Universal Basic Income — [Philip Davies in the Chair]

– in Westminster Hall on 13th October 2020.

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[Relevant documents: e-petition 302284, Implement Universal Basic Income to give home & food security through Covid-19, and oral evidence taken before the Petitions Committee on 17 September 2020, Support for individuals and households during Covid-19, HC 754.]

Photo of Philip Davies Philip Davies Conservative, Shipley 9:30 am, 13th October 2020

I remind hon. Members that there have been some changes to normal practice in order to support the new call list system and to ensure that social distancing can be respected. Members should sanitise their microphones, using the cleaning materials provided, before they use them and should respect the one-way system around the room. Members should speak only from the horseshoe. Members can speak only if they are on the call list; that applies even if debates are undersubscribed. Members cannot join a debate if they are not on the call list. Members are not expected to remain for the winding-up speeches, but they are perfectly free to do so if they wish.

Photo of Ronnie Cowan Ronnie Cowan Shadow SNP Spokesperson (Infrastructure)

I beg to move,

That this House
has considered the introduction of a universal basic income.

I thank the Backbench Business Committee for granting me this opportunity. I regret that this sitting is not fully hybrid and that MPs who are isolating or shielding to protect their health and that of others are in effect barred from taking part. That only increases the pressure on Members to travel when they could work from home and forces those who support us to attend the parliamentary estate, too. It was my first time back on the estate for a wee while and I was delighted to see new signs everywhere saying, “Keep left and keep moving”. I am hoping that that is a new sign from the UK Government.

While writing this speech, I noticed that as soon as I typed in the letters “u” and “n”, my iPad prompted me to select “universal”; when I accepted that, it prompted “basic income”. It appears that my iPad has been paying more attention to me than the UK Government have. It also learns quicker.

Universal basic income is an inclusive scheme that protects and recognises everyone. All adults and children receive a set payment on a regular basis. It is fair. It destigmatises the recipient. People are paid regardless of their circumstances. After all, are all people not created equal?

UBI alleviates poverty and reduces inequality. It strengthens a sense of individual citizenship. It empowers people and facilitates civic partnerships. To quote the UBI Lab Northern Ireland working paper,

“A UBI can be understood to be a right of citizenship—a fair share of the assets we and the generations before us have helped create. It recognises each of our stake, or share, in ‘the commons’
of the earth.”

I find that a truly beautiful concept.

A UBI strengthens social bonds and improves mental health. Nobody would deny that economic instability contributes to poor mental health, yet the current system dangles the threat of sanctions over the heads of recipients, going so far as to drive some to suicide. UBI removes that psychological burden. A UBI will not fund the lifestyle of an MP, but it is a platform on which individuals can add other income without fear of financial repercussions.

The current system ties work to welfare. It can make the transition into work more complex. People should be free to take on part-time or occasional work without strings attached. A UBI affords more flexibility to employee and employer, while acknowledging that employees are empowered and less likely to be exploited. It is permanent. It gives security and peace of mind. It cannot be withdrawn or become conditional, unlike the pensions of hundreds of thousands of WASPI women—Women Against State Pension Inequality—who were cheated out of their pensions by the UK Government. That permanency stimulates entrepreneurship, which can lead to the generation of jobs. It is the poorest in society who will directly benefit most; as we know, they are more likely to spend their money on essential items in their own community, which in turn stimulates local growth.

Prior to covid, the upsurge in interest in UBI was attributed to the gig economy, the increase in automation and the creation of a greater number of people described by Guy Standing as “the precariat”. Covid has accelerated the increase in the numbers of the precariat. Many people who once felt safe now feel vulnerable.

It is the duty of any good Government to protect their citizens—not just in the short term, not just by reacting to unfolding circumstances, but by planning for the long term, for future generations. To that end, pilot projects have already been run in Canada, the USA, Kenya, Brazil, Finland, India, Italy, Uganda and Namibia. Versions of cash transfer projects have been run in Iran, Lebanon, Kuwait, Zambia and Zimbabwe. There are plans for UBI-type schemes in Spain, Switzerland, Germany and Ukraine. I have a simple ask of the Minister: have the UK Government taken any steps to learn anything from any of those countries? And please do not quote the Finnish Finance Minister, who came out against UBI before the results of the Finnish trial were even published.

If the UK Government think it is beneath them to be advised by foreigners, will they back pilot projects in the UK and learn from them? Northern Ireland is asking, Wales is asking, Scotland is asking and England is asking. If ever there was a policy that could be pursued and that would be welcomed across the United Kingdom, UBI is it.

The four pilots proposed in Scotland are all well documented—all we need is the co-operation of the Department for Work and Pensions and Her Majesty’s Revenue and Customs. Those pilots will help us not only to learn about the economics of UBI but to understand the political, strategic, institutional, psychological and ethical feasibility of a UBI.

When we exposed the UK to universal credit, it was plain to see that it had not been thought through fully, and it failed miserably. Ever since then, we have been patching and amending the system. If we had run pilots for universal credit, we would have avoided many of the pitfalls and saved many people from the suffering that it caused.

I claim that UBI reduces crime, gives people more opportunity, improves health and mental wellbeing, improves community relations and contributes to a stronger local economy. Minister, run these pilots across the UK and prove me wrong. I know that the Minister is not a fan of UBI: he will claim that the cost makes it a non-starter. Why even consider it, if we cannot afford it? Why run pilots that might tell us that it is amazing, even magnificent, if we cannot then implement UBI? Well, Minister, let us run the pilots, learn what benefits UBI brings or does not bring, and then we can argue about cost versus outcome. If the Minister is seriously telling me that even if all the benefits of UBI that I am claiming can be proved, he would not move mountains to provide them for the citizens of the United Kingdom, then he is skating on very thin ice.

The NHS did not just materialise out of thin air; it was not dreamt up one wet Wednesday afternoon in the Tea Room or designed on the back of a fag packet. The NHS was introduced on 5 July 1948, but prior to that half of Scotland’s land mass had already been covered by the Highlands and Islands Medical Service, which had been set up in 1913. HIMS acted as a working blueprint for the NHS in Scotland. It was directly funded by the state and it had Ministers centrally in a Scottish Office in Edinburgh. It was a pilot project allowed to develop and grow; it uncovered unforeseen problems and fixed them. It ensured that, on day one of the NHS, the NHS was to all intents and purposes good to go.

There is an interesting aside about HIMS. One of its administrators was from my constituency, a Gourock-born woman called Muriel Ritson. She was the only woman on the Scottish Board of Health in 1919, but by 1942 she was sitting on the Beveridge commission, which helped to establish the NHS. The link is there for us all to see. She had learned her lessons, and she brought that learning to bear many years later. She also attended the school that Wendy Chamberlain and I both attended.

Mary Breckenridge, an American, visited Scotland in 1924 and later established the Frontier Nursing Service in Kentucky, based on the HIMS model. But not everyone saw the benefits of HIMS—just like today with UBI, the Conservatives argued against it. Lord Banbury objected to English taxpayers contributing money that would be of medical benefits to Scotland. Here we are, all these years later, with NHS Scotland and the wider UK NHS acting in true UBI-style and supporting us all through the current health crisis. If we had not had the NHS, it would have been too late for us to create it. It was there for us and UBI could have been there for us, too.

