Crisis requires fresher ideas than universal basic income
A think-tank has proposed the introduction of Universal benefit income. Tom Gordon looks at figures
PEAK pique is rising. The notion that the coronavirus epidemic is about to undergo a neat and sudden flip may be a beguiling one, but it is wrong, and more people are rightly pointing it out.
Donald Trump has been a prime advocate of this consoling myth, suggesting memorable dates such as Easter Sunday will be The Moment.
But politicians of many stripes in many countries – and, hands up, the media – have also been obsessing about exactly when the infection will crest and we can revisit normality.
Surely, as Boris Johnson might say, the inverted sombrero of salvation is within our grateful grasp? If only.
Professor Jason Leitch, Scotland’s national clinical director, had an attack of peak pique in the Scottish Government’s daily briefing yesterday.
He said: “The peak is not a sharp point. It won’t be on a Tuesday. It will be a curve. It will be over time.
“We will not know what that curve looks like for some time.”
Much more misleading is the idea that the infection peak, whatever its shape, will be the apex of the crisis.
Sadly, it is only the first Munro in a range of mountainous problems, as a series of economic reports and pronouncements this week made clear.
The Fraser of Allander Institute forecast a 20 to 25 per cent contraction in Scottish GDP if the lockdown lasts three months. That’s compared to a 4% loss of Scottish GDP caused by the financial crash of 2008.
In the US, the unemployment rate has rocketed to 10% in three weeks, with 17 million new jobless claims.
The UN estimates four-fifths of the global workforce have had their place of work fully or partly closed.
The IMF expects the coming recession to be worse than the
Great Depression of the 1930s.
The lockdown’s long legacy will create misery for millions, political and social upheaval, and a host of physical and mental health problems.
As Nicola Sturgeon said yesterday: “The public health crisis, and the way we’ve dealt with it, has also created an economic crisis. An economic crisis in turn can create issues with health and poverty and inequality.”
There is simply no modern precedent for the generation-defining disaster we now face.
Which brings me to another of my bugbears. Hawkers and peddlers touting their wonder-remedies.
The Reform Scotland think-tank yesterday issued a briefing paper urging a basic income guarantee, or universal basic income (UBI). The Covid-19 calamity had made this “logical and necessary”, it said.
It got a boost from Ms Sturgeon tweeting an endorsement. She later expanded on it at the daily briefing.
“It’s a concept I’ve long been interested in, although I haven’t come to an absolutely definitive view in my mind about whether it’s something that would be practical or indeed desirable to do,” she said.
“There would still be a lot of detailed exploration to do around a universal basic income, but I do think, given the nature of what we’re dealing with, that the case for that has been immeasurably strengthened.”
It made you wonder if she’d read the briefing, which was little more than a summary of a dusty 2016 paper on UBI from the same outfit which had been given a lick of coronavirus.
It proposed a flat £5,200 for every adult per year regardless of other income and £2,600 per child, figures that should ring instant alarm bells.
A sound rule of journalism is “Always beware round numbers”.
For instance, when Health Secretary Matt Hancock said he wanted 100,000 coronavirus tests per day by the end of the month, you knew right away it was sketchy.
There was no scientific evidence offered as to why 100,000 tests was superior to or more practical than, say, 80,000 or 120,000. But 100,000 does look good in a headline.
Little wonder it quickly unravelled.
Now look at that UBI proposal. It’s another PR number. It translates into a suspiciously round £100 per week and £50 for kids. Catchy, huh?
Tellingly, it came from politicians, not economists. Buried in Reform Scotland’s footnotes is the admission that the figure was first proposed by the Scottish Greens – in August 2014.
So not only a political gimmick, but an out-of-date one to boot.
The briefing paper may have piggybacked on Covid-19 to proclaim UBI’S time has come, but it hadn’t factored in six years of inflation far less a new economic landscape.
Even on these antique numbers, the costs are astronomical at £20bn a year, or half the current Scottish budget. It would be partly paid for by scrapping some benefits, scrapping the personal tax allowance, and adding 8p to all rates of income tax.
There is no doubt higher taxes will be used to pay for the emergency, but adding extra burdens just to give people back some of their own money seems a bizarre go-to solution.
“Coming out of this, governments are going to have to do some big, bold thinking about how we recover,” Ms Sturgeon added yesterday.
Quite so. But liking what you already like is hardly being bold.
Doing what you would previously have baulked at, going outside the party political box, would be bold.
This long crisis will indeed need big, imaginative responses; flogging dead hobbyhorses won’t do.
A sound rule of journalism is ‘Always beware round numbers’