The most universal benefit of them all

While the UK debates ending universality, economists in America are talking about making income itself universal.

With Labour's decision to push for the end of winter fuel payments for all, Britain has seen yet another step against the principle of universality in benefits this week. But while the tide here is pushing more and more in favour of means-testing every intervention possible, in the US, the opposite debate is being had: should even the largest interventions be universal?

In early May, Mike Konczal wrote an article in the Washington Post proposing a universal basic income (UBI), also called a "citizen's income". The idea is that significant proportions of the social insurance system get replaced with a "poverty-level" income which is given to all, universally and unconditionally. So rather than claiming unemployment benefit when out of work, disability benefit when sick, or a state pension in retirement, you claim a standard sum every month from the age of majority to your death, regardless of your status.

Many of the benefits of a UBI are the same as the benefits of universalising any part of the welfare system: it massively reduces bureaucracy at all stages; it's far easier to get benefits where they need to go; and it removes the stigma of claiming help from the state. For some benefits, even one of those arguments is enough to justify universalising them. So, for example, we don't means test the NHS – among other reasons – because the thought of keeping someone in the emergency room while we check their past six months of payslips is anathema to most people.

But the UBI carries its own additional upsides, by virtue of being so large compared to other benefits. The most important one is that its universality reduces so-called "income traps", points in the tax-and-benefit system where the marginal value of every pound earned drops too low. So, for example, as your earnings rise, you may find that you leave the personal tax allowance, lose working tax credits, and become ineligible for housing benefit all around the same time. That could mean that a job which pays thousands of pounds leads to a take-home pay rise of a tenth of that, giving you a serious incentive not to take it at all.

That problem is also what the Universal Credit is aimed at solving in Britain; but despite the name, it's not a universal benefit, and so it can at best smooth over the problems caused by withdrawal, rather than remove them already.

But Konczal's most interesting point is that there are strong right-wing – or, more accurately, libertarian-right – arguments for a UBI. By removing conditionality of benefits, it also removes a method of state control. It is no longer up to the government, for instance, to determine which types of work experience you can do while still being paid unemployment benefit; nor can they shape society by deciding which types of non-labour activities ought be rewarded – carers, community gardeners, political activist or artists all get the UBI without having to prove their worth.

In fact, as Konczal points out, it's the left which should really be wariest of arguments for a UBI. It has the potential to extend market logic to every reach of society, by equating "being a citizen" with "being paid". That's exactly the sort of thinking Michael Sandel warned against when I spoke to him last month, because, in his words, it "may crowd out attitudes and norms, non-market values, worth caring about".

Konczal's piece sparked a wide debate in the economics community. Despite his strong argument that a UBI ought to be a libertarian idea, many of them opposed it, arguing that handing out a UBI would mean that people would never work, and the government would instantly lose the tax revenue it takes to pay it in the first place.

That argument doesn't quite work; in fact, the understanding as to why that is was the great breakthrough in 19th century economics, the marginal revolution. People tend to make their decisions, not based on absolute levels, but on marginal changes. If you are given a UBI, then you still face the choice as to whether or not to go to work and earn an extra sum of money. And since people working on poverty pay don't tend to decide never to increase their income, it seems likely that a UBI wouldn't discourage much work.

But it would discourage some, because that's the point of it. By removing the link between "having to work" and "starving to death", a UBI would promote a healthier attitude to work, removing the element of fear which forces employees to sell their labour to exploitative employers. Instead, work would occur based on equitable negotiation: if the employee no longer lives in fear that they will be on the streets without a job, their bargaining position is greatly improved.

In the end, it's that outcome which will mean the UBI can never truly catch on among right-wingers – or even the centre-left – leaving the Green Party the only one in the UK to support it. In radically redistributing economic power from capital to labour, it is anathema to the conventional order . That is true despite the fact that elements of it ought to be hugely appealing to people from across the political spectrum. It is freedom-enhancing, bureaucracy-reducing, and in some cases life-saving, but it's also going to remain no more than a thought experiment. That's a crying shame.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Ken Livingstone says publicly what many are saying privately: tomorrow belongs to John McDonnell

The Shadow Chancellor has emerged as a frontrunner should another Labour leadership election happen. 

“It would be John.” Ken Livingstone, one of Jeremy Corbyn’s most vocal allies in the media, has said publicly what many are saying privately: if something does happen to Corbyn, or should he choose to step down, place your bets on John McDonnell. Livingstone, speaking to Russia Today, said that if Corbyn were "pushed under a bus", John McDonnell, the shadow chancellor, would be the preferred candidate to replace him.

Even among the Labour leader’s allies, speculation is rife as to if the Islington North MP will lead the party into the 2020 election. Corbyn would be 71 in 2020 – the oldest candidate for Prime Minister since Clement Attlee lost the 1955 election aged 72.

