As basic income trials take place around the world, the idea can no longer be dismissed as purely utopian. But can it truly reshape economies and societies?
In this episode, Richard Kemp talks with Howard Reed and Elliott Johnson, two of the co-authors of Basic Income: The Policy That Changes Everything, about the reality of basic income.
They explore various models of implementation, how such a system could be funded, how it differs from the current welfare framework, and the potential for basic income to create transformative change across society.
Listen to the podcast here, or on your favourite podcast platform:
Howard Reed is Senior Research Fellow in Public Policy at Northumbria University and Director of Landman Economics. Elliott Johnson is Vice-Chancellor’s Fellow in Public Policy at Northumbria University.
Scroll down for shownotes and transcript.
Basic Income by Matthew Johnson, Kate Pickett, Daniel Nettle, Howard Reed, Elliott Johnson and Ian Robson is available on Policy Press for £9.99 here.
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SHOWNOTES
Timestamps:
01:34 – What is basic income and how is it different from our current welfare offer?
04:19 – Can you talk more about the conditionality of our current welfare and the behaviour it causes?
05:55 – Has the welfare situation always been this bad?
08:05 – What are the three schemes for basic income?
12:26 – Can you explain why people from wealthy families can afford to fail?
14:54 – How fiscally different would basic income be for people on the ground?
16:53 – What are the wider societal benefits of basic income?
22:27 – Why do you call it basic income instead of universal basic income?
24:39 – Wouldn’t prices just go up if everyone had this extra money?
30:26 – How would basic income do better to help child poverty than child benefit?
35:26 – What do we need to do, and what’s already being done, to help basic income become a reality?
Transcript:
(Please note this transcript is autogenerated and may have minor inaccuracies.)
Richard Kemp: You’re listening to the Transforming Society podcast. I’m Richard Kemp, and on this episode I’m joined by Elliott Johnson, Vice-Chancellor’s Fellow in public policy at Northumbria University, and Howard Reed, senior research fellow in public policy at Northumbria University and director of Landman Economics. Along with Matthew Johnson, Kate Pickett, Daniel Nettle and Ian Robson, Elliott’s and Howard are co-authors of the book ‘Basic Income: The Policy That Changes Everything’, published by Policy Press.
Through financial crashes, Covid panic, never ending austerity, and multi billionaires hogging the world’s resources, it should be no surprise that many people are struggling to make ends meet. The structures in place that should be helping the vulnerable are not doing enough, and in some cases barely exist at all. Basic income, also often called a universal basic income or UBI, has gained traction in the press over the last several years. We saw a small version of it when Donald Trump’s Republican Party, government in fact, cut checks to American citizens who lost work during the pandemic.
In their new book, the authors take us through what basic income is, how it would work and what impact it would have on everything from poverty, crime and housing to health care and the wider economy. With trials now happening all over the world, this book shows why basic income isn’t just possible, it’s the vital solution to our age of crisis, paving the way for a fairer society.
Elliott Johnson and Howard Reed, welcome to the Transforming Society podcast.
Elliott Johnson: Thanks for having us.
Howard Reed: Lovely to be here.
RK: Thanks so much, guys. Thanks so much for coming on. Elliott, can we ask you first please in the UK, so we’ve got we’ve got a web of welfare support that a lot of people might already be familiar with. Universal credit, personal independence payments, child benefit, pensions, personal tax allowance, minimum wage. What is basic income and how does it differ from our current welfare offer?
EJ: Well, you see, it’s interesting, in the question there you identify one of the key issues, and that’s that the welfare system is a web that’s developed patchily and over time, and it’s met particular objectives of governments at each point in time as it’s been introduced, and to address issues that may or may not be current and where there may achieve better solutions available now.
And things like child benefit used to be truly universal. Every child in every family would be covered by that benefit, and it would bring a sense of unity and being together in the country. And that’s been lost in recent decades. But it was hugely important in the wake of the Second World War, when the welfare state was founded.
