Let’s think again about Universal Basic Income

I was disappointed that the working group on welfare at the recent Brighton conference decided not to back a Universal Basic Income (UBI). An amendment (defeated) put forward by members from Calderdale called for negative income tax. But actually, fundamentally, a UBI is both far more essentially liberal and—in any case–the current societal context and demographic trends demand that we should look far more closely at this, especially as we are a progressive party.

The current welfare system, introduced just after the Second World War, has become complex, bureaucratic, top-down and increasingly intrusive—note that all these descriptors are fundamentally illiberal. Remarkable as it was at the time in terms of its radical policies, and essential in modernising our society, now it is out of date and struggling to cope with 21st century society.

The two huge current issues we cannot ignore are the nature and rate of technological change, and the fact that we have an increasingly ageing society. Though full employment should be the goal of any society, increasingly it is not looking like it will ever be achievable again in the UK in a globalised world, especially the concept of full employment with an adequate, living wage for all workers. This is, at the most simplistic level, mainly because of: outsourcing basic, non-specialist work to cheaper labour markets in emerging economies; and advances in technology which will increasingly automate many forms of work undertaken by people.

Low wages have become a stubborn factor in the UK since the 1990s, and it is difficult to see how these can be shifted upwards anytime in the near future. The “gig economy” looks like it is here to stay for lots of us, with the accompanying lack of financial stability that it brings to many households.

The RSA has been investigating a UBI for well over a year and its report can be found here. In addition trials have begun in the Netherlands and are expected to begin soon in Finland. In fact the Finnish Government is designing a national Basic Income system to replace large parts of their current welfare system. There was a referendum to introduce a Basic Income in Switzerland in June this year, which though heavily defeated, shows how the idea is gaining currency. Think tanks in the USA, Germany, UK, etc, are increasingly looking at UBI as way to ensure all can lead a decent life in the modern world.

I am not proposing that this should be a policy “fix” that is “magicked up” overnight and done to people. This seemed to be one of the reasons for the working group to not include it in their conference motion, as they saw the difficulties with implementation. But in truth, that should not have been a constraint for them. For huge systemic changes to occur, there has to be a conversation with the public that lasts years, probably in this case, decades. There has to be long time for people to get used to the idea and thoroughly understand its benefits, what has changed and why it is needed.

We should be actively encouraging that conversation, and be seen as prime movers and advocates for significant changes in welfare. A poll of members on Lib Dem Voice has already shown that members support the idea of a UBI.

Freedom from being in government can have benefits. We should not longer be content with merely tinkering round the edges. We have to be liberal, think big, and UBI is a great place to start.

* Helen Flynn is an Executive Member of the LDEA. She is a former Parliamentary Candidate and Harrogate Borough Councillor and has served on the Federal Policy Committee and Federal Board. She has been a school governor in a variety of settings for 19 years and currently chairs a multi academy trust in the north of England.

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20 Comments

  • Conor McGovern 25th Oct '16 - 5:48pm

    With the onset of automised jobs and insecure employment across the board, UBI could be the policy of our age. It takes guts to adopt it as the policy of our party.

  • Stevan Rose 25th Oct '16 - 6:07pm

    Someone has to pay for this. And it removes the link between effort and reward. I see zero prospect of selling such a concept to voters and 1000 opportunities for the media and other parties to ridicule this party. The fact that the idea was heavily defeated in Switzerland should tell us this is a dead duck and Conference was right to dismiss it.

  • Laurence Cox 25th Oct '16 - 6:51pm

    @Conor McGovern
    It is what Sir Humphrey would have called a courageous decision. Look at what Malcolm Torry of the Citizen’s income Trust says. He talks of abolishing the Income Tax Personal Allowance, raising all rates of income tax by 3p in the £ and abolishing both the Lower and Upper Earning Limits on National Insurance, and that to provide a Basic Income that does not even equal JSA. It is a seriously expensive proposal and yet no-one who advocates it wants to talk about the cost or how it would be sold to the voters. Politics is the art of the possible.

  • Not before a thorough audit and forensic examination, please….. and certainly not before the Richmond by-election.

  • jedibeeftrix 25th Oct '16 - 7:09pm
  • Simon mcgrath 25th Oct '16 - 8:17pm

    If technolgy does start dramatically reducing the number of jobs perhaps we should consider a universal income. But previous predictions of technology reducing the overall number of jobs have never come about and the UK currently has record employment levels.

  • Paying for it is never the problem. Balanced budgets are only a requirement so that there isn’t too much inflation.

