Income should be a right; not reserved just for those who can work
Could we decouple a wage from work?
Except for the privileged few who don’t need to, or the unfortunate few who can’t, we all have to work. We have to just to survive, but also to have any sort of meaningful or enjoyable life. Work equals income.
But could we, even partially, decouple a wage from work? The proposal of a universal basic income is that everybody, regardless of who they are or what they do, should receive an unconditional amount of money each week to cover basic needs.
Firstly, it would be an engine for equality. Care work, for example, is not remunerated, and predominantly done by women. UBI would allow people to care for others and not suffer for it whilst also improving gender inequality.
Furthermore, huge reductions in poverty and destitution would be realised. In particular child poverty and pension-age poverty would be halved; things that surely everyone is in favour of.
“A basic income would fulfil a long-held, but never implemented goal: the introduction of an explicit income floor, below which no household would fall.” — Lansley & Reed, 2019
It would also be the biggest wealth redistribution programme in over 50 years. Our current economic system is one of ‘trickle up economics’. Wealth flows to the rich in the form of asset ownership (property, shares etc.) and by allowing it, we are making the rest of us poorer all the time.
Rishi Sunak is worth £700m. That wealth generates a passive income of around £30m per year for him. That gets reinvested in things like property that drives up property prices for the rest of us. Quantitative easing did the same thing but that’s another story.
“A UBI is a way of ensuring the economic gains, say from technological change, are fairly distributed and not colonised by capital.” — Lansley & Reed, 2019
The net cost of UBI is zero. The gross cost for an introductory UBI is about £268bn per year. That’s based on £60 per week to adults aged 18–64, £40 per week to mothers for each of their children (aged 0–17) and £175 per week to adults aged 65+.
Eligibility for the state pension, therefore, would become automatic for citizens over 65 years old. That is rather than the current conditional on adequate contributions; thus raising the income of those with incomplete contribution records — mostly women.
In enacting a UBI, child benefit, state pensions and job-seekers’ allowance would be removed saving approximately £118bn per year. At the same time, disability benefit, PIP and bereavement benefits would be protected and remain in place.
UBI costs are net neutral but it requires changes to taxation. Abolishing the tax-free personal allowance, whilst also increasing the tax percentage by 3p in the pound (to 23%, 43% and 48%) sounds like it’s going to hit most people’s wage packet.
However, upping the threshold at which upper tax bands kick in and introducing a 15% tax band for the first £12,570 reduces the impact. Further potential for expansion of UBI could include introducing a tax on wealth too.
So what are the results? Well it’s straight out of Robin Hood’s playbook; the poorest in society benefit as wealth is redistributed from the richest.
As the chart below shows, the poorest 10% of society see their income rise by 131%, whilst the richest 10% give up just under 6% of their income.
I’m all for this. I want a fairer society and I’m happy to give up some of my income to achieve it. However, I would like to see a range of salaries modelled on the new taxation and national insurance schemes to better understand the personal impact.
“With the decades ahead set to be full of economic shocks due to climate change and new forms of automation, basic income is going to be a crucial part of securing livelihoods in the future.” — Will Stronge, 2023
In 2022, Andy Burnham, the mayor of Greater Manchester, said UBI was an idea “whose time has come” as he spoke on the cost of living crisis. Burnham said: “A universal basic income will put a solid foundation beneath everybody so that they can have a life with security and stop worrying about everything.”
It’s time to have the detailed debate.
