We should argue for a temporary Universal Basic Income

It is a scary time. As Covid-19 spreads across the globe, it is causing severe disruption and panic. The shift in government policy away from gambling lives on the mass infection (so-called ‘herd immunity’) to instead falling in line with most of the rest of world in attempting to slow the spread of the virus means that the likely death toll from the outbreak has fallen dramatically.

However, the impact on the economy will be enormous and will compound the significant damage already done by Brexit. Companies are already calling in the receivers, thousands of staff are being laid off or sent home unpaid, and millions of people are facing uncertainty and fear for their family’s financial future.

What is needed now is to provide a secure income for everyone in this country to fall back on. Whether they are laid off or become ill, we must provide an income that will help them to keep paying the bills, feed their family and put fuel in the car. The simplest way to do this is to introduce a Universal Basic Income (UBI).

This is not a new idea; it has been knocking around for years and has even been trialled in a limited way in a few places. Calls for UBI have been growing for years as economic behaviour has changed, and our ways of working and living have struggled to adapt. The march of automation, the complexity of state-run welfare systems, and the increasing cost of state pensions and healthcare as we all live longer have led to calls for some form of UBI from across the political spectrum.

It is a fundamentally liberal policy. At once sweeping away the stigma and complexity of state benefits and empowering the individual to choose how to live their life. Guaranteeing all citizens a sum of money that ensures a basic quality of life no matter what happens frees up the individual to live happier, freer lives.

UBI brings benefits to all of society, not just those with least. The funds could be used to invest your family’s future, in your home, or start-up a business venture of your own. It gives those people in our society with talent the breathing space to realise their ambitions no matter the economic circumstances into which they are born.

The government would be simplified and streamlined by removing the need for pensions or the disastrous Universal Credit. It would also support flexible working as many more people could afford to go part-time or work flexible hours, thereby mitigating the impact of automation and improving quality of life.

This is not a magic bullet that will fix all our problems. There are widespread, structural problems in our society and economy that will cause disbenefits. I do not pretend to know how such a change will interact with our highly complex and interconnected economy, but this is the time for our party to plant itself on the political agenda with a big idea that will bring positive, liberal change to Britain. I hope that our party’s current and future leaders will press the government to introduce an emergency UBI to support everyone at this challenging and frightening time.

* Cllr James MacCleary is the leader of the Liberal Democrat group on Lewes District Council and Deputy Leader of the Co-Operative Alliance that runs the council

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33 Comments

  • Lorenzo Cherin 18th Mar '20 - 2:47pm

    Agree. As I argued here http://www.ustinovforum

    We must begin with immediate grants to the lowest paid, self employed, on benefits, tax credits. Australia got it under a similar type of government.

    We as usual give, as Bernie Sanders say, socialism for the rich, too often. Sunak is an improvement on Osbourne and co., but he must do more to get help where it changes situations for people in need.

  • Good post by James.

    At PMQ’s today it was raised by the Leader of the SNP and by Labour M.P.’s. No Lib Dems were called……. Johnson didn’t say no.

  • I am seeing a lot of large computer systems overload today so the system would need to be very simple for the govn’s computers to deal with it (the HMRS database is already there but sometimes quirly – don’t think it is up to millions of people simultaneously inputting their bank details, for instance). Post virus you are going to have higher taxes and lower benefits just to survive fiscally, so UBI would have to be something like 4k per adult, 2k per child and 8k for pensioners (less than some receive) with the rest of welfare system disappearing, as well as the personal tax allowance, state pensions and in-work benefits. Fantastic system from the angle of personal freedom and ease of use once set up… and no-one can moan than work does not pay compared to benefits. There would also have to be an embedded link between UBI and tax rate so that it does not become a political tussle down the line with promises that can’t be kept.

  • Andrew Toye 18th Mar '20 - 4:01pm

    This crisis is brutally exposing how precarious the labour market has become for many people, and how out of touch past and present governments have been in worshipping “flexibility” for some at the expense of insecurity for others.

    I agree, a first step would be a UBI, but wider reform of the labour market (in a way that benefits the contractor/worker/employee) is needed in the longer term.