Those systems all seek to assess based on who and, crucially, who’s not eligible to receive support and underpinning that is deservingness. So the group of people deemed deserving has shrunk drastically over that period, in recent decades, and politicians have sought to balance the books by cutting welfare. As a result, you often have, for example, people in work on low wages who don’t receive any support.
And that introduces real disincentives to be socially, physically and economically active and for people receiving means and needs based benefits. That’s, you know, it’s a real challenge as well. You know, it’s not their fault. You know, there are these perverse incentives. And anyone who stood to lose out and lose their financial security from being more active would likely behave the same.
And basic income does away with all of that. So it gets rid of all those perverse disincentives, all the bureaucratic complexity, all of the us versus them, you know, outsider groups. And instead everyone receives a regular cash payment to meet their basic needs. And for specific and additional needs like those associated with disability and child care, there are systems like Basic Income Plus and, and that would have supplements on top of this basic that everyone’s receiving.
And it would be assessed in a much more humane and appropriate manner. Just like, for example, the current tax system does. And this isn’t just an academic kind of hobbyhorse for me. I grew up in a family that was welfare dependent, and it it honestly, it instills some frankly mad behaviour that you’re forced into under the current system.
And something like basic income would have seemed mad to me at the time too, but I’ve been convinced by the evidence over time. And I don’t think it’s just a problem with our current system. I think it’s a problem that all conditional systems of welfare have, though ours has definitely worsened massively over time.
RK: Elliott, you were saying, about your own personal experience with welfare that it’s conditional. And because of its conditionality, it then evokes it encourages some mad behaviour. Can you explain a bit more about the conditionality and then the behaviour as a result?
EJ: Well, I think, for example, in my kind of professional work in the past, I’ve done studies that have looked at the effects on physical activity. And one of the things that hasn’t been recognised previously before that study was the fact that a fear of losing benefits, if you were to be more physically active and you’re disabled and people were to judge you as not being disabled enough, it’s it has a massive effect.
So even if you’re not immediately under scrutiny, although often you are, if you’re not immediately under scrutiny, this is pervaded throughout society. So, you know, disabled people across the country feel observed, feel like if they start to do something that might help manage impairments and health conditions, that they could lose their entire financial security. And for me, I felt that as well.
There were times when I was terrified about the idea of taking up any kind of work. You know, it was a feeling of, right, if I try to do this one little bit of work, I could lose basically everything that’s keeping me afloat. And therefore it probably just isn’t worth it. And that’s, that’s something that I don’t think has been recognised sufficiently.
This is a problem of systems that force people into this behaviour. And it feels like you can start to look around the edges of things and prove some things. But that’s a fundamental problem, you know, and I’m not sure it’s resolvable under under a conditional system.
RK: Howard can I can I ask you, please? In countries like the UK and the USA, the biggest cause of poverty you’re saying is it’s not individual failure, but government policies. You say in your book that 61% of UK adults in poverty today, they live in a household where at least one person is employed. In 2023, you reports on how 38% of people in need of Universal Credit, they also already had a job or multiple jobs. So so people are in the system and yet they’re still poor. So has it, has it always been this way? Did something somewhere along the line go hideously wrong?
HR: Well, it’s been getting worse for the last two decades. I mean, if you look at average hourly wages in the UK in real terms, so correcting for inflation. They peaked in around 2008, around the time of the big financial crash, and they’ve never recovered. Hourly wages, average hourly wages never recovered to that level over the last 17 years.
So you’ve got, although you’ve got, or you had, more people going into work, employment rates were rising, working age, employment rising until Covid when they fell back, you got more people in work, but they’re earning less, which means that the combination of those two things and the third thing, which is cutbacks in in-work benefits that households are entitled to like tax credits.
When the coalition government got in in 2010, and then through the 2010’s, tax credits for working households were cut back and then Universal Credit was cut back further. And so you end up with a situation where the poverty rate for households with at least one person in work went up from about 6% in the early 80s to about 18% now.
So you’ve got a tripling of that poverty rate for that group, where you’ve got households with at least one person in employment. Pensioner poverty in the same time has mainly gone down, but working age poverty has gone up and child poverty has gone up. So in far too many cases, you’ve got a situation where work simply doesn’t pay enough by itself to lift people out of poverty, and also the in-work benefits that you’re paying people don’t help enough either, because they’ve been massively cut back.
