LibLink Jane Dodds: Why the Welsh Lib Dems want to trial Universal Basic Income in Wales

Welsh Lib Dem leader Jane Dodds supports the Universal Basic Income as a means to tackle poverty and inequality.

She explains why in an article for Nation Cymru:

In Wales, like the rest of the UK, we are seeing increasing homelessness and food bank use.

We need to look for progressive solutions and to continue to oppose government policies that demonise the poor.

One possible solution is Universal Basic Income (UBI), an idea that has been the subject of much debate across the political spectrum, including within my own party.

UBI is rooted in the idea that people seek purpose and, if given the opportunity and freedom to do so, will make the best decisions about their lives. As a Liberal I strongly believe everyone should be able to make decisions about their own lives and live a life they are proud of.

UBI would give people a guaranteed minimum income, giving them the freedom to live their lives and make decisions of their own free will, not on the basis of where their next paycheque comes from.

Opponents of UBI argue that it would damage economic growth and lead to fewer people in work, but I think this view underestimates people. Money is only one factor driving us to work and I suspect that most people would take the freedom UBI would give them to pursue the job they’ve always wanted to do, not quit work altogether.

While some people may indeed choose to work less, that is not necessarily a bad thing. They may do so to spend more time with their family, achieve a better (and healthier) work/life balance, upskill themselves, undertake charity work or care for loved ones.

This does not mean there aren’t challenges surrounding UBI, but for me we can’t keep on trying the same old methods and expect to get new results. That’s why I want us to host some trials of UBI right here in Wales, so we can find out just how practical an idea it is.

There have been several trials across the world, each showing varied results. This proves UBI is a complex issue which must be carefully looked at and the system adjusted to match the needs of each respective country.

She outlined the potential results:

Before we discount the idea let us consider what the research has shown. Even at the reduced rates, under a Partial UBI scheme, we would see:

  • Child poverty fall by over 50%,

  • Working age poverty drop by 20%,

  • Pensioner poverty fall by a third.

You can read her whole article here.

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68 Comments

  • John Marriott 3rd Mar '19 - 3:38pm

    It didn’t work in Finland, did it?

  • @John Marriott – how do you know? The report isn’t due to be released until spring this year, so unless you have insider info from the Finnish Government……..

  • Jane Dodds is correct a Universal Income is a liberal policy, it increases people’s freedoms and allows them more choice. However, much depends on the level of Universal Income and if it replaces any existing benefits such as Income Tax Personal Allowance, or any part of Universal Credit then the only winners will be those people who already can afford not to work.

    It would be interesting to know where she gets her figures for the potential benefits from. The Benefit Cap and the Local Housing Allowance rates (and maybe the bedroom tax) are the main reasons for pensioner poverty. If we increased the standard welfare benefit levels for working aged people and children to the poverty level along with scrapping the Benefit Cap, Local Housing Allowance rates and the bedroom tax, plus ensuring that there is a disregard of at least £50 for everyone (including single people) before benefits are reduced and that the taper of 63% applies to all benefits I think very few people would live below the poverty line.

  • Joseph Bourke 3rd Mar '19 - 4:34pm

    Jane Dodds has been a great advocate of tackling poverty and inequality and has a good head on her shoulders. A pilot study among Welsh councils, who are willing to trial forms of UBI woul be very welcome.

  • David Warren 3rd Mar '19 - 4:35pm

    This is a really eye catching policy and I would like to see it adopted by the party nationally.

    Just over a hundred years ago Liberals led the debate with Lloyd Georges peoples budget time to do it again.

  • Could I ask what Scots describe as a daft laddy question ?

    Is UBI genuinely universal ?

    In other words, would Mrs Jones, a 75 year old miner’s widow in Ebbw Vale receive the same amount of UBI as 70 year old Charles Windsor, Prince of Wales ?

  • There is a need to consider carefully how the idea is sold. How it is framed as they say nowadays. There will be a huge opposition to it, just as there is against free at the point of delivery health care. There is opposition of this nature in the US even though the amount of government money being spent is greater than here, the outcomes are worse and poor people die because they cannot afford an operation.

  • Polly Toynbee had a good article exploring the issues https://www.theguardian.com/commentisfree/2018/feb/26/welfare-system-beveridge-75-years.
    I think UBI needs to be developed as part of an integrated tax and benefit system – a negative income tax replacing personal allowances and tax credits as Andy Hinton cites, supplemented with PIP payments for the disabled. However, housing benefit would still need to tailored to local rents. Give local authorities the powers to acquire land and borrow to build public housing and fund housing benefit with a local land value tax based on average rents and much of the problem can be solved.

  • Peter Hirst 4th Mar '19 - 11:29am

    It certainly needs piloting somewhere and where better than Wales? The size of the pilot needs some thought as does the size of the amount distributed. Does it go straight to each individual over 16 with no tapering or adjustment?

  • Laurence Cox 4th Mar '19 - 1:54pm

    If we start by saying that our aim is to reduce inequality by ensuring that everyone has a minimum income, then UBI is just one way of achieving this. We could also introduce negative rates of income tax for incomes below the current personal allowances or a job guarantee that offered a living wage job to anyone who wanted one. Our Harrow motion to Party Conference, which was not accepted, included the following:

    4) acknowledges that these policy goals could be implemented in a number of
    ways (such as basic income or negative income tax).

    Conference therefore:

    a) resolves that Liberal Democrats should campaign for an unconditional
    minimum level of income below which no-one is allowed to fall, guaranteed
    to all long-term UK residents.

    b) resolves that the system by which this is implemented should be should
    be designed based on the best available international evidence and on
    regional trials of different possible systems, and should replace most
    current basic forms of social security, with the exception of targeted
    payments such as those for housing and disabilities.

    I am concerned that the Welsh Lib Dems are plumping for one of these options without any discussion on how regionalised trials of different approaches could be organised.

