Free money for everyone: not such a wild idea anymore
Illustration: Lisa Rose Harper (lisaroseillustration.com)
No-strings-attached payments to every single citizen, with no means testing involved. That is the basis of a universal basic income (UBI) – an idea that’s not new but is increasingly making its way into the mainstream. Some see it as a way to redistribute wealth, fend off the worst effects of an unstable economy, reduce inefficiencies in the benefits system, enable people to take risks, and ensure that the gains from the so-called ‘robot and artificial intelligence revolution’ are shared fairly in our society. Others think such a policy would incentivise daytime TV binging and be a huge and unjustifiable drain on the public purse.
To find out more we caught up with Stewart Lansley, a proponent of the idea and a researcher of poverty and inequality. Lansley is a visiting fellow at the University of Bristol and is the author of A Sharing Economy, (Policy Press, 2016) and co-author with Howard Reed of a report that models different universal basic income schemes – called A Universal Basic Income: An idea whose time has come? and published by the Compass think-tank.
Adam: At its core, what is the universal basic income and how would it work?
Stewart: A universal basic income would provide all citizens with a guaranteed, no-strings weekly payment. It would be paid to all, with the amount varying by age. While some people dismiss the idea as pie-in-the-sky thinking, the principle of making payments to citizens as a matter of course already exists. Both child benefit – in essence a very modest basic income for children – and the new flat-rate pension system bear some comparison with how a UBI would work.
The idea has been around for generations and gained support from people as diverse as Martin Luther King, the right-wing economist Milton Friedman and the founder of eBay. Now sections within the Lib Dems, the SNP, and Labour are flirting with the idea, whereas the Green party have had the idea on the policy books for decades. Why has this idea had lasting appeal across the political spectrum, and what has led to an apparent resurgence in the past few years?
The idea has begun to catch fire in the UK because it offers much improved social protection in today’s increasingly fragile economy. Rising numbers are trapped in low-paid, insecure jobs, bringing a surge in the level of in-work poverty. These risks will rise as the ‘new machine age` slowly automates great chunks of service and manufacturing industries. Although experts are divided on the full impact of the new robotic revolution, what is certain is that workplaces will be transformed, displacing jobs, further widening the pay gap, and bringing widespread disruption to livelihoods. The benefit system – intrusive, harsh and patchy – is ill-equipped to deal with the increasingly precarious world of work. Even a modest basic income would strengthen the universal element of benefits, offer a more robust safety net and cushion the impact of inevitable economic upheaval.
In your report it states that a UBI would create a society where “all lifestyle choices are equally valued”. What is your response to people who have attacked UBI as “promoting an ideology of idleness”? If given free money, isn’t it naïve to think that a lot of people won’t just sit about? Would that be a problem?
Another strength of a UBI is that it offers a new charter of freedom between work, leisure, education and caring. For the first time, a UBI would both acknowledge and provide financial support for the mass of unpaid caring work, disproportionately undertaken by women.
Over time, a UBI would change behaviour. Some might choose to work less, take longer breaks or start businesses. By encouraging volunteering, caring and entrepreneurship these additions to choice have the potential to produce more value to society than large areas of traditional paid work. A guaranteed income – even at an initially modest level – would boost the heavily depleted bargaining power of workers, offering more choice over what jobs to take, and creating a fairer balance of power between employers and workers. Contrary to the claims made by some critics that a UBI will promote ‘idleness’, the overall effect, supported in part by evidence from earlier studies, is more likely to promote than weaken the incentive to work.
Who would be the winners and losers of such schemes?
There are a variety of possible schemes. Some advocates want ‘big bang’ reform that sweeps away the existing system in one go. However, the most workable option would be a more gradual approach. This could start with modest payments – around £70 a week for an adult of working age – while leaving existing means-tested benefits in place, but as a stepping stone to a fuller scheme over time. The simulations in the Compass report show that such a scheme would offer substantial gains: a sharp increase in average income among the poorest; a cut in child poverty of 45%; a modest reduction in inequality, and a reduction in reliance on means-testing. These are significant gains and they are affordable. They involve a manageable cost of around £8bn, just under 0.5% of total national income.
One of the key arguments advanced in favour of the UBI is that it will reduce the welfare bill and associated administration costs by scrapping means testing. However, the Tories have already chopped billions off the welfare bill and introduced Universal Credit with the aim of reducing admin costs – why should Conservative voters buy this line of argument?
The acute problems with the introduction of Universal Credit have weakened the argument for a comprehensive replacement of the existing system in one go. That’s why there is a strong case for an incremental approach. One possibility, for example, would be to start with a scheme for children, that would initially leave some of the present system intact but which could be gradually improved over time.
Over the past few years the public has been whipped into a frenzy around welfare recipients and the ‘something for nothing’ culture. You’re advocating giving the same amount of money to everyone, billionaires as well as the homeless. Why?
The same arguments have often been made against other universal benefits such as child benefit. By providing the same to everyone, you secure public acceptance – all citizens participate – while avoiding the problems of stigma, of scroungers vs strivers. Also you remove the way in which the current benefits systems actually disincentives work by punishing those who try to work as well as receive some benefits. As shown above, the net effect of an incremental scheme would be politically and economically progressive, as simultaneous changes in the tax system would ensure that the rich pay more additional tax than they receive in benefit.
Experiments in UBI or guaranteed income have or are being explored by governments in parts of the USA, Canada, Finland and the Netherlands. Now, Glasgow and Fife councils are considering variations on the idea. Could it be something that could be tried by Bristol council, and what would it take to make it happen here?
Ultimately, a real test of how such a scheme would work in the UK requires a proper, lengthy and adequately sized pilot with a control group. Glasgow is set to launch a feasibility study this spring, and may well be the first UK city out of the starting blocks with a local trial. While there is no reason why Glasgow could not be joined by one or more cities, including Bristol, it is also time that the government took a lead and joined other countries in planning its own trial.
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A UBI is being advocated by groups from both the right and left. How do their approaches differ?
The right – including a number of Silicon Valley enthusiasts – favours a basic income as a way of achieving a smaller state, of sweeping away a range of other forms of social protection. The left views it as part of a strong state, as a supplement to the wide public provision of services and not as a substitute. For them it is a profoundly democratic concept that promotes security, greater personal freedom and equal citizenship, recognising that all citizens have the right to some minimal claim on national income.
Finally, what do you think is the chance of a UBI being implemented in the UK ?
Even a year ago, the idea of a UBI was seen as pretty wild. Today, it is being taken much more seriously. A UBI is not a silver bullet, but it would be a crucial element of a new programme of radical reform aimed at creating a fairer and more stable economic and social system. While a UBI scheme is undoubtedly a long way off in the UK, and cannot be introduced without a much deeper public debate, the various pilots being launched across the globe are already adding momentum to the pressure for a more effective system of income support. If the various trials are a success, providing positive answers about the actual effects, some kind of permanent scheme becomes more likely. And once one country jumps, others will surely follow.
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