A Universal Basic Income (UBI) — We should trial it in Wales — Cllr Dimitri Batrouni
Wales and its Labour movement has a radical past in policy making and the potential for a radical future too. Since Carwyn Jones announced his intention to step down as Welsh Labour leader, candidates and other AMs have stressed the need for a debate on the future direction of Welsh Labour and the new ideas that could underpin it. This is a debate I welcome and consider to be vital given the background of austerity. With this backdrop, I wish to add my voice to the debate.
Huw Irranca-Davies AM, announced his leadership bid with the policy of universal childcare for all children pre-school age. A policy that is based on sound evidence that disadvantaged children who are behind their peers upon entering primary school find it incredibly difficult to catch back up.
Yet, the reverse seems to happen in my home area of Monmouthshire. Children entering primary school in Monmouthshire are the most equal, educationally speaking, regardless of income in Wales. This carries on, broadly, until secondary school. By the time those same children complete their GSCEs, the gap is the largest in Wales; this has been the case for the last four years.
This would suggest something else is going on. There are many factors to consider here, but it is suffice to say that differences in household incomes continues to have an impact as children grow up; indeed, in a county like Monmouthshire, where income levels are quite high generally, the impact on the less well-off children seems to get exacerbated.
This is where Universal Basic Income comes in. Firstly, what is it? It is a level of income (the same for everyone) given to every UK citizen. It is an idea that is gaining traction in many parts of the world, including Scotland, because of its positive results. It has been rigorously tested by independent academics across the world using randomised controlled tests (the gold standard of scientific research methods) in determining its effectiveness.
In many areas, the results are in. From diverse places such as Canada to Namibia the positive impact on people’s well-being is hugely significant. The effects of this policy has varied from country to country and has included the number of people hospitalised dropping by 8.5%, crime dropping 42% and truancy by 40%. There are many other examples.
For the Welsh Government, this is a policy weapon that cannot be ignored. UBI offers an ability to:
1. Tackle the root of poverty (a lack of money) and potentially reduce the social ills that spiral from it;
2. Provide financial security to people in an economy increasingly based on insecure work (which we know causes significant levels of anxiety);
3. Provide a source of income for people in a world where many jobs are being eradicated by new technologies and automation;
4. Remove the need and cost of the out-of-date welfare system which dehumanises claimants and disincentives people from earning more.
Importantly, it is universal. It avoids the stigma some welfare recipients feel and circumvents the issue some voters express, namely that people earn more through benefits than working. Whether this complaint is legitimate or not, to these voters this is an important issue. It cannot be ignored.
The cost of such universality will vary depending on the final sum allocated to a citizen, but it would be substantial. Yet, the financial cost of social problems to the taxpayer is already hefty. The Joseph Rowntree Foundation estimated that the extra demand on Welsh Government services driven by poverty stood at £3.6bn. This is a potential cost saving and that’s before we even start to calculate the administrative cost of the current welfare system that could be offset. It also ignores the social advantages extra money would give people to possibly change careers and re-train, take up a new past-time, send their children to music lessons, drama or sports clubs and ease the relentless pressure of working just to get by.
The challenges to delivering a Wales wide UBI are significant but the potential benefits could transform the country socially. As we do not currently have power over the welfare and benefits system in the Welsh Assembly, there would have to be some negotiation with the UK government about the scope of the trial. The grounds for such a discussion are solid.
That aside, we have the mechanisms now in Wales to deliver pilot studies. These pilots would run with the objective to create a roadmap that identifies the challenges and other policies that may be required to move Wales to the point of delivering a solution that could be transformative for its people. An ambition that the Welsh Labour movement was founded to deliver on in the first place.
The welfare system invades the personal life of claimants, aiming to constantly keep up to date with the changes in people’s personal lives. The botched universal credit system proves it is extremely difficult, if not impossible, to do this A Cabinet office report released a few years ago indicated that the administrative cost of Universal Credit alone could reach above £15bn over its life-time.
So, let’s do something about it. Welsh Labour should not be afraid to at least look at new ideas and should prioritize dismissing 20th century mechanisms to tackle 21st century realities. We will never drop our values or our commitments to tackling social injustice, promoting social mobility and seeking to eradicate poverty. The UBI policy option potentially allows us to tackle all three. We should continue Wales’ radical tradition and test UBI in Wales and see what impacts it has. We should never fear trying new ideas, it’s why we exist as a party.
Dr. Dimitri Batrouni is a Welsh Labour Councillor for the St. Christopher’s ward and Leader of the Labour Group at Monmouthshire County Council.