What kind of Universal Basic Income do you support?

There has been a lot of debate in the party about Universal Basic Income, but it’s not always been clear what kind of UBI is being proposed. This article is to ask you to choose from four clear options.

A key issue with UBI is how it will be funded, and if it is funded, whether other priorities will have to be dropped. In the 2019 election, Jeremy Corbyn proposed raising taxes by £80bn/yr. The Liberal Democrats proposed an extra £51bn/yr spending (this included a £14bn/yr ‘remain bonus’)

The four options below involve combinations of the cheapest of the schemes recommended by Compass and the spending from the 2019 Lib Dem manifesto.

  1. £191.9bn/yr extra taxes

Scheme 1 from the Compass paper (see below), plus the £51bn/yr spending from the 2019 Lib Dem manifesto

  1. £140.9bn/yr extra taxes

Scheme 1 from the Compass paper (see below), none of the 2019 Lib Dem manifesto implemented

  1. £61bn/yr extra taxes
  • Keep the £51bn/yr extra spending from the 2019 manifesto
  • £10bn/yr to move the UK benefits system more towards a negative income tax system
  • A UBI pilot scheme (cost very small)
  1. £51bn/yr extra taxes
  • Keep the £51bn/yr extra spending from the 2019 manifesto
  • A UBI pilot scheme (cost very small)

The UBI Scheme 1 in the above options comes from proposals in the paper written by Howard Reed and Stewart Lansley and published by Compass. It is outlined in the graphic below, along with Scheme 2, which is more expensive.

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As well as saying which of the above four you prefer, do also give us your ideal option.

Here’s just a few possibilities for your ideal option:

  • You might want to raise additional taxes and go for the more expensive version of UBI, Scheme 2 (at a cost of an additional £32.6bn/yr).
  • You might think even Scheme 2’s £71/week isn’t enough and want a more generous UBI design, paid for with either larger benefit cuts or greater tax increases. 
  • You might want a halfway house between options 1 and 2, implementing UBI, but only implementing some of the 2019 Lib Dem manifesto.
  • If you don’t want to us to propose funding a UBI in the next parliament, you might still want to include an aspiration to an eventual UBI. This would be similar to our 1992 manifesto and the Green 2017 manifesto.
  • On the other hand, you might think, as we have already left the EU and will have ended the transition period, that the £14bn/yr ‘remain bonus’ from our 2019 manifesto is no longer realistic, and so we have to reduce our spending plans.

If you do propose another UBI design, please try to be specific, especially in how much taxes would have to rise to fund it, and/or which benefits would have to be cut. If you like, give us a link to a proposal on the web.

(PS In the Social Democrat Group, we are split over the question of UBI. That split is a good thing, because disagreement can lead to thorough, rigorous and courteous debate. It has allowed us to publish two pieces: one sceptical of UBI, the other in favour. You’ll find more detail on the arguments in favour of and against a UBI there.)

* George Kendall is the acting chair of the Social Democrat Group. He writes in a personal capacity.

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105 Comments

  • Andrew Tampion 26th Aug '20 - 9:45am

    None of the above

  • John Marriott 26th Aug '20 - 9:48am

    Ditto!

  • Peter Martin 26th Aug '20 - 10:15am

    How will a UBI “pilot scheme” work?

    Presumably at least some people will be worse off with a UBI, which they’d probably have to be to make others better off. So are we going to choose people at random to be either better off or worse off ? Or are we going to ask for volunteers? I expect there’d be no shortage of volunteers to be better off but an acute shortage volunteering to be worse off.

    But a trial has to include both groups. There’s no point giving just a small group of people extra spending money and calling it a trial.

  • James BLESSING 26th Aug '20 - 10:30am

    I think the compass scheme is a good start and I would like to see us go for option 1 but with some changes:

    1. Don’t provide such a large amount to pensioners, they already receive the state pension so they should continue to receive the £61 here as UBI plus £89 from their pension (or a small increase on their current basic)
    2. Child portion should be ½ the adult amount (and paid to the parent until 16)
    3. Under/Over 25 should be removed, it needs to be Universal
    4. Set a long term goal to move away from means testing in general

    We should of course look to continue the rest of the manifesto plans (but with the natural number of changes) and the compass report does include options on how to cover most of the costs of such a scheme that seem to be reasonably well constructed.

  • Still don’t get the logic of putting up taxes to pay money to people who don’t need it. We need an efficient and fair welfare system, UBI is a distraction. None of the above….

  • James Belchamber 26th Aug '20 - 10:57am

    Let’s not Lib Dem a great policy – UBI is about the principle that people should not live in poverty, put into practice by paying people so they cannot normally fall into poverty.

    Once we’ve won the argument on the principle, people will support what is necessary to fund it.

  • Daniel Walker 26th Aug '20 - 11:09am

    @Colin Paine “Still don’t get the logic of putting up taxes to pay money to people who don’t need it.

    Because it means that everyone who does need it gets it, including people who didn’t need it on Monday but lose their job/are injured/unable to work due to mental health/are bullied at work/suffer relationship breakdown/etc. on Tuesday.

    And “putting up taxes to pay money to people that don’t need it” sounds daft, but it actually very simple – easily done using the existing tax system as a negative income tax. So it is efficient and fair by design if done right.

  • Agree with @James Belchamber. What do we think of the principle, then if we like it we work out the detail.
    Impression given by many is that UBI will be completely funded by tax. While there is obviously a cost, in many ways it is simply a redistribution, a recognition that our economy fails to share the spoils of growth fairly.
    Much of the cost will be offset by people being taken out of means tested benefits (and from fewer people required to administer said system) and higher marginal rates of income tax will claw back the majority of money given to the affluent and of course UBI itself will be taxed as income in the normal way for all of us. Obviously I don’t have the sophisticated models to calculate these figures, but someone in the party must.

  • Martin Boffey 26th Aug '20 - 11:20am

    Marginal tax rates of 55% (43% IT and 12% NI) or more on higher rate tax payers, who currently have a marginal tax rate of 42%. Plus an immediate bill of £1,140 p.a. as a result of removing the NI primary threshold. Are you having a laugh? And for this cost the individuals concerned will receive absolutely no benefit whatsoever apart from the warm fuzzy feeling of helping out others less fortunate than themselves – which is important and worthwhile but forcing people to do it in such a crippling way is not just wrong, it’s political suicide. I thought we were the party for everyone rather than “for the many, not the few.” Lunacy.

  • “What kind of Universal Basic Income do you support ?”

    It could be said such a question is the equivalent of asking a condemned man, “Do you wish to be hanged or beheaded ?”

    The danger with the 2020 Liberal Democrat Party is that it is desperate for a quick fix and will grab any passing straw…… thereby exhibiting a naivety that has become the party’s trademark over the last ten years. There needs to be a convincing answer about stopping wealthy persons receiving it…. which I’ve yet to see. Why should my tax money helped to fund such as Alan Sugar and Prince Phillip ?

    Much more research is needed (see the Joseph Rowntree Foundation website).

    And again , as has become customary these days, Scotland is well ahead of the field. The link below on the Scottish trials is well worth a read….. all near 200 pages of it :

    Draft Final Report on the feasibility of Scottish Citizens’ Basic …basicincome.scot › 2020/06/10 › draft-final-report-cbi-…
    10 Jun 2020 – PARTNERS involved in exploring the feasibility of a Citizens’ Basic Income (CBI) pilot in Scotland have completed the draft final report on their …

  • Laurence Cox 26th Aug '20 - 11:32am

    The Party already has a policy for a ‘Citizen’s Pension’ passed by conference back in 2004. If we are arguing for UBI, then we also need a State Pension that is non-contributory, so ending the need for Pension Credit to top up the pensions of those whose contributions are insufficient.

