If done right the scheme would be affordable and empower workersby Anthony Painter / February 16, 2018 / Leave a comment
Long before Universal Basic Income (UBI) became caricatured by its opponents as a Silicon Valley conspiracy, the Royal Society of the Arts was looking at the idea as a means of helping to address prevalent economic insecurity. The idea was that UBI—the unconditional payment of a regular sum of money to all citizens—would give people a better safety net and therefore give them extra freedom to make better decisions about their own lives.
As the debate ignited, as the idea moved from the imagination to the mainstream, so the misinformation spread. Perhaps inevitably, too many advocates have overstated the benefits of UBI and the risks if it is not adopted. On the other side, the argument has been preceded by scare stories of UBI as a gateway to a post-work dystopia. We accept neither of these interpretations.
Instead, we should look at the evidence of what UBI has been in practice—generally beneficial across the board in numerous trials. Time and time again we have returned to our original argument: a carefully implemented UBI would support good work rather than usher in a post-work future.
Our recently published discussion paper is intended to widen the lens on UBI. At the core of this paper is the following idea. In order to help provide greater security as people navigate economic and technological challenges in the 2020s, the government should provide up to two years of a £5,000 payment per annum for each family member (including children). This would enable people to re-train, try a new business idea, assume caring responsibilities, or perhaps try a new career. It would give people a helping hand in navigating the changing world of work; something we don’t believe the current social contract does adequately.
Our primary concern is economic insecurity. This is influenced by a range of interrelated factors beyond employment status. 30 percent of workers face chronic or acute precariousness with a further 40 percent facing uncertain futures. Access to that £5,000 payment could be just the support that makes a risk manageable or an opportunity worth taking. Think of it as a student grant but for everyone.
To fund the “Universal Basic Opportunity Fund” (UBOF), the government would finance an endowment to cover the fund for 14 years from a public debt issue (at current low interest rates). This endowment would be invested in housing, transport, energy and digital infrastructure for secure revenue and in global assets such as equity and real estate for high growth. This seems radical but actually, similar mechanisms have been established in Norway, Singapore and Alaska. In the third case, Basic Income style dividends are paid to all Alaskans. Essentially, the UBOF is a low-interest loan to invest that brings forward the benefits of a sovereign wealth fund to the present rather than waiting for it to accumulate over time.
These investments would provide returns to support the £5,000 payments to citizens and could be supported by a range of redistributive mechanisms such as corporate levies, high net wealth taxes, equity transfers from leading companies, and we have even suggested exploring a charge on UK data assets that are transferred to global platforms. The maximum cost of the Basic Opportunity Dividend as we have modelled it is £14bn per year. By way of comparison, corporate tax reductions since 2010 are expected to cost the Exchequer £16bn per year by 2020.
This approach would be redistributive, could be done now, doesn’t lean heavily on income tax, and provides a framing for UBI that is pro-opportunity, pro-contribution and pro-good work. And it’s a large scale Basic Income experiment before full adoption. The economic impacts—and there could be a significant uplift in productivity as people invest in their futures and find the best use for their skills—and social consequences, positive or negative, could be tracked during an initial testing period when the fund would be available to 25 per cent of the population.
The scheme could allow citizens to make major changes to their lives which they would otherwise be constrained from doing. A low-skilled worker might reduce their working hours to attain skills, enabling career progression. The fund could provide the impetus to turn an entrepreneurial idea into a reality. It could be the support that enables a carer to be there for a loved one.
As a practical means of advancing the UK towards a Universal Basic Income system, the UBOF could represent a stepping stone—to be enacted now—towards a better way of enabling citizens to live meaningful and contributory lives.