The past year has seen a surge in the popularity for a Universal Basic Income (UBI), and it is not difficult to see why. The Coronavirus pandemic has shone a spotlight on the full extent of the failures in our welfare system and in wider society. With money, or lack thereof, being a primary driver in homelessness, poverty, and all-round hardships, it stands to reason that the logical solution would be to provide people with the funds to alleviate their problems.
Welcome UBI, a universal, non-means tested regular payment of money straight to every individual. No uncertainty or five week waiting period that plagues universal credit. No extensive and intrusive paperwork, as is common for many emergency payments. No voucher system that limits the usage of potential funds. A simple regular payment that can be used however anyone wishes.
It is an idea that has gained popularity, especially here in Wales. The organisation UBI Lab boasts campaigns across Wales and has amassed significant support amongst Senedd Members. Their campaign during the Senedd election managed to garner the support of numerous candidates, many of whom are now elected. The icing on the cake is the Welsh Government have pledged to fund a pilot scheme.
How it is possible to accurately test and analyse a scheme that is ‘universal’ on a small scale is a question for another day. Whether or not it will work is what I wish to discuss further. It is my belief that although bold and ambitious, UBI is ultimately a white elephant, and that the negative impacts it will befall on Welsh society are cause for anyone on the left in Wales to oppose the scheme.
For me, the primary issue of a universal, non-means tested payment is that it assumes in of itself a degree of equality in society. For example, if we give £300 per month to everyone, this money will be used differently depending on the situation you are in.
It is a widely accepted fact that is it expensive to be poor. Meter electricity is far more common for those on low incomes but is generally more expensive. Cheaper clothes and white goods are more likely to break over time and will need replacing at a greater overall price. Ultimately, there is a premium cost to poverty.
For those in poverty, UBI will be spent on the bare essentials. It will be able to cover food, utilities, and housing cost, but will be unlikely to go any further. Add into the mix possible rent arrears, payday loans and other debt, it will only go so far.
Compare this to those better off in society. For some it will go into savings, perhaps for a holiday or to afford a deposit on a house. For others, it will be an opportunity to invest. Some may literally invest in stocks, while others may take a risk and start a business, knowing that they have an economic safety net. Some may also be landlords, who will receive a guaranteed rent through their tenants receiving UBI, in addition to their own UBI claim, in affect claiming double the amount of state money. In turn allowing them to pay off their rental’s mortgage and subsequently buy another rental, further reducing the housing stock, and impacting on the affordability that is the crux of the issue.
These are of course opportunities that are not available for those on the poverty line. Whatever example you choose, the bottom line is this: those who struggle in society will be able to keep their head above the water. Those who in a better position will be able to thrive. The money provided to people will have a different value dependent on their situation.
This is not to say we should not help those in poverty, but if we are to spend billions of state money, it should not be spent on improving the affluence of the middle class and increasing the wealth gap between them and the working class.
While it could be argued that changes to the tax system would help address this balance, Wales possesses limited taxation powers. To ensure equity, Wales would require extensive co-operation with the Westminster government, which is unlikely.
When thinking about this imbalance, we must also remember that Wales does not exist in isolation. Wales shares a large, populous, and open land border with England. Already we have seen the impact of the removal of the Severn bridge tolls — a relatively small economic change — on the housing markets in the south east. In the tail end of Covid we are also seeing a huge influx in houses being bought by people outside of Wales. A housing boom that is causing numerous landlords to sell the properties, reducing the stock of homes in the private rental sector.
If we introduce a massive financial gain in the form of UBI for all Welsh citizens, and we will undoubtedly see demand like never before. House prices will increase accordingly, making it even more difficult to afford to buy. Any affordable house will be swallowed by a middle class looking to take advantage of the financial benefits, thereby reducing the impact of the Welsh Government in being able to house Welsh people, and increasing the diaspora of young Welsh people. Rentals will likely either be sold or increase in their rent price as landlords seize the opportunity to gain from the demand. These pressures will disproportionately hit working class communities, many of whom already struggle with buying homes and affording rent.
This is not an exhaustive list of concerns, but I hope I have made clear that there will be people who will still struggle in a UBI society. The money given will be a great financial relief, but for numerous reasons people will still find themselves in a time of difficultly. UBI will not eliminate debt or arrears, it will not put an end to people choosing between food and heating, nor will it solve the lack of affordable housing. Further to this it will not solve the underlying issues that cause these issues. Issues that the average person has no control over and in all likelihood will place people in these situations through no fault of their own.
However, it will undoubtedly change the perceptions of poverty and of the people who struggle. When people are provided with funds to lift themselves out of poverty, suddenly they will be considered taken care of. Their struggles are no longer caused by failings in the state because the state has ‘solved’ the issues through the introduction of UBI. Instead, the causes of poverty are no longer institutional, they are personal. You will have greater scrutiny in the lives of people who require greater help, because the perception will be that they will have adequate help, and therefore the failings are with the person.
Now it may be easy to say that this is an overly pessimistic view of society. However, even with the current, substantially less generous welfare system, we still see television shows like ‘Benefits Street,’ or tabloids demonising those on benefits. Homeless are demonised as if their homelessness is the result of drug use, and not due to institutional failings. People in poverty are criticised for owning phones, or for spending money on takeaway, as if those choices are the sole reason for their situation. In an institution that theoretically provides everyone with what they require, the blame for failings will be shifted. The actual issues are never addressed, but instead are worsened as the political focus will have moved on.
Again, to some this would appear a very dramatic view of the whole situation. ‘Of course, we will still care about those struggling, this will just alleviate the pressures caused by the system,’ some may argue. However, this fundamentally ignores how long the policy process takes.
UBI falls under the portfolio of Jane Hutt, the Minster for Social Justice. Introducing UBI is not going to happen overnight. It will take years of research, piloting, and scrutiny before it ever reaches people. This is time that will be taken from Jane Hutt, the Senedd, the relevant Senedd committees, and civil servants. Time which could be spent developing mor effective and targeted policies. Years in which it will be far more difficult to implement changes, as any large-scale project will be rejected in anticipation of UBI.
There are numerous policies that are researched, costed, and would be far easier to implement under the current system. Free school meals, or introducing nationalised care are simple extensions of current policy and would have a massive impact for those who it targets. Quite frankly, it is criminal that the Welsh Government so firmly opposed the extension of Free School Meals but are so quick in adopting UBI.
UBI is a bold and ambitious policy that aims to make society fairer and reduce the plethora of issues faced everyday by those living in poverty. However, we have to accept that such indiscriminate policymaking is unlikely to achieve this and may actually make things far worse. We risk fuelling a wave of gentrification, cementing and widening the wealth gap between the working and middle class, and preventing the introduction of policies that would introduce far greater targeted improvements.
UBI is a patch on a broken system. The working class are beset by problems. If you look at the blog section of UBI Lab, you can find arguments suggesting that UBI will solve just about every societal issue, from climate change, the gender and BAME pay gap, and the north-south divide.
These are all issues created by a neoliberal economic system. UBI does not fix the system, but instead allows it to stagger on until the next global economic crisis. It allows people to continue the levels of consumption that keeps shareholders happy. It allows landlords to stay in their position of luxury. And it allows those are not living in poverty, the affluent middle class to pretend that the issue is sorted and allow them to sleep soundly at night.
Therefore, those of us on the left need to see UBI for the white elephant it is. We need to ensure that time, effort, and money is spent on targeted policy, and on the promotion of anti-capitalist projects, rather than a bloated bandage on a broken system.
Michael Andrews.
