The left needs an alternative to universal credit. Could it be universal basic income?

14th August, 2018 10:36 am

One of the biggest issues with the universal basic income debate – recently reinvigorated by John McDonnell’s announcement that the next Labour government would trial the scheme – is that nobody can agree on what the UBI should be for. For some, the UBI is the panacea for a fully-automated society of the future, where the concept of ‘work’ is consigned to the past. As Tom Wilson rightly argued for LabourList last week, there is no guarantee of sweeping job losses to automation, and the UBI does not offer a particularly compelling solution even if there was.

But is there another role for UBI, one that deals with the immediate welfare problems of the present, rather than those of an imagined future? Perhaps it could be the solution to the gaping structural flaws in universal credit and conventional welfare systems that the left so urgently needs to find.

Applying for universal credit is unreasonably slow and painful. As numerous charities have repeatedly pointed out, moving the process online risks making life difficult for those unable to use the Internet. And though it is simpler than previous systems, it still involves a complex set of eligibility rules and tests, all of which add only unnecessary stress and confusion to an already challenging period in the lives of those seeking support.

Personal Independence Payment (PIP) assessments, designed to test whether claimants are eligible for disability benefit, are a classic example of the onerous procedures ingrained into our current set-up. Despite its importance to the wellbeing of so many vulnerable people, PIP decision-making is sloppy. This year, the work and pensions select committee found that reports were “riddled with errors”. It is no wonder that two-thirds of appeals are successful. Tellingly of a system that values penny-pinching over lived experiences, even after navigating this process, those in need face a five-week wait before receiving their first payment.

How might UBI fix these shortcomings? To start, it would eliminate this period of stress, delays and stringent assessments. It would be given to all citizens above a certain age, then gradually taxed back off higher earners. This way, the wealthy would receive no net subsidy from the state, while those who lose their job would immediately and unconditionally receive the full income total. There would be no need for a five-week wait, since payments would continue as usual, and the only change would be the amount paid back in tax. That would mean no family had to survive without an income for an extended period of time, as is too often expected today. The other benefit to this automated approach is that no extensive knowledge of the welfare system is required for those who rely on it – there is one unconditional monthly payment, and no interaction required between the end user and the department for work and pensions.

On a national level, there are tangible economic benefits in adopting a universal scheme. Since the net benefit level would only be gradually withdrawn according to income, those re-entering the workforce would not come up against the high effective marginal tax rates of current welfare systems. Not only that, but a guaranteed income from the state might incentivise would-be entrepreneurs to take risks, leaving their jobs and starting businesses safe in the knowledge that should it not work out they have a guaranteed basic income to live on regardless. Those recently forced out of work by changes in the nature of employment might take the opportunity to retrain and find jobs elsewhere, allowing the economy to better respond to structural unemployment. UBI would also reduce administrative costs, which could be spent directly on welfare instead, and since everyone receives it, political support for maintaining a generous welfare programme is likely to be far stronger than it is today.

I don’t know what the future of work will look like, or how policymakers should respond if major changes arise. But I do know that our current way of thinking about welfare is steeped in negativity: we treat claimants with suspicion, and we fail to consider the potential economic benefits of a generous and ambitious welfare scheme. Universal basic income would be simple, automatic and compassionate. It has to be worth a try.

Keir Bradwell is a youth officer in South East Cambridgeshire CLP.

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