Income security for all – the case for (Recovery) Universal Basic Income
The Covid-19 pandemic has laid bare the extent of poverty and inequality in our society. It has exposed the failings of our welfare system to act as a safety net for people. As the newly elected MP for Cynon Valley, I am concerned at what the future will hold post COVID 19 for the people of my constituency.
We have a community and people second to none in Cynon Valley. But we still face significant problems with high levels of poverty, in particular child poverty, and high rates of people in receipt of welfare benefits.
While the government has introduced some measures to try to ease some of the financial pressures on people during this pandemic, these schemes have not reached everyone, and they are short term measures.
As we emerge from lockdown we are likely to face a damaging recession. Unemployment has been estimated to rise by 2 million (OBR), although this is likely to be higher as furloughed people continue to be made redundant. After 10 years of austerity, the impact of a recession on Cynon Valley stands to be dramatic. This austerity has seen the disappearance of 30,000 local government jobs in Wales and my own council’s funding being cut by £90 million.
The OECD has predicted that the UK economy will be the hardest hit of nations with a developed economy – and we know from bitter experience that it is the poorest sections of our society that suffer greatest hardship unless measures are taken to counter the effects of recessions.
So we must grasp this moment and do everything we can to ensure that as we emerge from lockdown, we do so with a fairer and more resilient economy. A vital part of this will be to replace our dysfunctional benefits system with one that provides financial security for everyone who needs it. It’s time we saw a return to the principle of universality being at the heart of our welfare system.
The idea of a Universal Basic Income (UBI) is gaining significant traction. The idea is that an unconditional and regular cash payment is paid to everybody regardless of their income or situation.
UBI has a number of merits most notably that it meets the human right that everyone should have enough to subsist; it overcomes the negative features of means-testing, like stigma; it is simple unlike the complex current welfare system and it stimulates demand in the economy by putting money in people’s pockets.
Here in Wales the idea is supported by the Future Generations Commissioner who regards UBI as a very real solution to helping people out of poverty and aiding the economy. I was also encouraged to see the First Minister Mark Drakeford say in conversation at the Hay Festival that he had been interested in the idea of a basic income for forty years, and that “we’re up for playing our part in such an experiment”.
I know that there are some limitations to a UBI, (like ensuring that those with additional costs because of disability or childcare needs do not lose out) and that a further debate is needed about its long-term potential benefits and costs. I recognise that it would not cure all of our economic problems.
The people of Cynon Valley however need immediate and radical action, so I cannot sit on my hands. I along with over 170 MPs and Lords signed a letter to Chancellor Rishi Sunak urging him to consider a Recovery Universal Basic Income.
This would be a temporary measure to address the needs of people and the economy given the very deep recession we are likely to face in the coming months. It would put money in people’s pockets and so boost spending and help the economy to recover – with an emphasis on helping local economies.
There are costs involved in any such scheme, and although there would be additional tax revenues as the economy grows from the effect of the stimulus, it will require investment.
In 2008 the taxpayer spent £137 billion to make sure the banks survived the financial crash. The people of this country are entitled to the same investment as the banks.
The Government could take advantage of low interest rates to borrow money to pay for this, or implement a ”People’s Quantitative Easing” with the Bank of England pumping money into the economy (as they did in 2008). Of course we could revisit the Robin Hood Tax, or close some of the 1,156 tax reliefs in the UK, many of which disproportionately benefit the wealthiest households.
Longer term, the “new normal” must incorporate both a welfare system that ensures no-one is left behind, and a taxation system that ensures that the wealthy pay their fair share.
We need action now. That’s why I am calling for a Recovery Universal Basic Income now – to mitigate the damage that the post Covid 19 recession will cause to my constituents, and our communities. A Recovery Universal Benefit system would help the economy during this recession – but it could also pave the way for a fairer long-term solution to the current broken system.
Cynon Valley MP