Universal Basic Income: Where have UBI schemes not been implemented?
In this follow-on blog post Stephen Moncrief, of the IFoA’s COVID-19 Action Taskforce (ICAT) Social Security Group, continues to take us on a journey to consider whether the Coronavirus Pandemic should alter our views on the desirability of Universal Basic Income approaches.
In my previous blog I outlined where UBI schemes have been implemented or trialled. In this blog I will take a look at where UBI schemes have not been implemented but where there has been considerable interest.
In 1969 President Richard Nixon was on the verge of implementing a basic income in the USA but changed his mind due to concerns over the possibility of causing a disincentive to work based on evidence from the “Speenhamland” system (operated in the late 18th century and early 19th century in England as a form of wage supplement for rural poor relief, which eventually gave way to the “New Poor Law” of 1834). There is much debate on whether the evidence used to replace the “Speenhamland” system should have been relied on - it would be unfortunate if over-reliance on the 1832 Royal Commission into the operation of the poor laws contributed to lack of due consideration of UBI in the 21st century.
Universal basic income received considerable attention during the first stage of the 2020 US presidential campaign after entrepreneur and former Democratic candidate Andrew Yang made the idea a cornerstone of his campaign. Yang’s “Freedom Dividend,” as he called it, would have given every American over the age of 18 $1,000 every month. Those enrolled in federal assistance programs could continue to receive those payments or opt for the Freedom Dividend instead.
In 2016 a Referendum in Switzerland voted overwhelmingly against introduction of UBI (77% majority).
The Netherlands is home to one of UBIs current biggest advocates, Roger Bregman. His work “Utopia for Realists” sets out 3 key radical ideas for the future, including introduction of UBI (the others are a 15 hour working week, and open borders).
In the UK in 2019 Professor Standing put forward a report into the possible introduction of UBI at an initial level of £48 per week (approximately 65% of the UK’s Job Seekers Allowance or 35% of basic state pension). If this was paid to every individual, then the cost would be less then £150bn. For comparison, all tax reliefs cost the treasury £420bn each year. The government has already paid out over £35bn through the Job Retention Scheme (furlough) introduced during the pandemic. The opposition Labour Party has said it would study the report ahead of its next manifesto.
In his book Basic Income, Standing argues that UBI is an economic right “paid from the collective wealth of society created and maintained by our ancestors”. He outlines the economic advantages: “Higher, more sustainable, economic growth… and protection against possible large-scale unemployment as a result of disruptive technological change.”
Nicola Sturgeon has said “the time has come” for UBI in Scotland. The think tank “Reform Scotland” devised a detailed proposal for UBI and recommended an annual payment of £5,200 (50% for under 16s). This would cost £20bn per annum and the think tank’s work included suggestions for how this could be funded.
Finally, in Northern Ireland UBI is under consideration and advocacy group UBI Lab NI have recently put proposals forward for a trial scheme, either based on a “top-up” (additional income) or a “replacement” approach, the latter would mean replacement of some benefits and tax reliefs but with an overall higher payment amount.
In my next blog post we will look at whether the current pandemic should alter our thinking on the future of this concept.
The IFoA Covid-19 Action Taskforce Social Security group comprises Laura Llewellyn-Jones, Stephen Moncrief, Alan Newton, Peter Tompkins, Chris Sutton and Tawanda Chituku.
Previous articles in this series:
For more information on ICAT and actuarial resources on Covid-19, please visit the IFoA Pandemics Hub.