Universal basic income: what is it, how does it work and could it help fight the coronavirus crisis? – Telegraph.co.uk

Posted: March 24, 2020 at 6:17 am

Governments around the world are preparing to send direct cash payments to all citizens to help them cope with the financial pressures of coronavirus. This strategy is known as universal basic income, but what exactly is it and can it help Britain fight the effects of the coronavirus outbreak?

Universal basic incomeis when governments opt to support the economy from the bottom up by giving money regularly to all citizens, without means testing, to spend how they please. This is unusual as normally governments prefer to cuttaxes, subsidise certain goods and services, or provide debt relief to support people during tough economic times.

Everyone would be paid a cash amount every month from the government regardless of their financial circumstances. Professor Guy Standing, of SOAS University in London, said about 200 a month would be enough to have a significant impact on many peoples lives.

Others have called for a temporary policy, where each British citizen would get 1,000 a month while we fight the economic effects of coronavirus.

One-off payments could be an alternative option.Other countries have already started handing out money in this way.Italy is giving around 500 (470) to each self-employed person andAustralia making a one-off payment of375 to all lower-income workers

Daniel Susskind, of the University of Oxford, said implementing a temporary universal basic income in Britain would be the best way of supporting small businesses, such as pubs and restaurants, that would not benefit from a top-down financial stability package from the Government or Bank of England.

He estimated that handing out 1,000 to every citizen each month would cost the Government about 66bn a month. He added that the implementation would be cheap and quick as there would be none of the bureaucracy that comes with means testing.

Funding people directly could be a more effective wayof helping them keep their livelihoodsintact than making them wait for government support of business to trickle down into the real economy.

Proponents argue that universal basic income is the only way to guarantee a basic standard of living for all citizens and protect them from sudden economic shocks.They say it would also cut costs for government departments as they would no longer need to monitor benefits fraud and carry out time-consuming means testing, which would release more money to be spent directly on citizens.

One scheme could also replace the current complex arrangement of government benefits and tax rebates.

Critics say the money is wasted on the rich as they would hardly notice the extra money so it could be better spent supporting disadvantaged parts of society or public services, such as the National Health Service.

Some argue that guaranteeing a basic standard of living would stifle innovation and disincentivise work, which would in turn affect the economy and reduce government tax income, making the scheme unworkable in the long run.

The International Labour Office, part of the United Nations, estimated average costs of a full universal basic income programme to be 20pc to 30pc of GDP a year. It concluded in 2018 that the money would be better spent on social programmes, supporting public services and investing in infrastructure.

Read more from the original source:

Universal basic income: what is it, how does it work and could it help fight the coronavirus crisis? - Telegraph.co.uk

Related Posts