Universal Basic Income

Julian Knight Excerpts

Wednesday 14th September 2016 Westminster Hall

[Ronnie Cowan (Inverclyde) (SNP)]

I beg to move,

That this House has considered universal basic income.

It is a pleasure to serve under your chairmanship, Mr Davies. I am grateful for the opportunity to introduce this debate.

If I asked people what a universal basic income is, I would get many and varied answers. It is even referred to with different titles, as universal, unconditional, basic or citizen’s income. That is not a bad thing, because it highlights the fact that we do not have one clear-cut, complete, top-to-bottom definition. Until we do, we cannot decide if universal basic income is a solution or not, but I hope we can agree that the current welfare system has failed.

If we were all given a blank sheet of paper and asked to design a welfare system, nobody—but nobody—would come up with the system we have now. They would need thousands of sheets of paper and would end up with a mishmash of abandoned projects, badly implemented and half-hearted ideas and a system so complicated that it lets down those who need it the most. We need only look at the personal independence payment and at tax credits to see recent examples of people being punished by a system that is supposed to support them. At the same time, the current system allows those who would abuse it to do just that. The expected expenditure on UK social security and tax credits in 2016-17 is forecast to be more than £218 billion. We are spending 28% of our total public expenditure on social security, but it is still not clear whether our welfare system is helping or hindering the most vulnerable people in our society.

Inequality in the UK continues to get worse as we tinker around the edges of our welfare system. The richest 10% of households in the UK hold 45% of the nation’s wealth; by contrast, the poorest 50% own just 8.7% of that wealth. We have seen that inequality manifest itself in different ways, across gender, age and nationality. For instance, the average household in the south-east of England has almost twice the amount of wealth as the average household in Scotland.

Despite attempts to improve the current system, in-work poverty has vastly increased, with the Institute for Fiscal Studies estimating that two thirds of children living in poverty in the UK are in working families. The rapid increase in food bank usage also reflects the failure of our system. In 2008-09, the Trussell Trust issued almost 26,000 three-day emergency food supplies; by 2015-2016, that figure had grown to more than 1.1 million, with almost one in three of recipients being referred to food banks because of a delay in their benefit payment.

Unfortunately, my constituency has some of the worst rates of deprivation in Scotland. Of the thousands of cases that my office has handled, I would conservatively estimate that at least one in 10 are related to benefits. I am seeing people who are left confused and anxious by a system of mystifying complexity. It lacks compassion; it processes people as if they were mere numbers going through a machine; and its rigid inflexibility prevents people from accessing the support to which they are entitled. I believe that it leaves people feeling less and less empowered.

Sharon Wright, a senior lecturer in public policy at the University of Glasgow, has said:

“Received wisdom dictates that benefit receipt is the outcome of making ‘wrong choices’. Welfare reforms have become increasingly punitive, on the rationale that strong disincentives and coercion are required to prompt the ‘right choice’.”

As she points out, claiming benefits is not a life choice; it is the result of unforeseen circumstances in a person’s life, such as unemployment, sickness or disability. However, welfare recipients still face hostility and a strong social stigma that defines them as being workshy or lazy, or as having given up on a sense of personal responsibility. I could spend the entire debate highlighting the failings of the welfare system, but I can summarise them by simply stating that our welfare system is not working.

A universal basic income could be a solution to this problem. In the words of Malcolm Torry, the director of the Citizen’s Income Trust:

“Technology lying idle, human creativity frustrated, wealth flowing from poor to rich, and finite resources uncontrollably exploited …we are still waiting for the next new key concept. A Citizen’s Income might be just what is required.”

[Julian Knight (Solihull) (Con)]

I congratulate the hon. Gentleman on securing this debate. He mentions the EUROMOD report by Mr Torry, and I wonder whether he saw the part of the report in which it is stated that, in order to support a universal basic income, the basic rate of income tax would have to rise to 48 pence in the pound. Can he say how on earth that is supportable in a modern economy?

[Ronnie Cowan]

As I said at the very start of my speech, there are many and varied approaches to this issue; no one has worked up the complete solution at this stage. What we are aiming for is acknowledgement of the fact that our current system is not fit for purpose, and the people of the United Kingdom should be looking for “best of breed”. If we are not prepared to take on that challenge, then we are not in the right job.

