Labour’s basic income would bankrupt us, says Mcvey

Universal Basic Income is expensive, unsustainable and doesn’t work – unlike our existing system

LABOUR’S plans to give every voter a universal basic income of £5,880 a year would provide a “major disincentive to work”, according to Esther Mcvey.

The Work and Pensions Secretary warned that the “tired, out of touch and rejected” proposals, touted by John Mcdonnell last week, would cost as much as “three and a half times the NHS budget” and is a “false hope”.

Writing in The Daily Telegraph today, Ms Mcvey argues that the Government’s benefits system reforms have put 3.4million more people into work, standing in contrast to Labour’s plans, which would “bankrupt the country”.

Her comments come after Labour last week confirmed it was considering plans for a universal basic income, which would ditch traditional meanstested benefits and replace them with a flat-rate payment to all citizens.

The policy has been trialled in Finland and Canada, where individuals received a £490 monthly basic wage. However, academics at the University of Bath estimate the scheme would cost up to £427 billion a year to roll out, more than double the existing welfare bill, and would be twice the annual GDP of Portugal or Greece.

Separately, the Centre for Social Justice think tank warned that the prohibitive cost of the scheme would mean that payments would have to be set far lower than many claimants currently receive in benefits.

“Pilots across the world have shown how a UBI policy is expensive, not sustainable and wouldn’t support extra people into work,” Ms Mcvey writes. Despite that rejection, the Labour Party seems to think it is the way forward.”

“Like all Conservative governments, we are helping more people get a job and get on in life. Labour, by contrast, has once again shown how it would see more people out of work and bankrupt the country.”

Tired, out of touch and rejected. I’m not talking about the Labour leadership, rather Universal Basic Income (UBI), the policy John Mcdonnell, Labour’s Shadow Chancellor last week proposed as its new benefit system – an unconditional state handout for everyone in the country, regardless of how much money you earn or your specific needs and circumstances.

Pilot schemes across the world have shown how a UBI policy is “expensive”, “not sustainable” and wouldn’t support extra people into work. Despite that rejection, the Labour Party seems to think it is the way forward.

Experts from the University of Bath have estimated the policy would cost up to £427 billion per year. That is more than three and a half times the NHS budget, greater than 11 times the defence budget and more than five times the education and policing budgets combined. It is also almost two and a half times the size of the benefit budget today, which, at £180billion per year is more than the GDP of Portugal or Greece. The Department for Work and Pensions is already the largest government department in the UK, with a third of all public spending. The benefit budget is also one the Conservative Government has spent eight years getting under control.

Under Labour’s UBI, however, the benefits bill would once again spiral out of hand. We all know the only way that can be paid for is huge tax rises on working people and a massive increase in government borrowing.

Finland has already rejected the expansion of its two-year UBI pilot, and, rather aptly, on the same day Labour proposed to adopt the scheme, the Canadian Government said they plan to end their pilot too.

Claims that UBI reduces poverty are also unproven. Last week a report from the Centre for Social Justice concluded that UBI is a “false hope”, and branded the scheme unaffordable. It found the system would not meet the needs of low income households facing complex issues, was no more generous for the most disadvantaged households than the current Universal Credit system, and, worryingly, provides a major disincentive to find work.

Countries piloting the scheme have come to similar conclusions. In April 2018 the OECD Economics Department published a paper comparing Finland’s benefit system with both UBI and Universal Credit. It found that a UBI system could improve incentives for many, but with a “drastic redistribution of income and likely increasing poverty as a result”, whereas Universal Credit would “consistently improve work incentives and transparency, while preserving or improving social protection”. In a nutshell, Universal Credit better supports people into work.

A further feature of the Universal Credit benefit system we’re creating is the use of technology to personalise benefits. This personalisation, seeing people as individuals, not numbers – and not as a group known as “the unemployed” – is revolutionising the welfare system, and so far has helped to deliver on average more than 1,000 more people into employment every day since 2010. There are now nearly 3.4 million more people in work, and figures out last week show how these reforms are significantly reducing – by more than 30 per cent – the number of children living in workless households too.

Sadly, Labour can’t bring themselves to support the direction the UK has taken on benefits and work. It is a direction that has broken the employment record 1eight times since 2010 and seen the lowest unemployment since the Seventies. It is a direction based on personalisation and individual empowerment. If, like me, you believe in social mobility then individual empowerment is the means to achieve it.

Universal credit is world leading, with countries around the globe coming to see what we are doing. We are shaping a new benefit system that fits the needs of the people it aims to support, working with stakeholders, partners and claimants to get it right .

Like all Conservative governments, we are helping more people get a job and get on in life. Labour, by contrast, has once again shown how it would see more people out of work and bankrupt the country.