  • Daniel Walker 26th Aug '20 - 11:59am

    @Martin Boffey “Plus an immediate bill of £1,140 p.a. as a result of removing the NI primary threshold.

    As the UBI would certainly be more than £1140, that seems an odd bit of reasoning, Martin.

    The sudden increase to 55% is mostly due to the dropping of NI to 2% past £50k, which is regressive. (The existing marginal tax rate on someone earning £49k is currently 53%, but only 42% for someone on £51k) The effective marginal tax rate on people on certain benefit “tapers” is even higher, and concerns me rather more!

    @David Raw “There needs to be a convincing answer about stopping wealthy persons receiving it

    If Lord Sugar gets £x per month UBI (only if he is domiciled in the UK for tax purposes, I would assume), and the accompanying tax rises (which there would have to be) amount to more than £x, then he’s not “receiving money” in any real sense, using the same logic that if someone gets 2hrs extra work, earning £25, but loses £25 of Income Support as a result, then they not actually earning money. I assume you decry the latter situation (as one optimistically assumes, does everyone); if so, the the former situation is also not earning money.

  • As always, a bit lost on the financial’s. At a time when the virus has devastated the nation’s tax receipts and with a further good kicking coming from Brexit, plus a tax receipt history that shows when income tax/NI is too high net receipts actually decrease, not to mention a doubling or tripling of people on benefits… surely a responsible party would have to decide how to divvy up a falling tax base fairly not spend fantasy money.

    A minimalist UBI replacing the welfare and pension system could still be part of that and could even propel more people into various kinds of work.

  • Martin Boffey 26th Aug '20 - 12:12pm

    @Daniel Walker
    The UBI would be eliminated by the removal of the income tax personal allowance, so the additional NI hit is not compensated for by UBI in any way.

    I was trying to keep it very simple. There are a multiplicity of issues around the basic rate/higher rate threshold and the fact it doesn’t dovetail with the NI system. In principle, once you hit higher rate your income tax marginal rate should increase by 20% and your NI rate reduce by 10%, giving a net increase of 10% so overall it is not regressive – it is the fact that the thresholds are not properly aligned between IT and NI that makes it so. I agree it is bonkers and needs reforming.

    But not nearly as bonkers as this UBI proposal…..

  • Martin Boffey 26th Aug '20 - 12:29pm

    @Daniel Walker
    Actually correcting myself here. The thresholds are more aligned than I thought. If you earn £49k you pay IT at 20% and NI at 12% – total of 32%. If you earn over £50k you pay IT of 40% and NI of 2% – total of 42%. there is a weird £25 bracket of earnings where you would pay 52% but I doubt that happens in practice.

    I don’t know where your 53% rate comes from so your personal tax knowledge may be better than mine. Your point on the tapering of benefits is well made.

  • Peter Davies 26th Aug '20 - 12:33pm

    The promise we should put in the manifesto is to convert the personal income tax and National insurance allowances into a UBI. On today’s values that would a tad over £10 per day. It would replace the first £10 per day of all current benefits. Benefit withdrawal rates would need adjusting to allow for all income being taxed. The marriage allowance would be abolished.

    Part of the extra tax needed (under £20 bn) would come from converting all or some National Insurance to income tax. This is fair because those relying on investment income are not currently benefiting from the NI allowance.

    This is an affordable scheme because very few people see a change in net income. if we choose the right taxes to pay for it, we could also promise that nobody with an income from earnings and benefits below the national average would be worse off.

    Raising the UBI level above this is more “expensive”. In practice though, if everyone is a claimant and everyone is a taxpayer then the perception is less “20 billion taken from taxpayers and given to scroungers” and more “poor people a bit better off, rich people a little bit worse off, most of us not much difference” That is a reasonable aspiration after the initial structural change has been made.

  • Martin Boffey 26th Aug '20 - 12:44pm

    @Peter Davies

    Interesting proposal. I understand your first paragraph but am a little confused by the second: “Part of the extra tax needed (under £20 bn) would come from converting all or some National Insurance to income tax. This is fair because those relying on investment income are not currently benefiting from the NI allowance.”

    I assume you are suggesting reducing the NI rate and increasing the Income Tax rate by an equal amount. This would be neutral on “earned” income but raise more tax from investment income. Am I correct? Because if so, this sounds like it would punish those relying on investment income rather than being “fairer” to them. If you do the switch the other way, would you not reduce revenue rather than increase it?

  • Paul Barker 26th Aug '20 - 1:29pm

    For now I have to say none of the above, clearly Brexit & Covid have made our 2019 spending commitments obsolete, we have to rethink all that.
    I dont feel that the Party has really debated even the principle of UBI yet, let alone the details.

  • Daniel Walker 26th Aug '20 - 1:40pm

    @Martin Boffey “The UBI would be eliminated by the removal of the income tax personal allowance, so the additional NI hit is not compensated for by UBI in any way.

    Ah right, fair enough.

    I don’t know where your 53% rate comes from so your personal tax knowledge may be better than mine.

    I got mine from MoneySavingExpert – but I misread the table, and you’re quite right. Apologies. The anomaly, if there was one, has clearly been eliminated!

  • Peter Davies 26th Aug '20 - 1:50pm

    @Martin Boffey
    “I assume you are suggesting reducing the NI rate and increasing the Income Tax rate by an equal amount. This would be neutral on “earned” income but raise more tax from investment income.” Correct. Those relying on investment income currently get an IT allowance worth £2500 per year but don’t use the NI allowance worth £1140. They the UBI of £3640 is clearly a major boost to their incomes. This would be clawed back by switching NI to IT. A 4.5% switch for instance would leave all those on investment income under £25333 better off and those above worse off.

  • Martin Boffey 26th Aug '20 - 2:08pm

    @Peter Davies
    I understand now – thanks.

  • David Allen 26th Aug '20 - 2:30pm

    None of the above, because the financials make Corbyn’s budget look comparatively restrained and well thought through!

  • Peter Martin 26th Aug '20 - 2:44pm

    Is there any requirement that “Britain should lead the world” on this? We’ve heard enough of that phrase over the years.

    Why don’t we wait until someone else, maybe one of the Nordic countries has a UBI scheme up and running? We are always told how we should be more like them.

    If it’s a disaster we can learn, for free, from their expensive mistake. If it’s a success we can consider copying it ourselves.

  • Peter Martin 26th Aug '20 - 3:05pm

    @ James Belchamber,

    “UBI is about the principle that people should not live in poverty, put into practice by paying people so they cannot normally fall into poverty.”

    According to the Rowntree Foundation the poverty line is £144 a week for a single person with no children. So we’ll be paying out this to everyone including some who’ll spend at least this on a meal out? This will be just enough, but not including any tip, for an afternoon tea for two at the Ritz. That works out at £7,500 pa. Can we call it £8,500 to actually take everyone measurably out of poverty, rather than just on the edge?

    “Once we’ve won the argument on the principle, people will support what is necessary to fund it.”

    You’re dreaming!

  • James Belchamber 26th Aug '20 - 3:06pm

    The NHS was once a dream, Peter.

