Universal Basic Income

Will Quince Excerpts

Tuesday 13th October 2020 Westminster Hall

[Rachael Maskell (York Central) (Lab/Co-op)]

It is a pleasure to serve under you as Chair, Mr Davies. I start by saying to both contributors so far that I wholeheartedly agree with the thesis that they set out while also highlighting the practical realities of what a universal basic income could bring.

We live in such an inequitable society—the second most inequitable society that there is. We have 4.5 million people living in poverty today, in one of the richest countries. We know that many have made their millions out of this crisis, but millions have fallen into very stark circumstances. We have heard about the 3.1 million people who have been excluded from any support whatsoever and are desperate at this time.

The unemployment rate in my constituency last year was 2.8%; next year it will be 27%. This is terrifying—one in four people losing their jobs because of the nature of our local economy. The 2.8% was an incredible feat, in a post-industrial city where the manufacturing base was wiped out, with the loss of the rail and chocolate manufacturing jobs, but we now face an unprecedented precipice, and we are worried—terrified—at what lies ahead. We have to think outside the box at a time like this. That is why I believe that York, because of the nature of the economy and the way our city works, would make an ideal pilot for a UBI, or citizen’s wage, as many call it.

We also know that, at the end of this month, many people on furlough today will fall over tomorrow. The reality is that, while wages are currently at 80%, they will drop in areas of high lockdown to 67% and in many areas to nothing. That will mean a longer and longer queue at the jobcentre—none of us wants to see that—or people simply struggling. UBI is not just about economic circumstances; it is about holistically supporting individuals, which is why I am also a convert to such a mechanism. It does not judge or call out, but it does protect. At a time like this, we have to look at how we protect society.

The Prime Minister talks about putting his arms around our society, yet we are not seeing the evidence of that. Many of the economic packages that have come out have been narrow, too late and too little. They do not look at the real, longer-term solutions that we need to look at in this crisis. The packages are short term and have not grappled with the real economic challenges of our age. We have to look at what will sustain us, and not just in the next six months or year—we are talking decades of recovery from this pandemic.

We have to inject the right solutions. Therefore, we should not rush, but move on this path to look deeper into this situation. We have seen the benefits where universality has been applied. We have the pension scheme—too low, I would argue, but it is a scheme that does not judge—and child benefit. Such a solution removes the issue of the undeserving poor, a narrative that has often sat with this Government. It does not judge; it recognises the real challenges. Of course, it should also sit alongside a progressive taxation system—something we desperately need which challenges those with broader shoulders and supports those without that resilience.

At a time when we see our high streets about to topple over, businesses folding, our whole local economy in York and our national economy spiralling out of control, and pp spiralling down with it, we need that safety net. Universal credit has been a good attempt, but it judges, it sanctions and it has caused harm. People have to wait for weeks before they get any money. At the height of the pandemic, it was not just five weeks, it was eight or nine weeks that people in my constituency waited.

[The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)]

indicated dissent.

[Rachael Maskell]

The Minister is shaking his head. I talked to my constituents who were offered a loan, to be paid back. I am telling the Minister about cases in my constituency where people waited that length of time to get their hands on any money. They were absolutely desperate and needed to use the food bank. Why are we doing this to people when we have other tools that we can utilise?

That is why I believe that universal basic income will bring the universality, the collective responsibility of society, and the solidarity to see people through this time. I argued for it at the start of the pandemic, seeing what was ahead. I believe ever more strongly that, as poverty encroaches, we must find proper solutions. At the moment many people are struggling to pay heating bills. A constituent came to me about that this week. People cannot afford to feed their families. Often it is the women in the family—the mothers—who do without to make sure their kids get what they need. It is tough. My city is like many other places in facing that.

One of the benefits of universal basic income comes from the fact that at the moment people are in and out of work, sometimes because they must isolate, and sometimes because of the pace of fluctuations in work. People who are self-employed try to get started or to do more work and then, with levels fluctuating, they fall back. Perhaps they have access to workplaces, or perhaps not. If there was a steady income for the self-employed, what a difference it would make to entrepreneurs who want to start a business but need time to build it up and to build a custom base. That would give them the underpinning they need to grow.