If the Minister is not prepared to follow current examples from around the world, then he should be brave—support the pilot projects and lead the world. Yes, it will cost more; it will cost lots of pounds and lots of pence. However, their value will be far higher than that of our current system, and the society that the spending will support is too precious not to exist. Although I do not doubt for one minute that budgets must be balanced, recent times have taught us that when the motivation exists, the purse strings can be loosened.

I will now review quickly the response of the Minister to UBI in a recent Petitions Committee sitting. He had three objections. First, how do we afford it? The Minister explained that the Centre for Social Justice found that giving every working-age adult in the United Kingdom £10,000 per year would cost in the region of £400 billion. He seems to think it is higher, but I question that figure. His argument was that the average universal credit claim was more generous at £16,000 per year, completely ignoring the fact that the UC figure is per household. A household with two parents and two kids do not need £5K per adult and £3K per kid to meet his generous standards. I have just halved his £400 billion in one stroke.

His next question was: how do we deliver it? The simpler the system, the cheaper the delivery—and UBI is simpler. Even if it costs the same as the existing system, we are still no worse off. He went on to boast:

“My Department and HMRC have done exceptional work throughout the pandemic to stand up new services and increase the capacity of existing ones. We have been able to move quickly to support over 9 million people”.

I offer genuine congratulations. That is a job well done. I know my local DWP and the one jobcentre left in my constituency have been superb, but with UBI there would be no need for that. All payments would already be in place. With UBI, the safety net has already been built. We are not building it as we are falling.

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Fair Work and Employment)

Is my hon. Friend as concerned as I am that at the height of lockdown, although the herculean efforts of the DWP staff ensured that people got paid, many people were getting about £60 a month taken off them owing to advance repayments?

Photo of Ronnie Cowan Ronnie Cowan Shadow SNP Spokesperson (Infrastructure)

That goes back to my original point: that I do not believe universal credit is the solution we are looking for. It has been patched and amended, but when it is put under pressure and there are changes in circumstances, the system is not fleet of foot and able to cope with people’s day-to-day living.

During the Petitions Committee sitting, the Minister turned to the issue of the impact of UBI. He had the temerity to say:

“this is the fundamental case against UBI.”

It was not the cost or the delivery, but the impact of UBI that he did not like. He stated:

“Unlike our UC system, UBI does not target support at those in greater need”.

Finally, he got it right. We do not need to target it—everybody gets it, with no stigma attached. He went on to say that UBI does not

“take into account additional costs faced by many individuals, such as those with a disability or those with childcare responsibilities.”

If he reads the pilot project’s proposals, he will see that they do take those into account.

Then, in sheer desperation, the Minister went for an old chestnut. To put it into perspective, Chair, UBI would be paid to you, me and all Members of this House. Yes it would—and it would be taken back in tax, thank you very much. In attempting to vindicate the current system, the Minister, without a hint of irony, said in his conclusions that the UK Government were

“providing millions to food charities to help get through to those who are struggling”.

Yet if people had UBI, they would not rely on charity from this one nation conservatism-driven Government. People do not want handouts—they do not want charity or the crumbs from the top table. They deserve a platform on which they can build and that allows them to sit at the top table as equals, not to be beholden to their rich benefactors. For the benefit of all four nations in the United Kingdom, will the Minister please support the plans for UBI pilots and allow us to move forward with a progressive welfare system that is practical, compassionate and fit for this century?

Photo of Christine Jardine Christine Jardine Liberal Democrat Spokesperson (International Trade), Liberal Democrat Spokesperson (Exiting the European Union), Liberal Democrat Spokesperson (Treasury) 9:44 am, 13th October 2020

It is a pleasure to serve under your chairmanship, Mr Davies. I thank Ronnie Cowan for such an impressive and informative speech about what UBI could bring to this country.

I say to the Minister that I stand here making this speech today as a convert to UBI. Two years ago, as the DWP spokesperson at our party conference, I was not in favour of UBI: I did not think that we should dismantle what we have at the moment and considered that we had enough problems with universal credit without going back to scratch. However, that was before I had heard the word “coronavirus” and seen the impact it was going to have on this country. That was before we arrived at a situation where 4.5 million people in the UK were living in poverty.

Coronavirus has changed everything. It has changed everything in much the same way—this metaphor has been used a lot—as the second world war changed everything for this society. When Beveridge put together his report in 1942, a lot of people said that it simply could not work, that it was not sensible and that the country could not afford it. What on earth was he thinking about? And yet, immediately post-war, the Labour Government set about putting that Beveridge report into action. What I say today is that what this country needs now is that kind of vision, and that kind of willingness to take on a challenge and to change society for the better for the next generation. It is not an opportunity that we asked for; it has come in the form of a challenge—probably the biggest challenge that any of us will face in our lifetimes. But we also have to see it as an opportunity to make progress.

Why UBI? The reason I became a convert, frankly, has been the number of phone calls and the number of people who have come to me since March this year—every day, every phone call, every person who thought they were financially secure, every person who spent decades building up a company, every person who was self-employed but now finds that they are without the support they need for the future: all that has convinced me that the only way to tackle the issue fully and to make sure that everyone gets the support they need is through a universal basic income.

UBI would help the people on whom we rely but we often miss: the carers, the people who are low paid. As the hon. Member for Inverclyde said, there should be no stigma or penalty to taking another job, but at the moment there is. I am thinking of people who have worked long hours to get our food to the supermarket shelves who are not on a huge salary and who could do with some help.

My basic plea to the Minister is this: look at whether we can have a trial, to see whether UBI can work and whether we can have the courage that the Government had immediately after the war. That generation looked to Beveridge and thought, “Here is another way. Here is a way of improving society. Here is a way of making a change, a legacy for future generations.”

We have all gone out on a Thursday night and applauded the NHS, which was part of that bigger vision. We have all, at some point in our lives, looked to the welfare state and thought, “Will it be there to help me?” In this, we have seen that it is not. It was a wonderful vision for the 20th century, but we need something new for the 21st century. We need something that makes sure that nobody falls through the cracks as we have seen in this crisis: the 3 million people who have had no support and who, regardless of the Government schemes we hear about, still have no support, no financial safety net, no way out of this from the Government. UBI could provide that.

At the moment, I would not give the Minister a blueprint and say, “This is the one you must follow” because that would be a mistake. We have to look at how we can do it, how it can be affordable and how we make sure that support gets to the people who need it: as I said, the carers, the stay-at-home parents, the people on a low income. They need our support now more than ever.

Two years ago, perhaps, I did not see it, but now I firmly believe that universal basic income is an idea whose time has come. This time needs something special—it needs us to have the courage that a previous generation had to do something radical and progressive. When people look back at this time 20 to 30 years from now, they could have this as something we tried to do and hopefully succeeded in doing for the future.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Digital, Culture, Media and Sport) 9:49 am, 13th October 2020

It is a pleasure to serve under you as Chair, Mr Davies. I start by saying to both contributors so far that I wholeheartedly agree with the thesis that they set out while also highlighting the practical realities of what a universal basic income could bring.

We live in such an inequitable society—the second most inequitable society that there is. We have 4.5 million people living in poverty today, in one of the richest countries. We know that many have made their millions out of this crisis, but millions have fallen into very stark circumstances. We have heard about the 3.1 million people who have been excluded from any support whatsoever and are desperate at this time.