  • @ Peter Hurst. “Where better than Wales ?”

    Can we take it that you don’t live in Wales, Peter ?

    That somehow smacks of the Thatcher decision to implement the poll tax in Scotland first. Fat lot of good it did her. There was a time when there were more pandas in Edinburgh zoo than Tory MP’s in Scotland.

  • By all means trial this (Finland did and terminated it mid way, I wonder why), but I’d strongly question whether UBI is liberal. It sounds like something more akin to socialism (making citizens dependent on the state, making no distinction between individuals, one size fits all, etc etc)

    One of its selling points is its “administrative efficiency”, doing away with all the costs and bureaucracy that come with means tested benefits. Okay. Am sure as soon as the 100,000 headcount cut at DWP comes to make redundant the JCP and Contact Centre staff that are no longer necessary, the Lib Dems would run a mile.

    Likewise, not sure how the UBI utopia incorporates disability or children? Usually its advocates say that of course there will be special extra benefits for X, Y, and Z groups. I see. Do no administrative efficiency whatsoever.

    Anyway, this does need to be trialed properly so that it can fail and we can move on

  • Peter Martin 4th Mar '19 - 8:38pm

    Money is only one factor driving us to work and I suspect that most people would take the freedom UBI would give them to pursue the job they’ve always wanted to do, not quit work altogether.

    You need more than “suspicion” upon which to base an economic policy.

    In my, admittedly limited, experience when individuals come into possession of significant amounts of money quitting work is exactly what they do. It shouldn’t be too hard to find the evidence on this point. We just need to take a look at what typically happens with lottery winners and others who have a windfall good fortune.

    We shouldn’t be handing out money to the stay-at-home partners of the wealthy which is what would happen under a UBI. If they they or anyone else needs a job then we should give them one but we don’t hand out money for nothing.

  • Peter Martin,

    “We shouldn’t be handing out money to the stay-at-home partners of the wealthy.”

    We have been ever since married couples and civil partners have been taxed independently (unlike benefits which are allocated based on household income).

    Virtually every stay-at-home partner of a wealthy partner spouse will be allocated (as part of the tax and wealth planing process) sufficient income in their own name to make full use of the £11,850 tax free allowance, the basic rate band of £34,500 at 20% or more likely 7.5% for dividend income, the £5,000 0% band for savings, the £1000 personal savings allowance, the £2,000 tax free allowance for dividends, the £11,700 annual exempt allowance for capital gains and annual gift allownces for inheritance tax.
    A UBI allocated as a tax credit in place of the personal allowance will not be handing money to anyone other than the low paid and unemployed without other sources of income.
    UBI has shown promise in Canada https://www.technologyreview.com/s/611418/basic-income-could-work-if-you-do-it-canada-style/. Unfortunately, the trial was cut short when the Ontario Liberal government was replaced with a new conservative government last year.

  • James Pugh, as I stated above, UBI is liberal as it can increase freedom and choice. In studies people have chosen to work less and study or train more, or set up new businesses, choices that the lack of money denied them.

    Liberalism has to be about increasing person happiness, freedoms and choices. Being economically free to do whatever you want in life has to be a liberal aim.

    Has Jane or anyone suggested where Wales would get the money to fund some trial schemes?

    As Joe Bourke and the article by Polly Toynbee pointed out the amount needed to make a person economically free has to include their housing costs.

    The Joseph Rowntree Foundation state that a family of two adults and two child need £21,476 to live on the poverty line, not including their housing costs. In London in January average rents were £19,056 a year and the rest of the UK they were £9,300 a year.

    Are we really advocating a Universal Basic Income of £30,776 a year for a family in the rest of the UK and more than £40,532 a year for a family in London? If not then it isn’t going to be enough to cover everyone’s needs.

  • Peter Martin 5th Mar '19 - 9:26am

    @ JoeBurke,

    You’re referring to the common practice in small family run companies of putting partners on the payroll, even though they don’t do much if anything, and, furthermore, taking income in the form of dividends rather than income to minimise taxation?

    I agree that this is something that needs to be investigated, discussed and hopefully rectified. I realise this could be difficult but if you don’t try you won’t improve the situation and reduce the unfairness of the existing tax structure. But Lib Dems don’t seem at all interested in this aspect of the taxation system and prefer instead to talk about the UBI.

    They need to get real. I don’t know who they talk to but it’s always a big mistake, as they should have learned from their Brexit experiences, not to ask typical voters what they think. Forget the doorstep. Just go down to the pub and ask people their opinion about handing out money in this way. UBI proponents won’t get much support at all especially when people realise that they’ll lose their tax allowance.

    But, on the other hand, if you suggest giving jobs to people who really need them you’ll get more support. They’ll be wary, as they should be, but they’ll see the logic that its better to pay a little more and get something back in return.

  • Peter Martin 5th Mar '19 - 9:54am

    @ JoeBurke,

    Correction: I should have written ” rather than wages or salary to minimise taxation” .

    You got this wrong too.

    “A UBI allocated as a tax credit in place of the personal allowance will not be handing money to anyone other than the low paid and unemployed without other sources of income.”

    What about criminals and others who make their money from the cash-in-hand black economy?

  • Laurence Cox 5th Mar '19 - 11:28am

    @James Pugh

    No, Finland didn’t terminate the trial halfway. It was always going to be a two-year trial and they chose to release data of the first year’s results. The final results should be available in about another year’s time.

