Updated: Wednesday, 3rd June 2020 @ 3:06pm

Coronavirus Crisis: Investigating what Universal Basic Income would mean for Northern families

Coronavirus Crisis: Investigating what Universal Basic Income would mean for Northern families

| By Tom Beattie

As part of a radical reimagination of the welfare system in Britain, Labour shadow chancellor John McDonnell announced plans to roll-out Universal Basic Income (UBI) at the last General Election.

In the wake of the coronavirus crisis such a scheme could become a necessity for Northern families.

The scheme, which would theoretically entitle every British citizen to a monthly tax-free allowance, was first proposed to be trialed in the North of England if Labour were to have won the election in December.

With the pressures on families currently stacking up following the chaos that has ensued as a result of the coronavirus outbreak, such a scheme would provide some much needed financial stability for many in the North West.

An open letter calling for the government to issue UBI has been signed by 500 leading academics and was published in The Independent earlier today; the proposal also received support from Labour leadership hopeful Rebecca Long-Bailey this week.

This follows news that Ireland and Denmark will roll-out a UBI scheme in response to the coronavirus crisis.

Trials in Finland - to date, the only advanced economy to have succesfully launched a long-term UBI widespread scheme - found that those who had benefited under the scheme had reported significantly higher feelings of self-worth and stability than they had before- even aside from the financial relief it naturally provided.

Curiously, it appears that the policy itself seems to have support from across the political spectrum, in some respects.

Indeed, economists on both the left and the right have argued for UBI as a source of personal empowerment, providing citizens with more choice over work, education, training, leisure and caring.

Practically speaking, for those on the left, UBI would be a modern method of cutting poverty and inequality in a way that is fitting for the 21st century and, for those on the right, it could guarantee a less bureaucratic and, therefore, more streamlined welfare system.

With jobs in many sectors looking increasingly under threat with the rise of technology and automation – which experts forecast could threaten up to a third of current jobs in the west within 20 years – UBI could help to keep families afloat financially while breadwinner earners retrain or enter full-time studies, for example.

INCREASE 'TRUST' IN POLITICIANS

Some critics, notably John Kay, the former director of the Institute for Fiscal Studies, fear that UBI would be too expensive.

Kay said: “If you do the numbers, either the basic income is unrealistically low or the tax rate to finance it is unacceptably high. End of story.”

However, the likes of Shadow Chancellor John McDonnell remain convinced of the benefits.

In March last year, when asked about Labour's proposal to roll out UBI he said:

“The reason we’re doing it is because the social security system has collapsed. We need a radical alternative and we’re going to examine that.

“We want to do it in areas that have been hit hard by austerity.

“We’ll look at options, run the pilots and see if we can roll it out. If you look at the Finland pilot it says it didn’t do much in terms of employment but did in terms of wellbeing – things like health. It was quite remarkable.

“And the other thing it did was increase trust in politicians, which can’t be a bad thing.”

The think tank Compass has suggested the total cost of the UBI would be as high as £300bn. For them, UBI can deliver social justice in a manner that is fit-for-purpose in a modern economy.

Compass have stated: “The basic income would update the British system of social security for the 21st century. All households would enjoy greater certainty about future income, directly tackling growing economic and social insecurity.”

Studies conducted by HMRC in 2017 concluded that Manchester has one of the highest rates of child poverty by local authority area in the UK, with 35.5% of children under 16 living in poverty.

Alarmingly, this figure is concurrent with the situations facing a host of cities in the north of England. In Liverpool, the same report claims that 32.7% of children under 16 were living in poverty, with the figure in Sheffield around 25%.

McDonnell does concede that the idea is undoubtedly left-field, however, he feels with the right strategy the scheme could make a real difference to families in the North.

“Of course it’s a radical idea,” he said.

“But I can remember, when I was at the trade unions – campaigning for child benefit and that’s almost like UBI – you get a universal amount of money just based on having a child.

“UBI shares that concept. It’s about winning the argument and getting the design right.”

'MATTER OF PRIORITIES'

Some have argued in the past that such a programme would effectively lead to the dismantling of the welfare state, however, these fears were quickly rebuffed by experts such as Guy Standing, the founder and co-president of the Basic Income Earth Network.

He is in favour of maintaining benefits for the most vulnerable people in society even with the introduction of UBI, something he stresses is affordable.

“There is no reason why a city or country could not afford to have a basic income for everybody,” says Standing.

“In Britain, tax reliefs for the wealthy and corporations come to about £400bn a year – this by itself could be used to pay for a basic income for everybody.

“It’s not something that is unaffordable – it’s a matter of priorities.”

Although no fee has been disclosed regarding how much those involved in such a scheme would stand to receive per week, it is worth noting that in March of last year, McDonnell came out in agreement with a proposal put forward by the New Economics Foundation (NEF) think tank who posited that a figure of £48.08 a week should be paid to every adult over the age of 18 earning less than £125,000 a year.

This would be on top of any pre-existent benefits anyone currently receives. The NEF’s proposal outlined that the cash would not replace benefits and would not depend on employment, something Guy Standing confirmed was entirely achievable.

The NEF’s blueprint, which forecasts that some 88% of all adults would see their post-tax income rise or stay the same while helping to lift 200,000 families across the country out of poverty, has also been welcomed by the Green Party’s Caroline Lucas.

In Manchester, currently 1 in 47 children are homeless according to the housing charity Shelter. Nationwide, at least 135,000 children were thought to be homeless or in temporary accommodation across Britain on Christmas day in December – the highest number for 12 years.

Perhaps, UBI could offer the catalyst for turning the tide in this most appalling of situations.