  • Frank West Which particular benefits would you cut Mr. West ?

  • David Raw,
    Perhaps they could cut the benefits to trusts and other gifts to the rich. Bit radical but then we live in strange times 😉

  • Seems to me that the Government is going to have to look at some form of UBI.

    It would be pointless bailing out industries with unlimited loans and grants if we still end up with massive amounts of unemployed surviving on either £57.90 JSA for under 24 and £73.10 a week for the rest.
    With the amount of unemployed, we are looking at, at the end of this crisis, people are not going to have the money to spend in the economy in order for it to even start to get back on its feet again.

    Capitalism is only viable when times are good, but it always takes a massive dose of socialism in times of crisis.

    What effects this has on inflation and the possibility of Negative Interest rates though I am not sure.

  • Universal Basic Income is a liberal policy, but it doesn’t help those on benefits if all it does is replace the benefits they currently receive at the same rate. So most UBI schemes do nothing for the poorest in society.

    Frank West,

    4k per adult, 2k per child and 8k for pensioners (less than some receive)

    From April Universal Credit for a single person 25 or older will be £74.59 a week or £3878.64 a year! So we should all know that £4,000 a year for an adult is inadequate just like all current benefit levels are.

    Do know that Statutory Sick Pay is £94.25 a week – £4901 a year? And will be £4984.20 a year from 6th April.

    A single adult needs £8335.60 a year and a couple £14,362.40 excluding housing costs and they need £4449.12 a year for each child to live at the poverty level. A lot more than you suggest. The guaranteed pension currently for a single pensioner is £8697 a year. So only pensioner couples should be receiving less than your £8k each a year – £13,273 for both.

  • Michael BG,

    we should be cautious about focusing exclusively on relative poverty measures. As this IFS report https://www.ifs.org.uk/economic_review/fp271.pdf notes:
    “There are good reasons not to look exclusively at relative poverty. With a poverty
    line that increases with median income, it is better for relative poverty if median
    income is lower (other things being equal) – but lowering the median income is not
    most people’s idea of desirable policy! During recession, when incomes across the
    board are likely to struggle, we should keep a close eye on absolute living standards.
    If all incomes fall, but median income falls fastest, then relative poverty will decline –
    but this would not be a laudable achievement.”

  • Joe Bourke,

    We are not yet in a recession, so no caution is needed when talking about what the relative poverty level is. If next year I am advocating lowering benefits because the relative poverty level has fallen then my all means criticise me.

    All liberals should recognise that no one living in relative poverty is free.

    Receiving a UBI which is thousands of pounds below the poverty line as suggested by Frank West will not sort out the problems which will come with lower aggregate demand which you have set out in another thread. It is important to point this out. We need to be advocating policies which will actually save the economy from melt down and ensure people at least have enough money to live on. And which keeps aggregate demand high enough not to make businesses decide to cut back on workers.

  • John Roffey 19th Mar '20 - 4:06am

    It is worth having a look at this article by IDS before pushing too hard for UBI:

    https://www.telegraph.co.uk/politics/2020/03/18/government-must-protect-workers-risk-coronavirus-universal/

    IDS is a pretty grounded individual – so I doubt if his figures are wrong.

  • John Roffey 19th Mar '20 - 9:34am

    Not sure if a paywall is operating for the Telegraph article. In case this is so – these were the key figures:

    “At the Centre for Social Justice we ran the numbers. We found that if the Government wanted to offer every adult over the age of 16 a UBI stipend of £5000 (hardly generous at less than a third of the poverty line) it would cost approximately £260 billion, more than twice the NHS budget. If they wanted to up the generosity to a level that would really boost incomes, say £16,320, it would cost, at nearly £900 billion, more than the total UK public spending budget.”

  • Pragmatic Scot 19th Mar '20 - 9:36am

    I believe some of our MPs signed a letter calling for UBI only yesterday. Cant see it online mind you. Think it went straight to the treasury.

    If UBI is not rolled out then we have to extend the mortgage payment holiday to all forms of credit (credit cards, payday loans car loans and student loans for anyone living abroad) and we have to decide how to pay off all forms of rent arrears for the duration too.