  • Mick Taylor 5th Mar '19 - 1:06pm

    Let’s see if I’ve got this right? You stop having a tax allowance of say £11500 on which you don’t pay 20% tax. Loss in income £2300 and instead you get a UBI of say £8,000, so no-one loses on that score. In order to pay the balance income tax would rise (or land or wealth taxes would be introduced) above an agreed level of income. So, yes, those who can afford it pay more tax and everyone gets a UBI. The progressive tax principle is a good one.
    Now, I don’t think UBI is an easy sell, but how else are we going to end poverty? Lots of people here offering reasons why UBI won’t work or won’t be accepted. Very little being suggested as to other ways of ending poverty. The time for radical Liberal Policies is NOW

  • Mick Taylor 5th Mar '19 - 1:09pm

    Peter Martin. Criminals should be caught and taken to court. Perhaps police could focus on that instead of harassing minorities, cannabis users or exuberant party goers.

  • Peter Martin 5th Mar '19 - 1:54pm

    @ MichaelBG,

    “Are we really advocating a Universal Basic Income of £30,776 a year for a family in the rest of the UK and more than £40,532 a year for a family in London?”

    I can’t speak for the Lib Dems – but I’d doubt it. Divide these figures by 10 and you’d still have overestimates. IMO.

    @ Mick Taylor,

    “Now, I don’t think UBI is an easy sell, but how else are we going to end poverty”

    That’s a fair question. Except the assumption within it is that UBI would end poverty. The figures provided by MichaelBG show what’s necessary to end poverty and I would say we’d all agree that what’s likely to be on offer is going to be at least an order of magnitude smaller. Therefore UBI will be neither here nor there in solving the problem.

    The UK GDP is about US$40k per person. That’s quite sufficient to end poverty providing it’s shared out more equitably. But a UBI isn’t going to help at all in that respect. So the “to each according to their needs” part of the well known saying, means sharing things out more evenly. The “from each according to their ability” part of the same quotation means that we don’t just hand out the money for nothing!

    It could be that “their ability” is connected to the horticultural science of growing certain plants! Should they become legal. However they’ll need to pay ALL their taxes on these when they are processed and sold.

  • Mick Taylor 5th Mar '19 - 2:15pm

    Who says the party is considering any particular level of UBI? I thought we were at the beginning of discussions on greater fairness? It really is far too easy to put up an aunt sally that no-one has suggested and then knock it down and then say UBI won’t work.
    If we start from the principle that no-one should be forced to live in poverty, nor on the streets, then we can start to build a policy that tackles those issues. It may be that UBI or negative income tax is the answer and we’ll need research and experiments to see what gives the best result.
    There is an attitude – and sadly some in our party share it – that allowing people to have an above poverty income is somehow pandering to moral laxity. That somehow allowing people a basic start in life will mean that they are paid by the rest of us to be feckless and idle. I reject that and so does the party in its preamble, where none shall be enslaved by poverty, ignorance or conformity.
    I want to know from others on this thread what they will support that will achieve our clearly stated objective and how we will sell that solution to voters. That’s what we’re in politics for, not to be shrinking onlookers.

  • nvelope2003 5th Mar '19 - 2:19pm

    People might not want to go to work if they got £30,776/£40,532 to do nothing then there would be a massive labour shortage. Who would do the work to supply the needs of the people such as food etc ? I guess they might not need many train or bus drivers as hardly anyone would be using public transport to get to work but lorry drivers would still be needed to move food.
    The Finns abandoned their UBI after 2 years as they said it did not work.

  • Peter Martin,

    “What about criminals and others who make their money from the cash-in-hand black economy?”

    The very high correlation between deprivation and violent crime is undeniable. The same socio-economic factors that underlie the current panic about knife-crime were present throughout the 19th and 20th centuries. Where there is high levels of poverty there will be high levels of street crime whether it is London in 2019, Glascow in 2005, Naples past and present or anywhere else in the world. Half of youth-offenders were excluded from school or brought up in care. Poverty and lack of education lead to widespread criminality.
    UBI is one means of restoring the welfare safely net and addressing this common factor of absolute poverty in virtually all studies of youth crime across the decades and around the world.

  • nvelope2003 5th Mar '19 - 2:29pm

    Mick Taylor: Wealth is created by human effort. Where they do not work there will be poverty and soon ignorance as they will not bother with education if they do not have to work.

  • Mick Taylor,

    the basic starting point for a UBI is replacing the personal tax allowance and National insurance threshold with a single tax credit that is paid to all adult UK residents under pension age. From April 2019 the personal allowance is £12,500. 32% of this amout (£4,000 per year- £8000 for a couple) would be the basic UBI (i.e. 20% income tax and 12% employee national insurance). Welfare benefits would be concentred on children, the disabled, and pensioners, funded as now via income tax and national insurance. In-work benefits would be concentrated on those in need of child care support to go out to work and social housing/housing support with housing benefit funded via a Land Value Tax.

  • OnceALibDem 5th Mar '19 - 3:07pm

    “In other words, would Mrs Jones, a 75 year old miner’s widow in Ebbw Vale receive the same amount of UBI as 70 year old Charles Windsor, Prince of Wales ?”

    Wouldn’t they get the same state pension?

  • Peter Martin 5th Mar '19 - 5:38pm

    @ JoeBurke,

    “Poverty and lack of education lead to widespread criminality.”

    There’s no evidence that growth in GDP and increases in education spending reduce levels of criminality. Maybe just the opposite?

    It’s more inequality than poverty and lack education per se which leads to higher rates of offending as proposed in studies like “The Spirit Level”.

    Societies need to be inclusive. Just handing out money won’t achieve much if anything. Everyone needs to feel valued and that does mean we require individuals to contribute to society. In return they should be properly rewarded.

    https://www.equalitytrust.org.uk/imprisonment

  • Mick Taylor 5th Mar '19 - 5:43pm

    Of course wealth is created by effort, though not all of it human these days. In whatever welfare system that is devised there will be a few who exploit it. However, most people actually want to work for personal fulfilment and to achieve something. If we free people from drudgery and give therm opportunities for fulfilling and interesting work what’s not to like?
    Essential work has to be done – and Brexit is currently ensuring at least some of it isn’t done, especially in farming – but a lot of work could be mechanised if it wasn’t primarily for keeping people just off the breadline. In a future free of poverty we could take a different approach to employment and people would be able to afford to do jobs they wanted or liked and retrain as many times as necessary. That would be a real Liberal society

  • Mick Taylor
    Now, I don’t think UBI is an easy sell, but how else are we going to end poverty? Lots of people here offering reasons why UBI won’t work or won’t be accepted. Very little being suggested as to other ways of ending poverty.

