In Depth

What is universal basic income?

Governments considering policy to help tide citizens over during coronavirus pandemic

Governments around the world are toying with the idea of sending direct cash payments to their citizens to help tide them over during the period of self-isolation that has resulted from the spread of coronavirus.

Speaking in the Commons on Wednesday, Prime Minister Boris Johnson has said such payments - known as universal basic income (UBI) in the UK - would “certainly be considered”.

What is universal basic income?

Sometimes referred to as “guaranteed” minimum income, or even negative interest rates, UBI awards everyone a fixed monthly payment, regardless of whether they are in work. This amount can be cut at a set rate if recipients meet and exceed a set limit.

It is similar to working tax credits in the UK, but avoids the costly administrative burden and complexity of applications and potential tax return-based clawbacks.

What are arguments for and against?

In non-crisis scenarios, those in favour of the scheme include many progressive and left-leaning economists, who argue it would help fight poverty and reduce inequality in a world where jobs are increasingly being robotised and where up to half of all work currently done, such as housework or care work, is unpaid.

They also say it would reduce the cost of administering complex welfare programmes with opaque eligibility criteria. The Telegraph suggests that supporters of UBI believe it is the “only way to guarantee a basic standard of living for all citizens and protect them from sudden economic shocks”.

Critics, however, often label the initiative a pipe dream, warning of sky-high costs and people quitting their jobs in droves to the detriment of the economy. Others argue that “disconnecting the link between work done and money earned would be bad for society”, says the BBC.

What about during the coronavirus outbreak?

The tide of opinion on UBI has turned dramatically in the wake of self-isolation resulting from the coronavirus pandemic.

Daniel Susskind, of the University of Oxford, told The Telegraph this week that implementing a temporary universal basic income in Britain would be the best way of “supporting small businesses, such as pubs and restaurants, that would not benefit from a top-down financial stability package from the Government or Bank of England”.

He estimated that handing out £1,000 to every citizen each month would cost the government about £66bn a month, but notes that the implementation would be cheap and quick as there would be none of the bureaucracy that comes with means testing.

Writing for The Guardian, Labour leadership contender Rebecca Long-Bailey has also ramped up her calls for UBI for all, “given the current five-week delay in universal credit payments, and the very low levels of statutory sick pay that are nowhere near the living wage”.

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When quizzed by Scottish National Party MPs in Parliament on Wednesday, Boris Johnson said UBI “is one of the ideas that will certainly be considered” to help families survive during the outbreak. But he added: “What I would say on the right honourable gentleman’s appeal for basic income is: do not underestimate the value to people of the measures that we have already announced that will support business, keep jobs going and make sure those businesses continue in existence.”

Former Conservative leader Iain Duncan Smith rejected the idea, arguing that it would be a “disincentive to work”, reports The Independent.

“Let me say now, it’s unaffordable, impractical, produces massive disincentives for people to work and most importantly won’t make any difference to poverty in this country,” he added. “And even if that weren’t enough, this would not be the moment for such a massive upheaval of our welfare system.”

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