It's time to copy Finland and give every citizen a basic income

As a flat universal benefit payable to all, there is little administrative cost; and there can be no “poverty traps” or “income traps”, because the benefit would not be scaled back as wages increase

Sean O'Grady@_seanogrady
Tuesday 08 December 2015 18:39

It sounds crazy, doesn’t it? The Government giving every adult a fixed sum every month to cover basic living expenses, and to do so irrespective of wealth and income. Dukes and dustmen alike would receive the same stipend from the state, with no means test, no restrictions on where to spend the cash and no caps. David Beckham would get it. Alan Sugar would get it. Any rich banker would get it. No questions asked. Mad, eh?

Well, maybe not as bonkers as it first appears. The Finns may be about to go for it, and the Dutch and Swedes are toying with the idea of streamlining their benefits system in such a way too. Minority parties in Britain have also proposed it, but from the safety of not being serious contenders for power. It’s worth mentioning that, in the somewhat attenuated form of tax credits, a version of the policy was brought in here by Gordon Brown, and proved so popular that when George Osborne tried to scale them back, he was forced into an ignominious U-turn.

The idea has purity and simplicity on its side. It can replace all existing benefits overnight, as the Finns are planning to do. As a flat universal benefit payable to all, there is little administrative cost; and there can be no “poverty traps” or “income traps”, because the benefit would not be scaled back as wages increase, the usual problem with linking benefits to earnings. Thus, it adds an incentive to work harder as well – a solid Tory value.

It is true, as the Finns might admit, that it amounts, like tax credits, to a subsidy to lower-paying employers, but, then again, if that means lower unemployment and helping people into jobs, then that might still be worth doing. The “living wage” approach only works if it doesn’t destroy jobs by being set too high. As is also the case with tax credits, the wage “subsidy” doesn’t always go to wealthy multinationals, but also to, say, a family-run hotel in a run-down seaside resort finding it difficult to survive. It would, in other words, do quite a lot of good in Margate and places like it.

The main drawbacks are determining the levels, and in winning the political arguments. After all, while a level of €800 (£580) a month – the Finnish rate – sounds reasonable, it is a lot less reasonable when British housing costs are taken into account, especially if childcare costs have to be met too. That is certainly one drawback, unless we accept that people should start migrating to very low-cost housing areas – maybe not such a daft idea given the depopulation places such as Grimsby or Sunderland are suffering from.

The political argument is more difficult to navigate. “Who pays?” for the universal income is the usual query, and it would have to be paid for mainly through income taxes – moving us towards a more progressive, redistributive system – which is why some people would resent it.

The Finns, as a Nordic folk, have a greater sense of social solidarity than the British, which is the reason why income taxes have historically been so high across the northern flank of Europe. The British, or perhaps more accurately, the English, seem to be more determinedly selfish in outlook. Which is why this eminently sane policy will for ever be blocked – by our own mad prejudices.

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