Renewed talk of universal basic income for welfare state’s future

The welfare state was the product of two world wars, between which there had been global economic collapse, hyper-inflation, poverty and wage disparity.

Liberal economist William Beveridge’s reforms were, arguably, the largest shift in societal, political and economic policy in the democratic age.

People could turn to the state when they fell ill and had an income if they lost their jobs or were unable to work.

Now, as we look beyond coronavirus, politicians and economists alike are suggesting ways to mitigate the lows of the labour market, stock market and globalised economies.

One such idea, trialled in various countries, but not formally adopted at a national level, is a universal basic income (UBI) – a set payment to every citizen from the government.

Dr Enkeleida Tahiraj, visiting senior fellow at the London School of Economics, is a specialist in the field and has advised the European Commission, the UN and the World Bank on economic policy.

She notes the upheavals caused by the coronavirus pandemic could act as the “drivers” necessary to affect huge shifts in policy, including the introduction of UBI.

She said: “The catalyst for change in Beveridge’s time was the human and economic costs of two world wars, but also the need for a response to protests arising from the hardships of the inter-war years.

“This would suggest similar social dynamics and major shocks of a magnitude as the current pandemic is might act as drivers for change in the policy landscape, with UBI becoming realisable.

“It is difficult for us to appreciate the impact on people’s lives of the NHS and welfare state after its founding as it started from a different context. It seems unlikely that UBI would have quite the same impact, simply because we have known and relied on these public services.

“So it seems possible to consider that a UBI is more likely to be introduced rather like Universal Credit, albeit reaching everybody and without the problems that Universal Credit continues to have.”

The thinktank Reform Scotland wants every adult to be paid £5,200 and child £2,600 per year – at a cost of £20 billion for Scotland and £235bn for the UK Treasury, offset by tax increases and the elimination of certain benefits made redundant by UBI.

Reform Scotland research director Alison Payne said: “UBI could be a continuing stimulus to the economy. It is considered to offer greater cumulative and compounding social benefits over the medium to long-term.

“If introduced as a form of ‘emergency relief ’ in a crisis such as the current pandemic, UBI could still offer individuals and households a meaningful level of income protection that would also have a positive stimulus impact when spent in to the economy in any form.”

But critics argue UBI would be a “disincentive” to people seeking work. Scottish Conservatives say it would be “cripplingly expensive” to introduce in the aftermath of the pandemic and the UK Government gave the idea short shrift when it was raised in April.

First Minister Nicola Sturgeon said she had “long been” an advocate for UBI, adding the current crisis and disruption caused by the pandemic strengthen the case for its introduction.

But with tax-raising powers reserved to Westminster it is currently impossible for her to act.

Shetland MP Alistair Carmichael, Scottish Lib Dem leader Willie Rennie and the Scottish Greens have long heralded the introduction of a citizen’s basic income.

Economist Willam Beveridge’s reforms reshaped society