Universal Basic Income and the Welsh Perspective

In Wales, like the rest of the UK, we are seeing increasing homelessness and food bank usage. The UK Government continues to roll out a Universal Credit system that will exacerbate this poverty. No compassionate politician can resign themselves to worsening poverty. We need to look for progressive solutions and to continue our opposition to government policies that demonise the poor.

One possible solution is a Universal Basic Income (UBI), an idea that has been the subject of much debate across the political spectrum, including within our own party. UBI is a conviction that people seek purpose, and – if given the opportunity and freedom – will usually make the best decisions about their lives – a great Liberal principle. It must be a conversation about how we live, not just how we earn.

Opponents of UBI argue that it would damage economic growth by leading fewer people to work, but I think this view underestimates people. Money is only one factor driving us to work. I suspect that most who work primarily for money would take UBI as an opportunity to make more money, rather than not work at all.

While many would likely choose to work less, this is not necessarily bad. 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, the most significant being whether a UBI generous enough to be worthwhile could still be affordable. There is also the challenge of how it would be funded.

That is why I’m so keen on piloting UBI to find out just how practical an idea it is. Apart from one major research study in Canada between 1974 to 1979, showing decreased hospitalisation rates, lower contacts with practitioners for mental health concerns and more young people staying on in schools, there is little evidence on the efficacy of UBI. The Welsh Liberal Democrats are proud to be an evidence-based party, and I would seek to establish as large an evidence base as possible on the likely impacts of UBI before a discussion on it as policy.

Various UBI trials are ongoing in Finland, Barcelona, Hamilton in Canada and Scotland, with a further study in California expected next year. We should carefully monitor and consider the results of these trials, but I also want to create an evidence base in Wales. I’d like the UK Government to allow willing Welsh councils to pilot forms of UBI. Through trials in Wales and hopefully across the UK, we’ll gain the needed evidence on the effectiveness and affordability of UBI.

I’d like to finish with a quote from someone involved in the pilot in Hamilton, Canada:

“Basic income has given me the freedom to live with some dignity with little extra money to buy the essentials in life. I want to make the most of this opportunity and work up to a full-time job eventually – I feel much more in control of my own life.”

Surely this is the type of compassionate and liberal approach needed to fight poverty and improve well-being. A system that improves lives allows people to live in dignity and gives everyone a little more control over their own destiny. I hope it is a system we will one day see working in Wales.

* Jane Dodds is Leader of the Welsh Liberal Democrats

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  • Peter Martin 29th Aug '18 - 8:37am

    “I suspect that most who work primarily for money would take UBI as an opportunity to make more money, rather than not work at all.”

    If you’re going to introduce a UBI you need to base that policy on more than just a suspicion of what is likely to happen. When people retire with a decent pension, they tend to not do any paid work at all. They usually don’t take the “opportunity to make more money”, even though they may be physically capable, they are happy to be not working.

    Anyone who has raised children into their teenage years will know that it can be quite difficult to get them out of bed in the mornings. I was always able to say to them “Look if you want that Ipod, new tennis racket, or whatever it was they did want, no-one is going to give you the money if you just want to lie in bed!” But we now have a lots of suggestions that we should do just that!

    We can’t have it both ways. We can’t say we are happy for people to not work if we want more fruit pickers, teachers, doctors, and nurses etc.

    So by all means lets make sure everyone has a decent income by offering them paid work, at a living wage and under decent conditions, if they are capable and if they need it. And if they don’t need it they don’t have to do it.

  • Martin Land 29th Aug '18 - 8:50am

    ‘people who oppose UBI’. They are called ‘Economists’.

  • William Fowler 29th Aug '18 - 8:53am

    A lot of pensioners do work to top up their state pension, especially if they have to cover rent rather than owning their own home, it would all depend on the level at which UBI is set… the country, almost bankrupt and going to get worse post Brexit, could only afford survival money so there would be sudden enthusiasm for fruit picking and the like once people realise that they would still get the UBI. Many would be horrified to find that they have to pay tax for the first time in their lives as the personal tax allowance would be gone, though. A week’s work would pocket enough money to buy a smart phone or 40 inch TV that they would not be able to afford on UBI so the incentive is still there.

