduce real spending power. So the effect of QE ( in its widest sense which includes Govt spending the money it receives from the sale of bonds) on real wages can be difficult to calculate. There are conflicting factors. It isn’t something that can be done on the back of an envelope.

    The real purpose of QE is to reduce interest rates, including longer term rates, which is why they are so low. On the one hand, this makes borrowing to purchase a home cheaper but, on the other, the extra spending power available, pushes up asset prices which benefits those who own the assets, but this makes the purchase more expensive. So, again, there are conflicting factors. There is also the bubble effect of increasing prices leading to more demand which pushes up prices even higher. But this is not directly attributable to QE.

    Our total spending power is more easily understood as being what we produce in total. There’s no point having the pounds or the dollars if they don’t buy anything in the shops. What we buy is the result of the labour power of workers, together with the benefits of nature. If the sun doesn’t shine and the rain doesn’t fall the wheat won’t grow. The wheat will only grow, the flour will only be milled, and the bread then baked if someone works to make that happen.

    So we can’t survive by paying ourselves to do nothing! Unfortunately.

  • Peter Martin 26th Aug '20 - 4:20am

    @ John Marriott,

    It is interesting that you should elaborate on my use of the term “worthwhile work”. It has, as you say, to be worthwhile for both the worker and wider society. The division of the proceeds of labour inevitably will mean, at least to some extent, that if a worker gets more everyone else, including those who seek to exploit the worker, will get less. This clash of interests has been largely what has driven politics in the 20th century.

    But there is more to 21st century politics than the clash over wages and the share of production which should go to the workers. Marx didn’t go along with the idea that labour was the source of all value. He recognised that nature was equally important. We aren’t going to produce much by farming in a desert no matter how hard we try. So we do have to look after nature and not asset strip it for short term gain. He was showing his green credentials at a time when hardly anyone else thought that mattered. Capitalism isn’t too good at acquiring “green credentials”.

    So this aspect of the political struggle should appeal more to Lib Dems than the class nature of previous conflicts. But those conflicts haven’t gone away. How the wealth is shared out, and what we are all required to contribute to its creation, does still matter.

  • Andrew Tampion 26th Aug '20 - 7:35am

    Ed Clarke 25th August 10.36
    “I can see where you guys are comming from, ‘Free Money’ has a cost if it is directed into areas which do not add value to society. Can I ask you guys, what was the ‘cost’ of the bank of england / the fed / european central bank of dumping trillions of ‘Free Money’ into the stock markets and property market? ”
    That’s a strawman fallacy because it’s possible to oppose both QE and UBI as I do.

  • Peter Martin 26th Aug '20 - 8:29am

    @ Andrew,

    If you oppose QE, do you oppose what is known as ‘Open Market Operations’ too? These are nothing new and they are both the source of our having money in our wallets. They are both just fancy terms for the process the not-so-independent central bank buying and selling of government bonds to achieve desired economic goals.

    QE is just OMO++ ! It’s quite debatable where we draw the line. Or even if a line should be drawn.

    https://www.investopedia.com/articles/investing/093015/open-market-operations-vs-quantitative-easing.asp

  • Buying shares close to the “bottom” of the market as happened with the FED, does that not mean they are sitting on a nice profit now but perhaps frightened to sell as it will dive the market again? Print money buy “cheap” shares then sell to double the money printed…

    Of course, classic share market crashes wipe out 80 percent of the value so buying when only 30 percent has been written off may not be so clever in the long term but the main aim is to get Trump back in so post US election anything may happen.

    In the UK around forty percent of the national debt is held by the BOE, so should that really be classed as debt or just money they have got away with printing to buy bonds?

    Printing money on a “one off” basis is different to printing it continuously to fund a generous UBI, some LibDems wanting it on top of welfare instead of it, that way madness lays.

  • Julian Tisi 26th Aug '20 - 9:18am

    Yet another article in favour of the principle off UBI without outlining the details – much like the Conference motion in fact. Yet another article which ignores the real concerns about its huge costs, including the opportunity cost (what else could we feasible promise in a manifesto which also proposed a UBI? – not much!). @Katherine Pindar, @Peter, @Peter Martin and @John Marriott all make good points I won’t repeat. I hope the Conference motion on UBI is rejected or at the very least referred back.

  • Daniel Walker 26th Aug '20 - 9:57am

    My thoughts on UBI are as follows:

    A. We are all (presumably) in favour of people not starving or dying of exposure involuntarily.

    B. Any form of means-tested or circumstantially-assessed form of social security “net” has holes in it¹, e.g. on the speed at which it applies and situations like ill-health, especially mental ill-health, which take time to assess fairly. Any such holes lead to people suffering needlessly.