The unemployment rate in my constituency last year was 2.8%; next year it will be 27%. This is terrifying—one in four people losing their jobs because of the nature of our local economy. The 2.8% was an incredible feat, in a post-industrial city where the manufacturing base was wiped out, with the loss of the rail and chocolate manufacturing jobs, but we now face an unprecedented precipice, and we are worried—terrified—at what lies ahead. We have to think outside the box at a time like this. That is why I believe that York, because of the nature of the economy and the way our city works, would make an ideal pilot for a UBI, or citizen’s wage, as many call it.

We also know that, at the end of this month, many people on furlough today will fall over tomorrow. The reality is that, while wages are currently at 80%, they will drop in areas of high lockdown to 67% and in many areas to nothing. That will mean a longer and longer queue at the jobcentre—none of us wants to see that—or people simply struggling. UBI is not just about economic circumstances; it is about holistically supporting individuals, which is why I am also a convert to such a mechanism. It does not judge or call out, but it does protect. At a time like this, we have to look at how we protect society.

The Prime Minister talks about putting his arms around our society, yet we are not seeing the evidence of that. Many of the economic packages that have come out have been narrow, too late and too little. They do not look at the real, longer-term solutions that we need to look at in this crisis. The packages are short term and have not grappled with the real economic challenges of our age. We have to look at what will sustain us, and not just in the next six months or year—we are talking decades of recovery from this pandemic.

We have to inject the right solutions. Therefore, we should not rush, but move on this path to look deeper into this situation. We have seen the benefits where universality has been applied. We have the pension scheme—too low, I would argue, but it is a scheme that does not judge—and child benefit. Such a solution removes the issue of the undeserving poor, a narrative that has often sat with this Government. It does not judge; it recognises the real challenges. Of course, it should also sit alongside a progressive taxation system—something we desperately need which challenges those with broader shoulders and supports those without that resilience.

At a time when we see our high streets about to topple over, businesses folding, our whole local economy in York and our national economy spiralling out of control, and pp spiralling down with it, we need that safety net. Universal credit has been a good attempt, but it judges, it sanctions and it has caused harm. People have to wait for weeks before they get any money. At the height of the pandemic, it was not just five weeks, it was eight or nine weeks that people in my constituency waited.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Digital, Culture, Media and Sport)

The Minister is shaking his head. I talked to my constituents who were offered a loan, to be paid back. I am telling the Minister about cases in my constituency where people waited that length of time to get their hands on any money. They were absolutely desperate and needed to use the food bank. Why are we doing this to people when we have other tools that we can utilise?

That is why I believe that universal basic income will bring the universality, the collective responsibility of society, and the solidarity to see people through this time. I argued for it at the start of the pandemic, seeing what was ahead. I believe ever more strongly that, as poverty encroaches, we must find proper solutions. At the moment many people are struggling to pay heating bills. A constituent came to me about that this week. People cannot afford to feed their families. Often it is the women in the family—the mothers—who do without to make sure their kids get what they need. It is tough. My city is like many other places in facing that.

One of the benefits of universal basic income comes from the fact that at the moment people are in and out of work, sometimes because they must isolate, and sometimes because of the pace of fluctuations in work. People who are self-employed try to get started or to do more work and then, with levels fluctuating, they fall back. Perhaps they have access to workplaces, or perhaps not. If there was a steady income for the self-employed, what a difference it would make to entrepreneurs who want to start a business but need time to build it up and to build a custom base. That would give them the underpinning they need to grow.

As for people on statutory sick pay—as well as those who do not get it—universal basic income would provide more of an underpinning while people have to move in and out of the economy. People on zero-hours contracts get paid—and then they do not get paid. They do not know, from week to week. Universal credit, whatever the Minister will say, is not agile enough to respond to the real economy that people work in. That would not be the case with a universal basic income. Also, people entering training and skills development may move in and out of it, perhaps with different hours at different times. They may or may not be on full-time courses. Universal basic income provides underpinning and does not discriminate. It does not call out disabled people, those who are shielding, or anyone else. It does not judge in that way, but understands. We need a system that understands people.

Something that came through to me clearly when we debated the Coronavirus Act 2020 was that there were opportunities to volunteer during the pandemic. We saw that from the British people in an incredible way at the start of the pandemic. No doubt as we get through the winter crisis together—and it is going to be a hard winter—many people will put their hand up and say, “I will help.” Universal basic income would give employers flexibility, because they would know that their staff would be out volunteering, moving in and out of those opportunities, as we pull together as a society to get through this impossible situation. We have to have that solidarity that was built. Flexibility, built into our ability to sustain ourselves through the crisis, would be underpinned by a universal basic income.

That is why I say do not push it off the table. A recovery UBI would help the economy to grow and establish itself again. It is interesting that the Mayor of London and even Andy Burnham, the Mayor of Greater Manchester, have said that we need to look at UBI. That is my ask of the Minister today: that we look at how to build the foundations of a new, fair economy, which does not discriminate and is built on the principle of recognising that everyone wants to put in, but sometimes people need help. UBI is the fairest way to do that. I ask the Minister whether he will set up a UBI commission to look at how UBI can work in different areas, and at the economic challenges of our age and the flexibility needed to grow a new economy, and to report back to the House on that commission to show how we can build a stronger, better economy and a fairer system for the future.

Photo of Lloyd Russell-Moyle Lloyd Russell-Moyle Labour/Co-operative, Brighton, Kemptown 9:59 am, 13th October 2020

Yesterday the Prime Minister responded to me when I asked what someone on minimum wage, who will have a third of their wage cut, should do. He said, “Oh, that’s the point of universal credit,” in the way that he does. I think he was getting confused with universal basic income. That would be the point of a universal basic income—so that as wages fluctuated down or there were particular problems, there was an automatism; so that there was always a basic floor and an income stream that people could rely on.

The reality, as we know with universal credit, is that there is an application system that is particularly difficult, and the work component has been re-imposed on universal credit in this country since lockdown. It is not just a payment made to support people unconditionally, and we know that the stress of the waiting period causes huge anguish for many of our communities. People do not see universal credit, or jobseeker’s allowance, or the dole—or whatever name it is given—as something that is their right or that they deserve. They see it as something that they are being judged on to get, and many proud people leave it until it is too late. They leave it, thinking, “I will use my savings; I will do the good thing for society and not go immediately and ask for support.” That means that by the time they are knocking on the jobcentre door, they might have already used up what little resources they had—resources that the Government expect them to live on while they are waiting for an application. How could we avoid a system that is degrading, causes mental health problems and causes people to rely on food banks? Surely we should explore some sort of system of universal basic income. It would, after all, do exactly what the Prime Minister promised; it would actually fulfil that pledge.

Universal basic income is not a replacement for universal basic services. We need the NHS, we probably need a separate way of dealing with housing, we need lifelong learning—we need those things to go along with it. However, it is a liberating factor for those things that the Government really should not be providing. My view is that the Government should not be providing food parcels—neither the Government nor charities. Charities do it in large part. In Brighton, most of those charities are also supported by the local council through cash amounts for them to go to the cash and carry. That is not dignified. It is not dignified that people have to go and get a bag of pre-sorted goods to live on that week. I do not think that is acceptable. That is where a cash transfer is important, because cash has a liberating element in those circumstances. It has a dignifying element in those circumstances, because when a person walks into the supermarket, they are able, on a par with everyone, to engage and purchase the things they may like.