  • Chris Bertram 29th Aug '18 - 8:58am

    A response to the launch of “Ein Gwlad”, maybe? They’re claiming to be proposing a form of Citizen’s Income.

    But I wouldn’t worry too much about them. Their launch statement was as bland as it’s possible to be without mentioning being in favour of motherhood and apple pie. We must hope that they prosper *just* enough to take votes off Plaid Cymru (who have their own troubles brewing), without hurting us.

  • Paul Reynolds 29th Aug '18 - 9:29am

    UBI is a legitimate proposal worthy of attention, and serious analysis, with many proponents and trials in some countries. It would have more supporters if many of the fundamental questions about it were addressed by its proponents. These include the cost (cash cost less tax income from multiplier effects), what happens to the tax system (the thorny problem of taxing people and then giving it back), the impact on the welfare system, defining entitlements (British citizens only etc), issues relating to the self-employed, application to those currently ‘not economically active’, and so on. It is incumbent on the proponents of UBI to set out how it would work in practice, and address potential unintended conseqences, so a wider audience can understand it.

  • Way back in the 1970s when the UK had double digit unemployment, I used to argue that if some people didn’t want to work they were helping those who did. However the employment patterns of those days were very different to what we experience now. A UBI pilot (or research programme) could be very valuable, presumably taking into account today’s underemployment and proliferation of crap jobs masquerading as “Full Employment”.

  • Peter Martin 29th Aug '18 - 9:54am

    @ Martin,

    “One never knows where Peter Martin is coming from……”

    You mean you never know! Some people are so fixated on the money aspect of our economy that they never do get it. The penny, so to speak, never drops.

    But, if I can have another try, it is to say that the real resources of the UK are largely the people that work within our economy. We have some oil, and gas but that’s not to be relied upon. Even that doesn’t just load itself into the tankers, or put itself into the pipes. Someone needs to make it happen.

    Therefore we need to organise our economy so that everyone is doing whatever is necessary to keep things going. It doesn’t mean we all have to work 50 hours per week for 48 weeks of the year. But we do need to do something and share out the proceeds fairly afterwards! Therefore, we should aim to minimise levels of underemployment and unemployment.

    We don’t want to be paying people for doing nothing! Especially if they have other, quite adequate sources of income!

  • The objections of people who might see UBI as a “handout” may be alleviated if the government invests in the robotics industry (that is expected to displace large numbers of jobs) and then uses its share of the profits of increased efficiency and productivity to pay UBI at least partly as a “People’s Dividend”. That way, citizens, as part owners, can no more be seen as ‘undeserving’ or ‘lazy’ than other shareholders of other companies who receive unearned income.

  • Peter Martin 29th Aug '18 - 10:20am

    @ Andrew Toye,

    I’ve no problem with robotics. I don’t, though, see many robots mowing the lawns or weeding the flower beds in my local park. The council don’t ‘have the money’ so the park looks run down at the same time as unemployment/underemployment and general levels of poverty in the area is high.

    If we do have more robots, why not use them to allow the rest of the human workforce to have a reduced working week? What’s the point, or the fairness, in having some being paid for doing nothing while the others have to work for as many hours as they ever previously did?

  • I don’t think UBI would lead to fewer people working but it’d instead increase wages for all that have it. Over the past few decades we’ve seen a dramatic decrease in labour bargaining power due to the collapse of the unions but we can’t go back to the union model because of how disastrous it was (Winter of Discontent), so we’ve been struggling to find a way to increase labour bargaining power without building massive protectionist groups as we saw with unions in the past. One way I really think would help would be to introduce that UBI, allowing all that have it the ability to withdraw their labour and continue to live at a decent level if they feel they aren’t being treated right by their employers. It aligns very well with liberal market-based principles unlike traditional British union models.

