Even we Conservatives know that welfare is in trouble, but Universal Basic Income isn’t the answer

The Swiss are holding a referendum on whether to give everyone a Universal Basic Income. Here is why they should vote against it  

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The Independent Online

The belief in, and hope of, social mobility is the motor of modern society: parents devoting huge amounts of time and money to give their children the best opportunities; millions of migrants travelling across the planet in search of a better life; workers spending ever more hours in the office.

Effort should and will be rewarded, eventually. This is a view particularly broadcast by conservatives who believe in a positive and progressive view of human potential.

But there is another story we need to remind people of: while nearly all people can rise in society, so nearly all of us could fall. The Office for National Statistics recently showed that one in three have lived in poverty at some point in their lives between 2011 and 2014. Admittedly, this can be a blind spot for conservatives.

That is why we need a strong safety net. This should not be just a fixation of soggy social democrats. Free marketeers ought to support a robust and popular welfare system too. A dynamic economy means people taking risks, insecure employment and inequalities in rewards. If anything, these components of capitalism are likely to become more commonplace in the future, due to increased automation and globalisation of our economy.  The provision of welfare is vital for continued participation in – and thus public support for – a free market economy.

Britain’s welfare state, however, is in trouble. The amount of financial support from government available to people facing testing times continues to be substantially reduced in the name of austerity, with material poverty now on the rise again. Meanwhile, the general public are deeply sceptical of welfare provision: nine in ten people believe the welfare state is “facing severe problems” and only 5 per cent believe it is a priority for government expenditure. The current Government have introduced reforms which are individually popular, but public attitudes towards welfare generally remain derisory. The welfare state needs a new stage of radical reform to achieve its potential and status as a vital public service.

On the political left, (alongside allies on the libertarian right) the idea of a Universal Basic Income (UBI) in the place of welfare is currently gaining traction. The Finnish Government are considering trialing a limited version of UBI. Next week, the Swiss are actually having a referendum on whether to give everyone a UBI of 2,500 Francs a month. Proponents point to several supposed benefits: simplicity and universality; the reduction in steep withdrawal rates of benefits when people transition into work which can lead to ‘poverty traps’; the granting of greater freedoms to citizens over how they spend their time, working or not; and the ending of conditionality to receive benefits.

Utopian nonsense. The system is complex because people have differing needs – for example, they have children, a disability or higher housing costs – which rightly require different levels of financial support.  To overcome this, either you end the universality of a UBI – in which case, you’re arriving back in the land of our current system – or you set it at a rate which is very high and thereby fiscally unrealistic.

And is it really desirable to introduce a new welfare system which will incentivise and allow many perfectly able people to not seek or stay in employment? Work is both a private and public good – and not just because of the money generated. Increased conditionality – which involves claimants undertaking activities such as preparing CVs, undertaking training and attending interviews to receive benefits – has been an important factor in reducing long-term unemployment in recent years, although there is a need for more discretion to be applied in its usage.  

A UBI is highly unlikely to improve the lives of those in challenging circumstances. Nor is it likely to improve public attitudes to welfare. That’s because a lot of government money for UBI will be directed towards people who are neither deserving (those who have decided to not work despite being able to) nor in need (those on higher incomes).

There is an alternative way. Those who have paid more into the system, by having longer work histories, should be entitled to higher levels of support if they require assistance from the welfare state. Such contributory welfare chimes with the prevailing idea of fairness: that rewards should be linked to effort. Only 10 per cent of working-age state welfare is now spent on contributory benefits, down from approximately 40 per cent in the late 1970s.  Government could include contribution supplements on benefits such as Universal Credit and Maternity Pay.

For those passionate about improving the performance and perception of Britain’s welfare state, attention should focus on campaigning for the introduction of greater contribution in welfare rather than a UBI. It is likely to lead to higher levels of public support for welfare and greater financial assistance to those who are vulnerable at a cheaper price than UBI and with none of the negative side-effects.