Workingwise.co.uk’s annual survey was published last week and shows that a high number...read more
In the face of a crumbling welfare net, discussions about alternatives are gathering pace. Is it time for change?
As our society ages, more and more people will spend at least some periods out of the workplace as a result of caring or health issues, in part related to inequality and poor quality and insecure work, and with an impact not just on their income but on their pension. Many are in jobs now that pay less than what they need for basic costs like food and energy while the benefits system has faced big cuts during the austerity years, increases in conditionality and sanctions.
The result is rising inequality, huge demand on the NHS and social care and labour shortages.
The Government believes work is a way out of poverty, although many of those now going to food banks are in work. It is consulting on occupational health proposals to support people with health and disability issues back to work or keep them in work in the first place, but perhaps on reduced hours.
But what if we could remove the shadow of future inequality and insecurity from people’s lives through providing a universal basic income? Could that promote healthier behaviour as people plan for longer lives? Could knowing that people are freer to leave a job mean employers start behaving better to retain them?
The idea of a universal basic income [UBI] has been around for some time, but discussions have ramped up in recent times as we have seen how the current social security system has failed many people. Many workers, for instance, are having to resort to food banks. In June a pilot scheme was announced by think tank Autonomy in central Jarrow and East Finchley, the first in England.
UBI is designed to cover people’s basic needs on a regular basis. It would provide predictability and, due to its universality, would potentially benefit everyone. A recent paper by Howard Reed, Matthew Johnson, Stewart Lansley, Elliot Johnson, Graham Stark and Kate Pickett examined three possible UBI models. Even the most modest which is based on a 3% rise in income tax would, the researchers say, reduce child poverty to levels last seen in 1977 by providing workers with a guaranteed 63 pounds a week. The researchers say that, since it would be financed by tax and National Insurance Contribution increases, it would be fiscally neutral. Housing, pension and disability costs would continue to be paid as now ie they would not be covered by UBI, but Universal Credit would taper according to the amount a person got for UBI and UBI would replace child benefit.
The most generous scheme, which would involve a 48% take in income tax for the average tax payer, would cover a minimum level of income and would see all pensioners, and not just those who have worked all their lives, covered by a flat rate of just over 200 pounds a week.
Other experts are more cautious about UBI. Donald Hirsch from Loughborough University, for instance, says the tax increases might be a difficult sell politically with the most generous scheme being ‘pie in the sky’ due to the high tax rates and the least generous one creating winners and losers. He thinks targeting more money at Universal Credit might work just as well in terms of tackling poverty and it would be simpler.
Advocates of UBI, however, think that the universal nature of it could mean greater buy-in and make it more difficult for governments to make the kind of changes that were brought in during the austerity years by pitting better off workers against those who have disabilities or other reasons for not working or working less.
Debora Price, Professor of Gerontology at the University of Manchester, says a UBI is not really a new concept. “In setting up, developing and supporting national pension systems – a global project that began in Europe in the late 19th/early 20th centuries,” she says, “but has since spread around the world – there is an underlying acceptance that a universal basic income is appropriate, needed and indeed politically and publicly supported, at least in the latter part of life. Once you accept the principle, then it really become a question of where the lines are drawn, and why. That becomes a question bound up with a country’s political economy and wealth. Even in some very poor countries, where one has been introduced and evaluated, the social, economic and health significance of a basic state pension has been profound.”
Referring to the inequality inherent in state pension rises, that is, that some people will not be able to work longer due to the health impacts of inequality and the erosion of benefits across people’s working lives, she adds: “In the end you are really asking what role the state should play, either directly as benefit provider or employer, or indirectly in shaping markets and economies, in ensuring that people have secure income and material wellbeing in later life. Nation states have a number of political, social and economic interests in doing this, at their most extreme, not wanting to see old people dying of starvation, cold and disease on the streets – the kinds of destitution that shaped the formation of pension systems in the first place, and led to their political and public popularity.”
Alternatives to the current flawed system are certainly a debate worth having as more of us age and with the health and social care net looking like it will take years to repair.