Minimum income: From Finnish trial to Lib Dem policy?

The Finnish Basic Income experiment ended at the start of the year, and preliminary results have now been reported publicly. Certain sections of the press blared out that the trial, which paid 2000 unemployed people an unconditional €560/month income for two years, was a “failure” – but was it? It is true that the experiment did not lead to significant increases in the experiment group finding work, but should we be judging the success or failure of a benefits system solely by whether it pushes people into any job that can be found? Our values and policy as Liberal Democrats should lead us toward different analyses.

Looking at the results closely tells a different, important, and encouraging story from a liberal perspective. Despite those opposed to guaranteed incomes claiming that a basic income would lead to nobody wanting to work, the data shows no drop in work-seeking among Finland’s experiment group. The fact that there was no rise either suggests that marginal income effects may be less important in influencing work-seeking than some had imagined; a lack of suitable jobs and retraining opportunities is not something for which any social security system will provide magic bullets. Other potential positive economic effects of a guaranteed income are, however, likely to have been invisible in this sparse study – increasing the spending power of the worst off and building a labour market that can be more flexible in retraining are significant potential positives that would only be effectively visible at scale.

The most important results from Finland’s trial, in any case, are the effects on wellbeing. The experiment group reported lower stress levels and better health outcomes than their counterparts in the control group. This is where we should be getting excited about the possibilities of a minimum income – freeing people from the psychological strain caused by income insecurity, freeing people to make the most of opportunities and build stronger communities, freeing people to live happier lives. Not only that, but consider the strain on other public services, the NHS in particular, caused by health issues that are largely down to poverty. Taking steps towards eradicating those ills is both smart and compassionate politics.

The Finnish trial, in short, has proven that a guaranteed minimum income can work, and do people real good. It’s imperative that we Liberal Democrats get the chance to debate policy on this area, and soon. In many ways some form of income guarantee already is our implied policy, given that as of our 2016 conference debate we’re committed to the complete abolition of benefit sanctions to create a minimum income floor; that, alongside our strong position on reversing social security cuts in our 2017 manifesto, makes developing a more consistently structured form of unconditional social security an obvious policy development for the party. It’s would also give us a powerfully distinctive policy to campaign on, and is increasingly being embraced by people from across the party, including a prominent endorsement from Welsh Lib Dem leader Jane Dodds as well as backing from party groups like the Young Liberals, the Radical Association, and the Social Liberal Forum.

There’s an opportunity to make your voice heard on this issue at Spring Conference, with the consultation session for the A Fairer Share For All working group happening. The group is actively considering unconditional benefit systems alongside other measures for relieving poverty; if you want to give them your views in person, then this Friday, March 15, they’re consulting from 3 to 5.30pm, at the Novotel, Room 3. You can also respond to their consultation paper by email.

A final thought, as Brexit looms: a little over a century ago, the last Liberal majority government came to office on a simple, but deadly effective, campaign – balancing a campaign defending free trade on the one hand with having the ability to pay for pensions and national insurance on the other, and tying the two together as a single compelling package. Might the combination of fighting to remain in or rejoin the world’s largest single market, along with a huge liberal step forward in how we provide social security, provide us with a similarly powerful message to take into the next election?

* James Baillie is a member and activist from Breckland and a former chair of the Lib Dems' Radical Association. He is currently a doctoral student at the University of Vienna, where he works on digital studies of medieval Georgia. He blogs about politics at thoughtsofprogress.wordpress.com.

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15 Comments

  • The fear that taking away the threat of sanctions would stop people looking for work has been proven to be the bollocks that liberals always knew it was. People mostly like having a job, even if you don’t need it for security – you get more money, you get a structure for your life, you get to feel like you’re contributing to society.

    But giving people security so they can tell their abusive boss where to go? Creating a situation where they can choose to spend three years trying to get a band off the ground? Offering a safety net when someone starts a new business? That’s freedom from poverty and freedom from conformity. That’s what the Liberal Democrats are all about.

    Anyone want to design a benefits sanction that can tell the difference between the Noel Gallagher spending years not working and writing Definitely Maybe and someone else just not working?

    Let’s just not try. There’s plenty of incentive to get a job when there are decent jobs around. If people want training, then provide it – but don’t force people into waste-of-time training courses just to get their benefits (I have an NVQ in IT from one such pointless course; I was already an experienced programmer at the time; I never put it on my CV).

    There are lots of ways of ensuring there’s an unconditional income for everyone rather than having a benefits system with sanctions. Let’s design a liberal one before John McDonnell decides to create a socialist one.

  • Well said James, and Richard above.

    What could be more liberal than a radical policy that will improve people’s wellbeing and provide the opportunity to make genuine (rather than forced) life choices.

  • Richard Underhill 12th Mar '19 - 5:55pm

    Did the Greens try this in the UK? If so, how successful was it?

  • I am very enthusiastic about this. I have registered for conference. I am keen that the party explore the reasons for ill health. The results of things like bullying at work are not only on the health of the people involved, but we can now trace the problems for the children, thanks to developments in epigenetics.
    We must consider the details of any policy, but also how to package it. .

  • Paul Holmes 12th Mar '19 - 7:35pm

    The Finnish experiment involved giving just under £6,000 a year (which they would still get even if they got a job) to a control group who were already on unemployment benefits and comparing the outcomes over 2 years with a similar control group in the same area who got ‘normal’ benefits and conditions. The Finns have judged that the money made no difference at all to the outcomes as to who got jobs over the 2 year period and have closed the experiment down. Much as so far as happened in other countries experiments/pilots.