So it’s those two things going on at the same time, really, that’s causing this.
RK: So in your book, you, you model three separate schemes of basic income. Can you explain these three schemes? How much citizens would receive per week, on each of these, and how how would we all pay for it?
HR: Sure, well, we’ve got three schemes. I’ll explain scheme one first, which is a kind of starter in inverted commas scheme. And that’s got each working age adult would be paid around 75 pounds per week. The modelling was done in 2023, so you’d probably be looking at over 80 pounds in today’s prices. But it’s below the kind of Universal Credit adult level or Jobseeker’s Allowance level just below it.
So it’s not that would not be enough to lift people out of poverty necessarily by itself, although there is a disregard in the system as well. So if you were claiming Universal Credit at the moment, you’d get, you’d still get 20 pounds of that on top of the basic income. So, so people would still be better off even if they’re already claiming means tested benefits.
And then children would get 50 pounds a week, which is substantially bigger than child benefit is at the moment. For pensioners, the payment would be just above the current full state pension, for somebody with a full record of contributions. But you wouldn’t need contributions to get it. You just need to be a UK citizen, so a lot of pensioners would would benefit quite substantially from that because there are loads of pensioners at the moment that don’t have a full National Insurance contributions record and are being paid less than the full state pension.
So that’s scheme one and scheme three is more of a full bells and whistles approach, where we pay everybody at the minimum income standard level. That’s the amount that researchers at Loughborough University have estimated, after consultation with the public through focus groups, they’ve estimated how much each UK household would require to reach an acceptable standard of living. And in our modelling that involves reaching the minimum income standard, involves paying each working aged adult or pensioner 300 pounds a week.
So a lot more than scheme one, and then about 100 pounds per child per week. And that’s much more expensive, obviously. The starter scheme can be afforded by making some changes to income tax mainly, reducing the personal allowance, increasing the rate by, I think three percentage points, the basic and higher rates and also equalising National Insurance treatment of self-employed and employees.
And when you make those changes to the system, you can basically afford that scheme. It’s, it’s what we call fiscally neutral. So it’s not involving additional net government expenditure. Scheme three is a lot more expensive. And we view that as a kind of medium term aim to, to get to we also have scheme two, which is sort of halfway house between the two sets, paying, if you like, halfway between the standard scheme and minimum income standard.
And we would afford that by making the changes to income tax, but also adding things like wealth tax, environmental taxes such as a carbon tax, we also recommend reducing or eliminating a lot of the tax reliefs in the current system. So we’re trying to effectively shift the tax base over from income towards like unproductive areas like assets and wealth.
And we’re also helping fund the scheme by investing in public services which have a multiplier effect, which delivers increased tax income in the short to medium term, like a few years down the line. And that helps balance the books, you know, over a five year period in the the ‘Act Now’ book has really detailed calculations on that and, shows how we make the sums balance.
And what we’re trying to do really is help solve the productivity puzzle that governments have identified for decades. Where UK GDP growth is per head has been falling for around 50 years. We think that by making productivity gains, by making these investments in public services, the productivity gains through better infrastructure, better population health and so on are so great that the system becomes self-funding over time, combined with the tax increases we put in place.
And we also think there’s a huge increase in security for families across the income distribution, getting people to the sort of circumstances that only wealthy families can be in at the moment. It’s only families at the top of the wealth distribution that have got that security at the moment. By introducing basic income we, we provide that to all families.
So it’s a much more redistributive picture and a much better kind of way of doing things.
RK: With, with the wealthy families, part of the book that was really kind of making a big impact on me, like explaining about how people from wealthy families, therefore they have the backing of their wealthy families. They can they can afford to fail, basically, while the rest of us don’t have that luxury. Can you can you tell us about that please?
HR: Yeah, I think that’s a really good point. I mean, there is so much conditionality built into the social security and welfare system at the moment and so much precarious employment or low wage employment at the bottom of the income distribution, in particular, a lot of families are only, you know, 1 or 2 pay checks away from destitution if anything. We know that a lot of families at the bottom of the distribution don’t have much of any savings.
