Government Policy

Universal Basic Income – ‘playing the game for smaller stakes’

In the late 1980s our union first published proposals for a citizen’s income – what we would now call universal basic income. This was long before the idea became fashionable.

Our proposal was simple – we would give an income of two thirds the average GDP per person to everyone, so long as they contributed meaningfully to society for a specified number of hours a week.

The contribution could be through work, self-employment, voluntary work, parenting or caring, or by undergoing education.

Hours contributed by employment, self-employment or voluntary work would be transferrable within households, to include those who bore a disproportionate burden of housework.

Individuals who were too sick or disabled to work or were beyond retirement age would be exempt from making a contribution. We hoped that the numbers who were too disabled to make any kind of contribution would be small, and the aim would be to find a meaningful contribution for everybody.

For those who did not contribute meaningfully there would be a smaller subsistence income of one third of GDP per capita. There would be a sliding scale between the two figures for those who contributed something, but less than the specified qualifying minimum.

Therefore, everybody would be able to qualify – if you couldn’t find employment there would be ample alternatives to choose. The only people who wouldn’t qualify would be those who chose not to.

Children before school starting age would be exempt from making a contribution and once children started school they would qualify by being in education. Payments made in respect of children would be divided between a payment to the parents to provide for the child, and a payment into savings to be accessed when reaching adulthood.

This method distributes two thirds of GDP in an egalitarian way – the labour market and financial markets would distribute the rest. It is what John Maynard Keynes called “playing the game for smaller stakes”. Keynes recognised the importance of incentives but also suggested that they need not be as great as they currently are.

To finance the arrangements there would be a one-off downward adjustment of existing incomes to reset the market. The money consequentially released to business by, for example, lower wages, would be recouped by a range of green taxes which would fund the new system.

Although the gross cost to be financed would be very high, the net cost would be quite small when you ignore the money which has simply been transferred to flow by one route rather than another. There would be savings to public services from eliminating poverty, and savings to individuals from greater security and therefore the lesser need to save for a rainy day.

If you assume a significant Keynesian multiplier from poor people having more money to spend, the net cost might even be less than zero.

There are also considerable benefits to health. Poverty is one of the largest determinants of health – ill health caused by inadequate income would be abolished. With wages contributing a much smaller part of the income of the low paid, most unskilled workers would be instead working predominantly for the qualifying credits. With many other options available for achieving those credits, their labour market power over working conditions would be dramatically transformed.

The credits for caring would liberate carers from the invisibility of currently unrecognised vital work. A guaranteed income makes it substantially easier to make neighbourly arrangements for supporting sick and disabled people – it reinforces rather than fragments society.

The spirit level which measures the health of all societies is remarkably consistent: with equality comes good health. Universal basic income would, at a stroke, eradicate the injustice and illness which plagues our current social system.

Dr Steve Watkins is the Vice President of Doctors in Unite. His paper on Universal Basic Income can be found here.