By Anna Coote
Originally published on Labour List 20 July 2020
Everyone should be entitled to an income guaranteed not to fall below a level that is sufficient for a decent standard of living. Most Labour Party members would agree about that. But what form should it take? Mounting calls for a universal basic income (UBI) have so far failed to get backing from Keir Starmer’s team. Here’s why Starmer is right.
UBI is a proposal to make regular, unconditional cash payments to everyone, whether they need it or not. That’s different from payments guaranteed to all whose income falls below a sufficient level. The phrase ‘UBI’ signals a broad-brush ambition, to which many subscribe without thinking too hard about the practical and political implications.
On the practical side, the cost of paying everyone would be astronomical, even if some of it is later clawed back through taxes. Familiar measures are listed as a means of paying for UBI: abolish tax allowances, eliminate tax avoidance, tax the rich, tax wealth and so forth. But it remains very expensive and there’s an even longer list of urgent causes looking to spend the same money – from ending a decade of austerity to implementing a green new deal and everything in between.
Most UBI proponents now suggest a ‘partial’ payment, arguing that this will provide income security and set us on the right track. Compass, for example, suggests £60 a week for adults. But even a relatively generous offer like that would fall well below the poverty line, requiring a range of means-tested, top-up benefits. Further steps towards a ‘full’ and sufficient UBI would absorb more and more public funds that are urgently needed in other quarters – to retrofit homes, generate renewable energy, support social care and make sure local councils can function effectively. By contrast, a guaranteed income scheme, such as that proposed by the New Economics Foundation, is a lot more affordable and cost-effective.
On the political side, the case for UBI is seriously flawed because it is only about money. We need cash, of course. But we also rely heavily on a ‘virtual’ income made up of in-kind benefits funded through taxes. The value of this social wage is enormous, though we tend to take it for granted. It is highly redistributive, as it is worth much more to low-income households. And it reinforces a genuine sense of ‘being in it together’ – the social solidarity that is fundamental to Labour.
Earlier this year I published a book, co-authored with Andrew Percy: The Case for Universal Basic Services. We set out detailed arguments for improving and expanding the social wage. The aim is to make sure everyone has secure access to life’s essentials – according to need, not ability to pay. Life’s essentials are what make it possible to survive, participate in society and flourish. Healthcare and schooling are obvious examples, but the aim is to improve and expand what we already have – to make childcare, adult social care, housing, transport and internet services available to all as a social entitlement, according to need, not ability to pay. The list doesn’t end there, of course. Clean air and water, energy, green spaces, libraries, recycling, street lighting, social work, legal aid and policing are part of the same picture.
Few of us can afford to pay directly for these essentials. They require a collective approach, funded through taxes. All our services have been catastrophically undermined by a decade of austerity and are in even greater peril as efforts are made to ‘balance the books’ after the Covid blow out. That’s why it is so important now to focus on pooling resources and sharing risks so that everyone has access to life’s essentials, not just now but in future too.
Compared with UBI, universal basic services (UBS) makes better use of public money by investing in the social infrastructure on which all our lives depend. It costs less by meeting needs collectively and thereby avoiding the moral hazards, transaction costs and profit-extraction of individual payments in the marketplace. It generates huge social value by building a secure, fair, well-educated, caring and healthy society.
UBS offers a principled framework for policymaking in different areas of human need. There’s no nostalgic return to the ‘good old days’ of the post-war welfare state. It involves a radical transformation of how services are designed and delivered, with devolution to localities and active engagement by citizens and service users. The state provides directly where appropriate but otherwise has four key roles: to ensure equality of access, to collect, distribute and invest funds, to set and enforce standards and to co-ordinate across sectors to get the best results all round. We argue that this approach can deliver substantial benefits in terms of equality, efficiency, solidarity and sustainability.
Progressive supporters of UBI usually insist that they too want more and better services. But I’ve yet to meet anyone who has shown how UBI and UBS fit together or how both could be afforded at the same time. Once you scratch below the surface sentiment, UBI is not an answer to our current problems, but a distraction. Unless it is so minimal as to be self defeating in its own terms, it leaves no fiscal space for improving and expanding the services we need. Its exclusive focus on cash payments to individuals diverts political energy away from the collective purpose of UBS.
So what are the best emergency measures for post-pandemic recovery? If our goal is sustainable social justice then what matters is not just money and markets, but caring for each other and working together to make sure everyone gets what they need – reimagining the ambitions of Beveridge and Attlee for our times, and staying within planetary boundaries. The UBS framework generates secure employment because most services are labour intensive, dependant on people and relationships more than technology. It safeguards money income by including an income guarantee. Crucially, it recognises the limits of cash in hand and the huge value of a generous, secure, collectively controlled social wage.