This week, the idea of a Universal Basic Income (UBI) captured headlines in the UK as a study, presented to Britain’s Labour Party, concluded that the country ought to introduce pilot schemes to test such a system, as part of efforts to tackle high levels of inequality and poverty.
The study, commissioned by the Progressive Economy Forum, a Left-leaning group of economists — and which the Labour party said it would give serious consideration to — focuses on the concept — proposed by the Congress Party — and which has been trialled in other parts of the world that would give members of the public “modest regular payment” to “help them feel more secure and able to purchase necessities for living.”
The report advocates a system that would have a number of essential features — involving a basic amount that provided basic but not total security, and a form of payment that was not paternalistic (as could be the case of vouchers), and enabled individuals to do as they wished with it.
It also had to be regular and predictable, paid equally to all individuals, and unconditional, with no behavioural or other conditions attached.
While the UBI is not a “panacea,” it would reduce poverty and inequality “substantially and sustainably,”, enhance economic security, and reduce the number of people dependent on Britain’s welfare system. The report has come at a time of rising concern about poverty and the economic sustainability of life in the UK and the rest of the world. Despite reforms over the years including an increasing minimum wage, and the raising of the threshold for personal tax allowance, the level of in-work poverty has remained high in the country.
Nearly 60 per cent of people living in poverty in the UK live in a household where at least one person works, according to a recent report — this is a substantial rise from the level of 35 per cent in 1994-95, and is something that the Institute of Fiscal Studies has attributed to the stagnation in house earning earnings since the early 2000s.
This in-work poverty has been manifested in many ways: the homelessness charity Shelter has estimated that over half of homeless families in the UK have a person in work, while the use of food banks — places that provide food and other basic goods to those in need — has risen sharply.
People’s problems have, to a degree, been exacerbated by reforms currently being introduced to Britain’s welfare system, with a system of universal credit set to replace the existing benefits system.
While pegged as a system that would simplify a very complex system of benefit payments and incentivise work, it has come under much criticism, with charities warning that in some instances it was worsening the plight of people and forcing them to turn to charity and food banks.
Across Europe the concept of a Universal Basic Income has been gaining traction, not least because of the changing nature of society, and warnings about the impact of widespread use of Artificial Intelligence and robots could have on society and jobs.
In 2017, the McKinsey Global Institute estimated that up to 800 million workers globally (a fifth of the global work force) could lose their jobs by 2030, as a result of robotic automation. Others have warned that this will only exacerbate poverty levels, by raising production but hitting wages.
In 2016 a proposal for a basic income for all was put to voters in Switzerland in a referendum, but it was rejected overwhelmingly. In the Netherlands, however, a number of cities have been trialling the system since 2015, focussing on small numbers of welfare claimants, with initial results set to emerge later this year.
The concept has not been just confined to the Left: Italy’s populist government is introducing a system that it has pegged as a citizens’ income, though with strings attached (potential recipients have to have been in Italy for a lengthy period and have to be below a certain income level to qualify).
A pilot scheme was launched in Finland in 2017 run by the Social Insurance Institution, which chose 2,000 randomly selected individuals on benefits for the trial to ascertain the impact it could have on their lives and ability to find jobs.
Though the study is just a year in — and its organisers say it is too early to draw firm conclusions, they note that while it did not increase the employment level of participants, it did increase their perceived well being levels — something that Guy Standing, the author of the British report, warns should not be dismissed lightly.
The political factor
Part of the problem with the trials that have been taking place so far, the report notes, are the political pressures that have sought to make things like the promotion of employment the primary goal, rather than other factors such as reduced stress or better attitudes to work and job-seeking.
It is notable that a trial system in Canada was ditched — despite showing signs of success — because of a change in government. “The primary justifications for a basic income are ethical or moral, not instrumental,” the report suggests.
Just as the concept of a universal basic income has been embraced by some on the Left as well as the Right, its critics have come from across the political spectrum. The British Left-leaning think-tank the New Economics Foundation published a report earlier this year, arguing that there was little evidence that UBI could live up to its promise, and that there were “more effective and sustainable ways of meeting people’s needs and fighting inequalities than just giving cash to everyone.”
There were also risks that its potentially high costs could result in the rolling back of public and social services, which would be very detrimental to vulnerable sections of the public.
On the Right has come the argument that the system — in addition to place huge pressures on the public purse — would disincentivise people from working. It’s an argument, swiftly rejected by Standing who, in his report, notes that while the pilots that have taken place so far provide no indication that it would lead to a disincentive to find work, the criticism that such payments would amount to something for nothing was hypocritical, given the widespread acceptance of the right of individuals to inherit family wealth.
“The wealth and income of all of us are far more due to the efforts and achievements of the many generations who came before us than to what we do ourselves, and if we accept the practice of private inheritance, as all governments have done, giving a lot of ‘something for nothing,’ to a minority, then we should honour the principle of social inheritance.”