Universal basic income: Why the fashionable arguments in favour do not add up – Murdo Fraser

Setting UBI too low would increase poverty, while setting it high enough for all would involve eye-watering levels of taxation on those who chose to work, writes Murdo Fraser

Nicola Sturgeon should not pursue the idea of a universal basic income, says Murdo Fraser (Picture: Fraser Bremner/Scottish Daily Mail/PA Wire)
Nicola Sturgeon should not pursue the idea of a universal basic income, says Murdo Fraser (Picture: Fraser Bremner/Scottish Daily Mail/PA Wire)

With the UK Government now effectively paying the salaries of a large section of the workforce, thanks to the generosity of the Chancellor Rishi Sunak, it is not surprising that there have been calls in some quarters for the permanent introduction of a universal basic income. The basic concept of UBI – whereby the state pays, on an unconditional basis to every citizen, an annual sum of money calculated to cover essential living costs – is one which has had its attractions to both those on the left and the right of politics over many years.

Last month the think tank Reform Scotland published a paper proposing a UBI worth annually £5,200 per adult and £2,600 per child, picking up figures put forward by the Scottish Greens. The policy has won the support of the First Minister Nicola Sturgeon, who along with other SNP politicians is calling for its introduction by the UK Government as a response to the Covid-19 pandemic.

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The advocates of UBI claim that it would be preferable to the existing system of welfare benefits, removing the need for means testing, and as a result generating substantial savings in the administration of benefits. Individuals would be secure in the knowledge that they had a set minimum income, and any work they did would guarantee payments over and above this without any clawback. In every case, work would pay.

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Moreover, individuals who chose not to work would have freedom to do so, knowing that the state would be always there to prevent them falling into destitution. In a world where the future of employment is ever more uncertain, and where we have seen a growth in the gig economy, individuals would have protection against insecurities and variable earnings.

So, what’s not to like? The problem is that, despite its superficial attractions, there are major flaws in all the models for UBI that have been put forward.

Bespoke benefits

The biggest problem with any system of UBI is simply that of affordability. For UBI to achieve its objective of providing a safety net for all individuals, it would have to be set at a sufficiently high level to cover all basic living costs, including those of housing. In effect, this would mean something close to the existing National Living Wage for a full-time working week. At such a level, the costs would be astronomical, requiring eye-watering levels of personal taxation, particularly on middle and higher earners.

Alternatively, if set at a lower level (for example, the figures suggested by Reform Scotland), the level of UBI would be insufficient to provide the basic support that makes the notion attractive to its advocates. That would still require the provision of additional top-up, and means-tested, benefits, and therefore the objective of simplicity in the welfare system would be lost entirely.

But it is not just on the basis of cost that the arguments for UBI fall down. The current welfare system, whatever view one takes of it, is established to provide specific payments for individuals in their bespoke circumstances. So, for example, individuals with disability, high housing costs, or high childcare responsibilities, will receive higher payments than those without. If that approach is dismantled, either individuals with these additional needs will lose out, or everyone will have to be paid at levels which would cover the costs being borne by the neediest, at huge financial expense.

UBI could increase child poverty

If UBI were attractive in supporting those in poverty, it might be thought that it would have the support of anti-poverty groups. However, think tanks such as the Centre for Social Justice and the Joseph Rowntree Foundation are united in opposing UBI, believing that it is not the answer to addressing poverty. Indeed, it is the conclusion of the Joseph Rowntree Foundation that UBI schemes would actually increase poverty for children, working-age adults, and pensioners, compared to the current tax and benefits system. If those who are devoted to campaigning against poverty take such a negative view, then the rest of us are right to be cautious.

There is another reason why UBI should be opposed, and that is because it offends the basic belief that work is good for people. There is a long Scottish tradition that work is fulfilling, gives purpose to life, and is a reward in itself – an approach described by the German sociologist Max Weber as “the Protestant work ethic”.

As we have seen over the past few weeks with people becoming increasingly frustrated in lockdown, enforced idleness is not something most people enjoy, for any extended period. Workplaces are not simply locations housing wage slaves: they are environments where we interact with other human beings, socialise, and feel that our efforts are of value. Even the most mundane jobs provide social benefits well beyond those available to individuals who are stuck at home unemployed, regardless of the financial rewards.

Money for nothing

There may be advocates of UBI who believe that the state should pay individuals an income which allows them to make choices not to work, to go on adventures and live their dreams, but such an approach is far detached from reality.

I suspect that the great majority of Scots would be more inclined to the view that people should not receive money for nothing, particularly when that comes out of the taxes of those who are having to get out of their beds and work hard for a living.

The question also has to be answered: if universal basic income is such a good idea, why has nobody implemented it before now? After all, it is a policy idea that has been around for many decades. Finland experimented with a scheme in 2017, but it was abandoned after an initial two-year trial period, and there are few indications of other countries wanting to follow suit.

I think it can be safely concluded, despite the extravagant claims made in support of UBI, that it is simply not a workable, deliverable, or cost-effective policy to be pursued. It does not even achieve what many of its advocates claim for it. At best, it is a distraction from the important task that will face all governments at the end of this pandemic, of rebuilding economies and getting people back into meaningful work.

Murdo Fraser is a Scottish Conservative MSP for Mid-Scotland and Fife

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