Nor is a universal basic income a substitute for a decent industrial strategy. We need strong trade unions pushing for greater conditions for workers. We need to ensure decent relations between employers and trade unions to make sure we have industrial harmony. We need to make sure that the national minimum wage is being pushed up so that it becomes a real living wage. All those things are needed. However, if we do not deal with the transitions, particularly in a society where we have more transitions and less stability in the job market, we might be helping those fewer and fewer people in full-time and stable work but not enabling people to develop full-time and stable work positively.

I am a universalist. I generally believe that giving things to everyone pushes the quality up, not down, because the pressure is that everyone understands their value. That does not mean that everyone pays in equally. One of the critiques that we hear is that giving all this money to everyone means giving rich people money. I do not know how those people think the pay-as-you-earn system works, but in a person’s payslip for the month they pay x amount of tax—x is given to the Government. If UBI were set at something like £100 a week—I pick that number from the top of my head—that would mean £5,000 a year. Under the current tax system, anyone earning more than £26,000 would be a net contributor. That is an interesting number, because £26,000 is about the average wage in the south-east, although it is slightly higher in Brighton. Actually, that would be very positive, because those earning more would be paying for it. Of course, the tax system would have to be redesigned to make it balance. Those enabling figures are an automatism.

In the ’90s, the Scandinavians developed what was called flexicurity. It was adopted, of course, by the European Union—we can have arguments about our leaving, but that is not why I raise it. I raise it because it was about looking forward and saying that the job market was changing. The Scandinavian countries recognised that they needed a more flexible labour market. Jobs for life were not necessarily going to happen, and were not necessarily desirable. Companies were saying that they needed the ability to be fleet of foot. The pact that was made was that if there was to be a more flexible workforce—the ability to hire and fire more easily—there needed to be greater protections. Some of that was about free lifelong learning. The pillars were a flexible labour market, lifelong learning, labour market policies and a strong trade union-business pact. The final pillar of the European model was a model social security system with adequate minimum support for all.

I know that the Government are slightly allergic to things that come out of Europe, but we should learn from that decent, forward-looking principle of how the labour market needs to look in the future. I do not want creative people to be forced to go into cyber-security, as the latest Government advert suggests, if they want to make ends meet. I want them to be free to develop new creative industries that provide billions of pounds of revenue to our country. If they are not given support to do that in difficult times, there is a danger that we will lose whole sections of our industry. I genuinely think that UBI is an opportunity to put some of that flexicurity model into practice.

UBI will not be perfect—there are problems with all systems—but I believe that it encompasses some of the principles of the failed universal credit system. It encompasses the idea that people can transition. Conditions could be put on it and infrastructure could be put around it, but I am not sure that would be particularly helpful.

UBI also has the ability to rebalance our generational problem. We have the clear problem at the moment that many younger working-age people—people under 30 or even under 40, so not that young in some accounts—feel that they are getting a rum deal. They feel that they will never reach pension age because it will increase on and on. They feel that the state has abandoned them in housing and welfare—under-35s have lower rates in housing, et cetera. They feel almost infantilised by the current system. That generational pact has broken. I think that part of the problem with coronavirus is that a lot of young people are not convinced that there is a generational pact in society, because they do not feel that the state or society has actually bothered to care for their concerns. They feel that huge amounts are given to pensioners. That is not necessarily true—our pension is rather low—but that is the feeling among lots of people.

A universal basic income would of course differentiate between ages. It would be slightly lower for children and would then increase for working-age people and again for pensioners. It would be a continuum, which would rebalance that understanding of a generational pact that everyone gains from. That would really transform our society for the better, which is why I hope the Government will at least explore some real, decent pilot schemes.

Photo of Wendy Chamberlain Wendy Chamberlain Liberal Democrat Spokesperson (Wales), Liberal Democrat Spokesperson (Scotland), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Work and Pensions) 10:10 am, 13th October 2020

It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate Ronnie Cowan—a fellow Greenockian, as he acknowledged—on securing this important debate.

I agree that the pandemic has made the case for UBI ever more urgent. At the outset of the pandemic, I and others welcomed the Government’s financial support schemes and, I admit, generally accepted that existing HMRC mechanisms were the most efficient way of getting support out quickly and effectively to employers and employees. However, time has passed, and we now need to recognise that millions of people missed out on any support and continue to do so. Many constituents have been in touch—I am sure the same is true of other Members present—to say that they had missed out on support either because they were employed a day after the furlough cut-off or because their old employer would not re-hire them. Others missed out on the self-employment income scheme because they were not able to jump through the Treasury’s hoops. They were, therefore, unable to access the support they desperately needed.

We have all heard these stories, which is why many of us are members of the all-party parliamentary group on gaps in support, ably chaired by my hon. Friend Jamie Stone. It is impossible to listen to these stories without feeling a huge amount of empathy towards these people, who have faced an incredibly difficult year and now find further months of restrictions looming. Some 3 million people were excluded, in some cases on an entirely arbitrary basis. Despite the campaigning of many, the Government consciously continued to exclude those people—if they got no support at the start, they are still not getting any now.

Other Members have referred to members of our society who are sadly all too familiar with the challenges involved in engaging with our welfare system. However, without access to the current support schemes, many who thought they would never have to do so have engaged with DWP and universal credit support for the first time. DWP staff have worked incredibly hard at this challenging time. I commend them for that, and acknowledge that, as a Member, I have had direct support from them. I also acknowledge that the Government have temporarily increased the universal credit standard allowance for 2021 and relaxed the minimum income floor for the duration of the crisis. However, that demonstrates that every support mechanism currently available has eligibility conditions, and it is therefore inevitable that people will miss out. That is often why they contact us, as their Members of Parliament, and it is why UBI is such a powerful idea: there are no hoops to jump through and no complicated terms and conditions that exclude people. There is no sense of arbitrariness.

We heard yesterday about further restrictions—more restrictions have already been put in place in Scotland—and I am glad that the Government are bringing forward further economic support. However, I am disappointed that, several months on from the initial lockdown, and facing renewed restrictions and a surge in infections and hospital admissions, we are still no clearer on test and trace or on a job support scheme that actually reflects the reality of operating under the current restrictions and the seasonality of work in constituencies such as mine, which relies on tourism. Indeed, it feels like we are back in emergency measures, calling on the Paymaster General to unblock issues and get responses from Government Departments.

Beyond covid, there has been support for UBI pilots. In Fife, the preparatory work has been done; they just need permission to run the pilot scheme. Instead of relying on evidence from elsewhere, let us develop our own evidence base, then we will be best placed to assess whether UBI will work and the income and infrastructure required to deliver it. This work could arguably start quickly, and report quickly as well. This year, many who assumed that the safety net of our welfare system would be there to catch them have found the holes too big. Exploring UBI is a way of addressing those holes and providing a platform for future prosperity and economic recovery.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health) 10:14 am, 13th October 2020

It is a pleasure to participate in this debate. I thank Ronnie Cowan for setting the scene and I am pleased to make a contribution. I am also pleased to see the Minister. I believe he will do his best to respond to what we are asking for.

