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Towards a fairer society: Universal Basic Income vs Guaranteed Basic Income

On Saturday conference will discuss an important paper about tackling the many sources of unfairness in our society.  I wrote about this for Liberal Democrat Voice in September when we were expecting to discuss them, and, given the importance of the issues, thought it worth republishing the substance of that article now.

The paper on fairness includes essential short term measures to deal with the cost of living crisis but its main focus is more strategic – covering lifelong employment support, more power to local communities and better workforce protections.

The conference motion also offers a choice – and conference will vote between two ambitious long term proposals to end poverty – a Universal Basic Income (UBI), and a Guaranteed Basic Income (GBI).

(There is also a third option which reserves judgement until both of these approaches have been fully tested over a number of years.)

The UBI proposal scraps income tax and national insurance personal allowances for everyone of working age, so that we all pay tax and national insurance on the first pound that we receive. That costs anyone currently paying tax £78 a week. The proposal also introduces a new payment to all working age adults of £78 (the “Universal Basic Income”) – so if you were previously paying tax you end up in the same place as before, but if you aren’t earning enough to pay tax, you are better off.  The current benefits system is retained but the UBI is treated as income under it – so that benefits are reduced; someone on Universal Credit would typically see a net benefit of £35 a week.  This way of delivering UBI is the output of two years of development by working groups – on which I served – and is very similar to proposals by some of the leading think tanks advocating UBI.

The GBI proposal is more directly targeted on ensuring everyone has a decent minimum standard of living. It establishes a commitment over time to get all households to a certain income level, and uses a reformed version of the existing benefits system to steadily increase the amount of this ‘guaranteed base’. An independent commission is set up to hold the government to account in terms of setting the right level over time – in much the same way as has been successfully done with the minimum wage.

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Towards a Fairer Society: Universal Basic Income vs Guaranteed Basic Income

The country faces an immediate cost of living crisis – requiring drastic action. This needs short term measures which can be funded through taxes on the additional short term profits of energy companies or through increase in debt. Measures which wouldn’t be sustainable long term but are needed to address today’s issues.

But we also need a long term strategy to make our unfair society better, and in particular, to reduce levels of poverty which pre-existed the current crisis. The conference paper and the debate on a Fairer Society address this. The paper covers policies which will make society fairer including lifelong employment support, more power to local communities and better workforce protections.

But in one specific area the paper offers a choice – and conference will vote between two ambitious long term proposals to end poverty – a Universal Basic Income (“UBI”), and a Guaranteed Basic Income (“GBI”).

(There is also a third option which reserves judgement until both of these have been fully tested over a number of years.)

The UBI proposal scraps income tax and national insurance personal allowances for everyone of working age, so that we all pay tax and national insurance on the first pound that we receive. That costs anyone currently paying tax £78 a week. The proposal also introduces a new payment to all working age adults of £78 (the ‘Universal Basic Income”) – so if you were previously paying tax you end up in the same place as before, but if you aren’t earning enough to pay tax, you are better off.  The current benefits system is retained but the UBI is treated as ‘income’ under it – so that benefits are reduced; someone on Universal Credit would typically see a net benefit of £35 a week.  This way of delivering UBI is the output of two years of development by working groups – on which I served – and is very similar to proposals by some of the leading think tanks advocating UBI.

The GBI proposal is more directly targeted on ensuring everyone has a decent minimum standard of living. It establishes a commitment over time to get all households to a certain income level, and uses a reformed version of the existing benefits system to steadily increase the amount of this ‘guaranteed base’. An independent commission is set up to hold the government to account in terms of setting the right level over time – in much the same way as has been successfully done with the minimum wage.

Posted in Op-eds | Also tagged | 19 Comments
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