  • Splendid piece by Jane, this issue needs to be kept near the top of the political agenda and good luck to the Welsh party.
    Still a number of people here trying to undermine the policy by looking at the small print. Surely the first thing to do is to agree (or not) whether this is in principal an idea that will support our liberal goals and THEN work out the nitty gritty. For those worried about the cost, remember that it will be taxed, it will take a great many out of welfare and allow us to spend less on the administration of welfare. Then add on the less tangible benefits such as the releasing of creative energy from those no longer tied into jobs they hate but can’t afford to leave.
    At a purely political level, I understand labour have already embraced this idea and they will reap the electoral benefit. Perhaps this is a litmus test as to whether we really are a progressive party ?

  • Lorenzo Cherin 29th Aug '18 - 1:29pm

    Jane Dodds is right to bring this forward.

    It could be very in keeping with the views of our kind of a party.

    The left should hate it because it renders much of the staff redundant in the public sector unions at Job Centre Plus.

    The right should hate it because it renders very much against their obsession, with not giving something for nothing.

    Both would hate it because it gives control, not to draconian staff or government paymasters, but to individuals.

    That is radical.

  • @Peter Martin @Simon McGrath

    It is why we need evidence to assess the pros and cons. And we need to think about and not have a kneejerk reaction – something normally @Peter Martin you argue against in your posts: http://www.compassonline.org.uk/wp-content/uploads/2016/05/UniversalBasicIncomeByCompass-Spreads.pdf

    discusses a UBI. And it notes some of the possible positives on work: “by reducing the impact of the poverty trap, and reducing the risk of losing benefit entitlement – while
    also giving more choice over the way we organise our lives, including through work.”

    People facing losing a large part of the benefits for a precarious job may be more likely to still take the risk if they have the safety net of a UBI.

    To be fair Compass also reports on temporary trials in USA and Canada of a level of drop-out “among primary earners (of the order of 5%) and higher among secondary earners (notably young mothers, teenagers in education and those about to retire), and some workers took longer between jobs.”

    Some of this may be bad, some may be good. People looking for work longer may well mean them finding a higher skilled job that benefits the economy. I think that parents/carers being able to spend more time if they so choose with their children is a benefit. It can provide the space and time for people to try new things and learn new skills – all vital to an economy.

    People have used similar arguments to yours before:

    Unemployment benefit and welfare? People won’t work. Child benefit? People will have more children. State Pensions? People should be prudent and provide for themselves. Free Health care? Ditto.

    In general we have moved away from the workhouse. I am a supporter of capitalism. But I am aware very much that it deals a random and unfair hand. The care worker contributes as much if not more to society as the Premier League footballer. Now we redistribute from the footballer to the care worker but I am also strongly in favour of universal and non-means tested benefits as they have wide acceptance and prevent people from falling down the cracks such as with universal credit and pension credit.

    There is also a social justice element – the land and its resources belong to all of us but through luck, violence of their ancestors, favouritism etc. – some lucky people have got a unfair share. Redistribution of that is fair.

  • William Fowler 29th Aug '18 - 2:39pm

    “can you explain why you think it would be OK to tax welsh people who go to work more so that other people who could work but choose not to can stay at home and play computer games/ watch rubiish TV etc. ?”

    Working people would also get UBI but lose the personal tax allowance, so the lower earners would get the most benefit but the govn would have to tighten up various loopholes, including treating capital gains and perhaps inheritance money as taxable income… would also need a strict residence test to stop foreigner turning up and claiming it (crashing the system fiscally) which would have the benefit of making low skilled work much less attractive for EU citizens as there would be no personal tax allowance, thus making freedom of movement move acceptable to leavers if there is a second vote.

    You could also replace the state pension with UBI but upped in amount at a certain age but subject to the same 35 year test (residence rather than NI contributions) and then you could incorporate NI into income tax, with combined rates favouring the low paid. If you were feeling really enterprising you could get rid of council tax and replace it with local income tax at the same time, again favouring the low paid, the overall amount of money taxed and spent in line with the current situation.

