Jon Cruddas and Tom Kibasi are wrong—"modified" UBI is the way forwardby Stewart Lansley, Howard Reed / July 6, 2016 / Leave a comment
Jon Cruddas and Tom Kibasi are not paid-up members of the Universal Basic Income fan-club—as their article in the July issue of Prospect—A Universal Basic Mistake—shows. As they put it, a UBI would “discourage work, perpetuate inequality, be expensive and be politically extremely unpopular.” Yet they provide no evidence for any of these assertions.
Of course, there are different models of UBI. The Compass report which we have authored, A Universal Basic Income: An Idea Whose Time Has Come?, outlines several types. These simulations show that a full scheme, one that swept away the existing system of income support, would be either too expensive or create too many losers.
However, a “modified” scheme, one that began by providing a UBI at a moderate level while leaving much of the existing system intact, would be perfectly feasible. Contrary to Cruddas and Kibasi’s claims, such a scheme, while not a silver bullet, would offer substantial gains: a sharp increase in average income among the poorest, a cut in child poverty of 45 per cent, and a modest reduction in inequality, all at a manageable cost of £8bn.
This model would strengthen the universal element of the current benefit system, thus reducing the reliance on means-testing. By providing a guaranteed, if modest income, it would, crucially, offer a more robust safety net in an insecure, low-paid and fragile working environment, while reducing the risk of poverty among those in employment. In this way, it offers a clear gain over today’s increasingly punitive, intrusive and patchy benefit system, making it fit for the 21stcentury.
Another significant merit of a UBI is that it offers all citizens much greater freedom of choice between work, leisure, education and caring responsibilities. For the first time, those who spend large parts of their time caring for others would receive an income, while all lifestyle choices would be equally valued. We would value but not over-value work
Yet Cruddas and Kibasi assert that UBI supporters are peddling “an ideology of idleness.” UBI fans are, apparently, extreme utopians, zealots for a new workless nirvana. But the Compass proposal is grounded in reality and accepts a full scheme would be currently unworkable. Instead, it suggests a modest reform, that would be crafted onto the existing system.
Such a scheme could be implemented in one go. Alternatively, it could be implemented in steps, thus avoiding the risks of “big bang” reform, and gradually improved over time. It could, for example, start with a UBI for children. Far from encouraging idleness, a UBI offers a real “charter for choice,” greater flexibility in how to balance work-life commitments amid the gradual casualisation of much of the workforce. Far from promoting the end of work, a UBI would aim to tackle the greater risks of a weakened labour market. This is evolution not revolution.
We accept that the precise impact on work patterns is unpredictable. A UBI would, over time, change behaviour. Some might choose to work less or take longer breaks between jobs. Others would be incentivised to start businesses. Some might drop out of work entirely to care or retrain, while others might devote more time to leisure (not to be confused with idleness), personal care or community support.
The net effect, supported in part by evidence from earlier studies, is more likely to promote than weaken the incentive to work. Indeed, incentives will be stimulated by lowering dependency on means-testing. By guaranteeing an income, a UBI would also increase labour’s greatly depleted bargaining power. These are strengths, not weaknesses.
Crucially, a UBI offers one way of providing income protection as automation gathers pace. The ultimate impact of the impending technological revolution is unclear, but it will bring further disruption and upheaval. Although they are yet to appear, the robotic revolution may bring significant productivity gains and thus potentially new social and economic opportunities. But there is also a serious risk that any gains will be go to a small powerful elite, leading to another jump in inequality and a surge in joblessness.
Cruddas and Kibasi simply dismiss the role that a UBI could play in meeting the challenges of our fast-changing times and helping to share out productivity gains. Yet such a scheme would be an important instrument for realising the potential for choice offered by new technologies. If John Maynard Keynes’s vision of a more leisured and less work-dependent world becomes a reality, UBI would be an invaluable tool for ensuring that those opportunities and choices are available to all.
Stewart Lansley and Howard Reed are the authors of A Universal Basic Income: An Idea Whose Time Has Come? (Compass)