A lot of them don’t own their own homes, so they don’t, it’s not obvious where these families are going to turn if, if, if, you know, life deals them a difficult hand and they, you know, they become unemployed or they or they become ill or disabled, we know the government’s kind of cutting the, the probably already fairly meagre level of disabled support even further at the moment.
So things are going to get worse in that direction. So with basic income, you know that you’ve got a guaranteed amount each week coming into your bank account, come what may. And so it gives you a much stronger, even if it’s at a relatively low level, it gives you a much stronger foundation with which to be able to experiment with different things and perhaps take take a few more risks in terms of trying different jobs, trying retraining, you know, starting your own business.
There’s a whole load of things that you that that you’re kind of going to have more chance of being able to do them if you’ve got basic income behind you, backing you up than in the current system.
EJ: I think that’s the thing though, that…so there’s all this talk regular about social mobility and social mobility is only theoretically possible if there’s the chance for people to go down as well as some people go up, and that isn’t the case. I mean, you know, people talk about a glass ceiling, but there is a glass floor.
You know, it doesn’t matter what you do if you have wealth behind you, there is that level of security. And obviously within a system like that, you know, that creates these incentives and disincentives. And if you’re, you know, currently the way to get security is to rely on wealth. And that’s not healthy for any us, it’s not healthy for the economy.
It’s not healthy for for the for the nation’s well-being. So the aim is let’s replace this. Let’s go back to the idea that hard work and productivity is the way to to drive the country forward rather than incentivising everyone to build up wealth that does nothing for for any of us.
RK: So let’s say I’m a concerned citizen about basic income, right? I’m very interested in receiving this money every week. Let’s talk about scheme one, right, where you say it’s fiscally neutral. I’m earning somewhere between 25 and 35 grand a year. And I would love to receive basic income. But you say my taxes are going to go up. But I think from my understanding in the book, it’s like, yes, I’m going to pay more tax, but I’m going to receive money.
So while it’s fiscally neutral for the government, I’m just wondering how fiscally different it’s going to be for me, the individual person on the ground.
HR: Well, the, the kind of the, the sort of crossover point at which people lose out compared to gaining on average is actually fairly high up the distribution for each scheme. There’s some, distributional graphs in the book that show, I think scheme one, at least this average gains across at least the the bottom 7/10 of the income distribution.
Now within those there’s winners and losers, although we’ve designed it so there’s very few losers if any at the bottom. But as you go up, you do get a pattern of redistribution. Because the payments for children are 50 pounds a week. You’re finding that, you know, families with children are often gaining further up the distribution than families without children.
But the, the main thing is that there’s substantial redistribution and a substantial drop in poverty as a result of the, even scheme one cuts child poverty to its lowest level since, I think, 1977 so the best result we’ve got for 50 years. And that reverses everything that happened during Thatcherism, in particular, where child poverty shot up and has never really gone down since.
In fact, it’s gone up a bit further since then. So we’re reversing 50 years of kind of adverse movements on child poverty. That’s that that’s a huge win, I think, for basic income. That’s just the starter scheme. The more, the more substantive schemes do even better than that.
RK: So you say that, basic income would lift up the poorest fifth of households who are below the national median line of poverty. While this is morally right, you say that it’s also good for society in terms of, the economy and healthcare and safety. Could you explain these wider societal benefits?
EJ: Yeah. So I think there’s a there’s a few things here. So first of all, there’s that productivity multiplier that Howard spoke about. So we’re starting if we have this investment in infrastructure and current spending. So things like healthcare for example, things like education, suddenly we’re all more productive. You know, we deal with the massive cuts that have been undertaken over the last 40 years and get us back to a point that we’re producing things and we’re producing things at greater scale and more efficiently than we ever have.
So that’s, that’s really that’s good for the economy. That’s that’s definitely good for the economy. We can’t go on with the situation where we’re increasingly financialized and where we’re getting lower and lower returns on, on, the money that the public sector puts into things. So the existing system really is just indefensible, as all the moves to even greater tightening of eligibility for claiming benefits.
