A review, with a response from Daniel Sage
Daniel Sage and Patrick Diamond, Europe’s New Social Reality: The Case Against Universal Basic Income, Policy Network, 2017, free to download here.
This report is a most useful contribution to the Citizen’s Income debate because it summarises very clearly some important objections against the establishment of a Citizen’s Income.
In the first chapter the authors set the agenda:
As an idea, UBI has a powerful allure in the context of profound social and economic disruption, a lack of alternative political visions, and public distrust towards the conventional welfare state. However, this paper poses a question about the extent to which UBI is necessarily the solution to these crises. It asks whether there are effective strategies and policies that could more credibly deal with these challenges. Finally, the report scrutinises the claim that UBI is a panacea for the travails of the centre left in its capacity to tackle the social challenges already identified. (p.3)
Chapter 2 catalogues some of the challenges facing Europe: low economic growth, a fragile labour market, a generational divide ( – the incomes of older people are more secure than those of younger adults), high youth unemployment, and rising inequality. In some countries unemployment and poverty indices have improved recently, and education provision has also improved, but health inequality remains a problem. The result of these and other challenges is political polarization, with a weakening of the centre ground: a situation that poses significant problems for Europe’s social democratic parties.
Chapter 3 discusses some of the causes of the electoral weakness of social democratic parties, recognizes Citizen’s Income’s appeal across the political spectrum, and charts the rise of the idea’s popularity in political parties towards the Left of the spectrum.
Chapter 4 examines claims that a Citizen’s Income would
(a) further gender equality, (b) provide a solution to the labour market disruption that will be caused by automation, (c) … promote better work-life balance and (d) … [and] address intensifying precariousness, especially for young people (p.13)
and provides convincing arguments in support of these claims.
Chapter 5 offers arguments against pursuing Citizen’s Income as a policy option. It would be expensive, and would require substantial increases in tax rates; and aversion to higher taxation, a perception that working age adults should only receive an income from the state if they are in employment or actively seeking employment, and a perception that benefits discourage paid work, would make public acceptability of Citizen’s Income difficult to achieve. The results of Evelyn Forget’s study of Canadian and US Negative Income Tax experiments are accurately reported: that is, that adolescents spent longer in education before finding a job, and women took longer maternity breaks before reentering the employment market. The authors suggest that the latter finding means that a Citizen’s Income would compromise gender equality. They also suggest that a Citizen’s Income would not address inequality in the employment market, would not address the problems posed by automation, would not address the ownership of capital, would not prevent precariousness, and might compromise the existing welfare state. The authors claim that to implement a Citizen’s Income would make it less likely that other necessary reforms of the welfare state would occur. They would prefer to see measures to enhance gender equality, improved skills training, sabbaticals, and a shorter working week.
It is of course not difficult to answer the objections: Recent research from the Institute for Social and Economic Research  has shown that it is perfectly possible to implement a Citizen’s Income of £60 per week and raise Income Tax rates by just 3%, that such a scheme would reduce both poverty and inequality, and that it would not impose losses on low income households at the point of implementation. The scheme would retain and recalculate means-tested benefits, but would take a lot of families off them, giving them greater freedom from bureaucratic interference and increased employment incentives. Such a scheme would enhance gender equality by paying Citizen’s Incomes on an individual basis rather than to households; it would provide households with greater choice as to how they organize their employment market activity; it would help to prevent precariousness; and it would not compromise any other parts of the welfare state as it would not require additional public expenditure. The fact that young people might spend longer in education, and that new parents might take longer breaks before returning to work, might be regarded as significant benefits. There are of course Citizen’s Income schemes that would suffer from all of the objections that the report’s authors mention: but there are also schemes that would not: and it is the fact that such realistic schemes exist that has helped to generate the significant increase in interest in the UK.
Citizen’s Income is no panacea. It would not address inequality in the employment market, it would not solve the problems posed by automation, it would not address the ownership of capital, and it would not prevent precariousness: but the fact that it could make a contribution in all of these areas, and that it could enhance gender equality, incentivize skills training, increase people’s ability to take sabbaticals, and make more possible a shorter working week, suggests that it would promote the authors’ preferred policy options rather than compromise them.
It needn’t be either/or. It could be both/and.
 Malcolm Torry, An Evaluation of a Strictly Revenue Neutral Citizen’s Income Scheme, Institute for Social and Economic Research, Colchester, Euromod Working Paper EM 5/16, 2016; Citizen’s Income schemes: An amendment, and a pilot project, Institute for Social and Economic Research, Colchester, Euromod Working Paper EM 5/16a, 2016.
A response from Daniel Sage:
Malcolm Torry provides a fair critique of our recent report, Europe’s New Social Reality: The Case Against Universal Basic Income, and persuasively engages with the key arguments we make against UBI. We would however like to respond to and clarify some of Torry’s objections, specifically on the following three points.
Winning the public debate on UBI
Torry states that one of our arguments against UBI is that ‘it would be expensive’. Whilst it is true UBI would be expensive (even the ISER report cited states income taxes would need to rise by 3 per cent for a very modest UBI of £60), it is not our prime objection. The policies we propose as alternatives (e.g. more generous childcare, parental leave and training programmes) would not be cheap either.
Rather, our prime objection is a doubt that the argument can be won for UBI in the present climate of public opinion in the UK. This is important as the precarious position of the centre-left in the UK, and elsewhere in Europe, requires the careful development of policies that work with the grain of public attitudes. The proposal of a policy – UBI – that would (a) necessitate tax rises and (b) go against dominant social norms around social security and employment does not seem a wise approach for the present. This is not so much a fundamental objection to UBI per se, but a question of strategy. Changing public opinion is an undoubtedly possible but slow process, which requires careful engagement with people’s values.
In our view, a more serious objection to UBI is its potential impact on gender equality. In present conditions, where inequality persists in both paid and unpaid work, it is unclear how UBI would correct this. Indeed, our concern is that UBI would in fact reinforce gender inequalities. The evidence from Dauphin is crucial in this regard and is often overlooked by supporters of UBI, who draw attention to the experiment’s more positive results. If a potential effect of UBI is to discourage secondary earners, predominantly women, from participating in the labour market, then it is quite plausible that gender inequalities could be reinforced by UBI. Policies that are known to promote gender equality in paid and unpaid work, such as shared parental leave, thus seem preferable in this respect.
Impact on the welfare state
Finally, Torry states a UBI would not ‘compromise any other parts of the welfare state as it would not require any additional public expenditure’. This is doubtful for two reasons. First, the additional taxes required to finance UBI could diminish public enthusiasm for further investment in other parts of the welfare state. This is problematic given the inadequacy of many existing programmes. Second, a commonly cited concern is that UBI could be used by future governments as a justification for cutting spending on other services. It is plausible, for example, to envisage a future government reducing spending on childcare on the grounds that UBI could be used to cover the costs.
The debate on UBI has revitalised discussion of the welfare state across Europe, during a time in which social security has come under threat across the continent. Our doubt remains however that UBI is unlikely to command widespread public support, at least in the UK. Given the present travails of the UK centre-left, policies that alienate large numbers of the electorate should be avoided. Further, more careful scrutiny should be given to the potentially unintended consequences of UBI, specifically around gender equality and the impact on existing welfare provision.