As others have said, covid-19 has been with us over the past few months. I recollect many conversations with constituents about these matters back in March. Never at any point did I honestly think we would end up where we are now, with these restrictions in place. Even as we were fast hurtling towards the changes, I never envisaged us being here.

I thank the Government, Ministers, the Chancellor and everyone who has been forthright and helpful. Others have done so, but I would also like to put it on the record, as it is important to include it in Hansard. Many of my constituents in Strangford have survived until now because of the Government’s commitment and help. To be honest, those people would not be there without that, so I put on the record my thanks to the Minister.

As elected representatives, the nature of our job means that people do not necessarily come to us to tell us how good things are or to say thank you, although many do and we appreciate that. People come to us because they have concerns and worries. Some have come to me—others have referred to this—because they fell outside the scheme.

Even with all the schemes that the Government have brought forward, it is clear that people have missed out, including the 3 million people referred to in a question to the Prime Minister during his statement on covid-19 yesterday, as well as the self-employed and directors. I do not want to labour the point, but they invested their profits and income back into their family businesses, thereby employing 12, 15 or even 20 people. But when it came to helping them, the help was not there.

Why do I look sympathetically on this particular methodology of benefit? It is because universal basic income could be the system to help those who did not receive the income they needed. I am not being critical of the Government, but I want to put that on the record. If we cannot help people, we have to consider different ways of doing things. That is why the hon. Member for Inverclyde has promoted this issue and other Members have supported it.

The experience of my constituency of Strangford is no different from that of Wendy Chamberlain, who said that tourism is important to her constituency. The core economic driver of Ards and North Down Borough Council, which covers the majority of my constituency, is based on tourism. Tourism is vital because it provides income and jobs, thereby keeping the whole thing going.

I am realistic about the system. I understand that the Government do not have bottomless pockets or a money tree at the bottom of their garden. There is no money at the end of the rainbow, so they have to work practically with the moneys that they have. I do believe, however, that the Minister should at least consider a pilot scheme for universal basic income, so that we can judge and consider it. Can we pay for it? That is important. We have to be realistic and honest. Can we reach out and help those people who have missed out, including in my constituency? Those are the people on whose behalf I am speaking today.

There are some 52 million adults aged 18 or over in the United Kingdom, and 12 million children and young people under 12. I understand the economics, the figures and the statistics that mean that some earners are taxed at a higher rate. My life is no different from that of anybody else, and the same is true of the lives of others in this Chamber. Society is judged by how it looks after those who are less well off. When I was a child—that was a long time ago, by the way—we never had much back in those days. It was a fact. We did not have material possessions, because that was the way it was in those days, but it made me more understanding of those who need help. That is why I am here today, to speak up and to support the hon. Member for Inverclyde.

The Minister is a compassionate person as well. I believe in my heart that he understands very well the policy we are putting forward and why it is so important. Can we do better than universal credit? I felt a wee bit embarrassed sometimes whenever people came to me during the covid-19 crisis and I said, “You can get universal credit.” I knew right away, though, that the guy or lady across the table had a business from which they were earning £300 a week—some were earning more—and I had to tell them, “Look, £94.50 is what you get.”

I understand that the Government offered what they could—I am not criticising that—but there must be a way to ensure that those businesses can hold on long enough so that they can then turn the corner and do better. I am really conscious of the issues. We need conditions when it comes to universal basic income. I understand that some of the naysayers are saying that it could reduce the incentive to work. Well, I tell you this: every person who came to me looking for help wanted to work. They wanted to continue to work and they wanted that opportunity. They just needed that wee bit of help to get them over the line. The Government have, in fairness, responded positively, but I wonder exactly what we need to do.

Photo of Ronnie Cowan Ronnie Cowan Shadow SNP Spokesperson (Infrastructure)

I should perhaps have said this earlier. One complaint about basic income is that it makes people indolent because people are paid for doing nothing. I refer the Minister to all the pilots that have been run throughout the world, which show that there is absolutely no evidence for that whatsoever. People the world over are just like us: they want the opportunity to work and earn a wage. Basic income does not make people indolent.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

I wholeheartedly agree. I was sympathetic to the really good question that Lloyd Russell-Moyle asked the Prime Minister yesterday in the Chamber. I am not saying that because he is sitting across from me; I told him it was a good question at the time. It was about the minimum wage. I understand how it works. There are arguments to reduce the working week to four days and to reduce wages, but if someone on a minimum wage loses wages, they have nowhere to go. This is about every penny they have.

I remember the stories that people in my constituency have told me. They managed everything almost to the last pound for that week. Even a small reduction in what they have will mean that they will not be able to pay their rent or their car off. They may be paying off furniture for their property, too. The whole thing becomes a real difficulty. If somebody takes ill, it becomes a real problem. The hon. Gentleman’s question was pertinent, because I could relate personally to what he was saying. I thank him for that.

In opening the debate, the hon. Member for Inverclyde referred to other schemes. I read in the briefing about the Finnish experiment. It is not all about money. I am conscious of time, so I will come to my conclusion fairly quickly. Those who participated in the Finnish experiment

“were more satisfied with their lives and experienced less mental strain, depression, sadness and loneliness. They also had a more positive perception of their cognitive abilities, i.e. memory…and ability to concentrate.”

Giving people that help improves their quality of life, physically and mentally. We have to look at that, because there is cost otherwise. If the Government or others are not able to help, there are impacts on people’s physical and mental health, which then has to be paid for by the NHS. I suggest that although the Finnish experiment may not be the best example, it did highlight that issue.

As I see every day, those who are under financial pressure and who are worried about their future also face mental stress and difficulty. I meet people every day, every week, in my office—my staff do most of that, to be fair—and recently, when universal credit first came in, I remember that there were great problems. Chris Stephens and I have spoken about these things on a number of occasions, and we understand that.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Digital, Culture, Media and Sport)

That brings to mind another aspect of this issue, which is sickness absence from the workplace. We obviously know the impact that has, but if people have the underpinning of a universal basic income, that will help with their rehabilitation and get those people back into work, whatever form of work that is. It may be volunteering experience or it may be through social prescribing, and therefore having a universal basic income could be a real aid to rehabilitation. Does the hon. Gentleman agree that this is another opportunity?

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

I certainly do. That is why I brought up the issue of people’s physical and mental experiences—because if we can get people into volunteering or get them back to work and moving up, that will make the Minister’s job a lot easier as well.

Rachael Maskell referred to the five-week period, which turned out to be an eight-week period in many cases. In a way, with all the experiences we had early on with universal credit, we overcame many of those issues, and the Government did as well. I therefore say gently to the Minister that we should perhaps be looking at a methodology for a universal basic income, at least on the basis of a pilot scheme, because with a pilot scheme the Government can perceive the issue, look over it, challenge it and investigate to see whether it is possible. In Northern Ireland, 16% of people—300,000 people—live in poverty, and that is before housing costs, which are enormous. With that in mind, the Northern Ireland Assembly also asked questions on this matter, although I understand that responsibility for the DWP lies here.

We have always had the greatest respect for the Minister, as he knows, and I believe him to be a compassionate person who can understand why we, the hon. Member for Inverclyde, and others have spoken on this topic. We believe there is a necessity for the universal basic income to be looked at through a pilot scheme. I believe it will help others, and therefore, along with others, I ask for that as well.