  • Peter Martin 19th Mar '20 - 9:50am

    A suggestion for getting around a paywall.

    1) Open the link as normal
    2) Right click and choose “View page Source”. This works in Google Chrome. Not sure about other browsers.
    3) Do a CTRL F (find command) for a keyword. In John Roffey’s example above I chose “ventilator”.
    4) You should then see all the text in the article.

  • Peter Martin 19th Mar '20 - 10:40am

    @ Christopher Perry,

    “At last the Government has followed the lead of the rest of the world, changed tack and is now trying to stop the spread of Coronavirus. The initial strategy of trying to flatten the peak and extend the period in order that the NHS might cope…..”

    Unless all Governments, not just our own, and against all the odds, succeed in “stopping the spread” then, by definition, all they’ll do is slow it. This is exactly the same thing as “flattening the peak”.

    It’s still a worthwhile thing to do. I, personally, am hoping to stay CV free until we have an effective vaccine!

  • The “Herd Immunity” idea, of allowing the virus to infect the majority of the fit and healthy, was something so insanely reckless that even Dr Strangelove would not have considered. Thank goodness they saw sense. Perhaps someone is working on the script now: “How I stopped worrying and learned to love Coronavirus”.

  • Michael BG at 12.46

    Michael, forgive me, but I believe you miss the most important thing about ‘UBI’. It is indeed, as you say, “a liberal policy” [If only it were a Lib Dem one! I must add], “but it doesn’t help those on benefits if all it does is replace the benefits they receive . . .So most UBI schemes do nothing for the poorest in society.”

    Michael, that is NOT ‘all they do’. What a true UBI does, or would do, is break the humiliating shackles that subject them to punitive and hostile conditions to ‘qualify’ for those benefits; conditions that mark them as an underclass. A proper UBI would restore each and every one of them to full status as taxpaying members of a reintegrated society, able to look anyone in the eye as an equal in all but prosperity or affluence.

    If you haven’t yet, please read the concluding section of Prof. Guy Standing’s Report (for the Shadow Chancellor) last midsummer: “Basic Income as Common Dividends: Piloting a Transformative Policy”. ‘Transformative’ it would be! A Lib Dem version of UBI would, I hope, call it a National Income Dividend. That would smell better in the voters’ noses; and it indicates briefly how it would work.

  • Peter Davies 19th Mar '20 - 12:08pm

    While we should be pressing for UBI in the long term and it would make the current situation much more comfortable if it already existed, I can’t see how a country that has taken a decade to bring in UC could get it up and running before the emergency has blown over. What they could do is remove the sanctions regime and the hostile environment which it supports.

  • John Roffrey,

    “if the Government wanted to offer every adult over the age of 16 a UBI stipend of £5000 (hardly generous at less than a third of the poverty line) it would cost approximately £260 billion, more than twice the NHS budget. If they wanted to up the generosity to a level that would really boost incomes, say £16,320, it would cost, at nearly £900 billion, more than the total UK public spending budget.”

    That is wholly impractical and not what should be done. The government can bring in a minimum income guarantee of £100 per week plus existing benefits for children, disabled and housing. That is almost double what an 18-25 year old currently receives and about £25 per week more than the current JSA.
    For those in work no tax or NI would be paid on earnings up to the level of the minimum wage. This is cash boost of £125 per month for most workers.
    For those on Universal credit/ESA the work allowance would be increased to the level of minimum income, approx £16,250 for a 35 hour week. Workers in the gig economy would not see any withdrawal of benefits until their earnings were above this level.
    The minimum income guarantee needs to be supplemented by job guarantee programs run by local authorities to deal with the shortage of manpower across all public services generally. This will also act as an automatic stabiliser supporting demand.
    These are permanent measures. The costs are in the tens of billions and can be tax funded as we come out of recession and the economic recovery is established. Temporary measures during the recession should include financial and cash flow support for employers in maintaining jobs and housing benefit payments for renters suffering loss of jobs or self-employment income.

  • Peter Martin,

    Thanks for that. I wonder if it works for all pay walls. I didn’t notice the search box at the bottom of the page at first and I copied and pasted it into a work document so I could read it easier.