  • Universal benefits and services have obvious advantages over means-testing. In the Aftermath of WW2 we have had Universal health and education services and until recently Universal child allowances. We also have universal pensioner benefits such as the winter fuel payments and public transport cards.
    In the mind of the public, people equate national insurance contributions with the right to receive benefits when needed. This goes back to the 1911 National Insurance Act when it was argued that “the scheme should be paid for by the individual, the state and the employer: “Working people ought to pay something. It gives them a feeling of self-respect and what costs nothing is not valued.”
    When it comes to tax versus national insurance many commentators seem to take a different view arguing that deducting tax to pay Universal benefits is giving with one hand and taking away with another. Others will argue the state simply creates money to pay benefits and the sole purpose of tax and national insurance is to control inflation.
    Ultimately, there has to be a system of redistribution to ensure both that no one is deprived of sufficient food, clothing and shelter for their wellbeing, that work is made available to those who need it and that those that are work are furnished with a standard of living that is relatively comparable to the mean.
    There are many forms of UBI or minimum income guarantee in place. Two prominent ones are Alaska’s permanent fund that pays a share of oil taxes to all residents of the state and Spain’s recent introduction of a minimum income guarantee.
    In terms of party policy, I would like to see the policy committee to consider three options;
    1. The permanent revenue-neutral scheme of £60 per week modeled by Malcolm Torry https://blogs.lse.ac.uk/socialpolicy/2020/05/21/the-basic-income-debate-needs-high-quality-research/
    2. The minimum, income guarantee, job guarantee and basic rental income outlined here https://www.libdemvoice.org/minimum-income-job-guarantees-and-basic-rental-income-64378.html
    3. The recommendations of Adam Corlett at the Resolution foundation https://www.resolutionfoundation.org/comment/10-policies-if-you-think-you-might-want-a-universal-basic-income-but-arent-sure/
    This has the potential to be a flagship policy for the Libdems and as Malcolm Torry notes needs to be underpinned with high-quality research.

  • Peter Martin 26th Aug '20 - 3:42pm

    @ James,

    But the NHS wasn’t a pipe dream .

    I just wonder who, if anyone, you’ve sounded out about the UBI. It’s not at all comparable with the NHS. There is clear majority support for the idea that we all support the NHS through our taxes and NI contributions. It’s there when we need it when we’re sick and only when we’re sick or to prevent us getting sick. There are some grey areas such as cosmetic surgery. Most would agree it should be provided for accident victims but they wouldn’t support free ‘boob jobs’ on demand, for example.

    I mentioned the idea of the UBI to approximately half a dozen people in the pub a few weeks ago. No-one had even heard of it. There was unanimous scepticism that it would make anyone better off. The consensus was that if the Govt was going to hand out £1 they be clawing back £1.50 in higher taxes. There was sympathy for those, especially the young, who couldn’t find decent jobs. Some thought it wasn’t a problem to be solved by Govt and it was more due to kids having unrealistic expectations in life after studying for what they termed ‘Micky Mouse’ degrees. They considered that if youngsters had done more practical apprenticeships there would be plenty of work for them.

    I’m not saying I totally agree with them but this is what you’ll find nearly everywhere. Even if you present figures to show voters they’ll be better off personally they likely won’t accept them. Neither do they like the idea of Govt paying out ‘money for nothing’. The people I spoke to weren’t high earners, from the social A and B groups. These certainly do have a reason for opposing the UBI.

    You’ll more likely find those in Kingston on Thames, and they might well vote Lib Dem now, than Kingston upon Hull. Either way you’ll likely end up losing votes.

  • Martin Boffey 26th Aug '20 - 3:48pm

    “The NHS was once a dream”

    Indeed – interesting. The DHSC revenue budget for 2019/20 – including the whole of NHS England – was £133.3bn. The capital budget was £7.1bn, giving a total budget of £140.4bn. So about basically the same cost as Compass Scheme 1, give or take half-a-billion of rounding.

    That’s just how huge a suggestion this is – another NHS, just like that. You can either see that as eminently doable because it’s been done before, or at the other end of the spectrum as completely looney tunes. I know which end of the scale I think it’s on.

  • John Marriott 26th Aug '20 - 4:23pm

    The latter, George. As I am no longer a member of the Lib Dems my views clearly don’t count. Having such a policy would not make me feel like rejoining.

  • Daniel Walker 26th Aug '20 - 4:50pm

    @George Kendall “You appear to favour UBI.

    I’m honestly not sure if I do or I don’t, to be honest, George. I get the point that the headline rate of tax increases is a tough sell, as is the argument that we could spend the tax increases on something else, but I like the principle (a safety blanket, if you like, rather than a safety net (the salient difference being, naturally, the lack of holes:) ) (I listed my reasoning on the Jane Dodds thread)

    My overall point is generally that it might not be practical, in the end, but it’s not implausible.

    It would have to be coupled with a comprehensive removal of perverse incentives like the benefit traps we talked of earlier, but that’s a good idea either way.

  • Peter Davies 26th Aug '20 - 5:03pm

    @George “I will try to remain open to persuasion if anyone can explain how we implement UBI without such prohibitive tax rises.” I think I have. It is obviously a limited implementation and does not achieve the abolition of means-tested benefits but it greatly reduces the number of people dependant on them. It means that everyone has at least some reliable income and nobody in the lower half of the income scale loses significantly.

  • Should not the discussion start with what the problem is. What are we trying to achieve. Then what are the possible ways of achieving it. Perhaps it might help to look at the actual details of what has been tried to achieve whatever it is we want. Finally we might be in a position, having consulted widely to campaign for this.

  • Peter Davies 26th Aug '20 - 7:51pm

    OK. @Tom. Here are my objectives. Others are free to add to them.

    1. Nobody should ever be left without an income. For those with no savings that means some money coming in at least once a fortnight. UBI can be paid by the day at very little extra cost.

    2. Everyone should be significantly better off earning money than not. The version I propose would remove the 67.44% and 74.84% marginal rates caused by the interaction of Universal Credit, NI and Income Tax. It would greatly reduce the number of people facing the 63% UC withdrawal rate. Many of the “Targeted” alternatives to UBI produce much higher marginal rates or even cliff edges.

    3. It should be intelligible. When Rishi Sunak tried to work out who needed support, he clearly could not work out all the different possible categories. The remaining elements of the social security system will still be too complicated to apply fairly but at least the number of people needing to interact with it and most of the complexity of tax codes will be removed. Employers will find the system much easier.

    4. It should reduce the level of inequality. Even within this party, there will be very different views as to what is an unacceptable level of inequality but levels in this country are high historically and by comparison with most of Europe. My initial proposals reduce inequality by a moderate amount and quite patchily. Once the mechanism is in place however I hope we could produce a consensus to take it further.

  • Julian Tisi 26th Aug '20 - 8:29pm

    It’s not often I find myself in agreement with David Raw but I think he’s hit the nail on the head here “The danger with the 2020 Liberal Democrat Party is that it is desperate for a quick fix and will grab any passing straw”. George Kendall makes a similar point above “some think that a bold radical policy is the only way for us to recover. My fear is the opposite. That, like our bold radical policy of Revoke, last December, it could do us enormous political damage.”

    I suspect this is what’s at the heart of the push towards UBI. Reading the comments on this and the many other articles on UBI I’m convinced that what we really need is some type of minimum income guarantee, paid to those who need it and not to those who don’t. This would be IMO almost as radical, but way less costly, fairer and an easier sell politically than UBI.