As for people on statutory sick pay—as well as those who do not get it—universal basic income would provide more of an underpinning while people have to move in and out of the economy. People on zero-hours contracts get paid—and then they do not get paid. They do not know, from week to week. Universal credit, whatever the Minister will say, is not agile enough to respond to the real economy that people work in. That would not be the case with a universal basic income. Also, people entering training and skills development may move in and out of it, perhaps with different hours at different times. They may or may not be on full-time courses. Universal basic income provides underpinning and does not discriminate. It does not call out disabled people, those who are shielding, or anyone else. It does not judge in that way, but understands. We need a system that understands people.

Something that came through to me clearly when we debated the Coronavirus Act 2020 was that there were opportunities to volunteer during the pandemic. We saw that from the British people in an incredible way at the start of the pandemic. No doubt as we get through the winter crisis together—and it is going to be a hard winter—many people will put their hand up and say, “I will help.” Universal basic income would give employers flexibility, because they would know that their staff would be out volunteering, moving in and out of those opportunities, as we pull together as a society to get through this impossible situation. We have to have that solidarity that was built. Flexibility, built into our ability to sustain ourselves through the crisis, would be underpinned by a universal basic income.

That is why I say do not push it off the table. A recovery UBI would help the economy to grow and establish itself again. It is interesting that the Mayor of London and even Andy Burnham, the Mayor of Greater Manchester, have said that we need to look at UBI. That is my ask of the Minister today: that we look at how to build the foundations of a new, fair economy, which does not discriminate and is built on the principle of recognising that everyone wants to put in, but sometimes people need help. UBI is the fairest way to do that. I ask the Minister whether he will set up a UBI commission to look at how UBI can work in different areas, and at the economic challenges of our age and the flexibility needed to grow a new economy, and to report back to the House on that commission to show how we can build a stronger, better economy and a fairer system for the future.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)]

I thank the Backbench Business Committee for granting time for this important debate, and all Members who contributed. I will try to address as many of the points that they raised in the time that I have.

This issue ignites passionate debate in many quarters, and I am grateful to be able to come to the House and make the Government’s position crystal clear. Throughout the pandemic, people have faced significant challenges. Many have sadly lost their job or have seen their income reduce. During these challenging times, my priority as Minister with responsibility for welfare delivery remains ensuring that the most vulnerable in our society receive the support and financial assistance that is available to them.

Thankfully, universal credit and the Government’s £9.3 billion investment in the welfare safety net has been there to catch those most affected. It has been vital to the 3 million people who have made a benefit claim since March. We have paid more than 90% of claims in full and on time, and we have got support to millions of families at an incredibly difficult period. We have targeted support, which gets to the people who need it most while maintaining responsible economic policies.

Despite the success of universal credit, some still attempt to deride the system and instead demand what they call a universal basic income, or UBI. The concept, as has been explained today, is that a standard monthly allowance is paid to all working-age adults, regardless of their circumstances. At first glance, it may appear appealingly simple, but in reality it would be a costly mess that would leave the vulnerable in society far worse off. It would disincentivise work in key industries and leave the country’s finances in ruins.

On the flip side, the universal credit system has proven that it is up to the challenge. Replacing universal credit, at potentially astronomical cost, would be of little benefit to anyone, not least those who rely on our welfare safety net the most.

I hope that my clear arguments against UBI, which I will set out today, will make it clear that the Government have no plans to adopt this policy, and for good reasons. It is not in the interests of the taxpayer or of those who rely on our welfare safety net. Rather than continuing to push the unrealistic and damaging idea of a UBI, its supporters would do well to look at the welfare safety net that we already have.

In the short time that I have left, I intend to cover three areas, if possible: cost, delivery and impact. First, I turn to cost. A 2018 report by the CSJ found that giving everyone over the age of 16 in the UK £10,000 a year would cost £500 billion. Despite those staggering sums being paid out, a UBI would be likely to leave the most vulnerable in society worse off. As soon as we think about the people who need more support from the state, the supposedly simple idea of UBI quickly starts to unravel.

[Ronnie Cowan]

Is that £500 billion gross or net?

[Will Quince]

I will have to write to the hon. Gentleman about the CSJ report, because I do not have it to hand.

[Ronnie Cowan]

That is the gross figure.