    John Roffey,

    It is always advisable to know the details. According to the ONS there are under 43.12 million people aged between 16 and 64 in the UK. Therefore £5,000 a year would cost £215.6 billion and £16,320 £703.72 billion. I expect the differences are because he has counted pensioners who should be receiving at least £6636.50 (half of the couples guaranteed pension). It is clear that he hasn’t reduced it by £2500 (the equivalent of the Income Tax Personal Allowance) a year for those in work paying income tax. (If we assume that 70% of those in work pay Income Tax; (32.985 x 0.7 x 2500 /1000) £57.72 billion can be subtracted. £157.88 billion for £5,000 is still a lot of money. This would assume it was on top of existing benefits.

    It is an interesting idea to use Universal Credit. If the benefits levels are increased as I suggest I am not sure just reducing the taper to 55% is enough. Perhaps a taper of 33% would be acceptable. Of course ending the five week wait for the money would also be needed.

    Peter Davies,

    Indeed, the government should end the sanctions regime and the hostile environment. It is Lib Dem policy to do this.

    Roger Lake,

    I think it was clear that I was talking about financial help for those who only receive benefits. I don’t understand why you don’t know I have read Guy Standing’s Report, as I have posted critical comments on it.

    Joe Bourke,

    Your idea does not keep a single person above the poverty line if they only receive your £100 a week and it does little to keep aggregate demand at its current levels. A single person would have a take home pay of £286.56 a week if they were earning your £16,320 a year.

  • Joe, you say, “This is the point. If you are relying solely on benefits to bring people out of relative poverty you will never get there……. getting people into remunerative work is the route out of poverty”.

    But more needs to be said…… remunerative work should show a proper respect for employee rights and levels of pay. The rise of the gig economy, zero hour contracts and all the rest of it as practised by the modern equivalent of the robber barons needs to be tackled head on …… and, for example, the rewards for employees who provide residential and visiting care should be better valued in a more liberal society.

    So called market forces cannot and do not provide the answers…… it needs political intervention in a way this party has barely considered. It was challenged by the ‘New Liberals’ early in the last century. It needs to be challenged again.

    The New Liberalism · Liberal Historyliberalhistory.org.uk › history › the-new-liberalism
    15 Aug 2015 – The disaster of the 1895 election, when the Liberals lost almost a hundred … They included almost all of the major New Liberal writers: L T Hobhouse, J A … While retaining a firm belief in liberty, it sought a wider definition.

  • Joe, you say, “The system put in place under Gordon Brown relied on a booming financial services and house price sector. When that collapsed the safety net went with it.”

    Not completely, it was Osborne, Cameron, Clegg and Alexander who completed that hatchet job by cutting even deeper. Whatever happened to Sure Start ? And where did the financial services sector crash start ? …. the USA… and in the folly of the leaders of Northern Rock and the Royal Bank.

  • David Raw,

    I would not disagree with any of your comments. John MacDonald thought that the state taking stakes in private companies would provide the robust foundations for maintaining a secure safety net. I would say addressing the Land monopoly is the key factor. I think it is the land monopoly that is the driver of absurd house prices, unaffordable rents and mortgage debt creation that ultimately destabilizes the whole economy and impoverishes so many.

  • Joe Bourke,

    If benefits were paid at the poverty level and there was no benefit cap and housing benefit paid all of a person’s rent then there should be no relative poverty. It will have no effect on median income. It would cost less to do this than to introduce a UBI at £5000 a year.

    Getting people into paid work clearly does not get everyone out of poverty. I advocate increasing the National Living Wage to above 67% of median earnings and that there are regional Living Wage rates especially for London. I also advocate providing free training for the unemployed to take up the jobs in the area in which they live where there is a shortage. I advocate a Job Guarantee scheme for those who need experience to assist them in getting a job and for those unemployed for some time to keep their skills up to date. I also support providing more economic support for the poorer regions of the UK.

    Do you think our new Commercial Landowner’s Levy to replace Business Rates will address the land issues you identify?