    Scrap the Benefit Cap, the Local Housing Allowance rates, the bedroom tax, and set the basic benefit level, from April this year, for a single person at £156.10 a week (£8117.20) [this compares to New State Pension rate of £168.60 a week for a single pensioner] and for a couple at £268.95 a week (£13,985.40) and pay £83.32 a week for each child. [Increasing the basic rates I think could be done over four years.] Allow single people (without children) to keep the first £50 a week of their earnings before they lose any benefit, and if both people in a couple are in work let them keep a further £50 a week of their earnings before they lose any benefit (so a couple without any children both in work would keep the first £100 of their joint wages each week). Apply the 63% taper to all benefits.

    Retain the National Living Wage at 60% of medium national earnings, while introducing regional minimum wages of 70% of each regions medium earnings. (I think this would need 7 years to be fully implemented.)

  • Peter Martin 5th Mar '19 - 6:22pm

    @ JoeB,

    “So we can stop agonising about welfare benefits going to criminals. It won’t cause them or their families any harm.”

    So you can decide what people will agonise about? That sounds rather arrogant. You need to get out a bit more and talk and listen to people. They’ll tell you what they like and what they don’t.

    ‘If we were to truly provide a basic income …. then it would be either hyper inflationary or have no impact on poverty. Every unit of currency (dollar, pound, yen etc.) represents a claim on resources available for sale in that currency. If we were to simultaneously increase every person’s claim on resources by the same amount, then prices would immediately inflate to eliminate any benefit.’

    http://www.jobguarantee.org/

  • I am not against giving Charles and indeed the other princes and princesses a citizens’ income. Of course they should also be deprived of the income of Duchy of Cornwall. Clarence House and Buckingham Palace could also make a significant dent in the homelessness problem in London. I would be generous and give them a free council house!

    Indeed I am not sure why a rather unequal citizens’ income should be restricted as now to these people and the descents who have managed to grab a bit of land when surely the land and our natural resources belong to us all?

    It does though illustrate some of the benefits of a citizens’ income. Give people an unconditional income and they often do a lot of work of economic and social benefit to the country.

    I am not sure that “forcing” a parent or a carer out to work (although they should of course have the opportunity to do so if they wish) – to earn money that pays for childcare and actually may make them worse off and/or claiming a lot of money in childcare benefits from the Government necessarily makes society and the economy better off – although theoretically because everything now as a price attached to it economists would say that it does.

    Indeed economists tend to know the price of everything and the value of nothing.

  • Joe, do you really think that £76.92 a week is enough for a single person to live on, excluding housing costs, when the Joseph Rowntree Foundation state that in April 2016 they required £148 a week to live on the poverty line? Do you think that £153.84 a week is enough for a couple to live on, excluding housing costs, when the Joseph Rowntree Foundation state that in April 2016 they required £255 a week to live on the poverty line? Can you explain how setting UBI at 52% of the poverty level for a single person, and 60% of the poverty level for a couple excluding housing costs addresses inequality? Please can you explain why that is better than what I have set out as the way to tackle poverty?

  • Michael BG,

    the welfare system provides a safety net, it is not intended to provide an alternative lifestyle. That is not something you can reasonably expect taxpayers to provide for the reasons Polly Toynbee sets out in her article linked above.
    An able-bodied adult of working age has a responsibility to provide for themselves and a couple with children have a responsibility to care and provide for their children. Help with child support comes in the form of child benefit and for working mothers in the form of child tax credit and low income earners are entitled to working tax credit.
    The safety net provides a minimum income below which an individual or household cannot fall.
    Those with a long-term illness or disability receive ESA and PIP to assist with daily living and mobility needs.
    Pensioners have a mimimum income guarantee of £168 per week provided by way of pension credit. Disabled pensioners receive a supplementay attendance allowance. Carers for the disabled are entitled to a carers allowance.
    Universal Credit (UC) for people in or out of work and under State Pension Age will eventually replace a range of other welfare benefits including Housing Benefit, Working Tax Credit, income-related Employment and Support Allowance and Income Support.
    For adults able to work, UBI can replace working tax credits and unemployment benefit without the need for means testing or clawbacks. To ensure the availability of employment, UBI would be supplemented with a statutory minimum wage job guarantee provided via local authorities and funded centrally.
    The focus of housing provision would be social housing, entailing a gradual move away from housing benefit towards council housing. This requires the abiiity for local authorities to acquire land without planning permision at existing use values and access to funds from the public loan board to build housing sufficient to their needs.
    With full employment via a statutory job guarantee, social housing provison sufficent to meet needs and a minimum basic income guarantee, we may be able to return to what Beveridge envisioned – offering all citizens protection as of right “from the cradle to the grave”.
    Addressing inequality requires a focus on equality of opportunity i.e.putting vocational training and adult education on par with higher education.Additionaly, we would need to reorganise the tax system so that there is a shift away from over-reliance on taxing wages and a move towards funding public services from taxes on land rents and other forms of economic rent extraction in the economy.

  • Peter Martin 6th Mar '19 - 6:41am

    Economist (The Sensible Kind): The Government should make more use of its fiscal ability to control the economy to ensure we have full employment and that it is working close to full capacity and for the public purpose.

    Neobliberal: No we can’t do that! There’s no magic money tree. Hyperinflation. Zimbabwe, Venezuela, Weimar Republic etc etc etc.

