Despite the Government’s measures, we still need an Emergency UBI
Despite the Government’s welcome support measures, we still need an Emergency Universal Basic Income
We need a Universal Basic Income to ensure that everyone has financial security and nobody falls through the cracks of both the Government’s support packages and our welfare system.
Modelling from the Royal Society of Arts has shown that their Emergency UBI scheme would leave 74% of the self-employed better off, particularly those on lower incomes, when compared to the Government’s help for the self-employed (1).
Their scheme would involve an upfront payment of £1500, followed by a weekly payment of £100 per adult and £50 per week per child. This would be on top of Universal Credit and support with housing costs.
There are a number of other proposals for an Emergency UBI from economists and think tanks, including the UBI Lab Network (2a), the Progressive Economy Forum and Autonomy (2b).
The UBI Lab Network proposal calls for a first stage of £500 a month for an adult and £200 per child, followed by a second stage of £1000 per month per adult and £500 per child to boost consumer spending during the recovery. These would be an emergency payment on top of Universal Credit and housing costs.
Support for an emergency Universal Basic Income is growing across the country and the world.
Politicians from a range of parties are calling for a UBI , including Labour, the Liberal Democrats, the SNP, Greens, SDLP, the Alliance Party of Northern Ireland and Conservative MP Sir Edward Leigh.
It is gaining increasing support from economists and civil society (500 economists and public figures recently signed an open letter in support. Martin Wolfe, Chief Economics Editor of the Financial Times, described a UBI as an ‘obvious option’ to support the recovery and a recent opinion poll showed 84% of the UK public support it (3).
In Spain, the Government intends to introduce a Universal Basic Income ‘as soon as possible’. Not just as a temporary emergency measure, but something that is a ‘permanent instrument.’
The Government has said that it is ‘not in favour’ of a UBI, because they claim that it would not support those who need it the most. This is simply not true.
A UBI would be a quick and efficient way of providing financial security for all, particularly for those who need it most.
As a simple and universal payment, like the Basic State Pension, it would ensure nobody who needs support would miss out. It would avoid the complex application processes tied to means-tested benefits, which misses out millions who need financial assistance. In recent years, over four million low-income families have missed out on means-tested benefits they are entitled to (4a), while 1.3 million low-income pensioners also missed out on means-tested Pension Credit (4b).
It would help millions of people and their families to stay afloat during this crisis, while providing a vital boost to consumer demand to support our recovery. And it would help alleviate some of the stress caused by financial insecurity. Trials in Canada and Finland the world have shown that a UBI leads to significant improvements in people’s mental (5a) and physical health. In the Canadian trial, hospitalisations decreased by 8.5% as a result (5b) This is more important now than ever.
If the Government is so concerned about higher earners receiving a UBI, this can be solved through raising the higher rates of income tax. This would mean that higher earners would simply pay their UBI back in tax. This is a much simpler and fairer way of targeting support than means-testing.
Our welfare system is creaking at the seams and too many are falling through the cracks.
It is now obvious Universal Credit (UC) cannot cope with the demands currently being placed upon it. It has already been linked to rising food bank use and rent arrears where it has been tried (6). An increase of £20 per week in UC payments, while welcome, is not enough to cover any extra costs claimants may have during the lockdown.
The online application system for UC is overwhelmed by demand and successful applicants still have to wait five weeks for any payments, while they continue to suffer from financial insecurity.
While providing welcome help for lots of self-employed, too many are still missing out from the Government’s support package.
Analysts have shown that the Government’s support package for the self-employed could miss out as many of 2 million of the 5.75 million people registered as self-employed (7).
Those eligible for the scheme will have to wait until June to receive payments. Millions need financial support now, not in two months.
The 2 million who miss out include those who started their own businesses in the last year and those who get less than half their earnings from self-employed work.
That means the cleaners, taxi drivers and freelance workers who have recently set up their business will get no support from the scheme, as well as those who rely on topping up their earnings from self-employed work to help them get by.