    If no-one saved money in the economy, and all the tax money was spent, there would be no need for positive inflation to increase economic activity.

    Right now, not enough taxes are collected where they should, whIle many live in low-wage poverty spending all of their income, and have no spending power.

    Governments are afraid of creating inflation right now. Each time money gets injected into the economy, most of it gets mopped up by the top 1% eventually.

    Solution: UBI, then raise taxes at the top where needed to balance.

  • Peter Bancroft 25th Oct '16 - 9:06pm

    I always think this proposal needs to come with a concrete income level and an explanation of the marginal cost. We might as well be arguing for greater spending on public services, lower taxation and to eliminate the deficit.

    Obviously it would be great to have an affordable universal income which could replace all other benefits, but as of yet it’s far from obvious how that particular circle could be squared.

  • Conor McGovern 25th Oct '16 - 11:19pm

    We should at least be exploring this as radical Liberals.

  • Excellent article Helen around an increasingly important issue. This policy needs to be dovetailed with a long overdue reform of the tax and national insurance systems as highlighted by the Mirllees review in 2008.

    The fact that forward thinking democracies like the Netherlands and Finland are trialling this augurs well for overhauling a welfare system no longer fit for purpose in the 21st century.

  • On my first reading of the RSA scheme, they have kept disability benefits out of it and suggested a way to ensure that the poorest are not worse off. I wonder if our working group studied this report. It is disappointing that the research used by our working group to reject a Citizen’s Income has not been make available. Did they even consider a more basic income to replace personal income tax allowances?

    Replacing the personal income tax allowance and replacing it with a Basic Citizens Income is a liberal thing to do and it does increase freedom and choice. The RSA even suggest it might increase wages while pointing out that a work force that chooses to work rather than being forced to work is a more productive work force.

    The RSA even suggest that it could be presented as a way of making work pay.

  • @ Jedibeeftrix
    “basic income is not an answer to automation”

    The article is not correct. At the beginning of the industrial revolution workers worked long hours and in the UK government restricted those hours for women and children and this reduced the hours men worked. The Factory Act of 1847 limited work for women and children to 63 hours and then 58 hours a week. Factory owners got round this act while having their factory open for 15 hours a day (maybe a 90 hour week). The Factory Act of 1850 increased the hours to 60 – only 10.5 on a week day and 7.5 on a Saturday and limited working hours for men to 67.5 hours. When my parents started work they had to work Saturday mornings but when I started work the working week had been reduced to only 5 days. So even the 1947 date in the article is likely to be incorrect.

    In the EU and the UK unless you opt out you cannot work more than 48 hours a week averaged out over 17 weeks (but there are some wide exceptions (https://www.gov.uk/maximum-weekly-working-hours/overview). Since 2000 France has a 35 hour working week with all hours after this having to be treated as overtime.

    The RSA report states, “In the US in 1993 a total 194 bn hours of labour were performed. By 2013, despite a 42 percent increase in labour and an increase of 40 million in the workforce, the number of hours of labour was still 194 bn hours.”

  • Great to see the many positive comments here. At the SLF we are taking forward ideas to consider how the welfare state does need reform, in the sense of “If Beveridge was alive now, what would the “giant evils” be.”

    As new chair of the SLF I am interested in contributions on this topic from all Lib Dem members or supporters of liberal values in UK politics. Email me at [email protected] .

    At the SLF we believe that now is the time for radical ideas in UK politics, and we are well placed to be agents for this. We cannot appeal to everyone, but must consider and propose the types of radical change that will serve people. There is a massive space for this at the moment with a Conservative government tacking madly to the right and the Labour party on the verge of collapse. Please get in touch.

  • My problem with this idea is that we can’t currently fund services adequately even for the most needy. Social care, health care, disability benefits, support for the homeless etc are all woefully underfunded and people don’t get support that they desperately require. In this context, how can we begin thinking about a universal benefit for all, when we can’t even pay for benefits/services for the most vulnerable? Surely we need to get the basics right first before being so ambitious?

  • I am 100% in favour. It will take away the stigma overnight
    Truly progressive and liberal

  • Steve Trevethan 26th Oct '16 - 7:09pm

    A most interesting article!

    The statement, “There has to be a conversation with the public.” is outstanding and should be written in lights and in BIG on our repaired Houses of Parliament.

    We also need to look at repairing our current social-financial-economic systems which are the foundation of the problems being here addressed.