And the reasons for that are that poverty has huge economic and social costs for the nation. In all the terms that you mentioned in the question, and we’ve spent decades funding systems to mitigate the damage that that poverty causes, rather than saying to ourselves, how can we remove the issue, you know, how can we remove the cause? That’s low income, that’s just people not having enough cash.
And low income and, inequality, you know, all the way up the income distribution, you know, well, you know, up to just below the very top is associated with that worse health and social outcomes. You know there are studies going back over decades now that show that every step below that very top point, people have worse health as a result of that inequality.
And children from, low income families are now much more likely to sort of inherit that low income as adults than they were in the past. So that chance for social mobility just no longer exists in the same way that it did. So the disadvantage is so great that hard work and talent, as much as you would like to think that they can overcome these things, just can’t do it anymore.
These kids have a mountain in front of them to get good qualifications, to get good work experience, opportunities in higher income roles, to have health that as kids translates directly to, you know, when they become adults and to have solid family, romantic relationships that that can be established and secure and, secure households and to remain independent and independent of the care responsibilities for long enough to to really take advantage of opportunities that they can develop for themselves.
But on the other hand, you have wealthy kids and they have almost a valley to walk into to all of those things, all those opportunities. And as I say, social mobility only works if you can drop down as well as go up. And that rarely ever happens. But I’ll give you an example of health specifically. So the Health Foundation looked at some of this, that was talked about from the poverty and, and worsening health over time.
And it costs around 3,800 pounds per additional year in good health that’s gained through a public health intervention. So things like smoking cessation, weight management, those kinds of public health interventions. Compared to that, it costs 13,500 pounds for reactive treatment through the NHS to give a person an extra year in good health. And that’s not even dealing with the upstream social determinants.
So that’s not dealing with things like the economic realities that people face. This is further down that scale, you know, down that pathway. So if we remove those stressors, then maybe there isn’t the need for people to smoke to deal with the huge stresses of, of poverty or the need to take part in sort of low level crime, like shoplifting to obtain the money, any resources to manage those problems.
It does change everything completely changes everything.
RK: Right, just thinking like, I don’t know, just like harmless vices I see myself using, a beer here and there, too many sweets. And like, if I, if I, if I had, if I had more money backing my backing me up. So I didn’t need to be stressed about that particular thing, then maybe I would or I think actually, definitely I would be, kind of be more proactive in, well it’s not even being more proactive.
It’s more just having the support available to me that I would need so that I’m not going to be relying on the health system later on down the line.
EJ: Having the headspace, so there are there are psychological theories, behavioural psychology theories underpinning some of this about if, for example, you believe that your life is going to be short and not you know, not very enjoyable, then why not drink more? Why not smoke? You know, why not do things that give you an instant, you know, an instant hit?
On the other hand. Yeah, it is just that cognitive load. I think we all know that when we’re busier with work or when we’re having relationship issues or anything like that, things like exercise can, you know, be pushed out the way, there just isn’t the space to deal with them. Now imagine if you’re constantly having to fight to retain your house or to, you know, make sure that you can feed your kids.
There isn’t any space to deal with with anything else. This isn’t about, you know, people in poverty being sort of different or being abnormal, being, you know, a sort of weird group of people. No, it’s just systematic things force you into these scenarios where you make decisions that make sense within those scenarios, everyone would react these ways if they’re put into them.
RK: The, can I talk a little bit about the naming of so you’re calling this basic income, while what I’ve seen in the news over the, over the past many, quite a few years is they, they all call it universal income, a universal basic income or UBI. Can you explain why why you’ve taken the word universal off this please and just call it basic income?
EJ: I mean, I think there’s two main reasons for that. So I think one of the aspects is that there’s a real importance in talking about public policy to make things clear and understandable. And when you have a system that we currently have with something called Universal Credit, the confusion between those two systems, you know, there’s a there’s a chance there that they get conflated and there’s misunderstanding.