    Economist (The Not so Sensible Kind): The Government should just give out money to everyone regardless of need. People will respond by using the time and increased freedom wisely. They will upskill themselves to do the jobs they really want to do. They will be free from all worries about where the next paycheque will come from. We will call it a Universal Basic Income.

    Neoliberal: Now that’s an interesting idea!

  • Peter Martin 6th Mar '19 - 7:05am

    @ Joe Bourke,

    “An able-bodied adult of working age has a responsibility to provide for themselves and a couple with children have a responsibility to care and provide for their children.”

    I’d go along with that in as sensibly run society. The problem arises, in our current society, that, on the one hand, the Government are indeed saying this, but on the other they deliberately keep unemployment and underemployment much higher than it need be to suppress wages in the cause of anti inflation. (The NAIRU) Consequently, even if both parents are willing to work all the hours they can, they may not earn enough to support their family or they may not even get the number of hours they need anyway.

    This is a fundamental contradiction which is causing nearly all, including Brexit, the problems which concern contributors to this blog.

    We always hear this kind of thing from the neolibs. As if we didn’t already know!

    “Inflation becomeas a problem when spending in an economy excedes the potential output of the economy. In other words, each unit of currency (dollar, pound, yen etc.) is a claim to some resources available for sale in that currency. If there is more currency than there are things for sale, then prices are bid up and inflation can become a problem”

    Therefore

    “If we were to truly provide a basic income…… it would be either hyper inflationary or have no impact on poverty. …… If we were to simultaneously increase every person’s claim on resources by the same amount, then prices would immediately inflate to eliminate any benefit.”

    http://www.jobguarantee.org/

  • Joe, I think you have misunderstood the point of UBI. As I stated above, it is to provide a basic income to everyone so that they are economically free to do whatever they want in life. When the current system was introduced, I think I read that the levels of benefit for the unemployed and pensioner were the same. They were much higher in real terms than the current working age benefit.

    It is clear from what you have written that with a UBI of £4000 you expect no one paying Income Tax to be better off. It is implied from your recent answer that you expect single people to be only £3.82 a week and couple to be £39 a week better off if on working age benefits. As I stated above this means that the people who will benefit the most from UBI are people who currently can afford not to work (this would cost about £26.4 billion). Therefore if your idea for UBI was introduced it would do very little to stop people living in poverty. It would not remove those receiving out of work benefits from living in poverty (more than 3 million people), it would not remove the 4 million workers who live in poverty out of poverty nor would it remove the 4.1 million children currently living in poverty.

    By doing what I suggest most of the 14.3 million people living in poverty would live at least on the poverty line and not below it, and none of the 4 million in work who currently live in poverty would live in poverty.

  • Peter Martin 6th Mar '19 - 7:50am

    “the Welsh Lib Dems want to trial Universal Basic Income in Wales”

    This isn’t possible. You can’t just give out a UBI to a few people as a test. It’s everyone or no-one. For example, I’d be quite happy to help “test out” the idea that Govt could hand out a £1 million pounds to everyone.

    So the Govt gives me a £1 million and, yes, I say that’s great. It’s made a big difference. The idea has worked really well! Thanks very much.

  • OnceALibDem 6th Mar '19 - 8:58am

    The Prince Charles/Miners widow analogy misses the point though.

    Both are* getting a basic income paid at a flat rate which isn’t means tested. It is called the state pension which is paid regardless of wealth or income.

    (*OK it’s based on NI contributions which for both these cases may not be totally straightforward but the broad point – eligibility is not linked to wealth or income still stands)

  • Nonconformistradical 6th Mar '19 - 9:09am

    @Michael BG
    “Joe, I think you have misunderstood the point of UBI. As I stated above, it is to provide a basic income to everyone so that they are economically free to do whatever they want in life.”

    Suppose this isn’t actually possible. “economically free” implies to me some means of earning some money. Suppose what a number of people want to do satisfies them personally but doesn’t provide any income – while at the same time a lot of jobes which need to be done are not being filled and a lot of goods actually needed are not being provided (or are provided at a prohibitive price)?

  • Katharine Pindar 6th Mar '19 - 9:53am

    To end relative poverty, it seems to me that Michael BG’s proposals of March 5 (6.05 pm), of increasing welfare benefits and taking related measures would work best. I hope they will come to acceptance, and that we campaign for increased benefits immediately. We have policies for taxation increases and variations which would if implemented provide the necessary financial backing. Meantime we should be demanding what our own Manifesto set out to help the poorest people – and asking the Independents of TIG to agree that urgent action is needed.

  • Peter, I do not believe any advocates for a UBI want to “simultaneously increase every person’s” income. They normally talk of setting it as the equivalent for the Income Tax Person Allowance, so no-one paying Income Tax will benefit. They often talk of reducing benefits by an equivalent amount as well, so those of working age not in work do not benefit either. They normally talk of increasing taxation on the richer sections of society to pay for it. I haven’t seen any scheme of UBI which addresses the problem of the reduction of the Income Tax Personal Allowance on incomes over £100,000. From April those earning over £125,000 have no Income Tax Personal Allowance. I have in the past suggested increasing the employee National Insurance rate to 12% on all income to pay for some of the costs, which would affect those earning more than £50,024 from April. (Please see my article of February 2018 for other ways of paying for it – https://www.libdemvoice.org/can-we-afford-a-universal-basic-income-56572.html).

    For over £2.67 billion a year we could introduce a UBI for everyone when they turn 18, then once my suggested reforms have been implemented we could add people when they turn another age, say 25 and then increase this age by two years each year (this might cost about £660 million a year, so perhaps ten year’s cohorts could be added each time for a cost of £6.6 billion and it would only take a further 4 years to roll it out to everyone). Once it had been rolled out to everyone it could be increased towards the poverty line.

