This article by Alison Payne first appeared in issue 22 of Scottish Policy Now.
Last week Reform Scotland published a briefing calling for a universal basic income to be introduced across the UK. UBI is not a new idea. Reform Scotland first called for its introduction in 2016, and is one of many organisations that have advocated its benefits over the years. Others include the Scottish Greens and the RSA, as well as the late Professor Ailsa McKay, a noted economist. It attracts support from across the political spectrum.
The coronavirus crisis has pushed UBI back to prominence. Spain has indicated it intends to introduce one, and in Scotland the first minister has voiced interest.
As a response to the present crisis a universal basic income would provide financial certainty to the many who have suddenly and catastrophically lost their jobs, or had their hours reduced. However, it also offers a long-term solution to many problems within our welfare system and could help to create the right long-term environment as we rebuild our lives and our economy.
With a UBI, each person receives an income from the state that cannot be withdrawn or reduced. Any earnings on top are taxed in full but the payment is never withdrawn. So work always pays. Means testing is removed and payments can be automated, so should allow lower administration costs and less intrusion into people’s lives. Each person is treated as an individual rather than as a member of a household, as is presently the case with benefits.
Not all work is permanent or full time and some work is seasonal or sporadic, making it difficult for people to accept it without losing out on benefits. Under a UBI system all work, no matter its regularity or permanence, would bring people more income. The endless changes to benefits brought about by changing working hours would end. And the UBI would replace only certain benefits — disability, maternity and housing payments would remain.
In Reform Scotland’s 2016 report we used the Scottish Greens’ figure of £5,200 per adult and £2,600 per child to work out indicative costs, which would be about £20 billion for Scotland or £235 billion across the UK. We suggested that paying for a UBI would require tax rises, though as savings were made through simplification and an increase in the number of people working we would then expect the tax rates to decrease.
The British welfare system was broken before the Covid-19 crisis, and sticking plasters cannot help. Now is the time to consider a radical new approach. Now is the time to start looking at a universal basic income.