Basic income: We cannot afford not to do it

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In contrast to persistent moves in Australia to reduce welfare entitlements and restrict eligibility, Dr Adnan Al-Daini evaluates the concept of "basic income", an unconditional minimum wage payable to each and every citizen, due to be piloted in Finland and Canada and under consideration elsewhere.

BASIC INCOME is a serious proposal necessary to address many of the economic problems facing the developed world.

Let us start by defining what basic income is. For that, The Green Party's paper on the subject is helpful:

Basic Income (sometimes called Citizen’s Income or Universal Basic Income) is a guaranteed, non-means-tested income, sufficient to cover basic needs, payable to every woman, man and child legally resident in the UK. It would replace personal tax-free allowances, and most social security benefits. Children would receive a reduced Basic Income, Child Benefit. People who are disabled and lone parents would be paid a supplement. Pensioners would receive their Basic Income as a Citizen’s Pension. Housing Benefit would be payable in the initial stages of a transfer to Basic Income.

The jobs available in today’s Britain are often low paid, part-time and of short duration. The State then subsidises wages with various additional benefits, tax credits and so on, to make it possible for people to have the basics of life. For those who become unemployed and/or homeless the State steps in to provide shelter and the necessities of life. The poorest and most vulnerable in our society have to undergo assessments, checks and obstacles to qualify. This process demoralises and humiliates those most in need.

The universality of basic income is its most potent asset and strength. And if we combine that with a truly progressive system of taxation, that starts very low and increases incrementally to well above the current highest limit of 45 per cent of gross income, this will make work truly pay and help narrow the income gap a little between the one per cent and the rest.

Basic income will do away with most of the checks and assessments  the exceptions being the case of housing and disability, where additional payments need to be made, subject to some assessment, for eligibility. In the case of housing, we need to ensure that additional payments don’t end up enriching private landlords. The State should embark on building social housing on a massive scale to provide adequate accommodation at affordable rents to those who need it.  

In the present system, having to go through these checks again acts as a barrier to people taking on short term employment. Moreover, a substantial amount of money earned in poorly paid jobs is deducted from the benefits received by the individual leaving him/her no better off. Also, withholding of payments until assessments are completed puts people at the mercy of loan sharks charging extortionate rates of interest. All these negatives are eliminated with basic income. It is paid regularly and automatically to every citizen.

This guaranteed payment will encourage labour mobility and entrepreneurship. It will also encourage further education and retraining to do the job you want to do rather than being stuck in a job that does not suit your abilities and talent. We could see innovation and new businesses sprouting in the economy that would generate wealth for the whole of society. As automation takes hold, the need for people to do repetitive tasks would diminish. Developed economies need to reinvent work in new ways that enhance the lives of people in society. Basic income will unleash the potential to do just that.

Families may decide to organise their lives and work patterns to suit their needs. One of the parents may decide to work part-time to give more time to their children as they grow up. This would be healthy for child development, boosting their confidence and could well help prevent mental illnesses such as depression and anxiety that are increasingly blighting the lives of many of our young. Additionally, people may want to provide help and care for their elderly parents by working part-time, or stopping work temporarily, knowing that basic income is there to supplement their earnings. All of this would save the taxpayer money and these savings should be included when the cost of basic income is considered.

Basic income is an idea whose time has come. It will reduce the level of anxiety and stress that many suffer as a result of low wages and work insecurity. In short, it is good for people and good for the economy. As a society we cannot afford not to do it.

Dr Adnan Al-Daini is a retired university engineering lecturer. You can follow him on Twitter at @respect65.

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