Why UBI is Great

You get money! You get money! You all get money!

Thirty people are to be given £1,600 per month for two years with no strings attached in a Universal Basic Income (UBI) trial. UBI is a controversial idea and the trial in the UK has already received criticism, mainly from those on the right who have likened it to communism. However, despite the naysayers, I think some form of a UBI has a lot going for it.

I’ve written before about the flaws in the current benefits system. It’s a cruel system which often penalises people from doing the right thing and is such a low amount that it’s difficult for claimants to live with dignity. However, the main issue with it is the fact that claimants have to apply and then wait before they receive any support from the State. This means that people can find themselves in financial difficulty and are at risk of going hungry or falling into debt while they wait for the help they are entitled to.

A UBI paid into every citizen’s bank account each month would prevent this from happening. If someone were to find themselves suddenly out of work then they wouldn’t face these difficulties. They would obviously be worse off, but at least they’d have the support they need straight away. As such, a UBI would provide a true safety net for people.

There would be other benefits as well. For example, having a true safety net could encourage people to be more entrepreneurial. Starting your own business is a real risk and many people who have great ideas simply don’t take the plunge. A UBI would give them a higher level of security, meaning that they can work on their idea and develop their business.

Moreover, it could lead to better job matching. The current system incentivises people to find pretty much any job, even if they’re not a good fit. This means that people don’t stick in roles for long and are less productive. Giving people a true safety net would mean that they could take their time when looking for a new job meaning that they find one which matches their skills and interests and so are more productive at work.

A UBI would also free up people to undertake more volunteering and caring work. The government today announced it wanted to recruit volunteers to tackle the crisis in caring. A UBI could help to achieve this by encouraging people who might like the idea of caring but can’t afford to leave their job.

We’re often patronisingly told that there is more to life than GDP. This is of course true and a UBI could actually make us happier. For example, we know that being forced to look for work is depressing and so a UBI which frees people from the drudgery and pressure of trying to find a job. This is important not just because it’s a good thing to be happy, but also because being satisfied in life makes depression, alcoholism, and drug addiction less likely. We should all want our fellow citizens to flourish, but even if you’re just a cold-hearted and dead eyed economist you still have to accept that this would be a good thing for the public finances.

A UBI would stop the infantilisation of a significant proportion of the population. Under the current system, Universal Credit claimants are required to meet with a civil servant once a week for a five minute conversation in order to assure them that they’re looking for work in order to get their benefit payment. This is surely a waste of time as well as government resources. Why are we subjecting our fellow citizens to this and why are we forced to pay for it? A UBI would not only end these pointless meetings but would also bring in significant savings as work coaches would no longer be necessary. These civil servants could help plug the labour shortage by getting a job in the private sector and job centres could be used for more productive purposes.

As for the cost, a UBI need not be too expensive. It would be clawed back through taxation for those who do not need it and there would be savings due to the benefits discussed above. The rate should be more generous than for Universal Credit but probably lower than the trial amount. It would also replace the State Pension.

Those against a UBI argue that it would just lead to people not working. However, there is no real evidence that a UBI would lead to an increase in workless households. What is more, it could actually encourage people back into the labour market who are currently reluctant to do so as it would impact the benefits to which they are entitled.

I don’t think a UBI is likely anytime soon but it’s a policy which deserves more trials. I’d also like to see a form of income protection. Under the current system if you lose your job then you’ll end up receiving far less from the State than your current salary. This is obviously problematic as when your salary increases, so does your spending. As such, those who find themselves suddenly unemployed might find themselves at risk of not being able to pay for their home and other essentials. Obviously there would need to be a ceiling to the amount, but it’s surely fair that those who have paid so much in tax receive what they need from the State if they fall on hard times (but that’s an article for another day).