Head to Head: Universal Basic Income

Universal Basic Income (UBI), a policy whereby every individual receives a non-conditional flat-rate payment, is a divisive topic; it has been trialled in places as diverse as the US, Kenya, Scotland and Finland. Whilst some see it as the solution to, among other things, a broken and dysfunctional welfare system, others strongly oppose the idea.

So, is Universal Basic Income the way forward?

Supporting UBI- George Aylett, Founder of Labour Basic Income and Labour Candidate 2017

One of the biggest problems facing the United Kingdom in the coming decades is the rise of automation and the fourth industrial revolution. Whilst the first, second and third industrial revolutions helped human labour, the fourth will see an age of technology where automatons can replace human labour. Self driving autos, for example, could replace all bus and taxi drivers within the next few years. A PricewaterHouseCoopers (PwC) report stated that a third of British jobs could be under threat from automation by 2030.

If this is the case, the welfare state in its current form will be unable to cope. Welfare should be modernised and made more efficient. This is why we need to consider ideas like the Universal Basic Income.

Basic Income is the idea that all citizens receive a guaranteed income which will be enough to cover essential costs. The Basic Income would fundamentally restructure the welfare state and turn it into a universal model. Universalism is the foundation of our healthcare and it should also apply to welfare as well.

What could the policy do?

Eliminate poverty in Britain

The Basic Income should be set at a rate which covers essentials (for example: food, water, and energy). This would eliminate absolute poverty in the 6th richest nation on earth and could significantly reduce homelessness.

It should be noted that some aspects of the welfare state should be kept e.g. housing benefit should be kept to ensure that costs are fully covered (because in expensive areas the Basic Income by itself could not cover these costs) and disability benefit to ensure that the most vulnerable in society have more than enough to live off.

Incentivise work by helping people start businesses

Many who want to establish their own businesses can not afford to take the risk of doing so. One bad week for a sole trader could mean not putting food on the table for their family.

However, if the Basic Income were implemented then this worry would not hang over the heads of those in insecure work. Minimising risk and offering security for small business owners means that people who wish to start up businesses are more likely to do so. This isn’t just a hypothetical either - trials of the Basic Income have shown that the number of business start ups increase in areas where the policy has been tested.

Significantly reduce welfare bureaucracy

The significant bureaucracy in the welfare state means those who desperately need welfare might not be able to get it. Whether that be strict assessments or sanctioning, people who have needed support have failed to get it. At one point, a woman in a coma was declared ‘fit to work’.

Meanwhile, the only requirement to receive the Basic Income is that you need to be a citizen of the state. That is all. No sanctions, no unfair assessments etc. The amount saved in bureaucracy could be billions. Not millions. Billions.

The important thing is that the policy should be debated on a large scale. I see Basic Income as an inevitability in the age of the 4th industrial revolution – and whether or not you agree with the policy completely, most agree that the idea should at least be tested in some local authorities. If the trials fail, those who oppose it have got their answer. But if the trials succeed in the UK and we see genuine improvements in living standards, the health of workers and productivity then the policy should be rolled out even further.

The idea is backed all across the political spectrum. It is not an idea which is 'left' or 'right' - it is forward thinking.

Let's consider the idea of a Basic Income - a system which could help create a more productive, fairer, aspirational and wealthier society.

Opposing UBI- Lyell Tweed, TalkPolitics Campaign Agent

The Proponents of a Universal Basic Income (UBI) suggest that all adults should receive the same minimum and guaranteed income irrespective of their other incomes. This is instead of the current means based welfare system that has been in operation for many years. This safety net approach is insensitive to household living arrangements, insensitive to other sources of income, not conditional on contribution and not conditional on willingness to work. This immediately highlights some of the obvious problems with seeing UBI as the one and only answer to mass unemployment and poverty. Activists and politicians alike rightly recognise the threat to jobs posed by the artificial intelligence and robotics revolution, but simply accepting UBI as the solution to this problem is ill-founded. 

An obvious case against UBI would be its sheer cost to set up and maintain. The current welfare state benefit system leads to huge deficits as it is, even when targeted at a specific number of people, so increasing the pool of citizens receiving handouts from the state will only increase these costs. This is merely a variation on the welfare state, so to think that this wouldn’t also lead to unsustainable costs is naïve. 

The advocates of UBI do not seem to have reached a consensus on how to fund this enterprise, with a wide variety of high taxes only giving half the explanation. This is not to mention how to fill this UBI budget black hole; resources would probably have to be reallocated from other areas of the economy such as health and education. If services such as these have to be restricted to funder UBI, it would almost defeat the purpose of the project.

Another problem with the idea of giving to everyone, regardless of their circumstances, is that it may lead to simply making the rich richer while the deserving are still left behind. This is a prediction that the OECD has made and shows the problems of moving away from a means tested safety net for the people who truly need it, to a wholesale system of handouts for all. This doesn’t just cause problems financially but creates more social problems than there are under the current welfare system. 

UBI will also mean redistributing from the productive, but less well off, to the unproductive but better off. Potentially, a worker on minimum wage could be paying into the system that pays UBI for people free-riding on the system by not working and living off the handout. There can be no reciprocity. In this respect, what separates UBI from the widely vilified Universal Credit scheme implemented by the Coalition government? 

Finally, although a lot of the time UBI is seen as a perfect left-wing creation, what would stop this being rolled out by people intrinsically against the welfare state? The way that the Conservatives have treated the Welfare state over the last eight years would not bode well for the overhaul of the system with something like UBI. 

Modern western economies face a plethora of challenges, which could open up a debate on a radical form of politics not seen since the post-war period. UBI admittedly could be part of this debate, but its arbitrary adoption is not the solution, and should not be the end of this debate. 

Further Reading

Image: Images Money @flickr

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