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Fair Work and Employment) 10:27 am, 13th October 2020

It is a pleasure to see you in the chair, Mr Davies. This has been a fantastic debate in which everyone has come to a consensus; we will see if that lasts as the debate goes on. It was led superbly by my hon. Friend Ronnie Cowan, and I very much subscribe to his advice that we should keep left and keep moving—that is something we should all do, and I encourage the Minister to do so. He is shaking his head, for reasons that are beyond understanding. My hon. Friend also said that pilots are being asked for across the UK and should be supported, which is something I will come to later in my remarks.

As someone who sits on the Select Committee on Work and Pensions, I can say that the Committee will be looking at universal basic income. There have already been 20,000 individual submissions not only asking the Committee to look at universal basic income, but supportive of it and describing its benefits. I am struck by just about everyone’s contributions regarding the disadvantages of universal credit, particularly the five-week wait—something the Select Committee is currently looking at—and, of course, the advance repayments model. It beggars belief that at the height of lockdown in May, advance repayments of £60 a month were taken off people. At least 1.6 million universal credit claimants had money taken off them in May this year, which is something that the Government really do need to look at.

By way of background, the Scottish Government confirmed on 21 May 2018 that they would provide £250,000 over two years to support the undertaking of the feasibility study for a universal basic income pilot in Scotland. In June 2020, a group established to explore the feasibility of a citizens’ basic income pilot concluded that while such a pilot was desirable it was not feasible within the current devolved settlement, as the necessary tax powers remained with the UK Government through the Department for Work and Pensions and HMRC. The Scottish Government have written to UK Ministers asking them to engage constructively, and to discuss the next steps in getting the pilots up and running. A petition entitled, “Implement Universal Basic Income to give home & food security through Covid-19”, was considered in an oral evidence session, as my hon. Friend the Member for Inverclyde mentioned, on 17 September this year. In response, the UK Government said that a UBI did not target help on those who needed it most, stressing that additional support had been provided during the coronavirus outbreak with the job retention scheme and changes to statutory sick pay and universal credit. I understand that the Welsh Senedd debated universal basic income on 13 September this year, with a motion calling for the Welsh Government to establish a universal basic income trial in Wales.

We want basic income pilots in Scotland, as well as elsewhere in the UK. That is desirable, but it can be done only with full co-operation and collaboration from the Government. Far too many people across the UK were living with the constant pressure of poverty, even before coronavirus. In the period 2016-19, about 1 million people in Scotland were in poverty, living precarious and insecure lives. That includes people in precarious and insecure work, which the Government need to tackle. It is not right in the 21st century that people are being pushed into destitution and homelessness, having to rely on food banks to survive.

The proposed pilot that the Scottish Government want to introduce would run for three years, with a one-year preparation period. Even with a pilot, it should be understood that such a systematic change to the welfare state could take many years to introduce. Commenting on these matters, the SNP social justice and fairness commission produced a discussion paper, “A Secure Income for All”, which explores the principle of the state providing a secure minimum income, with a more in-depth examination of universal basic income.

As many Members have said, the current situation with covid has exposed pre-existing vulnerabilities and shortcomings in the welfare and social security system. That system is an essential public service, like the national health service, and it should be funded properly and designed to support us all in times of need. Instead, it is our view that the Government have eroded the social safety net over the past decade, with brutal cuts and poverty-inducing policies such as the benefit sanctions regime, the benefit cap, the two-child limit and the bedroom tax. Even with the temporary £20-a-week increase in the universal credit standard allowance, which the UK Government have called generous, people who are out of work are £1,000 a year worse off today compared with 2011. We want that £20-a-week increase to be made permanent, and it is disappointing that the UK Government have refused the right to statutory sick pay to all those told to self-isolate as part of contact tracing.

If we look at the figures on statutory sick pay, the UK Government’s current rate is £94.25 a week, compared with £266 a week in Ireland and £287 a week in countries such as Germany and Austria. The UK Government have the second-lowest rate in the European Union for statutory sick pay. As Jim Shannon and other Members have said, during the covid period, people whom we would consider to have had a comfortable lifestyle before the pandemic no longer have such a lifestyle, which is one reason why a universal basic income could and should be a solution.

It is indefensible for the Government to obstruct potential solutions to poverty such as basic income pilots. As mentioned by Christine Jardine, there was a call by many political parties for an emergency basic payment to be put in place, to go in people’s pockets and support families during the covid crisis. An emergency basic payment would not be a universal basic income, but would go some way towards ensuring that people had a secure income. That is something which we very much believe the Government need to look at. The 3 million who have been excluded have been referred to in this debate. The Government need to consider an emergency payment going to everyone, particularly as local and regional lockdowns are put in place across these islands.

We certainly encourage a universal basic income. We want to encourage the Department for Work and Pensions to engage with all the devolved Administrations and any local authorities that want to put a basic income pilot in place, wherever they are in these islands. We believe the time has come for that to happen.

Photo of Karen Buck Karen Buck Labour, Westminster North 10:36 am, 13th October 2020

It is a pleasure to contribute to this debate under your chairmanship, Mr Davies. I congratulate Ronnie Cowan and others for securing the debate. We have heard strong contributions from Members who have critiqued the existing social security system and shown how its weaknesses have been exposed during the pandemic. That is absolutely right, for reasons that I will come on to, but we have heard not only about the pandemic, but about a recognition that the current social security system has a number of fundamental problems.

We have rehearsed the problems with the universal credit system on many occasions in the past and will no doubt do so again, 10 years on. Many problems have arisen from the fact that many people have been excluded from receiving help and the restrictions that apply, ranging from the five-week wait to the benefit cap and many other problems.

It is also true that there is a very long-term and fundamental issue with social security that those who support versions of universal basic income recognise. No system stands still. The world has changed fundamentally, particularly the world of work and the extent to which we are increasingly in a world of flexible employment, income volatility and fundamental demographic change.

Even the principles that Beveridge set out as the basis of the post-war social security system, starting with the concept of a flat-rate system, soon had to change as the world changed—as women went into the workplace and different pockets of disability emerged. The interaction between those at work and the nature of the jobs they were doing also changed and increasingly became a system that topped up the basic, flat-rate insurance-based systems, so we have ended up with a complex hybrid.

It is also true—I will come on to this in a minute—that whatever system we end up with will have to accommodate a variety of different approaches. Members have stressed this morning, and I agree, that if we want to build an argument for a form of universal basic income, the Government have done a lot of the work for us by introducing a system that has embraced conditionality and sanctions with vigour in recent years. If we want to convince people of the merits of a basic income, we could not do much better, given that the DWP seeks to micromanage so much of people’s lives, whether they are out of work or in work conditionality, where interaction with job centres often feels like an obstacle course of booby-traps designed to trigger sanctions. Those sanctions are wildly disproportionate including, until last year, cutting people off without support for up to three years. The social outcomes of all those policies include what many refer to as the soaring numbers of people whose destitution is such that they are dependent on food banks.

I do not want to cover all the points that have been made, but I will refer to two areas where the basic income argument is particularly relevant. The first is income volatility and the ability of the social security system to deal effectively with the fluctuations in income that have become characteristic of the labour market. Again, the problem is not new but, as self-employment, sometimes very dubious forms of self-employment, the gig economy and zero-hours contracts have become more prevalent, it is particularly pertinent.