The other side of things is that we shouldn’t pretend that there aren’t perhaps some scenarios in which someone could no longer be entitled to it. So there’s been discussions in the past around what happens if someone is, receives a lengthy custodial sentence, so gets sent to prison. Effectively, under that scenario, they are receiving their basic needs through the prison system.
There’s accommodation, there’s food, there’s support for their basic needs. It doesn’t really make sense to also provide a basic income. We also shouldn’t pretend that these things don’t have an impact on public support for such systems. So really it’s it’s really important that this is almost, you know, very much effectively as universal and, unconditional as you can make a system.
But we shouldn’t turn it into something that has other incentives or other disincentives. We need to be careful about this. We shouldn’t just use it as a tagline. There’s also the aspect of how do we deal with situations like immigration. So we would certainly call for basic incomes to be established in every country around the world. But there needs to be some qualification criteria for receiving something like this.
There needs to be some sort of good citizenship kind of aspect around these kinds of systems. There is disagreement about these among proponents of these things, among proponents of basic income, but I think it’s sensible to acknowledge there’s a need for pragmatism and there’s a need to think these things through very clearly.
RK: So thinking, thinking again as, normal guy on the street and my, my, my normal guy on the street life if everyone receives basic income. So we’re all getting cash in our pockets every week. And sorry for being cynical, but won’t businesses just increase the prices to take advantage of people’s new increased disposable income?
HR: Well, that would be a problem if we were assuming or if we were proposing that basic income wasn’t kind of fully funded out of increased tax receipts, and we weren’t proposing a fiscally neutral system, but because we are proposing fiscally neutral systems. So we’re not proposing an increase in government borrowing to fund the basic income. We’re assuming that it’s fully funded by increased tax plus any multiplier effects from infrastructure investment.
Also bringing in more tax. That means that the level of disposable, the overall average level of disposable income across the economy when you introduce a basic income scheme should be unchanged, right? There’s substantial redistribution from richer to poorer households. So that means that demand for certain goods and services might go up, but demand for other goods and services will go down.
Now, there are certain areas of spending where I think you need additional policies in place to stop particular price increases. A good example would be housing, where, we know already that because of the inadequacy of the benefit system and the low levels of income that people on low that people, poorer households have, a lot of people have to use in the benefit system, have to use like things like personal independence Payment or other benefits that aren’t really aren’t really designed for housing to supplement their housing costs.
And so if you, you know, if you bring in basic income, then there’s people who’ve got more disposable income to spend on housing. So I think you’d need a big investment in social housing to provide more low cost housing, which is something we recommend in the ‘Act Now’ book and also in the short run, I think you’d you’d need some kind of controls on rents for low income private in the, in the private housing market to stop rents kind of going up.
So I think you need additional policies in place to stop specific types of inflation in the short run, but I don’t think there’d be huge drivers of a massive increase in inflation across the board, because we’re being kind of fiscally sensible about how we propose introducing the policy. So you don’t get a massive increase in disposable incomes on average.
And there’s redistribution from rich to poor. I mean, a good example of a policy being introduced that critics said would cause massive inflation but didn’t. This is just to take an example from history or recent history, the minimum wage. When the minimum wage was introduced in 1999, the opposition at the time and the right wing newspapers said that you’d get sky rocketing inflation and you just didn’t, you know, it just didn’t happen.
And in fact, the conservatives and coalition government then went on to raise the minimum wage by above inflation in the 2010’s when the national Living Wage was introduced. So I think these kind of scares are usually overstated. We’re trying to avoid inflation, and we’ve got a cost of living crisis at the moment and in the ‘Act Now’ book we address that alongside basic income. We suggest large scale public investment in industry, clean energy to ensure that we’re not kind of subject to gas price spikes and blackmailing from private utility companies. So we’re investing to build productive capacity in the economy. And that’s, that’s that’s across the board. That’s the key element in what we’re what we’re suggesting really.
RK: With, you’re talking, earlier about kind of the conditionality of all of this. Just to go back to the conditionality, I’ve kind of I can imagine it must be so exhausting having to juggle all the types of conditional support that you need, plus the times that you need to get them at, plus the proof that you need to provide, plus the renewing of all that and having to do all over again, it must be absolutely exhausting. I can just imagine that basic income would be such a kind of a pressure pressure lifter.