    Nonconformistradical, in a liberal society why should anyone do a job they don’t choice to do for reasons other than providing their basic needs (housing, food, light, heat etc.)?

  • Michael BG,

    there are currently large ongoing fundng needs for the NHS, Schools, Local Government, adult social care, Children services, Policing and youth services, Housing, FE colleges, Adult education, apptenticeships and vocatinal training, defence and other departments. With an ageing population pressures on the NHSm adult soocialcare and pensions in particular will increase.
    Provideing a basic income to everyone so that they are economically free to do whatever they want in life is not a function of government. Managing the economy on a full employment basis and providing a safety net for the provision of basis housing and food needs in times of illness or unemployment is. Doing so on a universal basis without the need for means testing or withdrawal of benefits is a common definition of basic income.

  • Michael BG,

    “I haven’t seen any scheme of UBI which addresses the problem of the reduction of the Income Tax Personal Allowance on incomes over £100,000. From April those earning over £125,000 have no Income Tax Personal Allowance”

    Current combined rates of tax and NI at basic rate are 32%, higher rate 42% & additional rate 47% over £150k. Change the combined rates to 32%, 42% & 50% and reinstate the £4,000 tax credit univeral. A £4,000 tax credit against a 50% top tax rate is equivalent to tax on £8,000 of income.

  • Peter Martin 6th Mar '19 - 3:25pm

    @ Michael BG,

    You’re right that it can’t work like that. The sentence before says:

    “If we were to truly provide a basic income in accordance with the definition above, then it would be either hyper inflationary or have no impact on poverty”.

    Your previous discussion with JoeB confirms that the figures he’s got in mind are an order of magnitude smaller than would be required to make any significant difference. I don’t believe it’s any exaggeration to describe the UBI as a neoliberal con-trick.

    The employment rate of Down’s syndrome people is currently about 6%. But they are quite capable of doing lots of jobs if we had the imagination to help them into employment. That’s often what they want more than anything, but they aren’t going to get it under a UBI. They’ll be told to take the pittance, go away and stop bothering anyone.

    I can recommend the talk by Dr Steven Hail below. We agree on pretty much everything except when Crystal Palace are playing my team!

    https://www.dropbox.com/sh/6dcwhra1vzb8bj3/AAC4gaJ_ZB4_jPaLvwviK_zPa?dl=0

  • Peter Martin 6th Mar '19 - 4:02pm

    @ JoeB,

    “It is not intended to be a substitute for the principal way that people earn a living through work.”

    This isn’t true. The main reason this idea of a UBI has become popular in the USA, and else where, is because of the-robots-are-going-to take-our-jobs argument. So the neoliberals have asked themselves what are they are going to do with all the surplus workers that won’t be required.

    The sensible approach would be too reduce hours and have longer holidays for everyone – if that really were to prove a problem. However, they rather have a much greater percentage of the workforce totally idle and the UBI is their proffered solution. It’s probably just caused by worry that they’d come after them with pitchforks if they let them starve.

    As I said to Michael BG the UBI is a neoliberal con trick to keep the an increased number of people in poverty but without letting them starve.

    https://www.nakedcapitalism.com/2018/04/federal-job-guarantee-not-just-better-universal-basic-income-reasonable-option-universal-basic-income-sinister.htm

  • The concept of basic income is a simple one. It is part of integrating the tax and welfare system into a streamlined system so that there is always a basic minimum income sufficient to meet the essential bare costs of living – no more no less.

    Been here before, tax credits which very quickly became a welfare benefit, with all the complexity of the benefits systems’ ‘overpayment’ clawbacks and changing rules…

    I suggest a good first step to a UCI would be to integrate the welfare system into the tax system and make “tax credits” a real tax credit. However, last time this was suggested people got upset with the idea that HMRC would know about peoples taxes and ‘benefits’.

  • Joe, it seems you have your own definition of what a UBI is and it seems to be to provide the current inadequate out of work benefit levels to everyone and claw back this from all groups except those people who currently don’t have an income because according to our current means test they do not need it!

    Change the combined rates to 32%, 42% & 50% and reinstate the £4,000 … A £4,000 tax credit against a 50% top tax rate is equivalent to tax on £8,000 of income.

    If you introduced a £4,000 Universal Basic Income and abolished the craw back at £100,000, then someone earning more than £100,000 and less than £150,000 would be better off by £4,000 a year. Even if you introduced your extra 3% at £100,000, a person earning £125,000 would receive the extra £4,000 and pay only £750 extra in tax making them £3250 better off. This doesn’t help people living in poverty, nor does it reduce inequality which you claimed.

    The Institute for Fiscal Studies talk of a marginal income tax rate of 60% at £100,000, which also doesn’t seem correct. Perhaps the answer is to increase the Income Tax rate by 16% between £100,000 and £125,000 (16% of £25,000 is £4000) making your rates 32%, 42%, 58%, 42% and 47%. I would assume most people would see these rates as problematic!

    What level of income should a single person, a couple, or either with two children have for it to be “sufficient to meet the essential bare costs of living”?

    I think it should be the poverty line as defined by the Joseph Rowntree Foundation and updated by CPI since April 2016 which are the following per week:

    Single person no children £156.10
    Single person with two children £322.74
    Couple with no children £268.95
    Couple with two children £435.60

    Plus their housing costs.

    As a liberal Joe, why do you think it is fine for anyone in the UK to live in poverty? The Joseph Rowntree Foundation state in their latest report that 14.3 million people in the UK live in poverty.