  • Daniel Walker 26th Aug '20 - 9:00pm

    @Julian Tisi “I’m convinced that what we really need is some type of minimum income guarantee, paid to those who need it and not to those who don’t.

    As I said to David Raw, above, if you’re giving someone £x in UBI, but also taxing them £x (or more) extra, you aren’t giving them any money. People who don’t need it will not be better off financially, because they will be paying more tax. You think a MIG is simpler, but you need to keep an eye out for tapers, making sure working 1 extra hour is worthwhile for everybody, administer it etc. With UBI it is built in, and needs no further admin.

    Again, I agree that it might be a tough sell. But by definition people who don’t need it are not getting it in any real sense.

  • Colin Mcdougall 26th Aug '20 - 11:00pm

    I can’t say any of the options seems viable or deliver a reasonable outcome for the poorest in our community. These sums of extra taxation could transform the lives of the lowest paid in much more effective way in my opinion. In terms of the general principle of ubi my greatest concern that a right wing government could use this as a cover to massively reduce social insurance. After all UBI is and continues to be a popular policy of radical free market thinkers ie here sum cash in place of services/benefits. The policy seems to have huge risks and issues with no clear social justice outcome.

  • Peter Martin 27th Aug '20 - 2:46am

    Both the LDP and Labour Parties are reformist parties. We might say we don’t like Capitalism but essentially we’re going along with it. We want to make it work better in the interests of everyone. BUT we do have to understand how it functions to be able to do that. We can’t short circuit the system.

    As the monopoly currency issuer, the State is a key player. THE key player. It also makes the rules. It sets the laws. It has the power to put us in jail if we break them. One of those rules is that we have to pay our taxes. It doesn’t want our money per se, it can create as much of that as it likes. It needs to provision itself and to do that it needs its currency of issue to be worth something. There’s no longer any gold, or any other, standard to give it an intrinsic value. It can then buy what it needs including our time. In other words, we have to work to get the money to pay our taxes to make the currency worth something. This is what drives the economy.

    Like it or not, this is the system. If we unconditionally pay everyone a UBI, sufficient to keep everyone out of poverty, we are seriously short circuiting it. That’s not going to help anyone unless we have something better to replace it. Which I don’t think we do!

    If we recognise that this is what we have to make work as best we can, it is more logical to then demand that the Govt provide jobs for those who can’t find them any other way. If it is in charge of a system that demands that we work, to get the money to pay our taxes, it does need to become the Employer of Last Resort, if necessary. It has to provide a the Guarantee of a Job at a living wage for those who need one.

  • Andrew Tampion 27th Aug '20 - 7:40am

    George Kendall. The principle reason for my comment yesterday was that I objected to the absence of a no to UBI option in your article.
    As far as the principle of UBI I am unconvinced of the need for or desirability of such a scheme and sceptically of the UBI project for the reasons set out above by David Raw and Peter Martin and some others above.
    I am also concerned that some right wing Libertarians will attempt to use this as a means to undermine the benefits system. It is worth commenting in this connection that the even Scottish Government Report that David Raw refers to reccommends the removal of some benefits as part of their proposed Trial.
    Also I am concerned that, based on the Labour Governments various Income Crdeit reforms and the Coalition/Conservative Universal Credit scxheme, proposals to simply and make fairer the benefits system are almost always more complex to implement than advocate expect.
    Finally it is worth remembering that one of the many reasons that the 2019 Labour Party Manifesto failed was a wide spread feeling amongst the electorate that it over promised and wasn’t creditable (“Free Brooadband for Everybody!”). We should therefore be carefull before proposing a new scheme that would cost as much or more than the NHS.

  • “I know some think that a bold radical policy is the only way for us to recover. My fear is the opposite. That, like our bold radical policy of Revoke, last December, it could do us enormous political damage.”

    Yes this hits the nail on the head because the reality is we are not going to form a majority government and therefore our flagship policies are effectively going to be our red lines in any negotiation post election.

    If there was a hung parliament and we said to Labour after the election “we will only support your Queen’s speech and budget if you introduce a policy that costs £140bn a year we would be laughed out of the room.

    Ditto if we had said in 1976 we demand nuclear disarmament or no pact or in 2010 we want to join the Euro or no coalition.

    Radical policies like UBI would need buy in across other parties so it would be better to campaign for the principle (if that is what we want) rather than make it our own detailed policy to stand apart from the other parties.

  • I like the idea of negative income tax. This presumably copes better with people moving in and out of work and using the same infrastructure will be easier and cheaper to administrate. There must be some, probably a high threshold as I don’t like the idea of millionaires receiving it. I’d like children from birth to receive it. Presumably again it will be taxed that will help to make it progressive. So it could be introduced with an increase in income tax and perhaps a wealth tax to make it more affordable.

  • Edward Clarke 27th Aug '20 - 2:20pm

    The debate we are having on this has already been had after the great depression:

    https://api.parliament.uk/historic-hansard/commons/1931/jun/22/unemployment-insurance-advances-and

    “This case is not chosen for any special reason, but here is the case of a man and his wife and one child, a baby, living on 28s. a week. Their expenditure is: Rent, 8s.; burial insurance, 8d.; coal, 1s. 8d.; gas, 1s. 6d.; sugar, 6d.; tea, 6d.; meat, 2s.; bread, 2s. 6d.; butter, 1s.; potatoes, 8d.; jam, 6d.; milk (tinned), 6d.; fresh milk for the child, 2s.; clothing and boot club, 3s.; tobacco, 1s.; and extras, 2s. From which of these items is the 3s. to be deducted which will not mean a resort to the public assistance committee or else an acceleration of that process of deterioration, both mental and moral, of the unemployed?”

    “The present growing stagnation of industry cannot be left alone to work its own way out, because the final collapse here might be worse even than in Australia. In Australia the Governments have been running into debt. Here private industries are running into debt, and have been ever since the War. The breaking point has been reached. Something has to go, and it had better be the currency that should go. To preserve dollar parity we put an embargo on foreign loans, injuring the export trade. To preserve dollar parity we handicap our export trade, which would benefit enormously by a reduction in the value of the £.”

    The non means tested benefit given to the unemployed in 1931 was 27s which would amount to about £2000 in todays money, most of that was funded by debt (to avoid tax increases), these days we would fund it via QE. It was found years later to have been very successfull and prevented a total collapse as what happend in america (And they thought we were mad going into debt to give people ‘free money’).

    By giving a UBI to everybody you remove a ton of administration and would eliminte the black economy (Like whats been going on in Leicester) in one fell swoop. The mental health cost would be greatly reduced, I wonder what the health cost of excluding millions of people from support (approx 3 million) will turn out to be?

    Have a read of the debate, its quite funny how similar the for and againt points are.

  • I think any scheme so long at is acceptable to our voter base. UBI is about a lot more than mathematics.

  • George Kendall 27th Aug '20 - 5:22pm

    @Edward Clarke
    Thanks for the historical perspective. As they say, there’s nothing new under the sun.

    Would you be willing to say which of the four UBI options you prefer? And if there’s another version you’d like, what it would offer, how much in benefits would be withdrawn to partially pay for it, and how much tax increased to pay for the rest?