--- Later in debate ---

[Ronnie Cowan]

Yes, we are going there. I believe that it is called the “gig economy”, in which people share jobs and try to find a better work-life balance. People do not want to have to put in all those hours of work in simply to make money if it is not within them that they want to spend all that money. That chasing of the capitalist dream is hopefully something that is confined to the past.

If we genuinely want to create a more effective system of state support, we need to be prepared to address the difficult questions. Part of the challenge will be to bring together the patchwork of individuals and organisations that have expressed an interest in pushing forward the UBI agenda. Groups such as Citizen’s Basic Income Network Scotland and the Citizen’s Income Trust have helped me to outline what options are open to us in defining a basic income.

It is argued that the benefits of introducing a basic income include: reducing poverty and boosting employment; providing a safety net from which no citizen will be excluded; and creating a platform upon which all people are able to build their lives. More generally, it could be argued that a basic income would bring about increased social cohesion and mark the end of incentives that discourage work and saving.

In the time available to me today, I can only touch on the wide range of questions that will need to be answered in order to implement such a scheme. Who will be eligible for basic income? What will be the rate of payment? Over what timeframe will it be implemented? Most important, can the affordability of such a scheme be demonstrated? Having clear answers to these questions is vital, but that will not be enough; we will also need the political will to make changes.

The Irish Government published a Green Paper on a basic income as far back as 2002. It concluded that a basic income would have a substantial positive impact on the distribution of income in Ireland and would reduce poverty in a more effective way than the existing welfare system, but 14 years later the concept has not managed to evolve into a fully formed Government policy.

[Julian Knight]

I thank the hon. Gentleman for giving way to me again; he is being most generous with his time. The Irish Government came up with this proposal in 2002, but 14 years later they have still not been able to implement it. Also, would he reflect on the fact that in Switzerland this idea was actually put to a referendum and two thirds of voters voted against it? Is not the real reason that these people have gone against a basic income is that they realise it destroys the incentive to work?

[Ronnie Cowan]

I am not here to speak on behalf of either the Irish Government or the Swiss Government, but there is absolutely no indication that providing somebody with a basic income removes the incentive to work. Instead, what it does is to put life choices in front of people, so that if they want to study part time, work part time or work on a farm voluntarily they will not be penalised for doing those things, and therefore it is more likely that people will be prepared to take on work at a level that suits them.

If policy makers regard the basic income idea as simply an academic or abstract economic concept, we will never see it being used to break down the worrying levels of poverty and inequality that we have in the UK. The United States, Canada, Namibia and India have all piloted basic income schemes, while Finland and the Netherlands plan on trialling limited local schemes.

Many Members will be aware that Switzerland has already held a referendum on the implementation of a basic income. Although the proposal was rejected, that shows that other nations already have a more developed understanding of the concept. The charity GiveDirectly has announced that it will launch a full basic income trial. The project will involve at least $30 million and academic support from leading researchers. The trial will fully adopt the basic income model by making regular cash payments to every resident in several villages in Kenya.

I secured this debate with the humble notion that I do not have all the answers to the questions. I hope to facilitate discussion, to debate with my parliamentary colleagues and to consult the relevant organisations about the benefits and feasibility of the basic income concept. I believe it was first proposed by Thomas Paine in his 1797 pamphlet “Agrarian Justice” as a system in which at the “age of majority” everyone would receive an equal capital grant—a “basic income” handed over by the state to each and all, no questions asked, to do what they wanted with. Could this be an idea whose time has finally come?

On 25 May 1961, President John F. Kennedy announced before a special joint session of Congress the dramatic and ambitious goal of sending an American to the moon before the end of the decade and returning him safely. Not for one minute did he intend to design the rockets himself, and he had no ambition that I know of to be on the flight. His not unrealistic and ultimately correct proclamation was built on the premise that he knew America had the time, the money, the brain power and the will to achieve the goal. He challenged the American people to succeed and they rose to that challenge. I stand here in front of the Chamber today and I challenge all of us to work together to create a fairer welfare system—one that does not trap people in poverty, but instead acts as a platform from which the citizens of the United Kingdom can build better lives for themselves.