  • I’m one of the optimists that believes most people would react positively to a UBI regime. I see many benefits including reduced bureaucracy, supporting further education, greater labour market flexibility etc., but possibly the most liberal is that it would require bad employers to treat employees better.

    At the moment, if you have a crap job where your employer treats you badly, and you leave “voluntarily”, then you can have your access to benefits restricted for up to 26 weeks. Unless you are willing and able to make a constructive dismissal case or have another job immediately lined up, this traps people in bad jobs because they can’t afford to leave. It becomes a modern form of Indentured Servitude.

    With a UBI safety net, people would be free to leave bad employers without fear of absolute poverty, and so those employers would need to treat employees better in order to retain staff.

    For Peter Martin – I think most people envisage UBI at a minimal subsistence level to pay for food and rent, and not enough to pay for iPods and tennis rackets…..

  • Peter Martin 29th Aug '18 - 5:22pm

    @ William Fowler,

    “Working people would also get UBI but lose the personal tax allowance”

    I think Jane Dodds might have forgotten to mention this! As more people would qualify for a UBI than currently pay income tax, they’d probably have to lose more than their personal tax allowance, just to get back a lesser amount in terms of a UBI. Of course the Govt could just create the extra money but there would be an inflation risk.

    When you start making these kinds of changes you’re bound to upset more people than you please and that means you’ll lose more votes than you gain. That’s probably why it won’t happen.

  • @Peter Martin

    A bit away from UBI and I am thinking as I go:

    The personal allowance is worth £2,370 to those earning over £11,850 a year or £45 a week. You could give everyone £2,370 and tax them at 20% on their whole income and also take it off the benefit entitlement. It is likely that most of those earning up to £11,850 are getting at least £2,370 in benefits – housing benefit, tax credits.

    The extra cost to Government would obviously be those who are not economic active and not in receipt of at least £2,370 in benefits. The upside to people would be that they would know that in the complicated maze of benefits they wold get a guaranteed -£2,370.

    But I don’t see UBI in that way as (nearly) fiscally neutral – but as collective provisions – just as pensions, healthcare, benefits generally are and as redistributive. And we are may be saying to people – you may have periods when if you like you take a “sabbatical” from being economically active but that has benefits to society and society – volunteering, improving your skills, being a political activist (!), a thinker, caring for parents, children, grandchildren, developing a new business and then are hugely economically active again. Just as we say to people you don’t need to be economically active again just as if you are a pensioner we say you can take a break from being economically active or a young parent.

  • Peter Hirst 30th Aug '18 - 1:49pm

    I feel UBI should be tied, even if loosely to efforts to be self-funding. No-one should want to be dependent on the state for more than the shortest time. Help and support should be available and charity and voluntary work should count as fulfilling the requirements.

  • Innocent Bystander 30th Aug '18 - 3:58pm

    “I understand labour have already embraced this idea and they will reap the electoral benefit.”

    Or the opposite. Labour’s plan to follow the “Maduro School” of economic success is its greatest weakness and the nation’s dire peril. I can only hope that the voters will see through Labour’s Magic Money Tree but they may well be seduced into believing that tax increases will only affect “other people” and the “tax avoiders” rather than themselves.

  • There is a depressingly large proportion of very illiberal opinion expressed here about UBI. (I am speaking of the general tenor so far, not necessarily any recent contribution.) Broad generalisations based more on prejudice against ‘benefit scroungers’ (though not mentioned as such), and very little attempt to argue from facts such as the current Office for National Statistics (ONS) figures for Household Income by Quintile.

    Never mind the actual figures, for now. If you plot household incomes after Benefits and Taxes on the same graph as those before T and B have been taken and distributed you get a shallow curve crossing a steeper curve: the incomes of the poor before being less than they are after, and vice versa for the rich. With not much tweaking the same pair of curves could be obtained by the state paying a UBI from adjustments in tax rates.