The ability of the social security system to react in a timely manner to sudden drops in income is stretched to the limit. Despite the use of realtime information from the tax system, the monthly cycle of universal credit payments does not correspond to real-life volatility in many household incomes, as John Hills of the London School of Economics has certainly shown. There is a strong case for mitigating that volatility through payments that do not respond to changes in income, which is precisely what child benefit—the nearest thing we have to an element of basic income—does. The stability of child benefit has been shown to be one of the most valued components of the social security system. Whatever happens to earnings from other benefits, child benefit can always be counted on.

The second point concerns the basis on which benefits are awarded, whether to individuals or households. Our personal taxation system is overwhelmingly based on individuals, but our benefits system is increasingly based on the assessment of household income. Universal credit has reinforced that disparity. It is a benefit designed around an out-of-date model of a single breadwinner and it disadvantages second earners in the household, who can find most of their earnings lost to household means-testing. We should not be comfortable about the fact that people in lower-income households face a completely different set of implicit tax rates from the better-off.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

I want to underline the issue. It is not just about finance, but about health, and the physical and mental responses to that. Does the hon. Lady feel that that has to be taken into consideration when it comes to support in such a scheme?

Photo of Karen Buck Karen Buck Labour, Westminster North

I totally accept that security is fundamental to people’s physical and mental wellbeing. That is implicit in the idea of recognising the weaknesses of the existing system and how it responds to volatility, most obviously demonstrated during a crisis such as the pandemic, but consistent over the long term.

Basic income as a fully individual entitlement could go some way towards addressing that problem, although it must be recognised that it is not a complete solution, because most of the proposals for basic income retain large parts of the existing social security system, most critically, housing benefit. Beveridge was defeated by the disparity in housing costs across the country, and that remains now—if anything, it is probably more pronounced than it was. A basic income is not the only imaginable way to improve the current situation, but the argument for it sets out the problem with great clarity.

Some contributions to the basic income debate, however, suggest that the reform could be easily implemented—“oven ready”, to coin a phrase—and that all that is necessary to deliver it is political will and progressive values. I do not want to drown the debate in figures, but it is important to get a sense of the scale of change involved in even modest basic income proposals. I will refer briefly to two important studies that address the issue of how to fund basic income. Both show incredible clarity and are from people who are sympathetic to the idea.

The first is a paper by the late Tony Atkinson, who was a towering figure in the study of inequality. The paper was published after his death in 2017. Tony Atkinson favoured what he called a participation income, which would be conditional on some form of social contribution, but not unpaid work. As those conditions do not influence the modelling, we can take the results as relevant to basic income in general. The adult participation income in his model scheme is £75 a week. Child benefit is raised to £52.60 and £89 for the first child. The scheme prioritises children, and is certainly not extravagantly generous to adults. Other social security benefits would be retained, so it is essentially a partial basic income scheme. The modelling shows that it would not eliminate poverty, but would lead to significant reductions.

How is the model funded? The personal tax allowance is abolished, so income is taxed from the first pound. The basic rate of income tax rises from 20% to 30% from the first pound of earnings, rising to 40% of gross income at £25,000 to 50% at £45,000 and 60% at £90,000 and beyond. An earned income tax discount is introduced to avoid excessive taxes on lower-income groups.

Members will appreciate that those are not trivial changes to the system of personal taxation. My hon. Friend Lloyd Russell-Moyle said that a basic income would require a total restructuring of the taxation system. That is not something that we can enter into lightly. The scale of what is needed to accommodate such changes is considerable. A doubling of the marginal tax rate on gross incomes of £25,000 a year would surely make even the most ardent supporter of basic income hesitate.

Any basic income scheme faces the problem that spreading payments out over the entire population will require either cuts to other expenditure programmes or increases in tax revenue. The Compass basic income model, which is widely quoted, does not offer a blueprint for immediate reform. The other scheme is intended as a policy that could be adopted immediately. Therefore, the basic income for adults and children is lower, at £60 and £40 a week respectively. To balance the books, the income tax personal allowance is abolished, as is the primary threshold for national insurance contributions, so all income is subject to tax and national insurance. A new lower rate of 15p in the pound is introduced for the first £12,000 of income to avoid successively disadvantaging the lowest earners. All other marginal rates are increased by three percentage points, so the basic rate would be 23% in England, Wales and so on. That gives an indication of what the implications would be for changes to the tax system. In both cases, marginal rates of income tax increase not just for the rich, but for middle and lower earners, and income that was never taxed before becomes liable for income tax and/or national insurance contributions.

Although I accept a number of the arguments about the positivity of changes to the social security system that give people security, we cannot dismiss the fact that we will either have to find significant additional contributions to make it work or look at how the changes to the taxation system will affect people and ensure that is part of the debate. It is worth pointing out that the pilot studies that have been conducted in other countries do not have the advantage of being able to do all this in realtime, precisely because to make a full basic income work requires social security and tax to be fully integrated as part of the model; it cannot simply be about testing some aspects of the scheme.

I welcome this debate, and I certainly do not dismiss the idea of basic income. I recognise and support the contributions made this morning. People are saying that a basic income can address long-term problems that are poorly handled by existing social security models. As Labour develops our proposals for replacing universal credit with a more generous and less stigmatising system, I hope we will rise to some of those challenges.

Photo of Will Quince Will Quince The Parliamentary Under-Secretary of State for Work and Pensions 10:48 am, 13th October 2020

I thank the Backbench Business Committee for granting time for this important debate, and all Members who contributed. I will try to address as many of the points that they raised in the time that I have.

This issue ignites passionate debate in many quarters, and I am grateful to be able to come to the House and make the Government’s position crystal clear. Throughout the pandemic, people have faced significant challenges. Many have sadly lost their job or have seen their income reduce. During these challenging times, my priority as Minister with responsibility for welfare delivery remains ensuring that the most vulnerable in our society receive the support and financial assistance that is available to them.

Thankfully, universal credit and the Government’s £9.3 billion investment in the welfare safety net has been there to catch those most affected. It has been vital to the 3 million people who have made a benefit claim since March. We have paid more than 90% of claims in full and on time, and we have got support to millions of families at an incredibly difficult period. We have targeted support, which gets to the people who need it most while maintaining responsible economic policies.

Despite the success of universal credit, some still attempt to deride the system and instead demand what they call a universal basic income, or UBI. The concept, as has been explained today, is that a standard monthly allowance is paid to all working-age adults, regardless of their circumstances. At first glance, it may appear appealingly simple, but in reality it would be a costly mess that would leave the vulnerable in society far worse off. It would disincentivise work in key industries and leave the country’s finances in ruins.

On the flip side, the universal credit system has proven that it is up to the challenge. Replacing universal credit, at potentially astronomical cost, would be of little benefit to anyone, not least those who rely on our welfare safety net the most.

I hope that my clear arguments against UBI, which I will set out today, will make it clear that the Government have no plans to adopt this policy, and for good reasons. It is not in the interests of the taxpayer or of those who rely on our welfare safety net. Rather than continuing to push the unrealistic and damaging idea of a UBI, its supporters would do well to look at the welfare safety net that we already have.

