Starmer hasn’t backed universal basic income yet. Here’s why he should.

In her article of 20 July, Anna Coote dismisses basic income on account of political and practical problems. In fact, it is probably true to claim that ‘Labourists’ comprise a group of left-wing thinkers, who are ideologically opposed to Basic Income (BI). That is, they want to live in a different type of society from the variations that BI systems might bring about.

For labourists, ‘work is what gives meaning to life’, compared with people for whom other experiences are equally meaningful, if not more so, such as relationships. Do labourists want paid work to be compulsory – although it should not be necessary, if indeed it gives meaning to life for everyone? The main concern of labourists, as their name indicates, is that of protecting and strengthening the power of labour when negotiating wages and working conditions with employers. It is centred on the rights of employees, and one might wonder if their concerns extend to the more than seven million working age adults in the UK who are classed as ‘economically inactive’, which includes those who are full-time unpaid carers of children and adults, and many people with disabilities.

In many ways, labourists and BI advocates aspire to similar ends. Anna Coote quotes her objectives as ‘equality, efficiency, solidarity and sustainability’, to which many BI advocates would also subscribe. Similarly, she wants to build ‘a secure, fair, well-educated, caring and healthy society’, in which everyone has secure access to life’s essentials, which ‘are what make it possible to survive, participate in society and flourish’. No difference there, then. So, from where do the differences emanate? The missing objective, as far as BI advocates are concerned, is that of ‘autonomy’ or ‘choice’, compared with the labourists’ emphasis on collective control. This helps to explain the different instruments recommended to produce the different desired types of society.

A basic income is a periodic, uniform (except by age), unconditional cash payment, delivered to all on an individual basis, without means test or behavioural requirement. It can lead to five broad areas of outcome simultaneously:

  • autonomy – freedom from boyfriends, bosses and bureaucrats;
  • wellbeing in terms of freedoms from income poverty, stigma, insecurity and exclusion, together with increased health and educational opportunities;
  • a just, united and inclusive society;
  • labour market efficiency, flexibility and productivity; and
  • a more efficient administration system.

Labourists reject BI in favour of public services together with a Minimum Income Guarantee cash payment. (In contrast, some ‘Neoliberals’ would accept a BI system only in exchange for dismantling public welfare services altogether, in order to achieve low taxation.) BI advocates recognise that a BI system and public welfare services are complementary. Both are required. Cash is more efficient in meeting needs essential for all, and services are more efficient, for example, for health provision and education, which not everyone needs at the same time.

The labourists’ emphasis is on in-kind benefits via expanded Universal Basic Services. ‘It involves a radical transformation of how services are designed and delivered’, and it ‘safeguards money income by including an income guarantee’, that is, ‘payments guaranteed to all whose income falls below a sufficient level’. The recent Covid-19 pandemic has revealed the enormous gaps in the UK’s Social Security ‘safety net’. But Coote offers no recognition of the inadequacies of the current Social Insurance system, (which is supposed to provide replacement incomes for employees when unable to work due to sickness, unemployment or in retirement), nor acknowledgement of the structural flaws in the mainly means-tested Social Administration ‘safety net’. Will the rest of the Social Security system, in addition to the introduction of the Minimum Income Guarantee, remain intact?

Yet, a Minimum Income Guarantee (MIG) is a special type of means-tested benefit, which typically has a 100 per cent withdrawal rate on gross incomes below the sufficient level, and which introduces an inherent disincentive to work for pay for low-income people. In addition, means-tested benefits are intrusive, discriminatory, divisive, stigmatising and humiliating for those who suffer them, and lead to low take-up of the benefits to which people are entitled. Neither is it clear whether the unit of assessment and delivery will be based on the individual, or continue to be the couple, helping to shield domestic abuse from scrutiny, nor to how much conditionality and sanctions those claiming MIG will be subjected. A thorough examination of the current UK Social Security will reveal these flaws, to which a Minimum Income Guarantee is also subject. The labourists’ desired type of society, based on UBS, is a much more radical change, and therefore likely to take longer to transpire. Might it be advisable for them to adopt a BI in the meantime to complement the enhanced public welfare services?

Anna Coote claims that no-one ‘has shown how UBI and UBS fit together or how they could be afforded at the same time’. It is true that the initial outlay, for a full BI that is at least as generous as the OECD poverty benchmark (which, for a couple, is ‘60 per cent of median equivalised household net disposable income’) would be relatively high. But, even while retaining a small Personal Allowance, if financed via a reformed, progressive combined income tax and National Insurance Contribution system, as described in my recent book*, it could be financed by a standard rate of the new income tax no greater than the combined highest rates levied on income currently in the UK. Similarly, the financing of the BI and UBS systems could be separated so that they do not have to compete for the same funds, and the funding systems could become more transparent and accountable.

Labourists often sound angry when rejecting BI. I don’t feel angry at labourists – just a little bemused.

*Annie Miller (2020) A Basic Income Pocketbook, Edinburgh: Luath Press.

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