[Will Quince]

The point I am making is that when we even begin to think about introducing a UBI, we see that not only would the cost be astronomical, but the Government would have to increase taxation mercilessly; that is borne out in the feasibility report by the Scottish Parliament’s own commission. Indeed, there would be increased taxation far beyond anything seen in the United Kingdom before. We would be taking thousands of pounds in taxation from hard-working people, often simply to shuffle money around in what could be a costly farce of bureaucracy, before paying it back to people in monthly UBI payments. That would be a decadence of expenditure and a blow to productivity that we can little afford in the throes of one of the most severe economic situations that we have faced.

I turn now to delivery. UBI is indeed a fantasy, in which the practicalities are rarely thought through, and if we interrogate the idea even slightly, it very quickly unravels. Delivering infrastructure schemes of this size is not easy. For all its detractors, who have been proven badly wrong in the face of the pandemic, universal credit is one of the most advanced welfare systems in the world. As with any complex IT system that delivers sweeping reform, it has taken time to implement and it has not been without challenge.

In 2017, the Work and Pensions Committee found that any UBI that attempted to support people’s additional needs would not reduce complexity, and that ultimately it was difficult to see how a UBI would substantially alleviate poverty or provide income security.

As the hon. Member for Inverclyde (Ronnie Cowan) rightly pointed out, other countries have already tested UBI and quickly found that the practice is as bad as the theory. As the hon. Gentleman also pointed out, a UBI test in Finland was abandoned as a flop after two years, with the Finnish Finance Minister saying that the case was closed for UBI. Importantly—

[Ronnie Cowan]

rose—

[Will Quince]

I have given way once already; if I can give way again at the end, I will.

As I was saying, the Finnish Finance Minister concluded that there must be conditionality—that is the important point—in the social security system.

This Government have done brilliant work through the pandemic to stand up and bolster services, and to get money to those who need it in all four nations of our United Kingdom. We have supported more than 9 million people through the coronavirus job retention scheme and we have accepted more than 3 million new claims for universal credit. The universal credit system has proven that it is up to the challenge, and replacing it at potentially astronomical cost would provide little benefit to anyone, not least those who rely most on our welfare safety net.

Finally, I want to discuss impact, which is the fundamental case against UBI. The welfare system is a safety net and should be there for those who need it. Unlike universal credit, UBI does not target support at those in greater need or take into account additional costs faced by many individuals, such as those with disabilities or those with childcare responsibilities. To put things into some kind of perspective, UBI would be paid, as the hon. Member for Inverclyde pointed out, to me and all the other Members in the Chamber today and across Parliament. I would much rather that it be spent on supporting those who need it. To claim, as the hon. Gentleman did, that that would simply be taken back in tax is not a valid argument, as I have set out, because that is simply shuffling money around.

The OECD has also been clear about the broader consequences. For most high-income countries, a UBI could increase poverty and negatively affect the poorest, with middle-income households most likely to gain. That is all before we start discussing real outcomes. Evidence suggests that UBI provides a disincentive to employment, and in the Finnish trial the Government have acknowledged—I repeat this, because it is important—the need for conditionality.

[Chris Stephens]

Surely the Finnish model demonstrated that people rejected precarious work and that employers had to increase pay and model terms and conditions. It is just not the case that the Finnish model suggested a disincentive to work.

[Will Quince]

I thank the hon. Gentleman for his intervention and I hear the call that he and other Members across the Chamber make for a UBI pilot, but in rebuttal I say, “Show me the international evidence.” The hon. Member for Inverclyde made reference to numerous pilots that have taken place all over the world, so why does he not demonstrate what he argues for by showing what impact they had, and then showing the evidence of how those countries have gone on to implement UBI?

[Ronnie Cowan]

rose—

[Will Quince]

I will gladly meet the hon. Gentleman at some point in the future and look at that in further detail—but why have those countries not progressed? On the issue of the pilot, not only do we think that the concept is deeply flawed, but it is certainly not currently operable.

The Government remain wholly unconvinced of the case for UBI. We have taken steps to address the financial implications of the pandemic, and that has been possible only against the backdrop of a welfare system that has been technically capable of meeting the challenge of hugely increased demand, and that targets appropriate support for those who need it most. More than 1 million people who needed to access UC quickly have been able to receive funds within 72 hours and more than 90% of all claims have been paid in full and on time. That is a record of which I am proud. The pandemic has shown that universal credit is the right approach for the United Kingdom. It simplifies the benefits system, promotes and incentivises work, and provides targeted support to those who are most in need, in a way that is affordable to the taxpayer—challenges that UBI simply does not and cannot meet.