Covid 19 commentary: Has the time come to trial a universal basic income?

From the start, Covid-19 was the opposite of a “great equaliser”. Not only are the poor disproportionately ill and dying, but they are going hungry, often choosing between paying rent or eating.

And the numbers of the poor and the disadvantaged are swelling as the economic and physical impact of the lockdown are felt through furlough, unemployment, et al.

On Tuesday 14th April, a poll carried out for the Guardian reported Millions in the UK having to choose between paying rent and eating.

On Saturday, 11th April, the Food Foundation reported on a  YouGov poll, about which their director Anna Taylor concluded: The government must put money in the pockets of families who can’t afford food, and support local authorities to scale up the food response for those who are self-isolating so they can secure enough food to sustain themselves and their children. Other countries are doing this, so can we.”

We go further and recommend trialling a Universal Basic Income (UBI) for every adult in the UK — along with a substantial increase in child benefit for every child aged 0-18 years old.

Why recommend this? Two strategic reasons:

  • To enable recovery from this crisis and our preparedness for the next one
    The population will make a better recovery from this crisis if they have the financial means to be agents of their own health and well-being, and will be better prepared for future crises.

    • Crucially, it will protect and give agency to those most vulnerable to the economic effects of the current situation. Consequently we will be better prepared as a society for future crises (whatever they may be; for examples, scroll down to the background info in this Covid-19 blogpost of 21st March)
    • Stark social inequalities in the UK pre-existed Covid-19, and will greatly increase without such measures.
      • Thus access to a nutritious and balanced diet for children and adults will not be equal, with those previously disadvantaged becoming more so through reduced income.
      • This will in turn lead to impacts on the health and wellbeing of both children and adults.
        • Note, in particular, that with the closure of schools, previous much needed nutrition for children, vital for their physical and cognitive development, is greatly reduced, despite efforts to address this challenge.
  • To use this crisis as a unique opportunity to carry out a UBI trial:
    • A time-bound but flexible trial gives the Government and society at large the chance to test the extremes of the impact of a UBI, and iron out the kinks before considering a full roll-out.
    • In the food sector there is an urgent scramble to invest in robotics and automation, a situation being replicated across other sectors. The consequences of this will be more people without work, or being part of the ‘precariat’.
      • A pilot UBI now is therefore timely.

As the infographic points out, the answer to the question about when we need plan for recovery or preparedness for the next crisis is always now.

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Why recommend this? Four tactical reasons:

  • Every form of means testing takes time — and when it comes to food and shelter, too many households are in crisis or on the brink of crisis. UBI + child benefit increase can be implemented in a far shorter timescale.
  • Means testing is administratively costly.
  • It is inevitably inaccurate to some degree, leading to individuals and households slipping through the net.
  • The UBI should be taxable, so the Government will get back some of this investment
    • At what rate of tax, by whom and when payable are all aspects of the scheme that can be tested during a trial.

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BACKGROUND INFORMATION

Key UK-wide findings of the YouGov poll are:

  • More than 3M adults in Britain report that someone in their household has gone hungry in the first three weeks of lockdown.
  • 1.5M report that someone in their household hasn’t eaten for a whole day since the lockdown.
  • Food insecurity is much worse in households which are self-isolating, and households with children compared to those without.
    • In the previous week, 63% of households with children aged 8-16 eligible for free school meals reported receiving a substitute, up from 54% two weeks ago, and 62% say they will be getting support during the Easter holiday. This still leaves 507,000 children without free school meals.
  • 2% of those surveyed report having lost all of their income and, of these, 38% think they’re not entitled to help from the government.

Rachel Loopstra of King’s College London, a well-respected researcher on household food insecurity and food bank use in high income countries, had this to say about these findings: These figures are 1.5  to two times higher than we usually see. They suggest the COVID-19 lockdown has had a swift and devastating impact on the population’s ability to access sufficient food, both for economic reasons and because of self-isolation.

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In July 2019, Rachel published this paper: The rise of hunger among low-income households: An analysis of the risks of food insecurity between 2004 and 2016 in a population-based study of UK adultsHer conclusion states food insecurity affects economically deprived groups in the UK, but unemployment, disability, and low income are characteristics specifically associated with severe food insecurity. Vulnerability to food insecurity has worsened among adults with disabilities since 2004.

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Some key stats from the Institute of Fiscal Studies
These stats are taken from the IFS Briefing Note of 6th April: Sector shutdowns during the coronavirus crisis: Which workers are most exposed?

  • In summary, the shutdown affects the youngest and the lowest paid workers and women the most.
  • Comparisons with other workers:
    • Low earners are x7 times more likely to work in a sector that is shut down. One third of employees at the bottom 10% of earnings are now shut down (c.f. 5% of the top 10%).
    • Women are a third more likely to work in a sector that is now shut down.
    • Employees under 25 are x2.5 as likely to work in a sector that is now shutdown. A  mitigating factor: Over half of this age group (61%) live with parents or others.
  • The poorest people spend a bigger share of their income on essentials.
    • Before Covid-19, the poorest 20% of people spent over half their weekly budget (55%) on essentials (utilities, housing costs, groceries) compared with the richest 20% who spent 39%.
    • Stats re spending are in more detail in IFS Briefing Note of 8th April: Household spending and coronavirus.

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What does all his mean for Birmingham?
It makes an already bad picture look very much worse. These figures are from 2019, stats from the pre-Covid-19 world:

  • 56% of Birmingham citizens live in the 20% of the most deprived areas of England
  • 128,655 children (aged between 0-15 years old) live in the most deprived 10% areas of England.
  • One in four of our children live in poverty.

These Brummies were already three times more likely to be admitted to hospital for preventable disease or have long-term medical conditions; i.e. in Covid-19-speak, have underlying medical conditions.

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Links to more discussion about UBI and Covid-19
Stephen Bush in the New Statesman on 15th April: Covid-19 has changed my thinking on universal basic income

Michelle Murphy in the Irish Times on 10th April: Coronavirus: Time for a new social contract in Ireland

Wired interview with Guy Standing on 7th April: Can Universal Basic Income fix the coronavirus crisis?

Marketplace article by Jana Kasperkevic on 6th April: Universal basic income was a fringe idea. Then the Covid-19 pandemic happened.

LSE US Centre blogpost by Soomi Lee on 24th March: Why an emergency Universal Basic Income makes sense during the Covid-19 pandemic

Forbes article on 19th March: Covid-19 and Universal Basic Income: Lessons for Governments from the tech world

Open letter from more than 500 political figures and academics on 18th March, published by the Independent here

Chatham House Expert Comment by their Chair, Lord Jim O’Neill on 16th March: Coronavirus: All citizens need an income support

Also:
Jon Stone in the Independent on 20th March: Over 170 MPs and Lords call for universal basic income during pandemic. Although Prime Minister Boris Johnson suggested it on 19th March (see this Daily Mail report), it has been rejected by Chancellor on 24th March (see this Independent report) and again on 14th April (see this Daily Mirror report and this in The National).

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