  • I would refer people back to the excellent article by Michael BG on LDV that he mentions in his comment on a UBI and combining it with benefits. And the reports that he cited from the RSA https://www.thersa.org/action-and-research/rsa-projects/economy-enterprise-manufacturing-folder/basic-income

    and Compass http://www.compassonline.org.uk/wp-content/uploads/2016/05/UniversalBasicIncomeByCompass-Spreads.pdf which was supported by the Joseph Rowntree Fund and notes: “There are very strong arguments in favour of a UBI. Such a scheme would overcome many of the problems with the existing and increasingly complex, punitive and unpopular system of social security, which in multiple ways has become a weak tool for social protection but a strong tool for waste and the humiliation of those on the very lowest incomes.”

    Many of the people coming to your food bank @David Raw are people, I would venture are probably those who have fallen down the cracks of the current system.

    There is a particular problem that the RSA notes: “Tax credits have marginal withdrawal rates near 80 percent at some (low) income levels. In the case of the Basic Income scheme laid out here, no basic rate tax payer faces a marginal withdrawal rate above 32 percent”

    Anyone who is concerned about poverty and very high effectively marginal tax rates for the low paid I would venture needs to at least seriously consider a UBI – probably combined with a means tested benefit system.

    For quite a large number of people, a minimum wage job can only pay make them £1 an hour better off – probably not enough to make work pay with the additional costs of work. Part of that is reform of the benefits system along the lines very ably set out by Michael BG but also I would add (and he has mentioned this before) reform of the council tax – I would have a local income tax as most of those on low wages are stung immediately for may be up to £1500 in council tax.

  • Michael BG,

    “The Institute for Fiscal Studies talk of a marginal income tax rate of 60% at £100,000, which also doesn’t seem correct.”

    This is correct. If adjusted net income exceeds £100,000, the basic personal allowance of £11,850 is reduced by one-half of the excess. Therefore the allowance is reduced to zero if adjusted net income is £123,700 (£100,000 +(2 x £11,850) or more. A taxpayer with income in the range £100,000 to £123,700 is subject to a marginal rate of income tax of 60% (61.5% for a Scottish taxpayer). This is simple to calculate. A £100 increase in income over £100k causes a loss of personal allowance of £50. The increase in income of £100 results in an increase in taxable income of £150 at 40% i.e. £60. Each additional £100 of income over £100 (up to £123,700) results in an additional tax payment of £60 i.e. a 60% marginal tax rate. As regards a 3% increase in the top rate, a taxpayer with an income of £1 million paying an additional 3% on £850,000 (£25,500) will pay an extra £21,500 in tax (£25,500-£4000 tax credit)
    Tackling poverty and inequality requires deliverable real world solutions. That means addressing long-term youth unemployment with job guarantees and vocational training and putting adult education and apprenticeships on par with higher education.
    This will aid in both maintaining the current levels of full employment and begin to address the chronic staffing shortages in the NHS, schools and the private sector without continued reliance on large scale inward migration from outside the EU.
    The key to tackling poverty is social housing provison sufficent to meet needs and an integrated tax and welfare system (with the 32% marginal rate of withdrwal the RSA refers to)that provides housing benefits equivalent to rents, coupled with a minimum basic income guarantee that is affordable within existing constraints.
    These are the priorities along with the fundng needs of the NHS, Schools, Local Government, adult social care, Children services, Policing and youth services, FE colleges, and other departments.
    Increasing and maintaining welfare and public service provision for pensioners, disabled and children in need will come along way ahead in funding priorities over providing an unaffordable basic income to able-bodied adults so that they are economically free to do whatever they want in life.

  • Michael 1, thank you for your supportive post. In the past lots of people using food banks were people who had been sanctioned. I think our policy is to scrap the current sanctions regime. The conditionality of current benefits can be an issue.

    My issue with Council Tax is the Coalition reform which means that the government no longer fully funds Council Tax benefit for those of working age and this has meant that in the vast majority of council areas people on benefits have to pay some Council Tax. Before the reforms lots of people of working age on benefits paid no Council Tax at all. I would like the pre-2013 national Council Tax benefit scheme restored. If the basic benefit was increased to my suggested levels then the level at which no Council Tax would be paid would increase dramatically and even with a 20% taper, which I think was the standard, people would be better off in work, especially if they were being paid at 70% of their regions medium earnings.

  • Joe, are you sure that the craw back on incomes over £100,000 when their personal allowance is reduced is at 40% and not 20%?

    I note you have not answered my earlier questions:

    What level of income should a single person, a couple, or either with two children have for it to be “sufficient to meet the essential bare costs of living”?

    As a liberal Joe, why do you think it is fine for anyone in the UK to live in poverty?

    I expect you are aware that 2 million people receive Employment and Support Allowance; they are not fit to work but the government believes they should live in poverty. Do you agree?

    You must be aware that I believe the government should run the economy to ensure the economy is at full employment and that I believe the government should encourage businesses to set up in regions with the highest levels of unemployment, that the government should provide a training guarantee to people who have been unemployed for more than a few months as well as a voluntary job guarantee scheme where people are employed using their current job skills to keep them current. And that I believe more than 300,000 houses should be built every year of which at least 150,000 should be social houses for rent.

    I do agree with you when you write, “Increasing and maintaining welfare and public service provision for pensioners, disabled and children in need will come along way ahead in funding priorities over providing an … basic income to able-bodied adults so that they are economically free to do whatever they want in life.” This is why I call for the reform of the benefits system building on our current policies so no-one in the UK is living in poverty and then and only then should a UBI be introduced (and rolled out over 10 years or more and then increased towards the poverty line as economic growth allows).

    I am very happy that I have persuaded you that a UBI is not a high priority and should wait until no pensioner, child or disabled person in the UK lives in poverty. I hope to persuade you that the one million unemployed people living in poverty are a higher priority than those people who under our current means tested benefit system receive no benefits because they are judged not to need it.

  • Peter Davies 7th Mar '19 - 7:23am

    UBI needs to be introduced as part of a balanced budget including raising some taxes. Any “trial” in which you you just introduce the benefit without the tax is meaningless. If you want to dip your toe in the water and get some meaningful data before diving in then just introduce it for everyone at a very low level where the effect would be safely low but measurable.

