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You can keep your free money There are better things to spend our taxes on than a Universal Basic Income

Credit: Oli Scarff/Getty

May 13, 2019   4 mins

Universal Basic Income is number three on John Rentoul’s top ten “zombie policies” – i.e. undesirable or unworkable ideas that refuse to die. Others include proportional representation, import tariffs and the death penalty.

Certainly, it’s hard to think of a more expensive policy idea. If ‘basic’ means high enough to live on and ‘universal’ means everyone gets it then the cost would be astronomical.

That’s one reason why UBI doesn’t get much support on the Right. As well as seeing it as unaffordable, conservatives also tend to see it as immoral – because people capable of earning their own way shouldn’t be living off the state.

However, opponents of UBI can also be found on the Left. In the Guardian, Anna Coote of the New Economics Foundation draws upon a report she co-authored for Public Services International, “a global trade union federation”:

“It could find no evidence to suggest that such a scheme could be sustained for all individuals in any country in the short, medium or longer term – or that this approach could achieve lasting improvements in wellbeing or equality. The research confirms the importance of generous, non-stigmatising income support, but everything turns on how much money is paid, under what conditions and with what consequences for the welfare system as a whole.”

Though there have been UBI experiments around the world, not one has become established as a genuinely universal basic income. The Alaska Permanent Fund is as close as it gets:

“…built from the state’s oil revenues, [it] pays all adults and children a dividend each year – in 2018, it was $1,600 (£1,230). The scheme is popular and enduring; it has been found to produce some positive impacts on rural indigenous groups, but it makes no claim to sufficiency and has done nothing to reduce child poverty or to prevent widening income inequalities.”

An annual pay out of $1,600, while better than a poke in the eye, is obviously not enough to live on. It’s also worth noting that other governments drowning in oil revenues have not followed Alaska’s example. For instance, the Norwegian government used its fossil fuel bonanza to set up a sovereign wealth fund that now owns 1.3% of the world’s stocks and is worth almost $200,000 for every citizen. But while the fund could afford to pay out a per capita dividend, it doesn’t.

Even in a petro-state, money is finite. Any significant sum paid out directly to citizens comes at a significant cost to the long-term purpose of the fund, which is to secure Norway’s prosperity after the oil runs out.

Coote cites International Labour Organisation estimates that a “sufficient” UBI scheme would cost “20-30% of GDP in most countries.” Cut that by an order of magnitude, and a pocket money UBI would still cost 2-3% of GDP – a huge annual commitment and, most likely, a permanent one. (Remember that the whole of the £14 billion UK foreign aid budget comes to just 0.7% of GDP.)

Before committing to a UBI, however diluted, government would have to be sure it couldn’t use the money to do more good another way.

In this respect, the freemarket Right should be more in favour of UBI than the statist Left. Quoting William Gladstone, economic liberals sometimes speak of leaving money “to fructify in pockets of the people.” That’s usually in reference to the case for cutting taxes, but the same principle surely applies to UBI. Right-wingers might complain that UBI isn’t earned and thus more akin to increasing benefits than cutting taxes. But, then again, the Right is not traditionally averse to unearned income – and UBI ensures that everyone gets a chance to have some.

The Left, on the other hand, has more faith in the ability of the state to spend money productively on our behalf. Thus if ever the state found itself wondering what to do with a few spare billions (or rather tens or hundreds of billions) then there’d still be a case against UBI. That’s because UBI’s key advantage – the fact that it provides a means of support that every citizen can rely on no matter what – can be delivered in other ways. For instance, Coote argues for the provision of “Universal Basic Services” instead, i.e. public goods that everyone can access free at the point of need.

In the UK we already have some of these – most notably the NHS and primary/secondary education. If the resources became available then we could offer others:

“…it is argued that a similar approach should be applied to areas such as transport, housing, social care and information – everyday essentials that should be available to all. Collective provision offers more cost-effective, socially just, redistributive and sustainable ways of meeting people’s needs than leaving individuals to buy what they can afford in the marketplace.”

But just how universal would these additional services be in practice? They might be so basic or badly run that most people would go private – leaving only those with no choice using them.

One also has to ask searching questions about personal dignity. In some cases, collective choices by a competent government are unquestionably more efficient than individual ones. But is there a point at which state provision, however well-delivered and well-intentioned, undermines individual autonomy? Personally, I’d rather trust my medical dignity to the NHS at its best than US-style healthcare at its worst; but the idea of the state exercising a similar degree of control over my “transport, housing, social care and information” is another matter. With the partial exception of social care, these are surely things that a capable adult on a decent wage would expect to sort out and decide for themselves.

Rather than tax cuts, UBI or the expansion of universal basic services, I would prefer we channel new resources into universal basic opportunities, i.e. the investments in infrastructure and skills that most directly boost the ability of left-behind individuals and communities to stand on their own feet.

Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.


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