Coronavirus has amplified calls for a universal basic income
By mid-March it had become clear within the Treasury that radical new measures would be needed to keep the UK economy from entering into a state of freefall.
Firms everywhere, in every sector, faced a fight for their survival. Social distancing and the emergency new measures introduced in response to coronavirus, alongside the growing prospect of a lockdown, had driven the economy to near standstill.
For his part, Rishi Sunak had already announced support worth nearly £400bn to help businesses survive the lockdown, through a series of tax breaks, loans and grants, but with MPs from every party, alongside trade unions, campaigners and business groups expressing grave fears over huge waves of coming redundancies, officials in the Treasury quickly realised they would need to go much, much further.
Plans were drawn up at breakneck speed and the package of support announced, based in the UK state paying out grants to companies to cover up to 80 per cent of their workers’ salaries with a cap at £2,500 per month, amounted to one of the biggest governmental interventions in decades.
Explaining these were “unprecedented measures for unprecedented times”, Sunak said: “We are starting a great national effort to protect jobs. We want to look back on this time and remember how in the face of a generation-defining moment we undertook a collective national effort and we stood together. It’s on all of us.”
More support followed, as the chancellor unveiled a £9bn aid package for self-employed people, amid concerm that up to five million people had been left facing financial ruin.
These were not the sorts of measures any Conservative government could have dreamed of enacting just a few short months ago. No one doubted their necessity.
But while Treasury officials raced to put together different support packages, nearly 800 miles south, in Madrid, a different conversation was taking place.
The Spanish Government had already introduced measures to support workers and self-employed people, but faced with the worst COVID-19 outbreak in Europe, Spanish Economy Minister Nadia Calvino announced the government would go further. Specifically, she said, it would move to introduce a universal basic income (UBI) to protect the population, with reports in El Pais suggesting it would be based in a monthly payment of 440 euros.
With an even tighter lockdown in place than in the UK, more than 300,000 people in Spain applied for unemployment support last month.
But this wasn’t a temporary measure. As Calvino put it: “We’re going to do it as soon as possible. So it can be useful, not just for this extraordinary situation, and that it remains forever.”
Different voices have been calling for a UBI in Scotland for years, but the shock caused by coronavirus, and a report from the Institute for Fiscal Studies finding that millions of self-employed people would fall through the gaps in the UK Government’s new support packages, the calls have grown louder.
Nicola Sturgeon has longstanding interest in the idea, with the FM then suggesting the “current situation strengthens the case immeasurably”.
SNP Westminster leader Ian Blackford said: “There are serious gaps in the current UK system - and millions of people are not getting the financial support they need. A guaranteed minimum income for everyone would fix these gaps and put cash in people’s pockets.
“The coronavirus crisis has exposed the deep flaws in UK Government policy and the inequality that is rife in our society. This would be a key measure that could be continued for the long-term as part of the enduring fundamental change needed to ensure a strong recovery and build a fairer society that supports all our people.”
The idea, at its heart, is pretty simple, with supporters arguing a basic income would redistribute wealth and power to individuals and away from the state and employers, while helping to remove the stigma and bureaucracy associated with much of the welfare system.
Yet the difficulty for Sturgeon is that with huge chunks of the tax and welfare system reserved, most of the key levers needed for a UBI sit at Westminster. And while the logic behind the proposals is pretty clear, how would a UBI actually work?
Stewart Lansley, economist and visiting fellow at Bristol University, worked with Labour peer Ruth Lister to examine the impacts of different models in a 2018 Compass report, with the aim of addressing a common criticism of the practicalities of introducing a UBI – that the payments are either too small to actually help, or too big to be affordable.
Yet, far from rejecting the idea as fantasy, the report finds that paying a basic income of £10,000 a year to a family of four would significantly improve the living standards of millions, while remaining “feasible and affordable”.
In one approach, the government would pay £60 per week to 18-64 year-olds, £40 per week to mothers for each of their children and £165 to adults over 65, with the only criteria being residency in the UK.
Child benefit and the state pension would be abolished, but, unlike in other visions of a UBI, which would likely require huge increases to tax rates, the rest of the welfare system would be retained, and the payments would be made regardless of work status. The report puts the cost at £28bn - well under the money spent on the newly unveiled job retention scheme, which will cost around £40bn every three months.
The area is surprisingly contentious, even among its proponents - Reform Scotland argues for a UBI set at £5,200 per year for adults, and £2,600 per year for children - while others put a greater emphasis on the need for more universal service provision, as a means of protecting the most vulnerable.
Instead of a UBI, the New Economics Foundation (NEF) proposes a ‘minimum income guarantee’ with a payment of £220 per week for an individual, which anyone could apply for, without means testing at the point of access. But instead of a blanket payment, anyone earning over £30,000 in the next calendar year would have to pay some of the cash back.
Sarah Arnold, senior economist at the NEF, told Holyrood: “We need to make sure that no one suffers extreme economic hardship as a result of this crisis, and that everyone has enough cash in their pockets to meet the basic living costs – housing, bills and food. But we also need to ensure that the public services that provide the other essentials we need such as healthcare and social care are properly funded. We could give cash to everyone, even those who don’t need it – but a better solution might be to provide cash to all those that feel they do need it, and spend the rest on services that we all need to use.”