Despite record employment levels, in-work poverty now affects more people than out-of-work poverty. Average household debt is expected to reach an unprecedented £19,000 by the end of this parliament. For the 41 per cent of us with savings of less than £1,000, “just about managing” is one piece of bad luck away from “not managing”.
Amidst this economic insecurity, we need to rethink how people can be supported to enjoy secure and purposeful lives. A report released by the RSA today might offer part of the answer: a “UK Basic Opportunity Fund”.
The idea of the Fund is simple: provide all British citizens under the age of 55 with two payments of £5,000, to be taken in any two years of their choosing over the course of a decade (with parents able to claim for those under 18). With support from employers and other advice services, the recipient would be free to decide on the most beneficial way they could use the money.
That could mean people making major changes to their lives that would be otherwise untenable. A struggling low-paid worker could invest in a qualification which would in turn open the door to better employment opportunities. An aspiring entrepreneur stifled by full-time work might use the fund to go part-time, freeing time to turn an idea into a reality. A parent trying to sustain a small business could afford childcare to focus on making their company flourish.
Underpinning this intervention is a confidence that – when supported to do so – individuals are best placed to make decisions regarding their futures. The Fund is not a license for laziness. Rather it is an investment, of belief as much as money, in people to find good work and good lives, well remunerated not just in pay but in purpose and wellbeing too.
Supporters of a Universal Basic Income (UBI) will recognise these arguments. Rather than an alternative, the Fund represents a stepping stone towards a full UBI in future. By demonstrating some of the benefits of unconditional support – as already being shown in UBI experiments in Finland and Canada (with trials also set to begin in Scotland) – the Fund could help to shift political consensus towards adopting a wholesale UBI.
The Fund, as with UBI, confronts a culture of low paid and insecure work, a punishing Universal Credit welfare system premised on hard conditionality, and an all-too-common situation of people being trapped in unhappy circumstances simply by virtue of needing to pay the bills.
People need not be subjected to the stress of punitive welfare sanctioning, bad work, and vulnerability to the potential impacts of job automation in certain sectors. Instead, they could be given a helping hand to create better lives for themselves: reskilling to adapt to a changing labour market; responding to life changes such as caring responsibilities; or turning a creative idea into a livelihood, for example.
The benefits of this approach do not end with the individual. Higher skilled, better paid, and more productive work means a better economy collecting more tax. Freeing people to move between jobs facilitates better skills matching, important when most workers report their skills as being underutilised. Less insecure work also improves health and wellbeing, easing strain on public services.
The Fund is therefore not a giveaway, but an investment in both human potential and our collective future. The upfront cost of the fund – estimated to be around £14bn per year – is no reason to shy away. There are, as explored in the report, a variety of funding options to explore — including innovative ideas such as the establishment a Sovereign Wealth Fund (an idea pioneered by Norway, whose fund is now worth over $1 trillion) or instituting a levy on the usage of public data by global corporations.
A Basic Opportunity Fund, just like a full UBI, is not a magic solution to all our problems and would need to be paired with further interventions including a reinvigorated system of lifelong learning. But it could form one part of a re-envisaged approach supporting everyone to live secure, happy, and meaningful lives.
Jake Thorold is an RSA research assistant and one of the lead authors of the RSA report calling for the creation of a UK Basic Opportunity Fund.