Universal Basic Income: Time for a rethink

Written by Huseyin Kishi

Senior Green Party Politicians proposal would increase poverty according to modelling.

Since 1983 the then Ecology Party, which was to be renamed the Green Party of England and Wales have argued for a National Income Scheme, later renamed the Citizen’s Income in 1990s and more recently known in the 2000s as the Universal Basic Income.[1] [2]In 2020 Jonathan Bartley in Bright Green heralded it as “...only universal and unconditional protection ensures that nobody is left behind.”[3]. Sian Berry opined “Universal basic income has been Green policy since long before I joined the party, and is exactly what it sounds like: a guaranteed income for everyone, replacing benefits in an unconditional way, which is ready and able to take care of your basic needs if a personal crisis hits.”[4]

For Greens it wasn’t a widely discussed policy until 2015, in which it was declared by the Guardian as “...The renewed focus on the cost and feasibility of a citizen’s income, including the way in which it would differ from the government scheme to integrate universal credit, demonstrates the extent to which Green policy is now being taken seriously. “

Baroness Bennett, who recently said in an interview with Green World “A universal basic income, to meet its proper definition, ensures that you can meet all of your basic needs with an income that comes to you simply for being a member of a society – unconditionally.” [5]

An idea whose time has come

For its proponents, it seems as clear as day for its implementation. A radical shift for welfare and the alleviation of poverty and unemployment. They then point to a Finish trial but a press release that was published in 2019 said “The positive evaluation may not relate to basic income as such but to public debate around basic income and to the fact that people were members of a selected group” adding “The Finnish experiment was about partial basic income targeting able-bodied people without work, it was not about universal basic income.” [6]

It did not do anything near what its proponents had argued – despite the positive headline in the New Scientist.[7] For the Green Party, in their 2015 manifesto they state “Scrap most of the existing benefits apart from disability benefits and Housing Benefit. Abolish the income tax personal allowance. Then pay every woman, man and child legally resident in the UK a guaranteed, non-means-tested income, sufficient to cover basic needs – a Basic Income”. [8] They followed this up in their 2019 manifesto by stating that it would be funded by a Carbon tax and additional payments would be made to those with children or were disabled. [9]

Impact

Molly Scott Cato said in her article for the Ecologist “...But a basic income would only provide fundamental security and would leave most people on lower incomes than they enjoyed before the crisis.”[10]

Moreover, Caroline Lucas in 2016, though in support of the policy, noted “A universal payment for all must not undermine additional help for those who need it most.” [11]  The party’s own consultation paper in 2015 stated “It includes abolishing most existing benefits, abolishing income tax allowances, changing employees’ National Insurance, reducing tax concessions on private pension contributions, and replacing the current contribution-based basic State Pension (for existing pensioners) and the new single-tier flat-rate Pension (for new pensioners) with a non-contributory Citizen’s Pension.” It would still pay housing and disability as additional payments and the total estimated cost was £331 billion.[12]

At the time the Independent noted “The Greens have since admitted that it “would not be practical or right to carry out that change within a single parliament.”[13] Sky News declared “The party says this is a long term ambition rather than concrete policy going into the 2015 election - but the thought of giving millionaires more money is likely to be a voter turn-off.” [14]

Individualism over the collective

There is an established example of an income-subsidy, though means-tested, that provides some economic support. It is called housing benefit and has been place since the 1980s. Sir George Young, the then Minister of State for Housing and Planning, remarked in 1991 that: 

“Housing benefit will underpin market rents-- we have made that absolutely clear. If people cannot afford to pay that market rent, housing benefit will take the strain.” [15]

Housing benefit now costs £22 billion a year and does not lessen the risk of eviction, improve the quality housing, nor the energy, utility and tax costs either. As the Institute for Fiscal Studies notes: 

“...for most working-age people it covers a lower proportion of their actual rent than was the case in the past.”[16]

Housing benefit – far from merely taking the strain when it was believed that the market would later expand for all income-bands – continues to grow and has now become a private landlord subsidy. An aversion to capital spending in housing and the shift to income-subsidy has not resulted in a housing market that competes on price, quality and amenities. More concerning, due to changes in housing benefit from 2011, rather than payment going directly to the landlord payments were paid instead to the tenant, this resulted in landlord arrears.[17]  Rather than benefiting the poorest, over the last three decades it has increased the property portfolios of private landlords according to Shelter.

