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17 February 2016

How I learnt to stop worrying and love Basic Income

John McDonnell's decision to consider moving to the benefit is the right one, says Jonathan Reynolds. 

By Jonathan Reynolds

The first time Basic Income was pitched to me I have to admit I thought it sounded completely unrealistic. An unconditional payment to each individual, to support their full lives, whether working, studying, caring or being cared for? I remember sitting in Stalybridge Labour Club with a beer after a meeting, when my friend Gordon introduced me to the concept. “How else,” asked Gordon, “will we ensure sufficient support for people as they have to retrain throughout their working lives – not just for several different jobs, but for several different careers?”.

Gordon’s question is the right one, and it stuck with me. My outlook on politics is fundamentally shaped by my experience of growing up in the North East in the 1980s. The closure of entire industries, like coal and shipbuilding, had dramatic and fundamental consequences for the areas built around them. The same is true of the tragic situation in the steel industry today. I still believe the Thatcher Government’s abject response to deindustrialisation lies at the heart of many of the problems the UK faces today, such as low skills, worklessness, poor public health and so on. The UK spent a fraction of what a country like Sweden spent on education and retraining as traditional industries declined, and we have suffered the consequences.

But what should the left’s response be to this sort of seismic economic change? The traditional response, calling for the nationalisation of failing industries, doesn’t solve the problem. Running an industry at a loss because it is subsidised by the taxpayer is not a long-term answer. Globalisation means it was inevitable that the UK would have to exit some traditional industries – I wouldn’t fancy bringing back the cotton mills to Stalybridge, for instance – and education and retraining to take part in new economic opportunities is the only solution.  But as technology and the growth of the MINT countries brings ever more economic disruption, as well as opportunity, we must have a mechanism to provide people with both security and a platform from which to be able to access these new opportunities.  Basic Income would do just that. This is the first of my three justifications for backing it – as a policy to cope with inevitable but fundamental economic change.

The second justification concerns our existing welfare state.  I have always been taken aback by the bewildering complexity of our welfare system. The Child Poverty Action Group Benefits Handbook, which like many MPs I use to help constituents, is bigger than my copy of the Bible. The modern evolution of the welfare state – conditionality, sanctions, and adults being forced to fill in job search diaries as if they were in primary school – I find unconscionable. I don’t deny there are a small group of people who do need a kick up the arse. There are also people who definitely need to access some support to get back into work, especially with numeracy and literacy.  But why should this be punitive? A system which sanctions war veterans for selling poppies, or a person for attending job interview, is both ridiculous and counter-productive.  And that’s before we consider the fundamental problem of our current benefits system – how to taper off benefits when someone does return to work to ensure there is an incentive to work and not a “benefits trap”.

The Government’s answer is universal credit. Having been one of the pathfinder areas for universal credit, I’m afraid they will be disappointed. Thanks to George Osborne, universal credit will not now offer the kind of work incentives it was hoped it would, but the real problem is that it still cannot cope with the real nature of people’s working lives. There is not, as much as some Tory MPs would claim there is, a big group of people who never work and then a larger group who pay their taxes to support these people. Instead, many people move frequently into and out of work, because the work they can get is short-term, or insecure, or because the other responsibilities in their lives cause complications. The benefits system simply cannot cope with these people, and nothing I have seen suggests universal credit will be a solution to that. As an example, not only is universal credit designed to be paid four weeks after a claim is made (on the huge assumption that everyone is paid monthly in arrears and so will have four weeks wages to tide them over), if a claim for universal credit is made too early, and the claimant receives their final pay packet after lodging the claim, they can wait as much as 11 weeks before receiving a penny. It is not surprise that foodbanks are booming.  There are also huge questions regarding conditionality as the nature of work changes: if technology like Uber creates a hypothetically unlimited amount of self-employed work, how will conditionality work? Will every job seeker be forced to do self-employed work in exchange for their meagre support? It’s a problem which is almost upon us now.

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My third, and final, reason for backing Basic Income is far simpler. I object to the levels of poverty in this country and believe them to be an indefensible waste of talent and resources. I wonder how many successful businesses, or technological inventions, or medical breakthroughs, we miss out upon because we do not give enough people the platform from which they might fulfil their potential. Just think how more competitive the UK might be in the global economy if we stopped doing this? In a recent answer during Women and Equalities questions in the House of Commons, Nicky Morgan defended the government’s redefinition of child poverty to me on the basis that Government must tackle the ‘root causes of poverty’, which for her where educational failure and worklessness. I certainly agree these should be tackled. But what also struck me about this answer was that it essentially returned to a Victorian definition of poverty, i.e. that poverty is a result of character defects or personal problems. It is a position that pre-dates the work of Charles Booth and Seebohm Rowntree in 1903. There is no Conservative understanding of the person who works two or three jobs but is still low paid, or who has had a successful career for many years but then fallen on hard times.  Our current response to a scale of these problems is simply insufficient.  

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There are many issues still to resolve about Basic Income, such as how to give additional support to those with disabilities, and how to tackle the chronic British problem with housing benefit when we simply do not have sufficient houses. We would also need to consider how long economic immigrants would have to be in the UK before they became eligible. But I am convinced that many fundamental problems in the UK – be it dealing with economic change, work incentives, poverty or a lack of competitiveness – could be tackled in this way. I also think it provides an answer to one of the perennial questions for the Labour Party – how is it that the public loves the NHS yet resents the benefits system? The answer is, I believe, that the NHS provides something for everybody. So should the rest of the welfare state – providing again real social security for all. Moderates within the Labour Party shouldn’t be afraid to embrace radical ideas. I’m coming out for Basic Income.