Let’s have new debate on basic income

ONE OF the side-effects of the Covid-19 crisis has been a surge of interest in the idea of universal basic income.

The pandemic has fully exposed the flaws of the existing benefit system, and triggered an important debate on how to build a robust system of income support for today’s more fragile and turbulent times.

A universal basic income (essentially an income floor) is a guaranteed, no questions asked payment made to all eligible residents.

The intention of the post-war Beveridge plan was to construct just such a floor through a mix of measures: national insurance, family allowances, full employment and national assistance.

In the event, the plan was never fully implemented, while the principle of universalism has been greatly weakened over time by increasing reliance on a complex and intrusive system of meanstesting.

Britain has never come close to creating a robust income floor, and even before the pandemic, millions fell through what is an imperfect, mean and patchy system.

Work-related conditionality requirements, enforced through a punitive system of sanctions – five million have been issued since 2012 – have been greatly tightened.

With poverty rates at near-record postwar levels, the system also fails the key test of a robust defence against poverty.

While critics of an income floor have dismissed it as utopian and unworkable, the progressive thank-tank Compass has shown that constructing a floor below the existing benefit system would be feasible and affordable.

Starting rates of £60 for working-age adults (under 65) and £40 for children would pay a significant, no questions asked, £10,400 a year for a family of four, while these levels could be raised over time.

This scheme would, for the first time, create an ‘income Plimsoll Line’, boost the incomes of the poorest families, cut poverty levels, reduce inequality, strengthen universalism and cut meanstesting.

Implementing a scheme would need a series of tax adjustments to pay for the floor, while making the tax system more progressive.

Such a reform would build an automatic anti-poverty force into the existing system and boost security in an increasingly fragile world.

It would mean, for the first time, a modest income for the small army of carers and volunteers, mostly women.

As the coronavirus epidemic has revealed, their contribution – unpaid and largely unrecognised is, along with that of a parallel army of the lowpaid, from cleaners to supermarket workers – crucial to the functioning of society.

By providing all citizens with much more choice over work, education, training, leisure and caring, it would also lay the foundation for greater personal empowerment and freedom, a springboard for more stable and fulfilling lives.

Such a scheme would also be a powerful new instrument for mitigating, at speed, the economic fallout from external shocks from pandemics to recessions.

If a basic income scheme had been in place at the start of this crisis, it would have provided an automatic mechanism for providing comprehensive income top-ups.

Despite these strengths, the idea divides opinion. There is nothing new about progressive ideas provoking controversy.

Some of our most cherished institutions, from the National Health Service to the National Minimum Wage, were preceded by years of bitter dispute before they were finally implemented.

No government would dare remove these universally popular ideas today.

The crisis has sparked new life into an ancient idea. Underpinned by a crossparty parliamentary working group, and this week’s call by several opposition party leaders for a recovery scheme, the idea of a basic income now has political legs.

Developing such a floor would also set out a clear vision of the type of society that should emerge as the crisis subsides.