Our welfare system must promote employment as well as providing a safety net
Last year Quartz reported that Amazon were testing a new range of robots which could potentially replace warehouse workers. Over 50,000 people work in Amazon Warehouses in the United States, and around 8,000 people in the UK, and their jobs are threatened by these technological advances.
Technological change is not only affecting jobs in the online tech industry. The service sector over the last few years has been hit hard. Automation has steamed ahead, with self-checkout machines in high street stores and delivery pick-up boxes now a part of daily life.
Automation and technological change have altered the world of work. We are entering a post-industrial age, where well-paid, secure blue collar work is no longer the norm. The next generation will have more insecure, less well-paid jobs with poor prospects for the future.
The changes we have seen in the world of work means we must all fundamentally re-think our approach to welfare. The current model of welfare, which involves a range of schemes from housing benefit to Jobseeker’s Allowance and Working Tax Credits is no longer fit for purpose. These benefit schemes do not encourage people into work; rather, they contribute to a benefit trap.
As earned income rises, out-of-work benefits and in-work benefits are withdrawn, and often the rise in income is not enough to cover expenditure, which can be devastating for some families. What we must do is move forward with reform, building a welfare system which promotes employment and provides a sufficient safety net. A basic income could be the progressive answer.
An unconditional basic income is a non-means tested payment to individuals; a right that comes with citizenship. The model often promoted involves a monthly payment on an individual basis. This income would replace all existing state-provided cash benefits. The basic income would be paid tax-free, without any means testing, and the amount paid would vary with age – but no other conditions or terms would exist.
The basic income is superior to our current model, because it has the potential to reduce poverty and eliminate the unemployment trap created by our existing benefits system. It provides a safety net which adapts to the industrial and economic change currently occurring across Britain. It would also save money, due to the reduction in the amount of bureaucracy needed for the system to work.
The concept of basic income has existed since the late 1940s, and it has support from across the political spectrum. Economists as diverse as Friedrich Hayek to Tony Atkinson have publicly supported the idea. However, we must take into account the potential pitfalls in the implementation of a basic income; what may work in theory may not work perfectly in practice.
A major criticism of a universal basic income is that removing means-testing from our benefits system would be impractical, due to the cost of housing. Without means-testing, a flat-rate component must be in place if universal basic income is to allow people to rent accommodation. This will mean that those without significant housing expenses would gain more from a basic income; and worse still, those renting cheaper housing would receive a windfall gain.
This could also lead to regions like London being out of reach for those who rely heavily on their basic income. A possible solution to this problem would be to reduce the overall amount provided by basic income payments and retaining a housing benefit element in our social security system.
In the current political and economic climate, it is difficult to see a full universal basic income program being implemented. However, this must not stop the Labour Party from continuing to push forward a new vision for welfare. Finland’s Kela (their social insurance institute) have begun preliminary study into exploring ways in which a universal basic income could be implemented.
Here in Britain, we should also be encouraging this form of research. It is of course likely that the results could lead to the formation of a totally new and alternative welfare model to that of basic income. Regardless, we must acknowledge the changing nature of work in Britain – basic income is among a range of alternative approaches we can pursue in building a modern welfare system that works for all.
Martin Edobor is a founding member of Consensus, a junior doctor and chair of the Young Fabians
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7 Responses to “Why it’s time for a universal basic income in Britain”
Evan More
Universal Basic Income can only work in a State with very strict border control, for migrants and asylum seekers.
Will you agree to set a limit. I know we are not meant to talk about cost or sustainability anymore, those being consigned to old thinking now.
Without very strict border control, much stricter than anything we have seen in any part of Europe in the last 30 years, then it would collapse in 12 months under the influx.
Gerry Crich
The UBI is no panacea. Households are complex and needs are diverse. It is a mistake to believe that there is a single, simple figure that guarantees all households full social participation. Need is determined by the number of children, whether any adults in the household are in work and whether any members of the household have special needs (a disability for example). Inevitably a UBI will therefore need to be supplemented by some form of means testing otherwise the poorest could find themselves significantly worse off. Establishing a UBI that could account for the needs of all households would be prohibitively expensive and politically undeliverable.
Making the case for the UBI on the grounds that technology is destroying jobs good is to argue from a very weak foundation. The phenomenon of insecurity is complex too and cannot be attributed to more uncertainty about contractual status – on most dimensions the labour market has shown more persistence than change over the last 30 years. The level of self-employment is scarcely any higher than in the mid-1980s, levels of temporary work in the UK are low by international standards and job tenures (the length of time people spend in a single job on average) have not changed for at least two decades. Yes, the UK has a profound low pay problem, but this is hardly a new phenomenon and most low paid workers have permanent contracts. Policymakers should focus on the data and eschew futurist speculation – there is no worse basis on which to build a progressive prospectus.
Steve
Evan More, the UBI would be restricted to citizens.
Steve
Here is a UBI proposal from the centre-right Reform Scotland: https://reformscotland.com/2016/02/the-basic-income-guarantee/
petermartin2001
Even if it was technically possible for all our needs to be supplied by robots there would be nothing to prevent any government only handing out an income (and we’d all need an income even so) on condition that we did some of those jobs manually. But of course we are nowhere near that level of technology at the moment. If we ask any local council for a list of things that need doing there would be shortage of things to do.
It has been a while since any progressive political party has seriously promoted the idea of a guaranteed income from working but the idea is nothing new and doesn’t have to be workfare in disguise. Both types of schemes will meet the same objections from the political right with questions like “Who is going to pay”? If we play their game and agree that everything will be “fully funded” we’ll simply be shifting existing money from one group to another. Aggregate demand will remain unchanged and so the underlying macroeconomic problems of our economy will remain unresolved. On the other hand, if we don’t play along we’ll be dismissed as potentially fiscally profligate by wanting to pay out money for nothing.
They will have a point. No-one of any progressive inclination is advocating the removal of financial life support from those who genuinely need it; but, if we hand out too many ‘freebie’ payments, either through the tax system or just by giving everyone an old fashioned cheque the government could create too much stimulus in the economy and create inflationary pressure. The Australian government tried something similar after the Global Financial Crash. It did work, but it was a sign of desperation and panic in exceptional circumstances. If we only have a limited supply of bread and we pay out more money for people to buy more bread all we’ll achieve is a rise in the price of bread. But if we employ more people to bake more bread, even if the initial start-up money for the employment is just created, as we know governments can just create money by Quantitative Easing, then the effect may not be inflationary.
It is probably better to leave the production of bread to the private sector. It does seem more than capable of meeting our needs. The private sector isn’t so good at housing, health and education though, so there would be plenty of scope for offering government sponsored employment opportunities there. It is worth remembering that the UK government doesn’t create pounds by spending them into the economy because it needs to get those pounds back from us in taxation. It creates those pounds, and then gives us a tax bill designated in pounds so that we will work for these now desirable and valuable pounds, and so be able to pay that tax bill. That’s quite a different motivation.
The real economy runs on the labour power of us all. Ultimately, we can do ourselves a favour, and solve more than a few social problems at the same time, by not wasting the talents and the labour power of those who wish to provide it.