Covid has laid bare just how broken our system is - we must do better
Original image by Giancarlo Revolledo
The Covid-19 pandemic has laid bare the extent of poverty and inequality in our society. It has also exposed the inadequacies of our welfare system to act as a safety net for people, from the insufficient level and restrictiveness of Statutory Sick Pay (SSP) to the five week waiting time for Universal Credit (UC).
As we emerge from lockdown we are facing a very damaging recession, as well as ongoing economic insecurity and a climate emergency. We must grasp this moment and do everything we can to achieve fairer and more resilient society and economy.
A vital part of this will be to replace our dysfunctional benefits system with one that provides financial security for everyone who needs it. Universal Basic Income (UBI) - an unconditional and regular cash payment to everybody regardless of their income or situation – is gaining significant traction as a solution to many of these issues.
UBI has a number of merits most notably that it meets the human right that everyone should have an appropriate amount of money on which to subsist; it overcomes the negative features of means-testing like stigma; it is simple unlike the complex current welfare system; it stimulates demand in the economy by putting money in people’s pockets and thus could help avoid a deep and prolonged recession.
According to a recent opinion poll 84% of people support the introduction of UBI and a recent petition submitted to parliament in support of UBI had over 114,000 signatories. A number of pilots are taking place with some interesting results including in Scotland and Finland where the experiment resulted in increases in employment and positive effects on confidence, health and financial well-being.
Yes, there are some limitations to a UBI. It could need many modifications to ensure that those with greatest need retain additional benefits to meet those needs – including cover for housing costs, childcare and disabilities. It would also mean gaining public acceptance of some changes in taxation to pay for it.
While UBI does have cost implications some of these can be recouped through additional tax revenues as the economy grows from the effect of the stimulus. And we could call for a” People’s Quantitative Easing” with the Bank of England putting money into the economy to help pay for it (as they did in 2008). Or, the government could borrow and pay some of the debt back afterwards through progressive taxation. This would ensure that the highest earners didn’t benefit from the Recovery UBI in the longer-term. And of course they could close some of the 1,156 tax reliefs in the UK, many of which disproportionately benefit the wealthiest households.
Here in Wales an increasing number of politicians are expressing their support for UBI. It is also supported by the Future Generations Commissioner who sees it as a very real solution to helping people out of poverty and aiding the economy, while reducing society’s gaping inequalities which have grown deeper during this crisis. I am also encouraged to see the First Minister Mark Drakeford say he’s been interested in the idea of a basic income for forty years, and that “we’re up for playing our part in such an experiment”.
There is also action being taken at a national level and I feel honoured to be a Co-Chair of a Cross-Party Parliamentary and Local Government Working Group on UBI. This is an innovative new structure consisting of cross party MPs, Local Authority Councillors, Metro-Mayors, Peers and LGA Officers (open to any elected representative who’d like to join). The aim of the group is to coproduce work to collectively advocate for policy positions, Basic Income pilots and the need to test alternatives to the current system, with a view to influencing the wider debate around UBI and social security in the UK.
So let’s make a call for the “new normal” to include a benefits system that makes sure that everyone has equal access to a financial safety net that is adequate for their needs and that a progressive taxation system with the doors closed on tax havens and tax evasions helps to pay for such a fair system. Universal Basic Income would help the economy during this recession – but it can also be a means of paving the way for a fairer long-term solution to the current broken system.
More about the author
Beth Winter MP - @BethWinterMP
Cynon Valley, Wales
Beth is the Labour MP for her home constituency Cynon Valley.