Universal Basic Income

Eilidh Whiteford Excerpts

Wednesday 14th September 2016 Westminster Hall

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

We have had an interesting debate already this afternoon, and I warmly congratulate my hon. Friend the Member for Inverclyde (Ronnie Cowan) on stimulating discussion of whether a basic income model of social security would better meet the needs of our citizens at a time when we are facing significant demographic and economic change. He and the hon. Member for Brighton, Pavilion (Caroline Lucas) have highlighted some of the pilot schemes under way internationally, particularly those in other advanced economies, notably the Netherlands, Finland and Ontario in Canada. There is a tacit acknowledgement that all the schemes are in an early stage of development or implementation, and some have not even commenced yet; nevertheless, they offer insights into how basic income models might work in practice and how they might be adapted for a UK context.

My hon. Friend pointed out that the idea has a long pedigree, dating back to the late 18th century. I first encountered the concept of a basic income or citizen’s income models a number of years ago through the work of the late Scottish feminist economist Professor Ailsa McKay, who was particularly interested in exploring ways to close the income gap between women and men—a gap that more than 40 years after the Equal Pay Act 1970 continues to grow through the course of women’s working life and becomes most acute in old age. The idea of a citizen’s income did not have so much currency back then, but more recently there has been greater interest in a range of basic income approaches and the start of a more serious debate. Although that debate is still in its early stages, I am glad it is opening up.

As we have heard, the proponents of basic income schemes argue that giving every citizen the automatic right to an income could help tackle our growing problems of extreme poverty and destitution, streamline the complex bureaucracy of the existing benefits system and promote greater social inclusion. Those are all laudable aims, but for me one of the most attractive aspects of a basic income approach is that it would to some extent neutralise some of the toxic rhetoric that has developed around social security recently and has perpetrated divisive and damaging stereotypes about people living on low incomes. A basic income or citizen’s income would undoubtedly help us to move away from the trope of the undeserving poor and make it much harder to blame those swept away by rough economic tides for their own financial insecurity. That in itself makes it pretty appealing. When the gulf between the wealthy and the rest has not been so stark in living memory, any social security system that promotes social cohesion and a meaningful contract between the citizen and the state deserves to be explored.

None the less, I still have a lot of questions about how a basic income model would work in practice and whether it can live up to the grand claims sometimes made for it. My questions are mostly pragmatic. My biggest concern is that a minimum income could act as an income ceiling rather than a floor for large numbers of people, particularly those who are already the most economically disadvantaged and for whom the prospects of supplementary income over and beyond that are the most fragile. It would be counterproductive if those who are unable to work or have limited capability for work were to find themselves caught in a new, newly differentiated poverty trap.

I also worry that the value of a basic income could become eroded over time. We have seen, for example, how the value of the state pension has been diminished over recent decades to the extent that no one expects to live on it as a sole source of income any more. The poorest pensioners have to receive top-up pension credits to bring them up to a basic standard of living and those lucky enough to have had the opportunity to save through an occupational pension scheme depend on that income to top up their state pension. I wonder how we can avoid the risk that the value of a citizen’s income would shrink over time, entrenching poverty for those who would be most dependent on that income.

In addition, we would still face the major challenge of tackling income inequality and the widening gulf between those in secure, well paid jobs and the increasing numbers in insecure, intermittent, low-paid work. In my view, that is key to building a fairer society. A basic income could arguably smooth the fluctuations in earnings for those in precarious employment, but it would not do anything to close the earnings gap and it would mean that over time those in well-paid jobs could move even further adrift. My own sense is that a greater emphasis on reducing income inequalities in the tax and benefit system as a whole would go further towards promoting social cohesion. I will be interested to see the extent to which the basic income schemes being trialled in an international context address that point.

I am also interested in how basic income models could articulate and interact with those parts of the tax and benefit system that would still need to be based on assessment and means-testing. Most of the proposals I have seen for basic income models in the UK context exclude housing and disability benefits. Aside from state pensions, the biggest chunk of our social security budget goes on housing benefits and the level of support claimants get varies widely across the country, depending on the housing market in different areas, whether a claimant lives in private rented accommodation or social housing, and their income levels, because it is a means-tested benefit that is gradually reduced as earnings or incomes rise. Someone living in London renting in private sector accommodation and working in a minimum-wage job would receive a lot more in local housing allowance than someone in similar circumstances in my constituency for example, simply because the market rents are so much lower in my constituency. It is hard for me to see how we get away from variable rates of housing support given the huge disparities in housing costs across the UK, so we would still be left with means-testing for large numbers of people. Unless we are very careful on how withdrawal tapers are managed, a lot of people in rented accommodation could be left substantially worse off.

Similarly, there would still need to be capability assessments of some sort for those unfit for work, assuming that we recognise that sick and disabled people face extra costs and have less recourse to alternative income streams. In some cases, people will need long-term support. If one of the advantages of basic income models is that it gets away from harsh conditionality regimes and punitive sanctions, the problem for sick and disabled people is that they would still be subject to assessments and conditions even if the benefits themselves are non-means-tested.

I retain an open mind about the merits of basic income models, but until we examine specific models, it is impossible to fully assess the pros and cons or any potential unintended consequences of such substantial policy change. We need to be cautious in our approach, while looking carefully at the emerging evidence on how these models might work in practice and could be used to benefit people in the UK.