Thursday, November 05, 2020

Universal Basic Income: 'Fasten the seatbelt before hitting the wall' - Ronnie Cowan MP

Following 100,000+ votes for the petition in favour of Universal Basic Income (this blog March 19 2020) a Parliamentary debate was held on October 13th in Westminster Hall .  

The Debate Pack  for this gives a clear overview of the idea of a non-means-tested benefit (like the long-standing Child Benefit)  and should have prepared the Minister for Work and Pensions, Will Quince for a considered reply to the request. But he was scathing in his response.   

    ' when we even begin to think about introducing a UBI, we see that not only would the   cost  be astronomical, but the Government would have to increase taxation mercilessly' 

Clearly his department had not been allowed to give him a balanced view, for instance he rubbished the Finland UBI pilot trial without checking out the benefits, as Chris Stephens MP pointed out:    

    'Surely the Finnish model demonstrated that people rejected precarious work and that  employers had to increase pay and model terms and conditions. It is just not the case, that the Finnish model suggested a disincentive to work.'

The cost of UBI has been carefully assessed by the Citizen's Income Trust to be affordable. 'Strictly revenue neutral' is their phrase. It is very easy to rubbish a scheme by choosing a high UBI rate and showing it is unaffordable but the CIT sets a meaningful rate and shows it would be affordable for the taxpayer and effective for welfare. Additional benefits would accrue when such people as family member carers of the elderly might be more able to continue giving their care when adding their UBI payment to income from a part-time job. It could make countless family-oriented care situations more possible rather than leaving the state to pick up the total care bill at a far higher charge. 

Annie Miller's book  Essentials of Basic Income  give throughly researched findings which the Minister also failed to acknowledge.

Despite the huge financial measures that Covid-19 restrictions have forced on the UK government, Mr Quince is ignoring the many welfare gaps a UBI might help him to fill. The media is full of such comments as: 'government ''wilfully ignoring'' ' sectors of workers like those represented by The Association of Independent Professionals and the Self-Employed  ( 'Devastating gaps in aid for self-employed' The Times Nov 3. 2020).   

Some of these support schemes depend on a firm's previous profit records, so a new business start-up has nothing to show for the government to match with grants or income top-ups. Many  new businesses might be formed if UBI was there to encourage people to make a start by giving them a guaranteed small regular income. It is common knowledge that it is new businesses that create new jobs. Besides, extra UBI money in the hands of everyone will be spent and give a boost to the general economy. The governemnt should launch a pilot scheme for road-testing UBI in the UK.

It is reported that some billions of pounds handed out through various business support is likely to have been fraudulently acquired. Let's start a UBI scheme that will enable new jobs to be created honestly and to address the worst povery cases directly - with cash in the hand guaranteed to deal with unforeseen emergencies.  

In The Times Mark Littlewood** (Universal basic income is not the answer to the welfare question, Nov 2 , 2020) writes a really good summary of some of the benefits of UBI (despite the title he sounds half convinced):

  • the attraction of UBI is its simplicity
  • means testing would be handled through taxation  
  • meal vouchers for school children in school holidays would not be needed
  • each household would have enough in cash for the necessities 
  • about the existing universal credit scheme he says problems persist

He is worried about the impact on work incentives, but he should study the Hansard Debate Pack (link above) which shows, apart from the above Finnish model giving positive employment effects;  the Utrecht experiment yielded 'positive effects'  for employment for lower educated groups, and for the very long running Alaska Permanent Fund:  

    'Our results show that adverse labor market effects are limited, and, importantly, a small universal and unconditional cash transfer does not significantly reduce aggregate employment'

As Ronnie Cowan MP (Invercylde) said in the debate, concerning the huge numbers still under extreme financial privation under Covid-19: 

     'I am asking that we do something now before it is too late. We do not know what the final straw will be. We need to plan now, to go forward. It is wise to fasten the seatbelt before hitting the wall.'

The pandemic is likely to force the  government into finding a better way of handling welfare. UBI would do this and would achieve a move towards fairness, justice and an incentive to create new businesss and work. It would help poverty relief for hard pressed individuals and families, which causes Tories often promote. 

** Mark Littlewood is head of the Institute of Economic Affairs : 'we promote the intellectual case for a free economy, low taxes, freedom in education, health and welfare and lower levels of regulation.'   

Fair enough! That's what everyone would like if they had the income and the assets to fulfil that dream for themselves. When will the IEA think outside the narrow elitist box of the 'free' economy and market forces and realise that to empower everyone with a non-means-tested  basic income would help promote another of their aims of: 'creating a society that fosters innovation, entrepreneurship...'

Surely libertarians naturally favour a basic income for all? A new basic right for eveyone  - a  gain in freedom that they famously champion?

Posted by Charles Bazlinton author The Free Lunch - Fairness with Freedom