A modern method of cutting poverty: Investigating what Universal Basic Income will mean for Northern families – Mancunian Matters

Posted: December 13, 2019 at 3:16 pm

As part of a radical reimagination of the welfare system in Britain, Labour shadow chancellor John McDonnell has announced plans to roll-out Universal Basic Income (UBI).

The scheme, which will entitle every British citizen to a monthly tax-free allowance, will likely be trialled in the north of England if Labour were to win the upcoming General Election.

UBI trials in Finland, the only advanced economy to launch such a widespread scheme, found that those who had benefited under the scheme had reported significantly higher feelings of self-worth and stability than they had before.

Curiously, it appears that the policy itself seems to have support from across the political spectrum.

Indeed, economists on both the left and the right have argued for UBI as a source of personal empowerment, providing citizens with more choice over work, education, training, leisure and caring.

Practically speaking, for those on the left, UBI would be a modern method of cutting poverty and inequality in a way that is fitting for the 21st century and, for those on the right, it could guarantee a less bureaucratic and, therefore, more streamlined welfare system.

With jobs in many sectors looking increasingly under threat with the rise of technology and automation which experts forecast could threaten up to a third of current jobs in the west within 20 years UBI could help to keep families afloat financially while breadwinner earners retrain or enter full-time studies, for example.


Some critics, notably John Kay, the former director of the Institute for Fiscal Studies, fear that UBI would be too expensive.

Kay said: If you do the numbers, either the basic income is unrealistically low or the tax rate to finance it is unacceptably high. End of story.

However, Mr McDonnell remains convinced of the benefits.

He said: The reason were doing it is because the social security system has collapsed. We need a radical alternative and were going to examine that.

We want to do it in areas that have been hit hard by austerity.

Well look at options, run the pilots and see if we can roll it out. If you look at the Finland pilot it says it didnt do much in terms of employment but did in terms of wellbeing things like health. It was quite remarkable.

And the other thing it did was increase trust in politicians, which cant be a bad thing.

The think tank Compass has suggested the total cost of the UBI would be as high as 300bn, however, under the changes to taxation outlined in Labours fully-costed manifesto, it is likely that this will be well-covered. For them, UBI can deliver social justice in a manner that is fit-for-purpose in a modern economy.

Compass have stated: The basic income would update the British system of social security for the 21st century. All households would enjoy greater certainty about future income, directly tackling growing economic and social insecurity.


For shadow chancellor McDonnell, the north appears to represent the perfect testing ground for the scheme.

Id like to see a northern and Midlands town in the pilot so we have a spread, he said.

I would like Liverpool of course I would, Im a Scouser but Sheffield have really worked hard. Ive been involved in their anti-poverty campaign and theyve done a lot round the real living wage.

I think those two cities would be ideal and somewhere in the Midlands.

Studies conducted by HMRC in 2017 concluded that Manchester has one of the highest rates of child poverty by local authority area in the UK, with 35.5% of children under 16 living in poverty.

Alarmingly, this figure is concurrent with the situations facing a host of cities in the north of England. In Liverpool, the same report claims that 32.7% of children under 16 were living in poverty, with the figure in Sheffield around 25%.

McDonnell does concede that the idea is undoubtedly left-field, however, he feels with the right strategy the scheme could make a real difference to families in the North.

Of course its a radical idea, he said.

But I can remember, when I was at the trade unions campaigning for child benefit and thats almost like UBI you get a universal amount of money just based on having a child.

UBI shares that concept. Its about winning the argument and getting the design right.


Some have argued in the past that such a programme would effectively lead to the dismantling of the welfare state, however, these fears were quickly rebuffed by experts such as Guy Standing, the founder and co-president of the Basic Income Earth Network.

He is in favour of maintaining benefits for the most vulnerable people in society even with the introduction of McDonnells scheme, something he stresses is affordable.

There is no reason why a city or country could not afford to have a basic income for everybody, says Standing.

In Britain, tax reliefs for the wealthy and corporations come to about 400bn a year this by itself could be used to pay for a basic income for everybody.

Its not something that is unaffordable its a matter of priorities.

Although no fee has been disclosed regarding how much those involved in the pilot stand to receive per week, it is worth noting that in March of this year, McDonnell came out in agreement with a proposal put forward by the New Economics Foundation (NEF) think tank who posited that a figure of 48.08 a week should be paid to every adult over the age of 18 earning less than 125,000 a year.

The NEFs proposal outlined that the cash would not replace benefits and would not depend on employment, something Guy Standing confirmed was entirely achievable.

The NEFs blueprint, which forecasts that some 88% of all adults would see their post-tax income rise or stay the same while helping to lift 200,000 families across the country out of poverty, has also been welcomed by the Green Partys Caroline Lucas.

In Manchester, currently 1 in 47 children are homeless according to the housing charity Shelter. Nationwide, at least 135,000 children are expected to be homeless or in temporary accommodation across Britain on Christmas day the highest number for 12 years.

Perhaps, UBI could offer the catalyst for turning the tide in this most appalling of situations.

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A modern method of cutting poverty: Investigating what Universal Basic Income will mean for Northern families - Mancunian Matters

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