Could we ever see universal basic income in East Anglia?

Could handing out cash under universal basic income help the economy post coronavirus? Picture:THIN

Could handing out cash under universal basic income help the economy post coronavirus? Picture:THINKSTOCK - Credit: Archant

Is dishing out cash to every single UK citizen each month the cure to the economic impact of coronavirus? Angus Williams investigates universal basic income

Since the start of the year governments across the planet have scrambled to control the spiralling economic fallout of the coronavirus.

And as a result of the fiscal panic that has gripped the globe the concept of universal basic income (UBI) has gained even more supporters.

On the face of it UBI is simple: every citizen would receive a regular and stable payment from the government, regardless of their employment status, wealth, marital status or any other circumstances.

Not tokens or coupons – cold, hard cash they could spend on anything whether they blow it down the bookies or pile it in to a savings account.

But this is not a new idea – in fact it has been around since the 16th century. And in 1797 Thomas Paine, the Thetford-born philosopher and political theorist, advocated for the idea in a pamphlet called Agrarian Justice.

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Supporters of the idea say that it would provide a safety net ensuring no-one lives in poverty – even during an unprecedented global disaster such as Covid-19.

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Over recent years UBI has received yet more attention as people worry about automation.

Now, as a result of the coronavirus pandemic the interest is being turned into political proposals.

But UBI is not without its critics and most fear a spike in inflation that would wipe out any value in the handouts for those most in need. Detractors also say it would put more pressure on government coffers and drive people out of work.

One potential way to guard against soaraway inflation and a general devaluation of the pound could be more progressive taxing of high earners – but that comes with obvious political sensitivities.

A study carried out in Finland between 2017-18 paid 2,000 randomly-selected unemployed people £490 a month – with no obligation to seek a job or face a penalty if they took one.

The study found the basic income improved the recipient’s mental wellbeing, confidence and life satisfaction. But it did not do as much to encourage people into work as some observers had hoped.

Professor Helena Blomberg-Kroll, who led the study, said: “Some participants said the basic income had zero effect on their productivity, as there were still no jobs in the area they were trained for.

“But others said that with the basic income they were prepared to take low-paying jobs they would otherwise have avoided.”

More studies are planned and last month councillors in Leeds voted for a UBI trial in the city but central government is yet to approve.

Others have called for a basic income scheme to be implemented on a permanent basis.

In April, Nadia Calvino, the Spanish minister for economic affairs, said the country was looking to roll out a UBI programme “as soon as possible” to help families during the pandemic.

But, she added, it could “become a structural instrument, a permanent instrument”.

In his Easter letter Pope Francis even said it might be time for countries to consider UBI to help combat the economic disruption caused by Covid-19.

And there have also been calls for a UBI much closer to home.

Jamie Osborn is a Green Party councillor for Norwich’s Mancroft ward, and also one of the founders of the UBI Lab Norfolk, which is pushing to bring the policy to East Anglia.

He said: “I would like to see UBI implemented both in the face of a second lockdown and potentially permanently. I believe in the short term if we gave low-income families say £1,000 a month it would relieve a lot of uncertainty and fear.

“This in turn could relieve some of the pressure on the welfare state thanks to families having time to support one another more fully.

“From the studies I’ve read it also seems as though it doesn’t put up inflation. I believe that should it become a problem we have ways in which to control the inflation rate that we could employ.”

Peter Ellington, associate professor at UEA’s Norwich Business School and director of Triple Bottom Line Accountancy, said UBI was an idea that was worth “considering and debating”.

He believes UBI could complement other measures in helping the UK recover financially from the coronavirus.

“The question I would like to see being answered is: ‘Should we put all of our eggs in the basket of the furlough and self-employment scheme?’” he said.

“The purpose of the furlough scheme and the self-employment scheme is to get money into the economy.

“We need to push money into the economy if people aren’t working, or there’s an economic downturn so there’s not so much money moving around. But should we be putting all of our eggs in that same basket?

“Why wouldn’t we create a UBI which helps everybody?

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“A lot of people did miss out on the self-employment scheme or the furlough scheme and their only recourse is Universal Credit.

“That’s a fundamental argument for UBI – the fairness of the whole system.”

Mr Ellington said UBI could improve people’s quality of life and allow them to work doing something they enjoy rather than in a job they hate.

But he said there are issues which would need to be balanced out.

“We’d need to counter inflation. We’d need to put all of these issues into the mix. Making a decision based on facts and fairness should be the way forward.

“There’s no right answer. It’s about choosing a system that works in the fairest way and that might be a mix of systems, but the system that we’ve currently got seems to have a lot of faults in it.”