    The benefits would be obvious, especially for the poor, for they would now feel they were getting a share in the wealth which the nation as a whole creates, without the demeaning and frustrating humiliations of having to squeeze a ‘benefit’ out of grudging government functionaries. The relative statuses or affluences of the Joneses et al would be unchanged, so no cause for hard feelings except perhaps from the very rich — people now generally felt to be excessively and unfairly rich. The whole nation would feel more comfortable and less either bitter or guilty. And less government spending (ie less taxation) would be required by the actual running of the bureaucratic machinery. And the poorer households, even if some would be not much better off in terms of income, would lead lives of much greater confidence and less anxiety. And . . . .

    Most of the objections so far have been the jerking of illiberal knees, and that is disappointing. I believe UBI is exactly the kind of radical and Liberal and democratic idea that the recent Ashdown Prize competition ought to have thrown up, and that it ought now to be very seriously considered as a major plank in a future manifesto platform. It may be too late to educate the electorate in time for the next election, but it is not too soon to begin to elaborate and promote discussion, within the party and beyond it. Peter Martin, I think, has completely missed the point.

  • Peter Martin 31st Aug '18 - 3:15pm

    @ Roger Lake,

    “There is a depressingly large proportion of very illiberal opinion expressed here about UBI.”

    It depends what you mean by ‘illiberal”. There’s always been a worry about what to do with those who can’t manage, often through no fault of their own, to make a go of things in our society. We can call them the lowest 10% decile group if you like. Although the exact figure isn’t that significant.

    We can on the one hand consign them to ghetto estates, give them the bare minimum to live on, and I doubt if the UBI will be more more than that, and tell them to just keep out of our way and out of our minds. We’ll then consider them something to be policed, so they don’t disturb the rest of us too much. We’ll turn blind eyes to the extent of criminality on those estates providing that it doesn’t spill over and outwards from them.

    Alternatively we can make an effort to integrate them into the rest of society and offer something more from life. But this does means we’ll require something from them too. Not just because we need them, but also there’s no reason why everyone shouldn’t have something to share. That will provide for a sense of self worth that unemployment and poverty often takes away. At the same time what everyone does contribute will make us all more able to offer something back in return.

  • @Peter Martin

    I appreciate the point. But as Lib Dems we trust the people. I trust – most if not all would use the freedom of a UBI wisely. May be the time to improve their local estate or environment, further their skills, give them time to be with their children, elderly parents, volunteer, increase their skills, create art, music, literature, contribute something useful to the internet etc etc. – not just bound to the 9-5 “wage slavery”. Interestingly Google allows employees 20% of the time to work on something not directly related to the immediate work and it has given some highly profitable products. Good employers allow people paid time off to volunteer. But why should it be just good employers or those that can afford it. Sure some MIGHT use it to lie in bed all day – if so that is there choice but the benefit to society and the economy is far outweighed by the negative.

    Read the compass report, search online for both positive and negative about a UBI and don’t just reconfirm your confirmation bias.

    As it is we are moving towards a UBI – we already have it for pensioners, (a small amount) for ALL those with children, the unemployed.

    As a thought experiment – imagine a country a few thousand years from now. All meaningful economic activity is likely to be able to be done at zero marginal cost by robots, AI etc. Those that get the money are capitalists who can invest in the capital cost and it is likely that will be most of us as money will be raised from the population at large. But we have always used “slaves” – cows to produce milk, horses, human slaves – normally foreigners, machines – bicycles, cars etc. As we have produced far, far more from these “slaves” – some of it has gone to make capitalists very rich and some has been redistributed for the common good and keep people quiet. Now I am not against capitalists and capital. But it is right to redistribute this. Some of capitalist profits have come from luck and violence and the land or resources that belongs to all of us – at least originally – some from their own risk taking, money – may be from their own labour or sacrifice. It is not only morally right but necessary that there is redistribution. Capitalists need someone to sell to. And gradually a UBI has widened to the groups we give it to – eventually it will widen to everyone.

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