It is also harsh on the households with a sole employed worker earning £50,001. They will get no support from the scheme during this crisis, while a household with two self-employed workers earning a £49,999 profit will be covered (8).
These cracks and injustices in the Government’s support package are an inevitable result of any complex and means-tested system.
We need an Emergency Universal Basic Income to guarantee that everyone has basic financial security during this crisis. But, Covid-19 has also shown why we need a UBI permanently.
It has exposed how insecure so many of us are in this economy. Surveys have shown that over 16 million people in the UK have less than £100 in savings (9). Too many are one unexpected payment away from going into debt. This insecurity has been made worse by ten years of austerity and the problems associated with the introduction of UC and a more punitive sanctioning regime.
A UBI would also extend vital security to people training and gaining new skills, transitioning between jobs, in self-employment and the ‘gig’ economy, working on a small business idea and in carrying out vital unpaid work like caring for loved ones, of particular importance for women who still undertake the bulk of caring.
It would boost local economies by increasing consumer spending, particularly in areas hit hardest by austerity and this crisis, while trials in Canada and Finland have shown how a UBI can reduce stress and improve mental health.
After the crisis, a UBI would provide an alternative to our broken welfare system and a foundation for a better society. a society where everyone has a decent share of our country’s wealth and all have a decent safety net to fall back on.
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References
(1) 74% BETTER OFF UNDER ‘EMERGENCY BASIC INCOME - https://www.thersa.org/about-us/media/coverage-press-releases/2019/74-better-off-under-emergency-basic-income-than-trailed-government-proposals-rsa-modelling-shows
(2a) A PROPOSAL FOR AN EMERGENCY UNIVERSAL BASIC INCOME (UBI) DURING COVID-19 https://www.ubilabnetwork.org/blog/a-proposal-for-an-emergency-universal-basic-income-ubi-during-covid-19
(2b) Autonomy’s call for government action on the COVID-19 crisis - https://autonomy.work/portfolio/covid-19autonomy/
(3) Millions of family budgets already hit by coronavirus fallout, poll shows https://www.mirror.co.uk/news/politics/millions-family-budgets-already-hit-21759336
(4a) 4 million UK families have missed out on the benefits they're entitled to https://www.independent.co.uk/voices/uk-families-people-benefit-entitlements-dwp-department-for-work-and-pensions-claiming-a7955706.html
(4b) 1.3 million people aren’t claiming the Pension Credit they are entitled to https://www.independentage.org/news-media/press-releases/13-million-people-arent-claiming-pension-credit-they-are-entitled-to-says
(5a) Preliminary results of the basic income experiment: self-perceived well-being improved https://www.kela.fi/web/en/news-archive/-/asset_publisher/lN08GY2nIrZo/content/preliminary-results-of-the-basic-income-experiment-self-perceived-wellbeing-improved-during-the-first-year-no-effects-on-employment
(5b) Why Basic Income Is a Mental Health Issue https://www.vice.com/en_us/article/a3akm4/why-basic-income-is-a-mental-health-issue
(6) Universal credit behind rising rent arrears and food bank use https://www.theguardian.com/society/2017/oct/23/universal-credit-sending-rent-arrears-and-food-bank-use-soaring-councils-say
(7) Two million self-employed Brits could miss out on £10bn coronavirus bailout designed to help them https://www.bmmagazine.co.uk/news/two-million-self-employed-britons-could-miss-out-on-10bn-coronavirus-bailout-designed-to-help-them/
(9) Millions have less than £100 in savings, study finds https://www.bbc.co.uk/news/business-37504449
More about the author
Jonny Ross-Tatam - @JRossTatam
Co-Founder of UBI Lab Leeds
Passionate about #basicincome & drug policy reform. Founder @BuchananInst. Ambassador @LabourDrugRef & @TeachFirst & #BasicIncomeNorth.