Analysis: Guy Standing’s Basic Income Report

The UK could be on course to be the world’s Basic Income pioneer.

Basic Income has been in the news again, here in the UK. Guy Standing, a professor at the University of London and a long-standing Basic Income advocate, has unveiled his report; “Basic Income as Common Dividends: Piloting a Transformative Policy.”

This report was commissioned by the Shadow Chancellor, John McDonnell. If the Labour Party win the next General Election, he may be the person in charge of the UK government’s economic policies. And it’s not outside the bounds of possibility that he may be the person to implement the world’s first permanent, large-scale Basic Income system.

And so Guy Standing’s report could be very important, because its proposals might form the basis of official Labour Party policy and might actually be implemented by the next Labour government.

So, what does the report say? You can read it in full yourself, of course, but you might appreciate a summary, so here it is:

Report Summary

The report describes some of the key potential benefits of a Basic Income system. These include: Providing people with improved financial security, countering the uncertainties of the modern economy and reducing levels of inequality, stress and private debt.

It also outlines the shambolic failures of the Universal Credit welfare system currently being rolled out in the UK. (For those readers outside the UK who are not familiar with Universal Credit, it may sound a bit like Universal Basic Income, but it isn’t really anything like it. Far from being universal, it is actually an extremely complicated welfare system that operates on the basis of bureaucratic means-testing and draconian welfare sanctions. It is almost the polar opposite of a Basic Income system.)

The report then tackles some of the myths that fuel some people’s objections to Basic Income; such as that it is unaffordable and would undermine work incentives. The report accepts that whilst there is widespread support for Basic Income, there are many people who still believe some of these myths — and more must be done to facilitate a more informed public debate on the issue.

The report argues that ‘properly designed and implemented’ pilot schemes could be helpful in ‘the legitimation process’ for Basic Income and proposes five different sorts of pilot scheme that might be tried and how they might be evaluated.

In one option, all adults in a test area would receive an unconditional Basic Income of £100 per week, with existing means-tested welfare benefits (other than housing benefit) being suspended. Children would get £50. In another option, the ‘Basic Income’ payments would be lower, but existing means-tested benefits would be left in place.

The report recommends that “at least one of each of the five types of pilot be undertaken.”

So, in short; the report is proposing a series of pilot schemes be operated and evaluated, in preparation for a full-scale Basic Income system.

Analysis

This is a well-written, easy-to-read report that clearly outlines many of the key issues in the Basic Income debate. And it clearly outlines the economic and moral case for a Basic Income. But this report was made for a political purpose. It exists in order to help navigate a political path for Basic Income to become a reality.

If I’m reading this right, Guy Standing doesn’t think there is any need for pilot projects in order to prove the economics of Basic Income. Pilots aren’t likely to tell us much that we aren’t already perfectly aware of. He’s proposing pilot schemes because he perceives a political need for them.

The belief is that the electorate aren’t quite ready to embrace a proposal for a full-scale Basic Income scheme. But they may be ready to back proposals for pilot schemes. And they might be prepared to back a political party that reassures them that a full-scale Basic Income scheme will only be implemented if pilot schemes prove successful.

But here’s the problem: Pilot schemes are fraught with difficulties — not so much in terms of economics, but in terms of politics.

As Guy Standing recognises, one of the dangers of a pilot scheme is that it can be used as an excuse to delay the implementation of a permanent, national Basic Income scheme. But there are many other potential difficulties, as I have outlined in a previous article.

Let’s be honest. Almost whatever happens during a pilot project, opponents of Basic Income are likely to claim it was a failure. They’ll say Basic Income will disincentivise unemployed people from finding work. But when a pilot scheme proves this is not likely to happen (as happened in Finland), opponents will simply move the goal posts and claim it was a failure because it ‘failed’ to get people back to work faster than existing welfare schemes.

But perhaps that won’t matter. If the government that implements these pilot schemes is highly sympathetic to the Basic Income project, it may be willing to declare any successful pilot scheme an official success — despite what the sceptics say — and get on with implementing (or, at least, firmly proposing) a full-scale Basic Income system.

But, personally, I’m uneasy about the prospect of pandering to Basic Income sceptics — some of whom are highly prejudiced.

As Guy Standing acknowledges in his report, the key reasons some people are doubtful about Basic Income is that they have been taken in (often willingly) by the common myths that are spread around the internet by unqualified sceptics.

So what I want to see is a bold, confident approach to tackle the sceptics head on and expose their myths for what they are. It can’t be difficult to find plenty of expert economists ready to affirm that it is entirely feasible to have an affordable Basic Income system that can enhance, not damage, work incentives.

It’s not as if a Basic Income system has to be perfect in order to justify implementing it. It only has to be better than the alternative. And the alternative, at the moment, is Universal Credit, which is a diabolically immoral and inefficient mess.

Universal Credit should be replaced by Basic Income as a matter of urgency. It is unethical to delay that change in order to make time for unnecessary pilot schemes. And I strongly suspect Guy Standing agrees with me on that point.

But what’s the political reality? Perhaps pilot schemes are a political necessity? That’s a difficult judgement. And it’s for John McDonnell (and others) to make it. I hope he gets it right.