  • Peter Davies 27th Aug '20 - 6:57pm

    Not having to talk about gross amounts was rather the point. I could say that the gross cost of giving all the working people who use up their tax and NI allowances to UBI was £100 billion and the saving from taking away their tax allowances was £100 billion. Someone with access to better data would show that I’ve got both figures wrong by a mind-blowing amount and I’d look a right idiot. Instead I choose to say that the net cost would be 0 and be confident of my answer to the penny.

    I can say the same about anyone on benefits receiving more than £70 per week or £140 for a couple with nobody in the household earning more than £9504 p.a. There don’t seem to be any published figures that would let me work out how big that group is.

    There are also some groups who would definitely benefit. Students and others with no income but not available for work would gain the full £3640. I should be able to work out the numbers for that one. There would be some reduction in cost due to fewer students defaulting on loans. Single earner couples not in receipt of UC would gain £3390. This is probably the most significant group of winners. The other winners would gain less. There are those who are currently getting UC and paying NI or Income tax. They would gain up to 4.44% of their earnings over £9500 and 12.84% over £12500. Then there are those whose UC is less than £70 per week (£140 for couples) who would gain the difference. There are a whole lot of smaller categories mainly based on self employment or a changing income through the financial year. I’ll never even identify all those groups let alone work out the amount they gain.

  • Edward Clarke 27th Aug '20 - 7:32pm

    @George Kendall

    Thanks George – The only option I would go for is QE funded by new money issuance from the BoE just like the great depression for a few reasons.

    1. It would be ludicrously complicated to find that sweet spot with taxation and experimentation which UBI seeks to avoid
    2 . We have a vastly different economy now with high levels of automation and AI coming in, we just dont need humans as much to produce things (same with electrification in the 1920’s)
    3. Think of UBI as a distributed investment i.e. when you buy somthing you are investing in that business and society is ‘discovering’ what it needs to produce rather than the Torys top down approach.
    4. If we grow and become more efficient as a result the real ‘cost’ is vastly less
    5. We want to become greener and part of that is going to be through efficientcy which UBI forces in the economy, if you cant efficiently use Labor your business is gone. Also the current debt system forces you to grow exponentially to pay down the interest or go bankrupt and we don’t want that in a green world.
    6. The future needs innovation and you cant have that if you are psycologically destroying people and forcing people into any job for a jobs sake.
    7. The entire country would become a workers union forcing companies to adapt and adopt a psycologically safe work place which Google found is the biggest driver of team performance and productivity increases which we really need now.
    8. MMT or JG is just another implementation of the ‘Poor House’ from the 1800’s and would lead to a race to the bottom in my view, additionally the administration burden would be enormous and there’s no incentive for companies to pay decent wages or become more efficient.

    Finally, think of money as a time/value decsion making tool that can expand and contract rather than a physical item. The virtual world can expand indefinetly so we will never have enough physical collateral such as gold, mortgage bonds etc. to back it. If we fail to deal with this the virtual world will consume the entire high street and we still need those things.

    Just a few thoughts off the top of my head 🙂

  • George Kendall 28th Aug '20 - 1:10am

    @Edward Clarke
    I’m a bit confused by what you say, but maybe I’ve misunderstood you.

    You appear to be saying fund UBI with QE. Surely, using the Bank of England to create money to fund stuff has to be a temporary measure, for example to get out of a recession, or to fund one-off capital costs which may bring economic benefits later. If we start to use it to fund large ongoing year-by-year spending, like benefits, then it’ll lead to ever growing inflation. That kind of approach has never ended well for countries that have adopted it.

    Regarding UBI being a response to the permanent destruction of jobs by AI, I agree something like UBI may become inevitable if that comes about. But it hasn’t yet. Until the Covid crisis, there was record employment in the UK. And there is enormous debate among experts as to if, or when, this mass destruction of jobs might happen.

    There is a crisis in the loss of well-paying meaningful jobs for many of our citizens. In my opinion, the response to that should be heavy government investment in retraining, so that people can shift into jobs that give them a sense of dignity. Only if that proves to be impossible do I think we should give up, and assume that many people are never going find meaningful work again. But I’d regard a society where most people just live on a stipend from the state without any hope of a job or a career as a dystopia to be avoided if at all possible.

    There are, of course, people who advocate UBI believing it could increase employment. And I have completely different questions for them.

  • George Kendall 28th Aug '20 - 1:58am

    @Joe Bourke (This answer is partly to you too, @Andrew T)
    When you said “The cost issue is something of a red herring”, I wondered if I had misread you.

    But maybe that sentence is why, whenever I’ve asked you for the cost of UBI designs, you’ve sent me to linked articles (for which I’m grateful), but avoided giving the cost yourself.

    In my opinion, cost is absolutely central to this issue.

    Some argue that the models of UBI they propose are mostly an accounting exercise, that involves shuffling money around in such a way that no one is a loser. But when you look at the actual designs of schemes, this is clearly not the case. The Compass proposal involves enormous payroll tax rises on the rich (between 13% and 15% increases) used to subsidise everyone else. The authors admit this wouldn’t work in practice because the rich would avoid these taxes, so they’d have to be levied in other ways, and on people who aren’t so rich.

    Clearly those who support these taxes to fund UBI strongly believe this is right, but I struggle to see how they are being realistic. Leaving aside arguments about the economic effect, these taxes will only happen if people vote for them. If Corbyn was widely regarded as profligate for wanting to raise taxes by £80bn/yr, how is it remotely realistic to expect voters to support tax rises of up to £191bn/yr (which would be necessary if we were to also end austerity)?

    Wouldn’t such a policy just guarantee we’d fail to take seats off the Tories, and guarantee a continuation of Tory rule?

  • Peter Martin 28th Aug '20 - 5:09am

    @ George,

    Probably the UBI will fail to be implemented because its advocates will never agree on just what it is meant to do. Those on the right will want to use it to reduce the extent of state support for the poor. It will effectively be a cap on welfare benefits. There will be a UBI and not much else. Those more to the left will want a generous UBI to ‘take everyone out of poverty’. Those in the centre, like yourself, will be looking at how much this version will cost and balk at its implications. Both electorally and economically. But they might be prepared to go along with something that will perhaps just lessen the extent of poverty if they consider it affordable.

    In a society where everyone was relatively equal it is possible to argue the UBI wouldn’t cost much, if anything, at all. Everyone’s tax bill will be increased by an amount to pay for the UBI but they’d get that back anyway as a UBI. But, how do you express the cost of paying, say, an extra 5k in tax if the government was going to unconditionally give you a cheque for 5k as compensation? But, even if we decide there is no cost, the flaw in the argument is the implicit assumption that everyone will carry on in the same way as before.

    Even in a society which wasn’t quite so equal you can still make the same flawed case. Suppose, for the sake of argument, the ‘poverty line’ was 4k pa. But there was a minimum wage which paid 10k pa tax free for a full working week. So we bring in a UBI at 5k pa to not just put everyone on the poverty line but give a margin above it. We then have to raise taxes to pay for it. So everyone then still earns 10k minimum but now pays more (income) tax instead of no tax and receives a UBI of 5k to make up. So workers now have a choice of earning, by carrying on working, say, 7k after tax plus the 5k UBI = 12k net which is an improvement on what they had previously or receiving 5k for not doing anything at all. Or at least not doing anything legitimate!

