Frank Field MP
Your MP for Birkenhead
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Universal basic income won’t fix problems but will create new ones


31 May 2018
Food bank

THE welfare state plays host to the most dysfunctional relationship in British politics. The main source of conflict is the ongoing attempt by politicians at balancing four competing objectives: providing an adequate minimum income that protects the poor from destitution; incentivising that same group of citizens to get a job and climb up the pay ladder, so they eventually achieve financial independence; simplifying the means of administering this system; and limiting the size of the resulting bill that taxpayers are asked to meet. 

Successive generations of welfare reformers have tried, and often failed, to strike that balance. The latest attempt comes from proponents of a universal basic income (UBI)—an unconditional payment made by the state to all citizens, irrespective of their circumstances. But it is heading for the rocks.

Proponents argue that by adopting UBI, the welfare state will be so geared as to abolish poverty, enable people to navigate the modern labour market more easily and simplify the process of administering and claiming benefit. There are three main flaws in their case. 

UBI would fail similarly to square the welfare circle. To achieve its stated aim of paying adequate sums of money to the whole population, a UBI would require an increase of gargantuan (and unaffordable) proportions in the tax burden. Yet to remain affordable, it would require payments to be so small as to leave many of our fellow citizens below the poverty line.

First, readers will be forgiven for suffering a bout of déjà vu. For the proponents’ argument draws heavily upon the justification presented by the welfare reformers of 2010 in support of the universal-credit programme. 

Recent experience from the amalgamation of six working-age benefits into one monthly payment, as is happening under universal credit, offers two key lessons: the pressure to constrain costs has resulted in benefit rates being set at too low a level to relieve poverty and incentivise work; so too has the inability of a streamlined system to accommodate the additional challenges faced by disabled people, families with children and those with relatively high housing and council-tax costs.   

Likewise, to maintain simplicity, UBI would need to be paid at fixed rates. Yet to protect the living standards of particularly disadvantaged groups, it would need to offer graded payments that meet different circumstances, thereby leading us back on the path towards the complexity of the present system. 

Second, to view UBI as a panacea for worker protection in the modern economy is to concede the battlefield entirely to employers who exploit their workforce and pay poverty wages. Why not instead challenge those employment models—bogus self-employment in the gig economy and an over-reliance on agency and zero-hours labour—which create insecurity in the lives of working families, rather than give the state a mere reactive role of cleaning up the human wreckage caused by those models. 

Third, if UBI were to succeed in removing the need for large numbers of people to work at all, who would undertake those essential jobs that rely heavily upon human interaction and ingenuity—teaching, nursing and social care, for example—which are crucial to the common good and are likely to grow in number as our population continues to swell?

None of this, of course, is to deny the need for radical welfare reform. But reformers’ efforts would be much more productive, and likely to command support from taxpayers, if they were centred on how the existing system could be improved, rather than replaced, to protect the living standards of the less well off.

An initial set of options here includes reforming the national-insurance contributions base along progressive lines, guaranteeing paid work for those at risk of long-term unemployment, equipping low-paid workers with the tools they need to advance in the labour market, aligning benefit levels for families with children with the cost of living, and rolling out a “yellow card” warning system to protect vulnerable people from the heavy-handed enforcement of conditionality.

The quiet post-war revolution in welfare succeeded by improving the functionality and coverage of the existing system, which went with the grain of the country’s needs. UBI fails that test on every level.




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