Returning to universal basic income, In 2015 Baroness Bennett stated in the Guardian that a citizen’s income would be withdrawn when a citizen’s income reached an unspecified level.[18] Milton Friedman, the free-market economist, also agreed with the Green Party in their 2015 and 2019 manifesto, and instead proposed a negative income tax in his book  “Capitalism and Freedom.” Rather than benefits: 

“...he wanted to give poor people cash rather than an array of welfare benefits. People could then use the money as they saw fit”[19]

Likewise, in 2018, the Adam Smith institute proposed “Basic Income would ensure that ‘capitalism and efficient redistribution can be vindicated in equal measure”[20]

Assets over income-subsidy

Senior Greens often refer to UBI as increasing security and choice – but in effect – as was seen with housing benefit; this isn’t guaranteed. In fact, when Joseph Rowntree Foundation undertook modelling of it. They found that

“Those wholly dependent on state support would be neither better nor worse off if a UBI were introduced at the level of the current safety net. Those with modest earnings would benefit most from having the new non-means-tested payment. “ adding that “...it is not possible to raise the revenue needed to support them from taxation ­– even by increasing the basic rate to 30% from 20%. The UBI schemes also INCREASE poverty for children, working-age adults and pensioners compared to the current tax-benefit system: child poverty rises by over 60%. [21]“.

Similarly, the New Economics Foundation found “making cash payments to individuals to increase their purchasing power in a market economy is not a viable route to solving problems caused by neoliberal market economics” they also note that  “If cash payments are allowed to take precedence, there’s a serious risk of crowding out efforts to build collaborative, sustainable services and infrastructure”[22]

Senior Greens have stated we need a radical shift in thinking about welfare – but it is clear that universal basic income does not serve progressive ends and in that regard shares more in common with conservative thinkers and supporters of neoliberalism. They should instead look to take a leaf out of Karl Polanyi’s work – who observed that markets are planned as the economy is embedded into society and thus shaped by the state – but there has been previous resistance towards this – with the exclusion of market forces in welfare and housing in the 1940s.[23]

In order to provide unconditional protection while accommodating the most vulnerable. We should move away from the individualist universal basic income and its substantive costs. Instead we should look at the long-term collective and public ownership of universal basic services. Assets such as housing, information and transport would benefit us all.  

More information can be found here: universal_basic_services_-_the_institute_for_global_prosperity_.pdf (ucl.ac.uk) 

Huseyin Kishi is a writer and photographer based in London. He is a member of Sutton & Croydon Green Party

Notes

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[1]          https://green-history.uk/library/doc-archive/category/28-ep-manifestos

[2]          The Green Party | Social Welfare

[3]          Labour's failure to embrace UBI shows they haven't grasped the scale of the crisis | Jonathan Bartley (bright-green.org)

[4]          Sian Berry: This is the time to bring in universal basic income | Hampstead Highgate Express (hamhigh.co.uk)

[5]          The decade of universal basic income | Green World

[6]          https://www.helsinki.fi/en/news/nordic-welfare-news/heikki-hiilamo-disappointing-results-from-the-finnish-basic-income-experiment

[7]          Universal basic income seems to improve employment and well-being | New Scientist

[8]          Green.pdf (lancs.ac.uk)

[9]          Green Party Manifesto 2019.pdf

[10]          Coronavirus and the Universal Basic Income (theecologist.org)

[11]          The case for a Basic Income is growing | Caroline Lucas

[12]          Basic Income: a detailed proposal (greenparty.org.uk)

[13]          https://www.independent.co.uk/voices/editorials/general-election-2015-green-party-has-failed-make-its-mark-10196826.html

[14]          How Will Green Party's Medicine Go Down? | Politics News | Sky News 

[15]          House of Commons Hansard Debates for 30 Jan 1991 (parliament.uk)

[16]          Doubling of the housing benefit bill is sign of something deeply wrong - Institute For Fiscal Studies - IFS 

[17]          The impact of the direct payment of housing benefit: evidence from Great Britain (shu.ac.uk) 

[18]          Green party outlines plan for basic citizen’s income for all adults | Politics | The Guardian 

[19]          Negative income tax, explained | MIT Sloan

[20          Rising evidence for universal basic income — Adam Smith Institute 

[21]          Universal Basic Income - not the answer to poverty | JRF

[22]          Universal basic income: new study finds little evidence that it can live up to its promise | New Economics Foundation

[23]          https://www.dissentmagazine.org/online_articles/karl-polanyi-explainer-great-transformation-bernie-sanders