The Covid-19 pandemic has laid bare the extent of poverty and inequality in our society. It has also exposed the inadequacies of our welfare system to act as a safety net for people, from the insufficient level and restrictiveness of Statutory Sick Pay (SSP) to the five week waiting time for Universal Credit (UC).
As we emerge from lockdown we are facing a very damaging recession, as well as ongoing economic insecurity and a climate emergency. We must grasp this moment and do everything we can to achieve a fairer and more resilient society and 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. Universal Basic Income (UBI) – an unconditional and regular cash payment to everybody regardless of their income or situation – is gaining significant traction as a solution to many of these issues.
UBI has a number of merits most notably that it meets the human right that everyone should have an appropriate amount of money on which to subsist; it overcomes the stigmatising effect of means-testing; it is simple unlike the complex current welfare system; it stimulates demand in the economy by putting money in people’s pockets and thus could help avoid a deep and prolonged recession.
According to a recent opinion poll 84% of people support the introduction of UBI and a recent petition submitted to parliament in support of UBI had over 114,000 signatories. A number of pilots are taking place with some interesting results including in Scotland and Finland where the experiment resulted in increases in employment and positive effects on confidence, health and financial well-being.
UBI is gaining increasing support among politicians including within the Labour party and I am encouraged by Keir Starmer’s cautious welcome to consider UBI when interviewed on the Andrew Marr show last week. In my own country of Wales the First Minister Mark Drakeford says he’s been interested in the idea of a basic income for forty years, and recently said that “we’re up for playing our part in such an experiment” and the Future Generations Commissioner for Wales has made a firm commitment to UBI which she regards as a very real solution to helping people out of poverty.
The launch of the Labour for a UBI group at the Labour Party Conference this week will be a positive platform through which to promote and garner support within the Labour movement for the idea of UBI. The recently established Cross-Party Parliamentary and Local Government Working Group on UBI is also doing some exciting work to collectively advocate for policy positions, Basic Income pilots and the need to test alternatives to the current system, with a view to influencing the wider debate around UBI and social security in the UK.
This is an innovative new structure consisting of cross-party MPs, Local Authority Councillors, Metro-Mayors, Peers and LGA Officers.
UBI will need modifying to ensure that those with greatest need retain additional benefits to meet those needs – including cover for housing costs, childcare and disabilities. It would also mean gaining public acceptance of some changes in taxation to pay for it.
While UBI does have cost implications some of these can be recouped through additional tax revenues as the economy grows from the effect of the stimulus. We could call for a” People’s Quantitative Easing” with the Bank of England putting money into the economy to help pay for it (as they did in 2008). Or government borrows and pays some of the debt back afterwards through progressive taxation. This would ensure that the highest earners didn’t benefit from UBI in the longer-term. And of course they could close some of the 1,156 tax reliefs in the UK, many of which disproportionately benefit the wealthiest households.
We clearly need a benefit system that makes sure that everyone has equal access to a financial safety net that is adequate for their needs along with a progressive taxation system that helps to pay for it. This needs to be at the forefront of Labour party policy and action over this next period if we are serious about overcoming poverty and inequality in our society.