HR: I think the system nowadays is actually designed to catch people out to a certain extent, because the government is trying where it can to reduce expenditure on the welfare system, and one way of doing that is by, you know, disbarring people through sanctions, through other, other qualification conditions, like people have to wait several weeks before they get a first payment of universal Credit, for example.
EJ: It’s it’s I mean, I think this is the thing about being a patchwork, again, that these have all had specific objectives at specific times, and they’ve all been subject to revisions at different times. And it’s not a coherent system anymore. I mean, Universal Credit was an attempt to make it relatively consistent, but it doesn’t work. You know, the the sort of the objectives of the Treasury at the time mean that the rate at which it was withdrawn was, much faster than was initially intended.
It doesn’t account for the additional costs that, you know, disabled people face effectively anymore or if it ever did. So it’s it’s a it’s almost a job to navigate these systems. It’s not bureaucratically sensible. It’s not you know, we talk about wanting efficiency in government. This is almost the least efficient system you could have. It costs, it cost tens of billions.
And outcomes are terrible. It’s it’s as if there’s been, you know, we couldn’t have designed it worse if we’d conspired to make a worse system, I think I think we shouldn’t we shouldn’t be seeking to to defend the current system on the basis of economic credibility, because it simply doesn’t work. Every reform leads to a higher case load, worse costs, higher costs downstream, and worse outcomes for people.
RK: Want to talk about one bit of welfare that does exist currently at the moment. Taking something from your book here. The the UK is the the fifth or sixth largest economy in the world, but also the 35th in the world for child mortality. In 2022-23 you say that UK children have a 30% chance of living in poverty after housing costs. And by 2027 to 28, the Resolution Foundation estimates that 55% of children living in families of three or more children will be in poverty. So how would basic income do better here than, say, the existing child benefit?
HR: Well, the modelling we’ve done for the book suggests that even, the starter basic income scheme, which is like 50 pounds per week per child, would result in the child poverty falling to its lowest rate, in almost 50 years, lowest rate since 1977. And the reason for that? There’s several reasons. One reason is that the child payment we’re proposing per child, it’s a lot higher than current child benefit.
Current child benefits, 26 pounds per week for the first child and about 17 pounds per week for subsequent children. Now, obviously some families are getting more than that because they’re claiming universal credit for children and that would carry on under scheme one. Scheme three is high enough, at the minimum income standard that you could just get rid of Universal Credit more or less completely.
We also payments for disabled people, disability, disabled children, disability living allowance would carry on under our system. They wouldn’t be replaced. But the current system, if you were a child, in a in a family with three or more children, you don’t get, you don’t get child payments for the third, so you don’t get Universal Credit payments for the third child or subsequent children.
And so those larger families are more likely to be in poverty than anyone else. And under our system, you’d get a per child payment regardless of how many kids you have. So it doesn’t it doesn’t, penalize kids for the, the, you know, the the, the crime in inverted commas of being happening to be born into a family where they’re already two or more children.
So it seems like a much fairer system. It also we circumvent the, the benefit cap, which is the thing at the moment where families can’t get more than a certain amount of benefit per week or per month, that wouldn’t apply to the basic income. So you could get you could get it. You get it just based on the number of adults and children in your household.
And it’s a kind of per individual payment. It also there’s a there’s an extra simplicity to it because at the moment child benefit gets tapered off. If you’re living in a house, household where one of the earners gets more than 50,000, I think it’s going up to 60,000 soon. But that high income child benefit charge, that wouldn’t happen under our proposals.
Instead, you’d have increased income tax for, payments for for richer households. But it’s a simpler system in terms of actually getting money out to children, on a per child basis. So for all those reasons, I think it’s a much more effective system than the current child benefit system.
EJ: And I just want to follow up on that a little bit as well with, you know, I think the man on the streets kind of example, you know, we’re saying there’s a there’s a logic to saying, all right, I’m working full time, I don’t get benefits. I struggle to afford, you know, to to support my family with the 1 or 2 kids I currently have.
