Basic income must become part of a new settlement, for a new post-Covid age

I read with real interest Anna Coote’s article earlier this week, which questioned the arguments and assumptions behind the policy of basic income. It was a well written and reasoned article, but it presented an overly simplistic idea of basic income, what it is, what it is for and who pays for it. At its heart, a basic income is a liberation project. It has the potential to free citizens from three evils: want, drudgery and insecurity. If this crisis has showed anything, it’s how precarious many people’s financial lives are – living pay day to pay day, maybe in an insecure gig economy job.

Basic income addresses these issues in a way that provision of basic services cannot begin to do. The most important basic services for anyone are food and clothes. And yet these are the basic services most obviously missing from Anna’s argument. It’s all well and good providing legal aid – and it is important – but an income to pay for food for your kids’ stomachs and shoes for their feet is much more viscerally important.

Automation will soon be – and in many sectors already is – cheaper and more effective than human labour. Providing basic services to people does not help people cope with that. Only a basic income can mitigate the worst excesses of coming – and current – changes in the labour market. Just look at the job losses and iconic high street stores closing. For people who are losing their jobs due to these changes, providing them with free adult social care and access to green spaces does far too little for them. They need money in their pockets.

And this is the fundamental point: money in your pocket is a basic human right. For all the right wing likes to masquerade as libertarian, you can’t be truly free without money in your pocket. And when traditional work cannot generate that disposable income, other policies will have to step in. Only a basic income puts trust in the working classes that they know how better to spend their money than the state. It is not paternalism – it is empowerment.

Let me now address the cost issue. Anna’s argument is that it would be hugely expensive. But this is a right-wing fallacious critique that the Labour frontbench should not share. It has been argued by every opponent of Labour governments for every policy proposal ever. From the NHS to the national minimum wage, from the Open University to building schools for the future, every Labour government has shown that the most cost-effective option in the long term is to invest in our people and reap the dividend across decades.

I and others propose a basic income that is part of a new settlement for a new age: successful large businesses expected to pay it forward to the next generation, in a way that will benefit themselves in the long-term too; citizens trusted to make the right choices for themselves and their communities; public servants rewarded for their hard work in a way that they haven’t been done for years.

Post-Covid, we are going to need to stimulate demand, and a basic income would help. That is why some of the proposal’s greatest champions are business people. In America, this idea has been championed by such political titans as former President Barack Obama, and the aim has been to set the basic income at $1,000 a month. It has support across the political spectrum, which is a virtue rather than a vice.

Universal basic services would protect the current, failing, welfare system that the Tories introduced. It would protect Universal Credit, means testing, job centres. It would protect a safety net with huge holes. It would be characterised as Iain Duncan Smith did a free broadband connection, and it would easily fall victim to the next inevitable round of Tory cuts if and when they finally replace a Keir Starmer government. In contrast, we can make basic income an NHS for our times, loved and valued by all, and this would stop the Tories getting rid of it. They wouldn’t dare.

Basic income has been trialled and shown to work. The most recent trial in Finland found that basic income over a two-year period led to:

• A greater feeling of economic security;
• ​An improved level of mental health and wellbeing; and
• No noticeable effect on days at work in those who received basic income.

In fact, the trial found that those receiving the basic income spent slightly more days at work than the control group.

It is also popular. A YouGov poll in April found that 51% of the public support a universal basic income “where the government makes sure everyone has an income, without a means test or requirement to work”. Just 24% were unsupportive of the idea, while 9% said they did not know how they feel. It is an idea that takes the public with it – it even had a positive majority with Conservative voters, heresy I know for some but just the type of people we need to win the next election.

Why basic income and not basic services? It’s a false choice. Basic income stimulates demand and economic growth that pays for basic services. However, if it comes down to it, I am on the side of the idea that liberates and empowers, that trusts the British people with their own spending, that is tried and tested, that is mainstream and is popular with the public. Basic income should be part a new settlement with the British people that focuses plainly on dealing with our modern-day concerns, and fair and square puts more money in people’s pockets.