Universal Basic Income: Crazy idea or one whose time has come?

Eddy Adams

By Eddy Adams, on February 22nd, 2016

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As we get into the business of 2016, what are the big ideas ahead of us? I’ve been thinking about this, and looking round, have been surprised to find that one of them might relate to welfare reform. For it seems that, after years of stagnation, grind and paralysis, there is evidence of fresh thinking and innovation in several parts of Europe in this notoriously complex policy area. And perhaps its surprising to see that, despite being a national policy measure in most places, it is in cities and regions that some of the most interesting steps forward are taking place.

In particular, there is a growing debate – and willingness to experiment, with the concept of a Universal Basic Income (UBI).  The UBI principle has been around for a long time, long enough to have been championed by Thomas Paine, amongst others. At its heart is the notion that the state should provide a basic income level to all citizens, regardless of their situation. Linked to a basic rights/responsibilities notion of citizenship, it has always foundered on fundamental questions linked to implementation and affordability. Is it right that a millionaire would get the same basic income as a poor older person? What about people with disabilities, and so on.

Back in the 1990s I was lucky enough to work with the late Ailsa Mackay who was an influential champion of the concept. At a time when it seemed to be on the outer edges of sanity, Ailsa argued that it was a fair and practical way forward, particularly in relation to tackling income inequalities between men and women. She also proposed it as a simpler – and ultimately more efficient – way of using state resources to support society’s most vulnerable.

So why, after years in the economic wilderness, is UBI attracting so much attention now? After more than a decade of tightened welfare targeting, rising levels of conditionality and heightened scrutiny, any notion of universalism seems a marked departure from the direction of travel. But advocates claim that the labyrinthine complexity is one of the factors driving the need for change. Another is the punitive framework which discourages risk taking in a precarious the job market. Sitting tight is often the most rational option.

Anyone looking at how we might address this conundrum would do well to start in Utrecht. Together with a group of other municipalities, this URBACT city is exploring new options. Although anxious to avoid the UBI label, in January 2016 Utrecht launched a three-year pilot designed to test the extent to which the existing welfare model discourages recipients from looking for work. Their analysis suggests that the complex and conditional welfare model inhibits job search by recipients who are afraid of breaking rules and falling out of the system. This threat is particularly acute, when many available jobs may be short-life and part time.

The Utrecht pilot will involve inviting at least 250 unemployed welfare recipients to sign up for the experiment. They will be randomly divided into five groups. One of these will function as a control group, with no change to their current circumstances. Three will have their benefit rules altered whilst the final group will have almost no rules at all. It is this final group that will come closest to the classic UBI definition.

The pilot will run for two years, and will be evaluated by Utrecht University. The key question will be whether those with no rules try any harder to find employment  during the period than colleagues confined by the current welfare rules. The findings are eagerly awaited at national level and beyond, as the Dutch welfare conundrum is familiar to many other EU countries with advanced and long-standing welfare systems.

The Dutch are not alone, as other parts of Europe are following suit. At the end of 2015 a national poll in Finland indicated that 69% of the population was in favour of a UBI model. Subsequently, KELA, a national research agency has been commissioned by government to explore the options and provide further evidence for the debate around future welfare reform. Press reports cite a monthly figure of €800 as a potential benchmark amount within a universal model.

Closer to home, well for me anyway, in Scotland the Fairer Fife Commission is also exploring the concept as part of its work tackling regional inequalities. In a strong list of recommendations, the Commission includes the recommendation to select a town in Fife to pilot and evaluate a Basic Income model, drawing upon global best practice. In doing so, the Commission was influenced by Utrecht’s plans, described above.

So, although sadly no longer here to see these developments, my colleague Ailsa may have the last laugh. After years on the fringes, the Basic Income concept is gathering momentum and, who knows, may be on the verge of a breakthrough in Europe. As Victor Hugo said “Nothing is as powerful, as an idea whose time has come”.

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