Now Canada is trying a basic income, Britain can ignore it no longer

Hard to believe and yet true, it’s a hell of a lot lighter on the public purse than a means test

Hannah Fearn
Tuesday 08 March 2016 18:33 GMT
Canadian Prime Minister Justin Trudeau
Canadian Prime Minister Justin Trudeau (AFP/Getty Images)

If he lives up to his promises – and the early signs are good – Justin Trudeau is shaping up to one of the most ambitious liberal premierships in modern history. He has welcomed refugees into Canada while EU nations have begun a backlash against them, stood up to Putin over land grabs in the North Pole and, in a show of respect across the ideological divide, has confirmed he will work with Donald Trump should the situation become necessary. He’s even been photographed with two Canadian baby panda bears this week. Little practical impact there, but sterling PR work; he knows how to polish a reputation, the perfect veil under which to smuggle policies so radical that they had previously been cast adrift.

The province of Ontario, we learn this week, is set to become the first region of the country to test a “basic income”, a social support system that does away with means-tested welfare and replaces it with a single, universal payment that every citizen is entitled to. It is the ultimate leveller – and, as such, is the latest fad in leftish circles. And, apparently, Trudeau and his party are interested in extending this idea further.

First suggested by such figures as the philosopher Bertrand Russell in the inter-war years, the idea of a universal basic income – a monthly income, just enough to cover essential bills, paid as a benefit of citizenship, and which prevents anyone resident in a wealthy economy falling needlessly into poverty – has gained popularity in recent years, since the welfare systems of developed nations have begun to crack under pressure, leading to calls from the right to dismantle them altogether.

The idea is exciting for three reasons. First, it creates a system of social support that removes the stigma created by means-tested welfare. Those who are out of work because they are disabled, studying, between jobs or caring for a child or relative are all treated in the same way as those who are, in fact, working. Second, with a basic income to rely on, work always pays, encouraging enterprise and creativity. Tax takes rise as personal allowances are axed, while earned income is taxed at a higher level.

And third, perhaps hardest to believe and yet undoubtedly true, it’s a hell of a lot lighter on the public purse than a means test. If you remove a bureaucracy, you remove cost.

Detractors are easy to find. Critics warn that giving away “free money” will lead a laziness pandemic, a general outbreak of fecklessness that will steadily destroy any economy. Not everyone can follow their passions at work, they retort; if our citizens don’t need to work to pay their bills, how will we find anyone to clean the toilets?

The only way to find out if it works is to try it and see what happens. So far, trials of such schemes have been relatively small, taking place in individual Indian villages and in some parts of South America – all successful, but there’s only a little we can learn there that’s transferable to large national economy. Utrecht in the Netherlands is attempting something similar city-level, but as a stepping stone is planning to offer the payment to those already on benefit; at this stage, that’s not universal. Finland is set to launch a basic income later this year, but its wealth as a small nation is contingent on a high-tech economy and a small population, making it less useful as an exemplar to other western countries.

So all eyes are now trained on Ontario, and Trudeau’s Canada, for what happens here could place us at the cusp of the biggest overhaul of the welfare state in a century. Few formal details about the policy have emerged to date, but Premier Kathleen Wynne said her local government would “test a growing view at home and abroad that a basic income could build on the success of minimum-wage policies and increases in child benefits by providing more consistent and predictable support in the context of today’s dynamic labour market”.

At home, the Conservative government has little interest in the idea, although the case for a basic income from the right has been made on the grounds that it reduces state involvement and interference in private lives.

However, one of its long standing advocates on the left, John McDonnell, has gone from being an anonymous backbencher to shadow chancellor in a matter of months. Meanwhile, in Britain the welfare system has become unaffordable, creaking under the weight of housing benefit paid to even the moderately paid to cope with the costs imposed by a broken housing market. The appetite for a huge shift of perspective is growing.

In June, Switzerland will be the first country to vote on the introduction of a national basic income. If the people vote yes, a monthly stipend of anything up to £1,700 could be paid to every single resident. If Canada, Switzerland, Finland and the Netherlands are taking the basic income seriously, then Britain cannot keep dismissing it without its own test of the evidence.

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