    If the Welsh Assembly wants to advance our understanding of benefits policy, they could try testing our existing policy of getting rid of sanctions in a few areas and see whether it had any effect on employment, crime, health etc.

  • Peter Davies 7th Mar '19 - 7:36am

    One place that is worth looking at is Alaska. It’s a special case because it is funded by oil revenue but it is universal and the effects seem to be just what you’d expect. Some people have moved from full time well paid jobs to shorter hours or more fulfilling but worse paid work but the economic effect is matched by people moving into part-time or self-employed status from unemployed. Obviously, extreme poverty has been greatly reduced.

  • Joseph Bourke 7th Mar '19 - 11:49am

    Peter Davies,

    “UBI needs to be introduced as part of a balanced budget including raising some taxes”. I think this is reality. The level of benefits is determined by what voters/taxpayers find acceptable over a period of time – increasing in good economic times and stagnating during poorer economic times, as Polly Toynbee points out in her article.

    Survey data indicates half of Britons would support a basic income https://www.independent.co.uk/news/uk/home-news/universal-basic-income-benefits-unemployment-a7939551.html ,but this drops dramatically when the tax increases required are disclosed. Economists from the IPR released a policy brief looking into the feasibility and practicalities of introducing UBI in the UK. It argued that, if conceived as a replacement for most existing benefits, an affordable UBI would be inadequate in terms of coverage and support to individuals.
    For example, a UBI paying £73.10 per week for adults of working age that replaced existing benefits would cost an additional £143bn over existing social security expenditure.

    It would also require large increases in income tax revenue – but would increase working age poverty by approximately 7 per cent and leave 42 per cent of households with less disposable income.
    Malcolm Torry has done work on developing a more feasible basic income based on merging tax and national insurance and increasing the rate of tax by 3% that would provide a basic income of circa £60 per week for a working age adult https://www.iser.essex.ac.uk/research/publications/working-papers/euromod/em5-16.pdf

    Jane Dodds in Wales is no dreamer. She has a feet planted firmly In the ground. The trial in Finland was based around unconditional payments of around £495 per month (approx. the level of unemployment benefit) to 2,000 unemployed individuals, without any requirement to look for work as a condition of the payment. A similar type trial (paying an unconditional £4,000 per year in place of unemployment benefit) to a small pool of unemployed could be undertaken by the Welsh government. The trial was ended by the Finnish Government https://www.theguardian.com/world/2018/apr/23/finland-to-end-basic-income-trial-after-two-years, saying they were looking into trialling alternative welfare schemes, including a universal credit system similar to the UK.

  • Peter Martin 7th Mar '19 - 12:39pm

    @ Peter Davies,

    “UBI needs to be introduced as part of a balanced budget ….”

    The quest for a balanced budget is another neo-liberal con trick. The Government creates money as it spends. That’s where it comes from. It gets some of it back when it taxes but it obviously can’t get more back than it’s created in the first place.

  • Peter Martin 7th Mar '19 - 12:53pm

    A UBI is a Universal Basic Income. So can anyone explain how you trial a UBI without it being Universal?

    You’ll simply be ignoring the macroeconomic effects of a UBI by doing that. And, that’s where the real problems with the UBI lie.

  • Joe, you quote from the article you linked to:

    “It argued that, if conceived as a replacement for most existing benefits, an affordable UBI would be inadequate in terms of coverage and support to individuals.

    “For example, a UBI paying £73.10 per week for adults of working age that replaced existing benefits would cost an additional £143bn over existing social security expenditure.

    “It would also require large increases in income tax revenue – but would increase working age poverty by approximately 7 per cent and leave 42 per cent of households with less disposable income.”

    Replacing existing benefits and the Income Tax Personal Allowance with a UBI doesn’t transfer money to those on benefits or those paying income tax, as I have pointed out it mainly transfers money to people who currently do not receive any income and are dependents of people who receive enough income as deemed by our means testing system.

    I note that you wrote, “increasing (benefits) in good economic times”, which implies that you might be open to the idea of using the government’s increased income due to economic growth to fund increases to the general levels of benefit.

    Perhaps the first stage in introducing a UBI is to remove conditionality for the basic working age benefits.

  • @Michael BG

    Obviously more generous council tax benefit would be better than the current situation. I would though like to see a local income tax which saves having to faff around council tax “benefit”. You would have your personal allowance at £12k and at a guess would pay 4% above that. (I think when we had a fully worked out scheme we said that 3.5% with a lower personal allowance at the time would be cost neutral).

    You would make those on minimum wage around £1000 better off and substantially help those still on low wages but earning a bit more than the minimum. Also richer people are substantially under-taxed as regards local taxation. We also see income tax as a fair way to pay for national government expenditure.

    There is also a political point in that “axing the tax” and saving people on average £400 was always a very popular local campaign tool . A Conservative councillor who defected to us and was probably the best Tory campaigner I have come across (even if he did a nick a lot of our campaign methods!) says that they found it cost them a lot of Soft Conservative support. (Whereas increasing council tax benefit doesn’t).

  • Michael 1, I too remember when a Local Income Tax was party policy, but from looking on the internet around about 2008 Vince Cable removed it as being a high level commitment (in the same way as he ensured we ditched negative income tax and didn’t adopt reforming inheritance tax). In our 2010 manifesto it had been down-graded to only piloting Local Income Tax and I think by 2013 it had been dropped. We now talk about taxing wealth and having a Land Value Tax. The argument then becomes which is fairer taxing income or wealth?

    I think an easier reform than introducing a Local Income Tax would be replacing the current Council Tax with a flat rate on the value of the property which would make it fairer as currently the percentage is higher for the lower value properties.

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