We increasingly find ourselves living in a world of flexible employment, income volatility and demographic change. We need a new settlement that is more effective and offers proper protection to people. Because of this I welcome the inclusion of calls for a Universal Basic Income (UBI) into the current debate about creating a more generous and less stigmatising social security system. Although I have many reservations too.
The current Social Security system is failing Londoners, but there is little agreement about how the system could be improved, so I welcome the conversation over UBI and the opportunity it presents to think about a wholesale reform of the system. Although I also understand the scale of change involved in even modest basic income proposals.
Conceptually a basic income is a very simple idea: provide every individual in the country with a cash payment at regular intervals, without any requirement to work or qualify for it. The payment would be given to every citizen regardless of their wealth, employment, or personal status. No need to prove your entitlement would take out the costs and barriers to getting benefits, and make sure everyone has at least enough to live.
Support for the proposal comes from a very basic tenet of fairness. It cannot be right that some in our society live in luxury and excess whilst others live in poverty and without access to enough food or income to cover their rent. At the very least we should all have access to the basics for life.
A citizen’s income or UBI would ensure basic fairness and be successful if could meet these tests:
- Reduces general poverty and child poverty
- Reduces income inequality and financial precarity
- Increases well-being and happiness and reduces mental health problems
- Encourages more people into some form of work, but also creates a route to reducing dependence on the state and cutting welfare costs
- Increases national productivity
The flaws with the current benefit system are that it does not lift people out of poverty and still leaves families relying on food banks. They are disempowered and de-humanised by a system which works against them and which they must fight to get anything.
On the surface, Universal Credit looked like a step in the right direction by bringing together a confusing and complicated set of different benefits into one. But in practice it is failing at least 10% of the people on Universal Credit.
While COVID-19 has propelled this issue into the foreground, arguments for a universal income are not new – going back as far as Thomas Paine in the 1790s. The arguments for a UBI have come to the fore again recently, with many of my constituents in Putney having written to raise this with me since the pandemic began. Especially many people who did not expect to need Universal Credit and now finding that it is not enough.
Further evidence of its wide reaching popular appeal comes in form of the Pope, who suggested in his 2020 Easter address that “this may be the time to consider a universal basic wage”. While on January 20th this year the London Assembly Economy Committee looked into UBI and the Spanish government said last year that it aimed to roll out a basic income “as soon as possible” to about a million of the country’s poorest households.
In Scotland, the First Minister, Nicola Sturgeon, has said the experience of the coronavirus pandemic has strengthened her support for such a system, telling MSPs in May: “My position on that has gone from having a keen interest in exploring it to what I now describe as active support for it.”. While in North Ayrshire the leader of the council, Joe Cullinane has said: “As we rebuild our economy post-COVID, we must consider innovative solutions in recreating the social security safety net and now would seem the ideal time to test Citizens’ Basic Income.”
Public support is also growing, with a poll by YouGov in 2020 finding that in the view of coronavirus pandemic 51% of the public in the United Kingdom support a universal basic income, with just 24% unsupportive.
Indeed, COVID-19 has shown how precarious the welfare system is. Too many people are falling between the cracks of the economic support package, and the thousands of people who have joined the ranks of Universal Credit claimants are finding a system that just doesn’t pay enough.
There are 13,000 self-employed individuals in my constituency and so many have fallen through the gaps left by the Government. They have had no choice but to turn to Universal Credit, and they have found out the hard way that this is a hugely flawed system and nowhere near enough to live on.
More widely, the welfare system is failing Londoners, leaving poverty entrenched and inequalities increasing. In-work poverty is up, disabled people and black Londoners are shown to disproportionately lose out under Universal Credit, and child poverty is at 36% in my constituency and 37% across London. This is totally unacceptable.
The Mayor of London’s Cumulative Impact of Welfare Reform Report of 2019 showed the negative impact of welfare changes since 2010. The benefit freeze, changes to housing allowance rates, the move from Disability Living Allowance to the Personal Independence Payment, the ‘Bedroom Tax’ and the implementation of the two-child limit – which restricts claims to various benefits, including child tax credits, to just two children.
The analysis makes clear that the overall loss of income through changes to benefits and tax credits is not offset by the recent changes to Universal Credit and increases to the National Living Wage. It also shows that:
- Households with children and at least one disabled person are set to lose around £3,800 a year on average.