    Those advocating UBI need to be clear up front about:
    1. Is it Universal? -i.e. all individuals including children or all adults (however defined) or more specific groups such as Benefit claimants of one category or another (in which case it isn’t UBI).
    2. What financial level? Different pilots and proposals have involved everything from a couple of thousand a year to the £6,000 in Finland to suggestions of a ‘Living Wage’ (however defined). Which is it?
    3. Is it an unconditional entitlement or is it for example subject to Means Testing of some kind? Would the Royal Family or Sir Philip Green get it for example -or only people on lower incomes (in which case it isn’t UBI). Would it, in the latter case, be removed on some sort of taper if they start work or have an inheritance from a deceased relative? Or is it a fixed entitlement regardless of any change in personal finances? Is it instead of other benefits or as well as existing benefits?

    Only when those parameters are clear can we know the cost in £Billions (Recipients times level of cash per person) and whether it is remotely affordable. The devil is in this detail. Some for example say you can help make it affordable by scrapping other Benefits -but then the people most in need would probably be worse off so that others, who are already financially better off, can get UBI.

  • James Baillie, paying 2000 unemployed people €560 a month unconditionally is not a Universal Basic Income scheme because it doesn’t pay this money to people who means testing show they do not require it. It is this huge transfer to people who don’t need it which is a major down side of a Universal Basic Income. However, we can see this trail as an increase in welfare benefits and the abolition of the conditions except the means test. I would like party policy to be not only to end sanctions but to increase the benefit level to the poverty level so no-one on benefits would live in poverty.

  • Paul Holmes 13th Mar '19 - 9:50am

    @Andrew Hickey. But it is not remotely that simple or clear cut Andrew. Read 10 online comments on UBI and you are likely to get 10 different assumptions about what it is and how it is financed.

    Take the article at the head of this thread which interchangeably uses phrases such as Basic Income; Guaranteed Minimum Income; Unconditional Benefit System and Social Security but does not apply the word Universal. Yet many -as in recent LD Articles/threads – do use the phrase Universal Basic Income. Unless the definition is clear many enthusiasts are likely to be disappointed somewhere down the line. The ‘Boaty Mac Boat Face’ school of online policy making however does not produce such clarity.

  • We need to have in the party a mechanism to deal with developing policies. A mechanism which allows all members to participate. I accept that this is not easy. There are very few models to use. I have a booklet called “Participation Works! 21 techniques of community participation for the 21st century” published by the New Economics Foundation, no date given. So there are some starting points, and we need to find ways of building up enthusiasm amongst all our members. Resources are needed of course, but we could simply consider what what message we are sending to members by sending messages asking for money, and showing no interest in their views.
    On a plus side there do not seem to be the telephone calls which I used to get asking for money. They put a number of members off.

  • James Baillie 13th Mar '19 - 4:13pm

    I did not use any of the terms in my article interchangeably. In my writings on this subject I consistently use “minimum income” or “guaranteed income” as a general term for unconditional minima in social security, and “basic income” or as the term for the mechanism of providing that as a flat-rate payment with no taper. I didn’t use the term universal in this piece because, as you point out, the Finnish system wasn’t. All basic incomes are guaranteed minimum incomes, but not vice versa, as other delivery mechanisms such as the Negative Income Tax (which is under consideration by Paul Noblet’s working group) also exist.

    Actually, though, the delivery mechanism makes far less difference to affordability than you seem to think. The distributional effects of a true UBI, an unconditional universal credit, a negative income tax, etc, are all really pretty similar; in the case of UBI, higher personal taxation is balanced out for most median-income workers by the UBI itself (and indeed could potentially be hybridised with an NIT delivery mechanism so those payments just cancel out on people’s tax bill). The financial level is the core question, and I’m absolutely clear that it should cover basic living costs, and that we’ll need to raise taxes to provide that. In the long run (and again this is a complexifier for the affordability argument) the end of work conditionality is likely to provide lower costs across other services based on the available evidence, too, so a rough calculation of money x people as you suggest is likely to give an inaccurately pessimistic answer.

    One clarification to Michael BG: the FInnish trial did not represent an increase in benefits. In fact, across total benefits claimed (including other elements), claims were if anything marginally lower among the trial group. It should certainly be seen as a trial of unconditionality though, and an endorsement of that.

  • Paul Holmes 13th Mar '19 - 8:07pm

    James -I’m still not clear. Are you arguing for a Universal Basic Income or one targeted at those on Benefits?

    If it is Universal does that mean 18 -66 year olds (and rising as pension age does). Or all above 18 including Pensioners. Or starting at 16?

    Also how do you define Basic Living Costs (which vary depending on circumstances)? The Poverty line level for a single adult was judged by the Joseph Rowntree Trust to be £7,696 in 2016/17 now £8,164 at April 2019. For a single adult with 2 children it was £15,912 now £16,900. For some disabilities basic costs are higher still. Which figure/figures would you pitch your UBI at?

  • Alfred Emery 14th Mar '19 - 1:07pm

    I seem to remember that a Basic Income Scheme was Liberal Party policy back in the 1970’s. Can anyone please remind me why it was scrapped ?

  • @ Alfred Emery

    In about 2008 there was a working group lead by Vince Cable and I think it might have been then that Vince convinced conference to scrap this policy. He also ensured at about this time that we rejected reforming inheritance tax in the way which is now party policy. Vince was a leading voice in moving us from being left of New Labour to be closer to the Tories on economics and budgetary issues.

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