    Undoubtedly many will choose the latter because 5k is enough to be above the poverty line. After all, isn’t the purpose of a Lib Dem UBI to ‘take everyone out of poverty’? This is where the cost to society really lies and is just about impossible to quantify in advance. All you’re doing is creating an increased incentive for workers to drop out of the legitimate workforce and become involved in the black economy which may well also turn out to be the more criminal black economy.

  • Peter Martin 28th Aug '20 - 7:56am

    @ Edward Clarke,

    We can use QE to keep interest rates low. This is not quite the same as providing money for Govt spending but, however you look at it, we can’t pay ourselves for doing nothing. This is not at all the same as Govt spending to regulate aggregate demand, create jobs and prevent recession. The purpose of any intervention is to keep the economy working at close to full capacity and create jobs.

    Fairness in society cannot solely be about what we all receive. It has to involve what we contribute too. Lib Dems have nothing to say on the latter. But when this is introduced into consideration the JG can be seen not as a return to the ‘poor law’ or ‘workfare’ but as a way of allowing everyone to make a contribution and, in return, receive a fair share of rewards. It will set a minimum on wages and conditions for other employers.

    Everyone will include disabled people too. This doesn’t mean there will be forced labour for the sick. If workers aren’t capable of working they will still get paid. We’ll call it sick pay rather than disability benefits or whatever.

  • Peter Davies 28th Aug '20 - 9:34am

    @Joseph Bourke. The £101bn (2018) figure covers the specific group I mentioned (current tax payers) who will have net gains of zero but:
    “The costs of the personal income tax allowances do not cover individuals who are not on HMRC records because their income is below the tax threshold.”
    That group needs to be included in the gross figure if you try to work things out that way and they can’t work it out either. My guess is about £40bn +- 20bn. Many of these people also get UC which is tapered by net income so removing the tax allowance would increase the cost of UC. should that be included as a part of the gross cost? The answer doesn’t matter. Gross cost is a silly concept in this context.

  • George,

    I didn’t want to repeat previous posts on the cost of UBI schemes, but just to recap:

    1. The Torry proposal for revenue-neutral permanent UBI of £60 a week has a net cost to the exchequer of £26 million. Headline income tax rates increase by 3% in each band but this is offset by UBI payments so there are effective tax reductions for the first 8 income deciles. The top two income deciles see net tax increases. For the top decile of income payers, this results in about 7% of income of circa £1564 per week i.e. an average £111 per week of additional tax for the highest income earners reducing income to an average £1453 per week. The purpose of these models is to demonstrate the feasibility of Universal basic income proposal a as means of significantly improving the lot of lower-income earners and avoiding unnecessary means-testing for many.
    2. The Minimum Income Guarantee (MIG) has been costed at around £25 billion to ensure a minimum income of £100 per week (or tax and NI insurance relief of this amount) to all permanent residents and increase in the Universal Credit work allowance to minimum wage (net of taxes). The MIG is funded by restriction of pension relief to basic rate, reinstatement of fuel duty escalator and elimination of the lower threshold for employers’ national insurance.

  • Daniel Walker 29th Aug '20 - 8:11am

    @George Kendall “I’m afraid I struggle with these Torry blogs. I have found them interesting, but I haven’t been able to find key information about costs in them.

    Torry’s (permanent) proposals are intended to be (nearly) revenue-neutral. I think his latest full paper is this one, although that does also have a “Recovery” proposal for pandemic recovery in. The “permanent” costings are on table 5, page 10 – the net cost is £26m.

  • James Fowler 29th Aug '20 - 9:24am

    It’s easy in these debates to get caught in the millions, the billions and the percents. Here are two simple issues with UBI rooted in morality and behaviour that occur when you give everyone a flat cash payment:

    1. Generally, there is nothing so unequal as the equal treatment of unequals.

    2. Specifically, employers steadily freeze/cut wages to absorb the level of the new cash benefit.

    The purpose of the UBI seems to be to try and achieve greater social equity. I support that, but would like to see specific targeted measures relating to capital rather than income distribution to effectively address this.

  • George,

    changes in personal taxation are typically presented in the media in the form of “What does it mean for me”. The Torry proposals (similar to the Compass scheme) adjust tax and NI allowances so proportionally more relief is given to lower-income earners and less relief to higher-income earners with a 3% increase in headline band rates. The cost to the exchequer is estimated at 26 million i.e. basically revenue neutral.
    The lowest income decile currently receives household income of £202 per week. This will increase by £45 to £251 pw under the Torry scheme. The 2nd lowest decile will get an extra £26 per weel/ The highest income decile currently receives £1,564 PW. This will decrease by £112 to £ 1452 pw. The 2nd highest decile will see income reduce by £27 per week.
    This short ten-minute film https://www.prnewswire.com/news-releases/basic-income-explained-a-new-film-from-dr-malcolm-torry-301072752.html explains the difference between basic income, minimum income guarantee or negative income tax. We need to be clear as to which policy we will advocate as a party going forward. To advocate none would be a huge mistake for this party. It is incumbent on all of us to understand and be able to explain the benefits of the policy we adopt.
    Using a basic income reform of the tax and benefit system, both poverty and inequality could be substantially reduced; large numbers of households could be removed from means-testing; and means-tested benefit claim values, and the total cost of means-tested benefits, could be reduced considerably. The scheme could provide additional employment market and business-creating incentives for the large number of households no longer on means-tested benefits (Collado, 2018): an important factor in relation to the rebuilding of the economy following the coronavirus outbreak.

  • Peter Martin 30th Aug '20 - 5:00am

    “there is no total cost. It is designed to be revenue-neutral. If you increased the income tax rate by 3% it might raise 18 billion.”

    It might, at least initially, but if everyone has to pay more income tax they’d have less to spend. Other tax receipts such as VAT would start to fall. The economy would slow, employment levels would fall and income tax revenues would then start to fall too.

    The mistake is to think you can change one thing and everything else will remain the same.

    “If you increased the personal allowance at the same time to the minimum wage you would give back an equivalent amount in extra tax relief.”

    And you’d probably get back more in total. You’d be transferring money from higher income groups to lower income groups who are more likely to spend it and create a economic stimulus.

    “In this case, you are not increasing the personal allowance, You are reducing it and giving a tax credit or benefits payment instead. It is tax reform and redistribution that requires no increase in the government’s deficit and borrowing and that leaves 80% of households with an increased after-tax income.”

    This is household economic thinking. If you’re transferring spending power from the wealthy, who are less likely to exercise it, to the less wealthy who are more likely, you can’t assume that everything else will remain the same. The governments deficit will probably fall but that’s not the issue. There could be an inflationary effect. This is not to say we shouldn’t transfer spending power to the less affluent but the macroeconomic effects do need to be properly considered.

    It’s probably better to do it gradually so that any inflationary effects can be compensated for as they start to happen.

    This is a big danger if a UBI is introduced quickly. If, as likely, there are mass resignations from low paid jobs at the same time, the UBI will end up making us all worse off. We want low paid jobs to be better paid jobs not even lower paid than they already are. Which is what will happen to net wages if workers have to pay more tax. The UBI won’t change that.

  • Peter Martin 30th Aug '20 - 3:07pm

    @ Joe B,

    “There is absolutely no prospect in the forseeable future of mass resignations from any job, low-paid or otherwise.”

    You don’t know that. Anyone who has had three teenagers might have had difficulty getting them up in the mornings. They might have said something like “You’d better get moving because no-one is going to pay you for lying in bed all day”. If they’d the choice of working all week for, say £13k pa, after tax and UBI, or half that for lying in bed …..