    ILO Paper 7 reports that the priority of fiscal consolidation, reduction of social expenditure and measures that have lessened the incomes and powers of non-investors, have damaged growth and quality employment.

    http://www.ilo.org/global/research/papers/WCMS_218547/lang–en/index.htm

    Then there are the problems resulting from the widespread use of a unilaterally controlled fiat currency of reference. [The USA makes as many dollars as it likes, as it has done since 1971.]

    Does “Economics” control us, or do we control economics? [Clue: It’s not a science.]

  • John Littler 31st Oct '16 - 4:32pm

    The Universal Citizens Income was a LibDem idea some decades ago, which was dropped as impractical in terms of cost. However it’s time may be coming again quite soon.

    Robotics and advanced computer software are within 15 years of wiping out a large proportion of work. This will include a lot of professional work as well as manual or admin. GP’s and Lawyers could be among the coming cull and there are not enough constituencies to offer them all MP positions!

    Already, it costs manufacturers as little as £3.50 p.h. including maintenance, to lease robots to carry out a variety of tasks, such as putting items into boxes and being re-programmed easily to change task. People living in the west cannot compete with those costs.

    These changes are likely to take effect more quickly than new jobs can be created and the new jobs may find themselves becoming largely taken up by the fast developing new technology.

    To prevent the above from happening would be nigh impossible, as any industry or country not using it would be massively disadvantaged and could not compete. Any protectionist economies preventing such technology would incentivise the smuggling in of goods made at lower cost and would fall behind, impoverishing most people.
    See part2

  • John Littler 31st Oct '16 - 4:33pm

    Part2:

    But people out of work would still need an income to be able to survive, to pay to consume the output and services of the new economy they need, but the old model of losing nearly all money earned in addition to unemployment benefits, would be penal, bureaucratic and unsuited to a minimal or multifarious work economy.

    A “near” Universal Citizens Income for adults might be the answer. It would pay everyone a basic minimum sum until any earnings on top which they might make, moves up into a high earnings threshold, after which the UCi could cease, as they would not require it to achieve a comfortable living standard. This choke off would save revenue and make it easier to implement.

    Clearly, this cut off would not help to sell the policy among higher earners or those anticipating themselves to become high earners, but it seems like an acceptable means of making the policy more affordable and less wasteful

    The cost of the UCi could be partly offset by removing all or most of the tax free allowance of the basic rate of income tax, because they had already been given the money tax free.

    In order to prevent a cut off point from discouraging additional earnings and making people £1 over that point worse off overall, the UCi could be phased out for top end earners with a taper.

    The main additional payments outside of UCi would be related to numbers of children cared for.

  • John Littler 31st Oct '16 - 4:33pm

    3.

    By the above means, people could have a living income, yet would not be penalised for doing additional part time or self employed work, without the need to keep re-registering and changing benefits /employment status, which are necessarily becoming a lot more flexible and variable.
    See part3

    John Littler 10th Oct ’16 – 7:28pm
    Part3:

    UCi would greatly simplify the admin to run the system and would cut costs, yet would allow more incentives to find top up work. It would enable people to do charity work, perhaps for expenses and any mix of leisure, part time employment or self employment as they are able and would not freeze people out of the world of work on fixed benefit income, where they are highly supervised under a huge number of rules, taking back all earnings beyond a pittance, as at present.

    The opposition to this would be from monied interests such as the right wing press, which would rather people fought over vanishing work and made themselves available at worse and worse terms at lowest possible cost to unscrupulous employers. The unscrupulous employers could then set the standard as a race to the bottom, using fake self employment contracts, as presently offered by many couriers and others.

    This seems radical for a moderate party, but we will have to find radical solutions to address the workplace and incomes, which are going to change out of all recognition, very soon and we need to prepare for it. Labour might stray into this territory, but they are mainly distracted in internal battles. The Greens have already advocated a similar policy.

    There would be winners and losers, but allowing no radical change to meet these challenges, would invite an angry and frustrated electorate, who would tend towards high crime, drugs, depression, declining areas and riots. As we know, the devil makes work for idol hands.

  • Bernard Aris 2nd Nov '16 - 9:16pm

    At the D66 autumn party Conference (celebraqting the 50th anniversary of our prodly Social Liberal party!) on the location of our founding in Amsterdam last weekend, conference supported resolutions and election platform amendments supporting what we call “Basic Income” (which I think is the same as UBI) in the form of social support subsidies to unemployed and non-working peple with a much reducedc list of conditions and demands for those receiving it; D66 aldermen/councillors with this in their portofolio started experimenting with this when, in 2014, we conquered a dominating position in many (student) city councils.

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