Why should people who are not working receive benefits for those additional children? Well, first of all, this is happening under the current system. You know, we have a system that that doesn’t support people in work, the the high high income child benefit charge, you know, for most of its history, you could have a combined income of two parents earnings sort of 50,000 pounds each, and you would get that child benefits payments, you know, you would receive the benefit from it in the last ten, fifteen years, if you were one parent earning, 100,000, you wouldn’t get that child benefit payment.
You know, these are the kind of weirdness of these these systems that they create. On the other hand, there’s an aspect of it. Let’s have some pragmatism here. Right? We have a current system that sought to penalize. And yet that hasn’t resolved anything. You know, people who are living in poverty, still having big families, you know, at times it hasn’t disincentivize that all it’s done is stored up child poverty that has a huge impact on everyone and that that damages everyone. So there’s a sort of an initial feeling sometimes of thinking like a universal payment could be a light touch and enable people to get away with things that’s, you know, it happens under the current system. It happens far worse. We need to liberate people from these these systems.
And we need to ensure that if you’re doing all the right things, you’re doing all you can to support everything that you’re also provided with security.
RK: You describe how our health care, criminal justice and social care systems, they often mop up after our economic failures that that the these systems they take the burden created by policy errors. Basic income, you say, would relieve enough pressure from our threadbare social systems and make sure that everyone has enough. So what do we need to do? What’s already being done to help basic income become a reality?
EJ: I mean, I think I think the important thing about this is, you know, we are still pushing for pilots and trials of basic income, but that’s in the absence of of government action on it. In reality, I think we would quite confidently be able to say that there’s enough evidence from a range of trials that have taken place in similar contexts and from our own advanced economic modelling, to demonstrate that basic income would be absolutely transformative and set the conditions for national renewal, that I think we all want.
To give an example from history of how things have shifted and how things don’t feel possible anymore, as they did, you know, when they did in the past. In 1942, in the midst of, you know, the Second World War of an absolute existential threat to Britain, William Beveridge published a report that said, we need to emerge from the crises of the 19th and early 20th century into a comprehensive welfare system that looks after everyone from cradle to grave. Effectively. We’ve all fought, we’re all fighting and dying together.
We all deserve to have security and to benefit from the wealth that the country creates. There’s a generation in this country born just after the Second World War, in the wake of of those reforms, who throughout their life had family allowance growing up, low cost or free public housing, free milk in school to support their development, free higher education, a secure, highly paid job market, rapid progression through jobs, a guaranteed final salary pension to supplement the state pension.
That’s a generalization. Not everyone experience these things, but the chances of success was so much higher than they are now. And how did that happen? Well, the labor government from 1945 to 1951, just six years, didn’t say we need to spend the entire rest of the Parliament undertaking reviews, commissioning more evidence. They said, okay, this evidence exists to justify we’ve seen what the absence of these systems does.
Let’s implement the Beveridge Report and a whole raft of other public services as soon as we possibly can. They said that because the idea of giving people the security to be socially and economically productive and satisfied is just obvious. So I think the message of this book is its title. Basic income is the policy that changes everything. Government needs to get on with it.
We’re stating the bleedin obvious, but without that you get policy based on the patently ridiculous.
RK: Elliott, Howard, thank you so much for coming on the Transforming Society podcast today. It’s been wonderful to talk to you about your book, and I hope everyone reads it, and I hope the government is listening. I hope we get these changes in as soon as possible. I’m going to let everyone know where to find your book in a moment. But first, could you, is there anywhere that we can find you online?
EJ: Yeah, so well there’s a few places. So, commonsensepolicygroup.com is the website for the group that we work with and through the vast majority of the time. We’re also at Northumbria University. So we have our pages there and a range of other things, but commonsensepolicygroup.com is the best place to go.
RK: ‘Basic Income: The Policy that Changes Everything’, written by Matthew Johnson, Kate Pickett, Daniel Nettle, Howard Reed, Elliott Johnson and Ian Robson, is published by Policy Press. You can find out more about the book by going to policy.bristoluniversitypress.co.uk and also transformingsociety.co.uk.