Why a Citizens Income is better than means-testing at fighting poverty

Photo by Roman Synkevych, via Unsplash

The Covid pandemic has pushed unemployment numbers to record levels all over the world. In the UK, nearly two million people have applied for Universal Credit benefits since the government advised people to stay at home due to coronavirus. 

It is very probable that a large number of these claimants will be coming face to face with the Welfare State for the first time in their lives, having never had to apply for benefits before.

If you are one of these first-timers to the system, it will be a rude awakening. First you will have to navigate the bureaucracy  to even be considered for help. You will have to tell the state about the minutiae of your life: what kind of household do you live in? In what kind of arrangement? Are you married? You will have to prove that you are in need. Do you have any savings? Are you looking for work? How exactly are you looking for work?

Then you will have to be careful not to fall into unexpected traps. If your circumstances change, you have to tell the authorities. This could lead to a fall in income, or penalties if you make a mistake. And you will be constantly having to prove that you are still in need to keep getting the help.

It will be a humiliating experience. Maybe you probably never thought you would find yourself in this position. Isn’t welfare for the poor? For the work-shy and the lazy? 

But the pandemic has exposed the stark reality that all of us can easily fall into poverty at some point in our lives. So the question arises: Is the current means-tested benefit system the best way to look after those in need? If the aim is to prevent people from falling into abject poverty, isn’t there a better way?

Universal Basic Income (UBI, also referred to as a Citizens Income)  is a better way to tackle poverty and financial insecurity. It is a simple concept: A regular payment to all citizens, no questions asked. Everyone gets it as a right of citizenship. 

Why is Universal Basic Income better than the current array of means-tested benefits? There are a lot of reasons, but here are the main ones:

  1. It is simple. Because everyone gets it, there are no complex eligibility rules to administer and expensive and intrusive enforcement mechanisms. Like the old Child Benefit, or the existing state pension, it goes to everyone equally.
  2. It carries no stigma. Because everyone gets it, no one feels stigmatised for claiming it. There is evidence to suggest that a third of benefits go unclaimed. There are many reasons for this, but complexity and stigma certainly play a part.
  3. It is fair. Yes, everyone gets it, but those who don’t need it (those who are considered rich by society) pay it back through the tax system.

A lot of work has been done that bears out the fact that a Basic Income would be better than the current status quo when it comes to tackling poverty. Here is a summary of some of that evidence.

Universal Basic Income is not a new idea. It can be traced back to 18th century philosopher Thomas Paine (and further back than that), but it has received new impetus in the wake of the Coronavirus crisis. And it has support from all shades of the political spectrum.

As the article points out, a Universal Basic Income is not intended to replace all benefits. But it will have the effect of lifting large numbers of people out of the benefits trap and provide them with a more secure financial platform to organise their lives.

And, crucially, it also points out that a modest Citizens Income is easily affordable without massive tax rises or major cuts to the existing benefits system.

Had a Universal Basic Income been in place when the pandemic hit and people were asked to go into quarantine, it would have been easier to direct help to all members of society and prevent many of them from falling into means-tested benefits and all the problems outlined above.

If you want to know more about UBI, here are some resources to help you:

What is it?

Why do we need it? 

Coronavirus and Basic Income 

You can also sign up to our newsletter (see right-hand side of this page) to stay informed about the Basic Income debate.

And if you want to get involved with UBI organisations, here is a handy list of groups to get you started.

 

 

Footnotes