By: Dr Brian Beach

• The coronavirus pandemic has led to greater state support for people’s incomes, stimulating greater debate around providing a universal basic income (UBI).
• Challenges to introducing UBI can be eased by incorporating an approach with universal basic services (UBS).
• Policies put in place to help people through the crisis leave certain segments of the population without adequate support; a universal approach would prevent people from falling through the cracks.

The coronavirus pandemic has sparked a number of fundamental changes to how modern societies operate (at least in the short term). We have collectively taken steps to protect public health despite the impact that measures such as stay-at-home orders and physical distancing have had on our economies. Many people have suddenly found themselves without work – and by extension, without income.

To address the hardship that this loss of income puts on people, the government has introduced schemes to provide financial resources for those not working such as the Coronavirus Job Retention Scheme for businesses with furloughed workers. State intervention to support people has been necessary as markets cease to function as before. Such government action to provide income for large segments of the population has increased debate around the need for state support to all in the form of a universal basic income (UBI).

Money for everyone – too costly or cost-effective?

In simple terms, UBI entails a guaranteed level of income given to everyone by the government with no conditions. Part of the argument for the benefits of UBI is based on the idea that providing people with a minimum level of financial security enables them to pursue their own ambitions in a way that will maximise their contributions to society.

Various pilot programmes to roll out UBI have been trialled in different parts of the world. The B-MINCOME trial in Barcelona, which ran from October 2017 to the end of 2019, found increases in a range of outcomes, including general wellbeing, economic wellbeing, personal autonomy, and happiness, alongside decreases in material deprivation, worries about having enough food, and poor mental health. Preliminary results from another trial in Finland, which took place in 2017 and 2018, found that basic income recipients were less likely to receive other social assistance benefits, had higher levels of wellbeing, and reported fewer problems with health and stress.

Despite some indicative evidence of the benefits from UBI, one of the biggest challenges to providing UBI to everyone is the potential cost of such a programme. For example, to provide a universal income of £1,000 per month to everyone in the UK would amount to around £66 billion per month. This is a massive sum, and concerns around where to find this money are valid.

Yet governments are expected – rightly so – to find the money to pay for vital public services; indeed, the coronavirus crisis has highlighted the consequences of persistent underfunding to our health and social care services. We now see in stark relief the troubled legacy of austerity – this crisis has negated all the years of sacrifice endured at the sake of prioritising poor budget management over the delivery of adequate services.

Some of the work looking at UBI pilot programmes argues that the effectiveness of UBI depends greatly on the broader environment of the welfare state and the details of what is offered. Trials themselves have been conditional rather than universal and not lasted long enough to robustly demonstrate their impact on broader outcomes like employment.

People need more than just money

In suggesting that UBI is no silver bullet, the New Economics Foundation has been involved in shifting the focus from cash payments (i.e. income) to a broader reconsideration of how to meet people’s essential needs. This introduces the notion of universal basic services (UBS).

In their book, Anna Coote and Andrew Percy argue that the UK can build on the existing welfare state – the NHS and schools are universal after all – to provide fundamental services to everyone. Why stop at health and education when child care, adult social care, housing, transport, and internet access are necessary for a well-functioning advanced democracy? Examples from other countries of delivering these services can help develop new approaches in this area. Research also suggests that the cost of adequate UBS would amount to around £42.2 billion or 2.3% of UK GDP, while a typical UBI approach would run up toward 10% of GDP.

At the same time, income itself is important in modern society and can therefore be considered part of the package of basic needs. Reform to the welfare state and social security to provide comprehensive UBS must consequently include some degree of UBI as a component. Here again, there is precedent in the UK welfare state. Just as the NHS is a universal service, the State Pension is a near-universal income albeit restricted by age. So when we think about how to finance UBS and UBI proposals, we must remember that some of the projected costs for a comprehensive UBS system would replace government expenditure on existing programmes.

New perspectives in the coronavirus pandemic

The government’s response to the coronavirus pandemic has been welcomed because it aims to give people the financial security they need during this difficult time. Yet people who are self-employed or working in the gig economy feel like they are slipping through the cracks of the new rules. As individuals face the consequences of significant economic disruption, government is the best-placed institution to support them despite years of policymaking that argues the market will provide. The question then becomes why this should only happen in a time of crisis and why our institutions do not work effectively to reduce individuals’ risk of destitution, ill health, poor work, etc. in times of prosperity.

Extensive uncertainty remains in how our societies might look following this crisis. We will need to rethink our approaches to the balance between free markets and state intervention to optimise our ability to serve people and to respond to future crises in public health and beyond. Knowing that one’s basic financial needs are met regardless of any attachment to the labour market opens the door for innovation, reduces the need to remain in bad work, and helps level the playing field between paid work and the unpaid contributions that are vital to society like care. This also becomes important in the context of the life course; basic financial security at all ages will help prevent some people from falling into debt in early adulthood, allowing them to plan and make progress toward a secure retirement.

UBI may be necessary in the short term, but long-term solutions will need to incorporate the principles of UBS – including basic income as a service – to secure individual rights and reduce the inequalities that have grown during the UK’s austerity years.