Could universal basic income have prevented furloughing?

Now more than ever, Universal Basic Income is a topic of consideration across the working nation. With people unable to work in the UK due to the imposed lockdown and other restrictions, the government has introduced some financially protective measures for the self-employed and employees. But is this a knee-jerk reaction to something that could have already been implemented?

What is UBI? It is a government payment made to all people with no regard to gender, working status, number of people in the household or contribution to society, that would vary only with age.

So, how would that work? Everyone of the same age would receive an individual fixed income payment from the government – this cannot be withdrawn and would be paid automatically, as a legal right.

What are the positives of this? Presuming the UBI was rolled out nationally, it would mean that everyone would receive unconditional income to meet their basic needs – it would be able to theoretically buy-out poverty. It would provide everyone a level of financial security, even in times of uncertainty, regardless of their ability to work.

What are the negatives? It would be both expensive and difficult to initially roll-out. It’s unlikely to reduce things such as homelessness in the first instance, as it’s likely to still require an address and various other aspects – similar to requirements for benefits. There is also a question about where the poverty line really sits. With so many factors contributing to what people’s basic needs really are; how can a basic income level be determined?

Has it worked anywhere else? There has been no successful long-term implementation of UBI. However, one charity has launched a long-term pilot in Kenya, which, if successful, could potentially change the way charities provide support to those in need. However, it is typically the government providing the stipend through taxes collected, and if funded from charities, runs a risk of failure if there is any fundraising trouble. There have been some pilots of a similar nature in negative income tax, but again these have not continued.

Could UBI have prevented furloughing or the government needing to provide this bail-out? If all UK nationals were eligible to a fixed level of income (regardless of anything else they earned or not), there would be far less uncertainty for those unable to access the outlined government support. Some key positives include:

  • It would protect those who are self-employed, as well as those in regular employment – and even the unemployed;
  • People who are not covered by the agreed government proposal (i.e those who signed contracts after 28 March) would have a basic income to cover them;
  • UBI could be much cheaper than the total bailout that the government has had to provide (less than £350bn).

But there are also some really crucial negatives to consider:

  • People could have been exposed to a loss of job security, as employers may consider UBI to reduce their responsibilities to employees with a dependence on that income;
  • It would be fixed at ‘poverty line’ unlike furlough arrangements, which if not already set up, could be significantly lower than peoples wages;
  • There are further issues with UBI being at the level of income determined for ‘basic needs’ as this varies massively;
  • Whilst it may offer a cheaper interim solution in the case of a virus, it would likely be more demanding on public resources going forward – either increasing taxation or decreasing income tax to be paid.

I think that UBI has some way to go before it could be a practical long-term solution that could be rolled out properly. As with anything involving a level of subjectivity, there is room for error, fraud and a constant need to respond to change. For a short-term solution during COVID-19? The response scheme from the USA does bear semblance to an interim UBI solution, but the reality is that it is not clear how this could be maintained for a longer period of isolation – or beyond.

I am supportive of anything that provides an equal footing for all to start from – but the balance in finding that equality can be very fine. Diversity of people’s needs, and the logistics to implement such, at least for now, comes with a risk of being very unequal indeed.

All opinions are my own. No paid or sponsored content. Quoted and relevant links credited. All links correct at the time of publication. Information researched and interpreted by myself. For entertainment only – this is not intended for advice. COVID-19 is a virus that needs to be taken seriously and firstly all medical advice provided by WHO and the NHS or relevant health authority should be followed. There may be unique advice for people who suffer from illnesses and one size does not fit all. If you consider yourself (or those close to you) at risk, seek advice – remotely – from a healthcare professional.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s