    They’ve all turned out fine but it really wouldn’t have done them any good at all to have just been handed money unconditionally. It’s making a big assumption that many, even non-teenagers, will act in a more socially responsible manner. Many will take the UBI but won’t like paying a relatively high rate of tax on additional earned income. So they’ll work cash-in-hand to make up the rest.

  • Peter Martin,

    policy should be based on evidence rather than anecdotes about teenagers. UBI trials show no loss of work incentives, In fact, there has been a slight increase in work take-up in the Finland Trials.
    UBI or a minimum income guarantee should be introduced at modest anounts – £60 per week (replacing much of the personal allowance and NI thresholds) as suggested by Torry or Compass and accompanied with a job guarantee scheme to ensure work availability and skills development. The two programs complement each other.

    With the onset of Coronavirus cash-in-hand work is becoming rather scarce. Cash is hardly used anymore in China. I understand, consuner transactions are settled almost entirely by mobile app payments there.
    Benefit or tax fraud is often raised as an objection by Conservative MPs, but it is relatively insignificant compared with the tax gap that exists at the corporate level.

  • George,

    the Compass scheme Scheme 1 would be close to revenue-neutral – with a net annual cost of £0.7 billion – but would still require an increase in the standard rate of tax to 23p. The net cost of £0.7bn is missing from the last line of the chart in your article.
    The gross cost is equivalent to the cost of eliminating much of the personal allowance and NI lower threshold and the increase in the income tax rate by 3% (1% raises about 6 billion – 3% about 18 billion). It would be difficult to raise income tax rates by 3% and impossible to withdraw tax and ni allowances, if the money was not being given back in the form of tax credits/UBI.

  • Antony Watts 31st Aug '20 - 11:29am

    Might be a bit late and end of queue, but here goes. What is the basis of all this?

    “All Europeans should enjoy the right to basic goods (e.g. nutrition, shelter, transport, energy) in their home country, along with the right to paid work contributing to the maintenance of their communities while receiving a living wage, to decent social housing, to high quality health and education, and to a sustainable environment.”

    Is this it?

    So what does it cost to provide this? UBI must hold people to the minimum of these provisions surely.

    So it’s no good putting top down numbers, we need a bottom up analysis of how to give a sustainable acceptable life to everyone, then there’s the challenge of incentivising them to work…

  • Peter Davies 31st Aug '20 - 12:03pm

    No George, Taxing people and giving them the money back is not exactly the same as tax and spend. It is exactly the same as not taxing. There will not be revenue officers carting sacks of gold around. For most people there will be a change to the wording on their pay slip or benefit advice.

  • Well said, Antony Watts. And thank you for encouraging another late-comer.
    And I agree very much with your brief assertion or reaffirmation.

    But I think your concluding challenge is easily met. I believe any UBI will not be so large as to encourage idleness, or indeed to make it possible to anyone without other income. Many people do plenty of work for no financial return: parents at home bringing up small children, offspring at home caring for grannies and aunties, Volunteers. Would-be volunteers who have to find dull paid work to support their charitable intentions. There is so much necessary and valuable work done willingly by many, so let’s encourage that by eliminating cruel necessity. Toil undertaken without pay tends not to be called ‘work’, and it is wrong to think a UBI would just allow the lazy to be idle: it can enable thousands to do socially valuable — ‘valuable’ — work they could not otherwise afford to do.

  • Peter Davies 1st Sep '20 - 8:41am

    The most efficient way of paying UBI is to pay it directly into their bank account. Employers and financial institutions would deduct standard rate tax at source. Those in higher tax bands would need to fill in returns though in most cases they would merely confirm the income on which they have paid standard rate and pay the extra.

    In the short term though, only a small number of people would go on to this system immediately. Those on benefits would just get a note saying £140 of their fortnightly or £300/£310 of their monthly benefit was now UBI and most employees would stay on their existing tax code until they got a direct payment set up. That need not happen until they change jobs.

    You will notice that under this scheme, most of the enormous additional “Cost” will not occur when the scheme is introduced. It will happen quietly over a number of years and will make no difference except in admin costs.

  • Peter Davies 1st Sep '20 - 8:53am

    “One option I rather like would be to pilot making Universal Credit non-conditional for a random group of people, and seeing how that affected the rate at which they found work.”

    A better measure would be whether it made any difference to the rate at which employers filled their vacancies. I suspect not. There would just be a slight tendency for jobs to go to people who wanted them rather than those that didn’t. One happy worker, one happy idler, one happy employer.

    Making Universal Credit unconditional might be a good first budget measure while putting in place the structures for UBI and taxes like LVT and inheritance tax. If the work-hours requirement were removed, it would replace job-seekers allowance and provide a small income for students.

  • Peter Davies 1st Sep '20 - 8:41pm

    32.7 m on paye. 12.5 m on state pension. Perhaps 3 m claiming benefits and not in one of the other groups. That’s a big majority of the adult population of about 50 m that already have a method of payment set up. None of them has to move over immediately. In the long term though you are right. the simplest way is a separate payment like child benefit. I’m suggesting they would move to that system the first time they changed employer or employment status or whenever they chose once the initial rush was over. The advantage of a separate payment is that once it is set up, you don’t have any manual intervention until the recipient changes bank account or dies. The gaps and opportunities for mistakes when changing between systems is one of the most hated aspects of the current regime.

    The people with non-paye income already have to fill in returns. My suggestion was that we could reduce this number by making interest and dividends taxed at source.

    The reason that I don’t think that most paye taxpayers would notice the initial change is that for most of them (those below average income) there would be no change to notice. Some would see an increase in their UC payments but sadly they probably wouldn’t notice that either.

  • I am sorry I am coming late to this debate, but I hope those who I am responding to will respond back to me.

    Peter Martin,

    Where did you get a JRT figure of £144 a week from for the poverty line? Their most recent report (page 15) states that for a single person the poverty line in 2017/18 was £152 a week (https://www.jrf.org.uk/report/uk-poverty-2019-20). The Social Metrics Commission state it is £157 a week for 2018/19.

    Joe Bourke,

    Please can you give a quote and a reference for the claimed policy of providing “living cost support for entrepreneurs”? I looked in a ‘Fairer Share for All’ but couldn’t find it.

    On a more general note. A few years ago I was an enthusiastic supporter of a UBI and set out how it could be funded – https://www.libdemvoice.org/can-we-afford-a-universal-basic-income-56572.html.

    Nowadays I am much more concerned with increasing working-age benefits to the poverty line, which according to the Social Metrics Commission is £157 a week for a single person and £271 for a couple. I suggest it can be done over ten years at a cost of £52.9 billion on top of our costed manifesto commitments of £9.43 billion.

  • Peter Martin 3rd Sep '20 - 9:23am

    it is wrong to think a UBI would just allow the lazy to be idle: it can enable thousands to do socially valuable — ‘valuable’ — work they could not otherwise afford to do.

    This all sounds very nice. But, can you take off your Lib Dem issue rose tinted spectacles for a moment?

    What do people do when they retire or win big on the lottery? Some, perhaps, do a bit of voluntary work but most don’t do anything at all other than what thy might have done for themselves previously. They don’t look at it as being lazy they just look upon it that they have enough income to not need to have to go out to work any longer.

