Universal basic income – effective solution to a challenging future

Jun 8, 2023 | Bylines, News

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As a proposed universal basic income pilot takes shape in England, is it an idea whose time has finally come? Bremain Chair Sue Wilson writes for Yorkshire Bylines. 

A universal basic income (UBI) trial granting recipients £1,600 a month has been proposed for two areas of England for the first time. The pilot programme will prospectively take place in central Jarrow, in the North East, and in East Finchley in North London. Thirty people will take part in the two-year trial and the effects on their mental and physical health will be monitored.

 

The first trial of its kind in England

The micro-pilot is backed by think tank Autonomy, whose director of research, Will Stronge, described the amount proposed as “substantial”. He added that, with societal changes brought on by climate change, and technological and industrial advances, building an evidence basis now was vital, “so the ground is well prepared for national implementation”.

Participants in the trial will be selected at random from volunteers in both regions. Anyone is invited to apply but only 15 candidates will be selected in each area – with a caveat that 20% overall are people currently living with disabilities. The researchers will also recruit a control group.

Autonomy are seeking financial backing for a two-year programme. The trial already has support from community development charity Big Local and Northumbria University and also aims to secure support from philanthropic sources and local authorities.

The move has been welcomed by the Green Party, is currently Liberal Democrat policy, and has the support of the Labour mayor of Greater Manchester, Andy Burnham, who said, “a universal basic income will put a solid foundation beneath everybody so that they can have a life with security and stop worrying about everything”.

 

If the poll shared on Twitter by the Politics Polls account is anything to go by, the proposal also has considerable public support, with two-thirds of the almost 20,000 participants in favour.

Universal basic income is not a new idea

Many other countries have trialled a similar scheme in the past, such as Iran in 2011 and Finland in 2017. Earlier still, the idea almost made it onto the US statute books under Richard Nixon in 1969. However, despite receiving the support of the House of Representatives, the proposal never made it past the Senate. A ‘retrospectively’ successful basic income guarantee was also tested in Canada in the 1970s and Alaska currently delivers a ‘permanent fund dividend’ to its citizens, operating under similar principles.

Closer to home, at the present time, Wales has its own two-year trial, but with a specific group only – that of young people leaving care. In the EU, Spain is also currently running a trial with 5,000 participants, with adults receiving 800 euros per month unconditionally and minors receiving 300 euros. The Spanish scheme will run until the end of 2024

 

UBI: the cons

A common concern regarding any UBI scheme is the idea that paying people a lump sum, with no strings attached, is a disincentive to work. However, the idea that it would discourage the unemployed from seeking work is not born out by research, and UBI actually encourages entrepreneurship. Also, the aim of UBI is to meet people’s basic needs. But people have other needs too, and just because their basic needs are met, that won’t stop them striving to meet their remaining needs.

Another fear is that UBI would lead to rising prices. Again, this is not supported by the evidence, although it could potentially lead to a rise in wages through increased bargaining power.

A major worry, of course, is how the country would pay for UBI. Well, if the purpose of the exercise is to improve the lives of those worst off at a time of record poverty levels, closing the gap between the rich and the poor, then let’s tax the wealthiest in our society. Whether that be by scrapping non-dom tax status and/or raising the percentage of tax that the UK’s millionaires and billionaires pay, the cost of UBI is manageable.

Of course, there will be those, like Conservative mayoral candidate for London, Shaun Bailey, who are worried that UBI recipients will blow their money on drugs or booze. Presumably they would say the same about the homeless or those on benefits. Funny how there never seems the same concern about the wealthier in society ‘blowing’ their money on such things. Surely the point is that the choice of how one’s income is spent is for the individual to make, not any government.

 

UBI: the pros

The most robust trial – in Finland – came to the conclusion that the monthly payments boosted the recipients’ mental health, cognitive functioning, financial wellbeing and confidence in the future. The study compared the recipients to a control group of 173,000 people on unemployment benefits.

Washington DC based writer and advocate of UBI, Scott Santens, has been researching the idea since 2013. Having compiled the findings of a number of studies, he says “the data speaks for itself”.

A long list of positive observed effects include: a reduction in crime, improved student grades, a decrease in alcohol consumption (likely due to reduced stress), healthier diets and a reduction in obesity, a rise in home ownership, an increase in birth weights, a reduction in debt and an increase in self and part-time employment. Add to this the fact that those with more money in their pockets will be spending more and boosting their local economies.

 

Unanswered questions

Autonomy have set out their proposed approach in a report which seeks to answer many of the concerns that have been raised as how this will affect those who are already relying on state benefits. Questions remain over whether such a stipend may affect personal independence payments and state pensions and, more widely, how UBI payments would take account of current inflationary pressures. There are also legitimate questions over the sample size which is limited to the procurement of private funding.

According to the report the study will seek to evaluate whether UBI can assist in boosting economic activity and aspirations; increasing general mental health and wellbeing; relieving subjective financial strain; and easing the ability to engage in unpaid work such as caring for relatives. Ultimately, the question is how might UBI help people secure more control over their own lives? Careful analysis of the findings will form an essential step toward deciding whether UBI is feasible to roll-out on a national level.

Everyone deserves a basic standard of living, a roof over their head and enough food to eat. The national living wage has been set at just under £1,600 per month, which mirrors what the participants will receive. That leaves one important question. Why is the British state pension – which recipients have contributed to their entire working life – only just over half that amount at £883? No doubt a question the government might find difficult to answer – it is also highly likely that England’s first foray into trialling UBI will raise many similar questions.