In the short time that I have left, I intend to cover three areas, if possible: cost, delivery and impact. First, I turn to cost. A 2018 report by the CSJ found that giving everyone over the age of 16 in the UK £10,000 a year would cost £500 billion. Despite those staggering sums being paid out, a UBI would be likely to leave the most vulnerable in society worse off. As soon as we think about the people who need more support from the state, the supposedly simple idea of UBI quickly starts to unravel.

Photo of Will Quince Will Quince The Parliamentary Under-Secretary of State for Work and Pensions

I will have to write to the hon. Gentleman about the CSJ report, because I do not have it to hand.

Photo of Will Quince Will Quince The Parliamentary Under-Secretary of State for Work and Pensions

The point I am making is that when we even begin to think about introducing a UBI, we see that not only would the cost be astronomical, but the Government would have to increase taxation mercilessly; that is borne out in the feasibility report by the Scottish Parliament’s own commission. Indeed, there would be increased taxation far beyond anything seen in the United Kingdom before. We would be taking thousands of pounds in taxation from hard-working people, often simply to shuffle money around in what could be a costly farce of bureaucracy, before paying it back to people in monthly UBI payments. That would be a decadence of expenditure and a blow to productivity that we can little afford in the throes of one of the most severe economic situations that we have faced.

I turn now to delivery. UBI is indeed a fantasy, in which the practicalities are rarely thought through, and if we interrogate the idea even slightly, it very quickly unravels. Delivering infrastructure schemes of this size is not easy. For all its detractors, who have been proven badly wrong in the face of the pandemic, universal credit is one of the most advanced welfare systems in the world. As with any complex IT system that delivers sweeping reform, it has taken time to implement and it has not been without challenge.

In 2017, the Work and Pensions Committee found that any UBI that attempted to support people’s additional needs would not reduce complexity, and that ultimately it was difficult to see how a UBI would substantially alleviate poverty or provide income security.

As Ronnie Cowan rightly pointed out, other countries have already tested UBI and quickly found that the practice is as bad as the theory. As the hon. Gentleman also pointed out, a UBI test in Finland was abandoned as a flop after two years, with the Finnish Finance Minister saying that the case was closed for UBI. Importantly—

Photo of Will Quince Will Quince The Parliamentary Under-Secretary of State for Work and Pensions

I have given way once already; if I can give way again at the end, I will.

As I was saying, the Finnish Finance Minister concluded that there must be conditionality—that is the important point—in the social security system.

This Government have done brilliant work through the pandemic to stand up and bolster services, and to get money to those who need it in all four nations of our United Kingdom. We have supported more than 9 million people through the coronavirus job retention scheme and we have accepted more than 3 million new claims for universal credit. The universal credit system has proven that it is up to the challenge, and replacing it at potentially astronomical cost would provide little benefit to anyone, not least those who rely most on our welfare safety net.

Finally, I want to discuss impact, which is the fundamental case against UBI. The welfare system is a safety net and should be there for those who need it. Unlike universal credit, UBI does not target support at those in greater need or take into account additional costs faced by many individuals, such as those with disabilities or those with childcare responsibilities. To put things into some kind of perspective, UBI would be paid, as the hon. Member for Inverclyde pointed out, to me and all the other Members in the Chamber today and across Parliament. I would much rather that it be spent on supporting those who need it. To claim, as the hon. Gentleman did, that that would simply be taken back in tax is not a valid argument, as I have set out, because that is simply shuffling money around.

The OECD has also been clear about the broader consequences. For most high-income countries, a UBI could increase poverty and negatively affect the poorest, with middle-income households most likely to gain. That is all before we start discussing real outcomes. Evidence suggests that UBI provides a disincentive to employment, and in the Finnish trial the Government have acknowledged—I repeat this, because it is important—the need for conditionality.

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Fair Work and Employment)

Surely the Finnish model demonstrated that people rejected precarious work and that employers had to increase pay and model terms and conditions. It is just not the case that the Finnish model suggested a disincentive to work.

Photo of Will Quince Will Quince The Parliamentary Under-Secretary of State for Work and Pensions

I thank the hon. Gentleman for his intervention and I hear the call that he and other Members across the Chamber make for a UBI pilot, but in rebuttal I say, “Show me the international evidence.” The hon. Member for Inverclyde made reference to numerous pilots that have taken place all over the world, so why does he not demonstrate what he argues for by showing what impact they had, and then showing the evidence of how those countries have gone on to implement UBI?

Photo of Will Quince Will Quince The Parliamentary Under-Secretary of State for Work and Pensions

I will gladly meet the hon. Gentleman at some point in the future and look at that in further detail—but why have those countries not progressed? On the issue of the pilot, not only do we think that the concept is deeply flawed, but it is certainly not currently operable.

The Government remain wholly unconvinced of the case for UBI. We have taken steps to address the financial implications of the pandemic, and that has been possible only against the backdrop of a welfare system that has been technically capable of meeting the challenge of hugely increased demand, and that targets appropriate support for those who need it most. More than 1 million people who needed to access UC quickly have been able to receive funds within 72 hours and more than 90% of all claims have been paid in full and on time. That is a record of which I am proud. The pandemic has shown that universal credit is the right approach for the United Kingdom. It simplifies the benefits system, promotes and incentivises work, and provides targeted support to those who are most in need, in a way that is affordable to the taxpayer—challenges that UBI simply does not and cannot meet.

Photo of Ronnie Cowan Ronnie Cowan Shadow SNP Spokesperson (Infrastructure) 10:58 am, 13th October 2020

I thank everyone who has taken the time to come and speak today, and I thank the Minister for his time as well. I have rebutted most of what he said, because it is the same speech he used in the Petitions Committee, about implementation, outcomes and being too costly. I have already dealt with that here.

If anyone really wants to see how the models work—I acknowledge what Ms Buck said on that—with all the numbers in boxes that we can add up, subtract and play all these games with, Annie Miller wrote an excellent book called “A Basic Income Handbook”, which contains many examples that can be drawn on. She also handily gives calculations to put into a spreadsheet, so that people can build their own and play with it. If the Minister wants evidence from across the world, I am not going to bring it to him. He has the staff behind him. I would have thought someone would have brought him evidence and said, “You want to have a look at that.” That is why I asked in my speech whether he had looked at any evidence from across the world. He comes up with these old canards and arguments that UBI makes people indolent and stops them working. There is no evidence anywhere to show that.

I wonder what the final straw will be that makes the Government wake up to the idea. At one point, a couple of years ago, the gig economy was coming forward, and it brought the discussion back inside the Overton window. Now it is covid-19 that is taking us down the next stage of the path. I fear that if we do nothing now, it will be covid-22, a drop in the economy, or a serious escalation of the gig economy. I am asking that we do something now before it is too late. We do not know what the final straw will be. We need to plan now, to go forward. It is wise to fasten the seatbelt before hitting the wall. The Minister believes that the financial cost is too high to justify UBI. I fear that the cost to society without a UBI will be far higher.

Motion lapsed (Standing Order No. 10(6)).

Photo of Philip Davies Philip Davies Conservative, Shipley

In order to allow the safe exit of hon. Members participating in this item of business and the safe arrival of those participating in the next, I suspend the House for two minutes.

Sitting suspended.