While Corbyn is said to be enjoying the role at present, he still resents the intrusion of much of the press and dislikes many of the duties of the party leader. McDonnell, however, has impressed even some critics with his increasingly polished TV performances and has wowed a few sceptical donors. One big donor, who was thinking of pulling their money, confided that a one-on-one chat with the shadow chancellor had left them feeling much happier than a similar chat with Ed Miliband.

The issue of the succession is widely discussed on the left. For many, having waited decades to achieve a position of power, pinning their hopes on the health of one man would be unforgivably foolish. One historically-minded trade union official points out that Hugh Gaitskell, at 56, and John Smith, at 55, were 10 and 11 years younger than Corbyn when they died. In 1994, the right was ready and had two natural successors in the shape of Tony Blair and Gordon Brown in place. In 1963, the right was unprepared and lost the leadership to Harold Wilson, from the party's centre. "If something happens, or he just decides to call it a day, [we have to make sure] it will be '94 not '63," they observed.

While McDonnell is just two years younger than Corbyn, his closest ally in politics and a close personal friend, he is seen by some as considerably more vigorous. His increasingly frequent outings on television have seen him emerge as one of the most adept media performers from the Labour left, and he has won internal plaudits for his recent tussles with George Osborne over the tax bill.

The left’s hopes of securing a non-Corbyn candidate on the ballot have been boosted in recent weeks. The parliamentary Labour party’s successful attempt to boot Steve Rotheram off the party’s ruling NEC, while superficially a victory for the party’s Corbynsceptics, revealed that the numbers are still there for a candidate of the left to make the ballot. 30 MPs voted to keep Rotheram in place, with many MPs from the left of the party, including McDonnell, Corbyn, Diane Abbott and John Trickett, abstaining.

The ballot threshold has risen due to a little-noticed rule change, agreed over the summer, to give members of the European Parliament equal rights with members of the Westminster Parliament. However, Labour’s MEPs are more leftwing, on the whole, than the party in Westminster . In addition, party members vote on the order that Labour MEPs appear on the party list, increasing (or decreasing) their chances of being re-elected, making them more likely to be susceptible to an organised campaign to secure a place for a leftwinger on the ballot.

That makes it – in the views of many key players – incredibly likely that the necessary 51 nominations to secure a place on the ballot are well within reach for the left, particularly if by-election selections in Ogmore, where the sitting MP, is standing down to run for the Welsh Assembly, and Sheffield Brightside, where Harry Harpham has died, return candidates from the party’s left.

McDonnell’s rivals on the left of the party are believed to have fallen short for one reason or another. Clive Lewis, who many party activists believe could provide Corbynism without the historical baggage of the man himself, is unlikely to be able to secure the nominations necessary to make the ballot.

Any left candidate’s route to the ballot paper runs through the 2015 intake, who are on the whole more leftwing than their predecessors. But Lewis has alienated many of his potential allies, with his antics in the 2015 intake’s WhatsApp group a sore point for many. “He has brought too much politics into it,” complained one MP who is also on the left of the party. (The group is usually used for blowing off steam and arranging social events.)

Lisa Nandy, who is from the soft left rather than the left of the party, is widely believed to be in the running also, despite her ruling out any leadership ambitions in a recent interview with the New Statesman.However, she would represent a break from the Corbynite approach, albeit a more leftwing one than Dan Jarvis or Hilary Benn.

Local party chairs in no doubt that the shadow chancellor is profiling should another leadership election arise. One constituency chair noted to the New Statesman that: “you could tell who was going for it [last time], because they were desperate to speak [at events]”. Tom Watson, Caroline Flint, Chuka Umunna, Yvette Cooper, Andy Burnham and Liz Kendall all visited local parties across the country in preparation for their election bids in 2015.

Now, speaking to local party activists, four names are mentioned more than any other: Dan Jarvis, currently on the backbenches, but in whom the hopes – and the donations – of many who are disillusioned by the current leadership are invested, Gloria De Piero, who is touring the country as part of the party’s voter registration drive, her close ally Jon Ashworth, and John McDonnell.

Another close ally of Corbyn and McDonnell, who worked closely on the leadership election, is in no doubt that the shadow chancellor is gearing up for a run should the need arise.  “You remember when that nice Mr Watson went touring the country? Well, pay attention to John’s movements.”

As for his chances of success, McDonnell may well be even more popular among members than Corbyn himself. He is regularly at or near the top of LabourList's shadow cabinet rankings, and is frequently praised by members. Should he be able to secure the nominations to get on the ballot, an even bigger victory than that secured by Corbyn in September is not out of the question.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.