The debate coincided with the launch of a report on the subject by the RSA and was framed by Anthony Painter RSA (left).
He argued that our current system of benefits is not fit for purpose and the new Universal Credits system designed to replace it is actually perverse.
He described the current system by means of an analogy with a catapault, a wall and a boot. Claimants are flung out of catapult by a system designed to force them into any kind of work and once there they hit the wall, which is a very steep rate of benefit reduction which equates to an effective “tax rate” of 70-80%. The boot is there to help the catapault by penalising people who don’t comply by capping or suspending benefits. “Food banks exist because of the boot.”
This, he says, is welfare at the sharp end when what is needed is a system which can support the creative potential of the citizen. “The key question is what kinds of lives do we want to support?”
What the RSA is proposing is a basic income of £3700 per person per year which would replace most forms of benefit except housing benefit and sickness benefit. Crucially there would be no conditions attached which would allow people to choose whether to work and what sort of work to do. When in work the RSA proposes that the income would taper but at a level which would equate to an effective “tax rate” in the 30%s. It would give people back agency, supporting such life choices as caring for others, setting up a business, or practicing as an artist. As for cost, the RSA points out that the proposed level is really rather modest and would cost an extra 1% of GDP. This, argues Painter, is within the range of other spending commitments.
One of the key hurdles to overcome in moving to a Universal Basic Income is political – none of the mainstream political parties support the idea. But there is hope. Ben Southwood of the Adam Smith Institute (second from right) said there is support both on the right and the left. “It may seem strange that some of the most enthusiastic early proponents of Universal Basic Income are from right,” he said. He said, however, that he preferred to see the UBI as a “negative income tax.” This, he believes, would be more feasible politically. The key to bringing the right on side would be the need to scrap a lot of benefits. For this reason, he said, it would be better to roll housing benefit into higher basic income. This, he said, would encourage people to move to where housing is cheaper.
All the panellists saw paradoxical hope in the Universal Credits system being championed by Iain Duncan Smith. They all believed that the system would be an expensive and disastrous failure and that this may be the spur to look for truly radical alternatives. “Public support for the welfare state is very low,” said Tom Clark from The Guardian (right). “We really need to rebase it.”
Frances Coppola, the economic commentator (second left) summed up the argument for the Universal Basic Income. It was about “making the best use we can of human capital,” she said. “Society is better if people are doing things to the best of their ability.” The current view is any job will do, she said. “But any job won’t do.”