- London’s single parent households, which are overwhelmingly run by women, will be at least £2,400 a year worse off on average.
- The Government’s tax and welfare reforms will put an extra 75,000 London children in poverty and see women on average lose against men in virtually all scenarios. This includes as much as £600 where a woman is a household’s primary earner.
- The poorest black Londoners will lose an average of £870 a year following the changes – significantly more than the poorest Asian or white Londoners
- The capital’s social renters face an average loss in household income of £1,200 per year. By contrast, Londoners who own their properties outright or have a mortgage stand to gain an average of £700 and £110 respectively.
I would add to this increasing insecurity and mental health problems, and rising food bank use. By contrast, the wealthiest 50 per cent of Londoners – those less reliant on welfare and who will benefit more from tax cuts – will see an average overall increase in their household income of £210.
Basic income in action: Kenya and Finland
My interest in a UBI goes back many years to seeing the positive results in trials around the world and in Kenya where I was living and working in development.
Early projects have continued and four years ago US charity GiveDirectly began a 12-year, £26m programme involving 20,500 people in 195 villages. Results so far have been very positive – with freedom for women who are not reliant on their husbands, investment in small businesses which earn more income and lead to greater household savings.
The trial has also found that:
‘Experimental evaluations of conditional cash transfers have consistently found that recipients of shorter-term transfers do not reduce their work effort or spend the money they receive on alcohol or tobacco. Instead, these evaluations have documented improvements in a wide range of outcomes including food security and educational attainment, investment in small businesses and long-term earnings. Even short-term infusions of capital have significantly improved long-term living standards, psychological well-being, and life expectancy.’
I have been particularly interested to see examples of better outcomes for families where women are given the cash transfer. I have also been interested in how such schemes allow more people to do community work, care for relatives or community members and be more creative and more entrepreneurial, allowing people to build new businesses and strengthen their communities.
Finland’s two-year scheme, run by the government nationally between 2017-18 has had widespread international interest. The trial paid 2,000 randomly selected unemployed people from across the country a regular monthly income of £490, with no obligation to seek a job and no reduction in their payment if they accepted one. So, while it was a very restricted group and the payments weren’t enough to live on it still showed many positive results. It didn’t show a significant impact on employment, but researchers said that “The basic income recipients were more satisfied with their lives and experienced less mental strain than the control group.” Good, but not a ringing endorsement.
Recommendations for a UK pilot scheme
- It is recommended that a pilot should be a randomised controlled study, with two study areas where the whole community receives a CBI (2,500 receiving the high payment, the other receiving the 14,600 the low payment).
- The preferred model for piloting a CBI pilot in Scotland is based on 5 key principles: universal (paid to all); unconditional (no requirement to search for work); individual (not paid to households, like Universal Credit); periodic (paid at regular intervals); and made as a cash payment.
- No one would lose out as a result of being on the trial.
- The model proposes two levels of CBI payments – one ‘high level’ based on the Minimum Income Standard and one ‘low level’ more closely aligned with current benefit levels. For both levels of payment, suspension of a range of existing income-related benefits is proposed, while others, primarily related to disability, housing, childcare and limited capability for work would continue.
In having this conversation we have to also debate and research the arguments against a Universal Basic. We have to start from these:
- Affordability – what would it cost and could we afford it?
- Best use of the money. Especially in London, the housing crisis is the root of poverty here. If we had the funds to spend on tackling poverty in London, we have to have the debate about whether spending this on housing wouldn’t be a better and more transformation use. I want us to have that conversation too.
- Public support or just being seen as more ‘money for nothing’ and views that the money will be wasted. Negative views about people in poverty will need to be confronted and debunked. There is research on cash transfers around the world which addresses this head on in a research into ‘does the money just get spent on alcohol and tobacco, and the evidence is that it does not.
- Does it really address people’s different needs, and especially different needs for disabled people and this is often the biggest concern of many people about UBI
- Would it decrease poverty or even increase poverty
- It is an individualistic intervention that undermines community and solidarity, or, does it enable people to care more, take up more community activity, be more creative, think differently, build communities.
- Does talking about a very different system stop us talking about reforming the system we actually have and making it better.
As we emerge from lockdown, it is time for radical ideas and a radical rethink of how our economy and society works and I welcome the increase in political interest and in research into the concept and whether it really would achieve its aims in practice.