  • Michael BG,

    government is neither a business nor a charity. All government services are subject to a degree of rationing whether and prioritised for those with the most urgent needs. The social security system is prioritised to meet the needs of those who are unable to provide for themselves. Whether that be because of disability, old age, caring for young families, involuntary unemployment or low pay.
    The social contract is a joint responsibility. If you are able to provide for your own needs, you can reasonably be expected to do so by taking up an offer of paid work. This is particularly so for those in persistent poverty as a consequence of long-term unemployment. It may be that you have better things to do than working. Perhaps painting or making a sculpture. if so, you can still receive a basic subsistence benefit from the state and pursue a grant from the Arts council or other such philanthropic bodies so you don’t need to work.
    We need a robust social security net that is there for everyone in need. This requires full employment and the willingness of those fit and able enough to do so to engage in productive activity. Low pay, in part, is a side effect of the subsidising of employment via tax credits. The greater the level of subsidy the more reliant people become on the social security system. Job guarantees create a floor that private sector employers have to meet – full-time work at minimum pay. Only those who prefer part-time or flexible work will then take-up zero hour contracts.
    Being able to pay your way form what you earn depends to a very large extent on how much of your disposable income is absorbed by rent payments. This why it is so important to address rent costs with land reform and the mass production of public housing for rent.
    The most important aspect of the Commercial Landowner Levy is the shift of liability from tenant to landowner as is typically the case in most countries. The UK is an outlier in this respect.
    In the present circumstances many businesses are facing bankruptcy and unable to pay both business rates and rent. Foe example, many travel agents and tourism firms will be unable to keep staff employed as well as meet rent payments and business rates. Local authorities still need the business rates income. Like Cicero, we have to ask Cui Bono? If employees are left stranded, business owners forced to take on loans to pay rent, rates and other fixed costs who benefits? Why is the burden of this crisis not shared across all factors of production – land, labour and capital instead of being borne solely by workers and entrepreneurs?

  • Joe Bourke,

    Liberals believe that living in poverty is a bad thing. The party does not believe in using sanctions to force people to do the things the government thinks you should do to find a job. This is why there is talk of a UBI. However, your Minimum Income Guarantee is very much like a UBI but has some conditionality.

    I don’t understand why you as a liberal think the safety net should not be set at the poverty level. Perhaps you can explain why you thing people relying on the safety net should have their freedoms restricted. We accept that those of retirement age should not live in poverty, even though many of them could work.

    I couldn’t see an answer in your last post to my question – Do you think our new Commercial Landowner’s Levy to replace Business Rates will address the land issues you identify?

  • Joe – “addressing the Land monopoly is the key factor. I think it is the land monopoly that is the driver of absurd house prices, unaffordable rents and mortgage debt creation that ultimately destabilizes the whole economy and impoverishes so many.”

    There is a lot in this. Landowners who own land adjacent to towns and Cities are playing a waiting game for the most profitable crop, which is buildings. It is right that land should be taxed. After all, the best aspects to tax are those that largely maintain demand and do not leave.

    Land will always be in demand and is not going anywhere else. It does not seem right that by contrast, workers on modest incomes should have a high proportion of their incomes going on various taxes, plus either rocketing rent or mortgage interest, while large land holdings ( not gardens) worth millions are scott free, or held overseas with little information available about it.

    The productive areas of the economy that can create many jobs and export should be less taxed to make them more competitive, if Land can be made to fill on tax revenues

    Supermarket land banking on the end of towns to prevent competition arriving is also unacceptable

  • Michael BG,

    Liberals believe in individual rights and responsibilities within a shared community ethos. Absolute poverty (where household income is below a necessary level to maintain basic living standards -food, shelter, housing) is a bad thing and is rightly the target of the social security safety net and a minimum income guarantee.
    Relative poverty (where household income is below 60% of median incomes ) is a measure of inequality rather than material deprivation and is best addressed by robust employment rights such as minimum wages, adequate provision for disability benefits and job guarantees together with economic policies that support the maintenance of full employment.
    The Commercial Land Levy is only one part of the necessary Land reforms required. Among the more important is a reform of the 1961 Land Compensation Act as per the Shelter campaign https://blog.shelter.org.uk/2019/06/land-reform-the-key-to-ambitious-social-housing/ and putting council tax on a more progressive basis.

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