It’s been an incredible year for anyone with the slightest interest in Universal Basic Income (UBI). In the last twelve months, we’ve seen the idea move from the fringes of political debate to the forefront of the progressive policy conversation in Wales.
Just days after 25 of the 106 candidates who signed UBI Lab Cymru’s Pledge For UBI were elected to the Senedd, our First Minister announced that he’d be pressing ahead with a pilot, which he noted was due to the significant numbers now in support of the idea sitting in the chamber.
The crowd goes wild!
Before I present my argument for the policy, I want to make one thing clear: a Universal Basic Income is not a magic bullet.
However, I believe that it will alleviate poverty, improve physical and mental well-being, encourage entrepreneurship and improve educational attainment. Hopefully, it will help move us away from an economy obsessed with growth and jobs and towards one with wellbeing at its heart.
Those who claim that advocates of a UBI are suggesting it will solve all of society’s ills are either not paying attention or are purposely being disingenuous. We saw the latter in Anna Coote’s response to UBI Lab Cymru team member Lowri’s recent interview on BBC Radio Wales. Coote, of the New Economics Foundation, suggested that advocates of UBI are claiming that it is a “magical solution” when we are doing nothing of the sort. What we are suggesting is that it offers a vast improvement on a failing welfare system that has left millions in perpetual poverty.
Indeed, Michael Andrews in his blog for this website effectively claimed that because it wouldn’t solve every single issue we face we should forget about it and see it for the white elephant that it is. He claimed that giving everyone the same amount of money is inequitable.
First, let me address the point about giving everyone the same amount of money every month whether they are rich or poor. The solution to the apparent inequity is very simple: you change the tax system. And it’s not good enough to say that is unlikely to happen. With that attitude, the suffragettes, the civil rights movement and many other groundbreaking changes would never have come to pass. This is defeatist and not the way change is brought about.
It was also argued that UBI is a bad idea because those who are not experiencing poverty may spend it on things that are not considered the bare necessities. If the price of alleviating poverty for the most disadvantaged in society is that a small section of the squeezed middle class save a little bit of money or go on holiday, are we really going to complain about that?
Then there’s the point of it being too expensive. There are myriad reasons why it isn’t as expensive as people make out.
As I’ve already pointed out, changing the tax system would recover some of the cost of a UBI for everyone by taxing it back from those who don’t need it.
Further, removing means-testing will save a significant amount of the £7 billion we spend on administering benefits in the UK every year — that’s before anyone receives a penny, which is an absurd amount of money to waste.
As noted in Michael’s blog, those in poverty will spend their UBI on meeting their basic needs — the clue’s in the name. The increased demand and extra flow of money pumped back into the economy will create jobs and improve tax returns.
There’s evidence from trials in Indian and Namibia that show that UBI creates a significant surge in entrepreneurship. Participants in the pilots had the capital to set up their own business, were more willing to take a risk because they had an income floor to fall back on and were aware that their potential customers had more money to spend. This inevitably leads to more jobs and more taxes going to the Treasury.
I’m aware that the points made in relation to increased job creation don’t square with the argument that we should be moving away from this type of thinking. But the argument must be made for those who are not yet prepared to think along these lines. It is simply to demonstrate that it’s also in their interest.
We already know from past trials around the world that basic income has a significant positive effect on physical and mental wellbeing. The recent Finnish pilot, where people were given €560 per month, showed that recipients were more satisfied with their lives and experienced less mental strain than the control group. The trial in Stockton California found that recipients were less anxious and depressed, as well as less likely to feel fatigue or body pain associated with poor mental health.
The improvements to physical and mental wellbeing will lead to reduced demand on our health services, which of course is a good thing given the catching up they’ll have to do over the coming years. However, in addition to that, treating fewer people will result in a colossal saving for the public purse, as well as improving people’s lives.
People on Universal Credit must wait five weeks to receive their benefits. That’s if all goes well, which most of the time it doesn’t. That wait forces families into taking government loans to tide them over, which they then have to pay back out of the benefits they receive — forcing them to take out other loans to cover the costs of a reduced benefit payment. It’s a vicious cycle and, quite frankly, one that we should all be repulsed by — especially in the world’s fifth largest economy.
As I mentioned above, a UBI is not a silver bullet, but instead a foundation which we can all build on. We still have to tackle the housing crisis, improve public transport and fight for an education system that’s meritocratic and accessible to all. We must make the case for rent controls, so that crooked landlords don’t take advantage of the introduction of a UBI by increasing rental costs.
Progressives should not be fighting with one another about whether we should be arguing for Universal Basic Services or UBI — we should make the case for both. But, as Rutger Bregman famously said, “poverty is a lack of cash”. Putting money directly into people’s hands means we can help them now. A free bus pass will not feed anyone.
The time for a UBI has come. It’s a 21st century solution to 21st century problems. The inevitable climate emergency means we must transition to a greener economy. A UBI can be one of the ways in which we make the case for that transition.
For example, one way we could pay for a UBI is by investing in green infrastructure such a tidal energy, which Wales has in abundance. We could then use the profits to set up a Green Sovereign Wealth Fund that pays everyone a dividend. In Alaska they pay out a form of UBI from the profits derived from oil production. We could have a green version of that here in Wales.
There’s also the suggestion that a carbon tax could help to pay for a UBI — we tax all the other sins such as smoking, drinking and so on, yet we don’t tax the biggest sin of all: pollution.
Many will say we need independence to do these things. But that’s an argument for another blog. For now, progressives should get behind a policy that will transform society for the better. A policy fit for the 21st century.
Jonathan Rhys Williams is the founder of UBI Lab Wales.