Should We Give Every UK Citizen a Basic Income Instead of Benefits?
By Sirin Kale
(Photo by Adam Barnett)
Finland is looking to scrap individual welfare benefits and replace them with a universal basic income available to all Finns, regardless of how much they earn.
Although the
details haven't been ironed out yet, a pilot scheme would see Finns receive a
payout of 550 euros (£396) per month (while still receiving some other
benefits). If the pilot is a success and the scheme is rolled out nationwide, Finns
would receive 800 (£576) euros a month tax-free, replacing the range of other
benefits they receive at present.
Here in the UK, a
basic income was
proposed by the Green Party in their 2015 General Election
Manifesto, with the claim that it would save the UK £163million annually in terms of welfare payouts.
Before you start planning your move to Finland to be showered in free cash, however, it's worth pointing out that the basic income proposal will be officially prepared by the government by November 2016, so it's still some way off, according toFinnish press reports.
Although socially
liberal, Finland has struggled economically in recent years, with rising unemployment
and limited growth. While this may seem counterintuitive, some economists argue
that giving everyone a basic income – regardless of need – would actually save
the taxpayer money in the long term.
VICE spoke to
Professor
Guy Standing, an expert in labour economics at the University of London.
Co-founder of the Basic Income Earth Network, he's been advising the Finnish
Government on their proposals.
VICE: Hi Professor
Standing. Why do people want basic incomes? Surely we should only give people
benefits if they're in need?
Professor Guy Standing: What you're describing
is means-testing, and evidence shows it's a weak system. You have to measure
someone's income, check it, and all sorts of errors creep in. For example,
people don't know what to count as their income, or their income last week
might be different from their average of the last three months.
Who would benefit
most from the introduction of a basic income?
Firstly, the
people who traditionally are disadvantaged by mean-testing, because they don't
know how to operate the system. So vulnerable people; those with addiction
problems, or migrants. Secondly, the precariat class. These are the people that
existing social welfare policies fail to reach. They're in and out of casual
jobs, their incomes fluctuate all the time, and by moving towards a basic income
you provide them some degree of certainty.
If you give
everyone free money, won't everyone just stay
at home watching whatever the Finnish version of
Jeremy Kyle is all day?
Evidence suggests
basic incomes increase the incentive to work. When you have means-testing, and
you only receive benefits if you're on a low income, then when you improve that
income through extra work you end up losing out. So people end up stuck in a
poverty trap.
When you have a
basic income, you remove the poverty trap effect and you incentivise people to
earn more income, because they get to keep the extra money.
Aside from saving
money from the welfare bill, what are the other benefits?
An Indian trial
found benefits such as reduced healthcare costs, because people had access to
better nutrition. When you shift more income to low income groups, they spend
it on basic goods and services that stimulate economic growth. So you increase
tax-paying revenue.
Isn't it weird to
give people on high incomes state funding they don't need?
It's easier for
the Government to give everyone the money universally, rather than trying to
work out who's poor and not poor, and then tax the money back from higher
earners, who'll be paying a higher tax rate in any case.
What are the
down sides?
Well, there is
always an upfront cost to introducing major welfare reforms. In this case, when
you introduce an integrated tax benefit system, there are certain costs
involved with the electronic administration of such a system. Another argument
I've heard in the past – particularly from trade unions – is that if people
have a basic income they wouldn't lobby employers to raise wages.
How likely is it
that we'll see other countries move to introduce a basic income, like Finland?
If you'd asked me
ten years ago, I'd have said the costs of transition would have made it
difficult, particularly in larger countries like the USA. However nowadays the
costs are less. We know there have been trials in Africa and India, and there
are talks about doing pilots in Canada. And there have already been pilots
taking place in Utrecht, in the Netherlands.
There's been a
remarkable change in recent years in terms of countries putting basic income
proposals on the table in a legislative sense. The hope is that introducing
basic incomes will have an emancipatory effect: helping more people to feel in
control of their lives than ever before.
Thanks
Guy!
More from VICE:
Why the Tech Elite Is Getting Behind Universal Basic Income
We Don't Need More Austerity: We Need Luxury Communism
Here's Why the Green Party's 'Citizens Income' Could Make You Even Poorer
Comments