    Speak to anyone running a charity shop. Yes they’ll have volunteers coming in to help from time to time. Usually it’s because they a bored and need someone to talk to. But often they are highly unreliable. They’ll want to come and go as they please. If the weather is too good they’ll want to be out in their gardens. If its too bad they won’t want to make the effort to get there in the rain and snow.

  • Peter Martin 4th Sep '20 - 9:44am

    “The Tories will argue that tax and spending cuts will stimulate economic growth …… Labour will make the same argument around greater levels of state spending..”

    To an extent, they are both right. Except the Tories don’t generally have VAT in mind, even though that is the most important tax for most, when when they are making their lower tax argument. It’s just a single argument in Keynesian terms with two aspects to it according to political preference.

    The downside of both sides is that extra spending/lower tax can lead to higher than desirable levels of inflation. That’s the time to tighten up fiscal policy and not before.

    “The Libdem approach should be focused on allowing people individual control over their own lives….”

    This is just right wing waffle! What is really meant is that the Govt should take a hands off approach and tell everyone that the problem of low wages, high levels underemployment and poor employment prospects generally is eveyone else’s problem but theirs.

  • Peter Martin,

    Lots of retired people are glad to retire because they found going to work in the last few years difficult. This was true for my mother who retired at 60 and I expect it will be true of many more with the retirement age moving to 67 for both men and women. Also it is harder to find employment the older one gets.

    When people talk of a UBI they often are talking of quite a small amount. Even if it was £70 a week as suggested by someone in this thread that is not enough to live on long term. If a person has no housing costs and has some savings to use then a person could manage to live on that amount so long as they have the savings to pay for expensive items such as the expenses of having a car such as tax, insurance and servicing etc. Therefore a UBI of £70 will not encourage many people not to work. It is likely to make part-time employment a better option and this can allow a person to do a part-time education or training course, especially if they are young and are still living at home with low or no housing costs. Even if a UBI was set at the poverty level for a single person (£157 a week) it would be hard to manage on if the person is paying £78.59 a week in rent or £159.95 for a couple (my LHA rates).

    A young person of 19 if working 35 hours a week on the minimum wage of £6.45 would earn £225.75 a week even after reducing this by 32% they would have £153.51 a week. If the UBI was £157 a week and it is not taxable being in work would still be beneficial.

    You haven’t said where you got your £144 a week figure from.

  • Joseph Bourke,

    I too couldn’t find, “living cost support for entrepreneurs” in our policies and like you thought it might be a reference to recent calls by some of our MPs. It has now been pointed out to me that on page 20 of our 2019 manifesto it states, that we would “Create a new ‘start-up allowance’ to help those starting a new business with their living costs in the crucial first weeks of their business”, which is not how I understood what is in the motion. I thought it was long-term support.

    I think a Minimum Income Guarantee would be better than a UBI and because it is means-tested students and those doing training courses could be eligible for it. However, a Minimum Income Guarantee is not universal. I don’t think the opinion polls on a UBI ask a realistic question. I wonder how many people would support a UBI of £61 a week for those aged 25-66 at a gross cost of £140 billion a year and the cost to all income tax payers of more than £70 a week (Compass scheme 1)? I would hope there would be support for ensuring no one in the UK lives in poverty even if people were told it would cost over £60 billion. And especially if it was done over ten years to ensure taxes for the average income earner did not increase.

  • Joe,

    George states that the additional government spending required by the Compass 1 scheme is £140.9 billion a year. To get to your £26 million net cost, taxes and national insurance are increased. It has been stated in the comments that the abolition of the Income Tax Person Allowance and National Insurance threshold would cost an income tax payer £70 a week. If they earned £12,500 it would also cost them an extra 3% which is £7.21 a week. So for a single person earning £12,500 a year they would receive £61 a week and have to pay an extra £77.21 a week in taxes. For every £1000 on top of the £12,500 they earned a tax payer on the basic rate of income tax would have to pay an extra 57.7 pence a week.

    To use your logic if I stated where the government could increase its income by £60 billion and so bring the net cost down to zero and you would then say there is no additional government spending!

    Do you think that a person who is not well enough to work should not receive enough benefit for them to have a car? If that person lives in the country then a car is likely to be very necessary for them to have much freedom at all. You seem to think it is fine for those living on benefits to be enslaved by poverty. As a liberal I do not.

  • Joe Bourke,

    Do you dispute that the Compass scheme 1 proposes the abolition of the income tax personal allowance and the national insurance threshold as well as increasing the income tax rate by 3% to 23%, 43% and 48% and the higher rate of national insurance contributions to 12% from 2% (page 15). Do you dispute that someone earning £12,500 a year will pay an extra ££77.21 a week to the government and an extra 57.7 pence a week for every £1000 they earn on top of this?

    The scheme that I advocated in February 2018 was near to revenue neutral with a net cost of £650 million, and basic income tax payers received a UBI which is equal to the amount extra they pay in tax, unlike in the Compass scheme 1.

  • Guy Standing has producd a short report on the cost and distributionl impact of a basic income floor https://www.compassonline.org.uk/wp-content/uploads/2020/04/BasicIncomeFloor_SL_FINAL.pdf
    As an illustration, rates of £60 for adults under 65 and £40 for children
    “would pay a significant, unconditional £10,400 a year for a family of four. A study for Compass has shown that such a scheme would be feasible, affordable and highly progressive.
    It would:
    • create for the first time an unconditional BIF
    • boost the incomes of the poorest families, and cut child poverty by
    more than a third and working-age poverty by over a fifth.
    • reduce inequality, strengthen universalism and cut means testing.
    • act as a counter-cyclical devise, with rates adjusted to handle both economic and natural shocks.
    The would be concentrated amongst lower income groups. The losers, in contrast, would be concentrated amongst the top fifth.
    Figure: the distibutional impact of a modest BIF can be seen on page 10.
    This illustrative scheme would cost around £20bn net. This is less than the aggregate cuts to benefits (of nearly £40bn) since 2010, and the cost of the government’s wage subsidy scheme over 3 months. It would take the UK back to a level of social security spending slightly less than in 2010, but with a much more progressive and watertight system in place.
    It would be possible to implement a scheme at a higher starting point (say £40 per child and £100 per adult per week) though at a higher net cost.
    Meeting the gross cost of the scheme would need tax adjustments. The most important of these would be the conversion of the current personal income tax allowance into a cash payment and a small rise in existing tax rates. The personal allowance costs a huge £110bn but is of no benefit to those with low earnings and those not in paid work. If paid to adults of working age, this, on its own, would enable a weekly cash payment of
    over £40 at no additional cost to the Exchequer. Though other forms of funding could be used, these tax changes would ensure that the benefit of the BI payments would be clawed back from the better off, thus raising the progressive impact of the scheme.
    Despite its strengths and growing support, the idea of a BI – like the national health service, child benefit and the national minimum wage before it – remains controversial, although it is now being backed by some former critics.

  • Joe Bourke,

    It is good to know that you do not dispute the figures I set out at 3.09 on 7th September. Abolishing the Income Tax Personal Allowance and replacing it with the equivalent amount as a Basic Income of £48.08 a week would have a cost to the Exchequer. As you correctly point out not everyone of working-age uses some or all of their Income Tax Personal Allowance and in February 2018 (https://www.libdemvoice.org/can-we-afford-a-universal-basic-income-56572.html) I calculated that it would cost £26.75 billion to provide this amount of Basic Income to those people. Therefore if my calculation was correct this is what it would cost the Exchequer to change the personal allowance into a Basic Income.

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