    C. The primary benefit of UBI is that it, by definition, has no holes in it.

    D. All work should pay; no effective marginal rate of tax should be larger than the income tax + NI rate for that level of income (so benefits “tapers” need to account for that, or you end with a welfare trap)

    E. You can efficiently administer UBI through the tax system as a Negative Income Tax.

    F. A person getting UBI whose tax has increased by at least as much as the UBI is not a net cost. (conversely, a person whose tax goes up by less than or equal to the UBI rate is not losing out)

    G. Some people would have their income increased by UBI enough that they would not therefore be eligible for some social security payments; It should be arranged that this would not result in a net reduction for anyone currently in receipt of support, presumably by ensuring there were no “peverse incentives

    To do it properly would require a fairly major overhaul of the tax system, so Julian’s point about an opportunity cost is not invalid, and given the fact that the headline rate of income tax would have to go up, and the personal allowance abolished, even if ~70% of the population would be at least slightly better off (see Torry paper, below) it might be politically very difficult to sell. But it’s not unaffordable in principle. There might be (a small number, in my view) some people who decide that the UBI level is fine and they need no more money. But if it stops other people starving, and allows people to work a small number of hours, as caring responsibilities or health permit, and be better off as a result that seems a small price to pay to me.

    Torry, Malcom, 2017: https://www.iser.essex.ac.uk/research/publications/working-papers/euromod/em12-17

    ( I understand there is an updated version from Prof. Torry, but I haven’t read that one)

    1. Which isn’t to say I couldn’t think of one that had fewer and smaller holes than the present one, obviously.

  • I won’t pertain to fully understand UBI, but I think what I like is that with UBI you guarantee an income for all* – this means you can avoid a ‘protectionist’ policy where you have to “save jobs” and instead allow the market to be fully responsive (ie because everyone is guaranteed a standard income one doesn’t need to save frankie and bennies from going bust and can allow frankie and bennies to fold, and in its place new businesses arise).

    Regarding the point made re create an under class – we have regional inequality to the worst levels in the developed world, this in afraid is already a problem. Complementary policies, like retaining the Skills Wallet would go some way to resolve this. But in the main from what I understood in the leadership debates the proposed UBI was ~11,000/annum – I can’t see masses avoiding work for this reason, I mean people still choose jobs above this wage now.

    * from what I understood what Ed Davey was proposing was not a UBI in its traditional sense that it would be open to all regardless of warning, I think basic allowance counted as UBI for workers?

  • neil sandison 26th Aug '20 - 11:49am

    The principle of a universal basic income is the right one .where the revenue is raised is the devil in the detail . A vote in favour of the principle with a reference back to a working party is practical .It should be recognised as a social security safety net . Despite being a member of the Green Liberal Democrats I do not think this is the best use of carbon taxes which should be about changing behaviour in companies to less polluting forms of production .it should incentives the circular economy , and encourage a change in our purchasing power towards more green products , The social security through a UBI is about putting back the safety net that has led to such insecurity for so many low or insecure households under the conservatives since 2015 . That should be through general taxation from those with the broadest shoulders and the biggest profits ie tech and on line companies who have done so well out of COVID 19. our mission is to tax excessive wealth not employment.

  • I have been voting nothing but Liberal since 1959 when I was 21. For years I was satisfied, doing so — but paid not much attention, knowing we had the right motives and intentions. Recently, I have realised with dismay that we are timorous and short-sighted. The summit of our ambitions seems to be to tweak and fiddle and hope to improve some things, somewhat. That is not good enough: we must be radical and open-minded and alert and bold.

    UBI is not principally about Money: it is about the way we live together. If we stop tweaking, and instead say “Let’s start again!”, where shall we start? Most of us, if we are honest, feel we are doing ok, but recognise that some are not. We would like to help them, but that will cost: it might cost ME! And invention slumps, as we peer for the Magic Money Tree in the thicket.

    And the economy continues to run, and incomes are earned and paid; and lo, there is a National Income, the aggregate. Its total, if we simplify a bit, is not only the sum of all the household Incomes — it is the National Product too. Add together all the money paid for goods and services. Paid to whom, you ask? Paid to the people doing the work, either by toil itself, or by financing the tools required. And for our consciences or love, we each pay some of our earned income to support those who for various reasons cannot work: children, children’s parents, the ill, the injured, the lost — and sometimes ourselves (NHS?). We chip in to a kitty of more or less charitable taxes, as a cricket club’s adults buy bats for members of school age to play with. The club pays rent for the ground. [continues below, I hope]

  • We are all members of the club called UK. The club knows what last year’s books show, and the committee must consider the coming year. Stop buying bats, to pay for the mowing? Or buy the bats and get the boys to mow?

    The UBI ought to be the first thing determined by the Chancellor of the Exchequer’s Budget for the coming year; and the rest of the Budget will explain how taxes will change to finance it.

    This sounds like a fantasy, I know. “Fantastic, Incredible” we might say, echoing the our current PM. We, like him, would be wrong. The support which UBI would constitute would ensure that everyone had enough to keep body and soul together, and keep dry, and probably not much more. The rest of the national income would be distributed more or less as it is now, by a fair system of Taxes. It is not a problem of Finance or Money or Economics: primarily, this problem is Politics ( represented above as the Chancellor). With a decent voting system we would have a government that represented the population’s needs and morals, and not the wishes of a big or small minority as happens now. The UBI would be called the National Income Dividend, everyone getting an equal share as an equal and taxpaying share-holder in UK Ltd.

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