Whilst a UBI-style programme might appear desirable to some, it is simply not feasible. Two key questions are whether UBI would be affordable, and whether it could be introduced in away that prevented losses amongst the most vulnerable in our society. A universal basic income scheme fails on both counts.
A report from the think tank Compass and the Joseph Rowntree Foundation found that UBI could be prohibitively expensive, would create too many losers among the poorest families, could dramatically increase the number of children living in poverty (as was also found in modelling by the Citizen’s Income Trust), and could significantly increase inequality because it would not account for individual needs and circumstances. These factors alone demonstrate just how ineffective, and in fact damaging, a UBI-style system could be.
The report also found that the additional tax revenue required to support such a system could be as much as £160 billion. This would be unaffordable, even without considering the likely behaviours of individuals in the labour market.
I wholeheartedly support the ethos that there is dignity in work, and we must ensure people have the tools to find meaningful employment. Our current welfare system, built around Universal Credit, seeks to incentivise claimants to move off benefits and provide tailored support to help people find work and increase their earnings.
The unique circumstances of coronavirus have of course raised concerns about employment for many people, which is why the Chancellor’s recent summer budget statement focussed on protecting and creating jobs. This approach, rather than a universal basic income, will bring long term benefits for individual employees and the UK economy.
Throughout the crisis, the government has been committed to protecting livelihoods through numerous support schemes for businesses, employees and the self-employed. In addition, the standard rate of Universal Credit has been increased by £1,000 from 6 April for 12 months. This is an £86.67 increase per month, on top of the planned annual increase. New Claim Advances are also available online and by telephone for those who require money urgently, and the majority of these cases have received payments within 72 hours. Since the middle of March, there have been more than 2.9 million claims for Universal Credit. With the system meeting the challenge of the surge, people are receiving the support they need.