The concept of a Universal Basic Income is currently attracting attention.

As automation concentrates wealth into smaller groups, this proposal would see taxes pay for every adult to receive an income.

On the one hand it simplifies the welfare system, frees people to work hours that suit them and enables them to care for others. On the other hand it would cost a fortune and make work less attractive.

The Business HQ panel puts Universal Basic Income under the spotlight ...

HeraldScotland:

David Eiser Research Associate at the Fraser of
Allander Institute.

Based at the University of Strathclyde, the FAI is one of Scotland’s leading economic research institutes. David leads the institute’s work on fiscal policy.

The principles of a universal basic income have a lot to commend. By providing a guaranteed income to everyone, a UBI gives people more flexibility to retrain, look after children or elderly parents, or start a business.

There are two main objections to a UBI. The first is cost. The second is the effect on incentives. If the UBI was set at £12,000 per year (any less would seem to undermine the notion of the UBI providing a respectable income for those not in work) and paid to those aged 16 and over in Scotland, it would cost £54 billion. This is over three times what is spent on social security benefits (including the state pension, tax credits and housing benefit) in Scotland currently. And presumably, higher UBI payments would be required for those with children or disabilities.

Some of this cost would be offset. All income would be taxed – removing the personal allowance for income tax and national insurance would raise at least an additional £8bn Exchequer revenue. A large proportion of Scotland’s £17bn welfare bill would no longer be incurred. Provision of grants and loans to students could be curtailed. Nonetheless, a large funding deficit is likely to remain. It has been suggested that some of this cost could be funded by higher taxes on the incomes or profits deriving from new technologies and innovation – particularly where those new technologies have displaced demand for labour.

This brings us on to the issue of incentives and behaviours. UBI is often justified on the basis that it will improve work incentives faced by low earners, who will no longer find means tested benefits withdrawn as they move into work. But the effects on middle to higher income earners on decisions about whether and how much to work, invest or innovate are difficult to predict – especially if the funding of UBI entails higher average or marginal rates of tax on income, profits or wealth.

In short, a UBI set at a meaningful level would represent such a marked shift from our current welfare system that we have very limited information about what its effects might be. This is why genuine experiments – of the sort under way in Finland – will be so valuable.

HeraldScotland:

Jennifer MacKenzie, Managing Director, TEFL Org UK

Co-founded the company in 2008, now an accredited Living wage employer with staff in Inverness, Edinburgh, Madrid and Beijing.

It’s certainly an idea that is gaining media attention, with tests being run internationally and interest being shown here in Scotland by Fife and Glasgow councils. But, let’s take a quick step back first; it currently would not be possible to offer a Universal Basic Income in Scotland because the Scottish government does not have full control over the welfare system. Anything that was offered here, even by the Scottish government, never mind councils, would be a very partial scheme that would not offer one of the fundamental benefits of a Basic Income and that is the simplification of our very complex welfare system that can be so difficult to understand that some don’t apply, and conversely leaves it open to fraud. I must admit to a duality of hats here as in a previous life I worked for the DWP. Firstly, in Disability Living Allowance (DLA) and Attendance Allowance (AA) and latterly in Crisis Loans; thankfully for only a short period because it is utterly soul destroying to have to listen to the hardships others are suffering in our technically rich country. These were/are complex benefits that the government has tried to simplify, automate, and reduce causing real problems for recipients in the process. They are also hugely bureaucratic and employ large numbers of people to manage them. An UBI could reduce this bureaucracy.

As an SME owner I am proud to run a Living Wage accredited company, however, when we started out, paying the accredited living wage would have made it very hard for us to grow, expand and create the quality jobs we have been able to do for the Highland economy.

Would a basic income paid regardless force small business owners into having to pay more for the same job to be done; forcing some out of business, reducing the desire of many to take on employees and stifling the growth of others?

To conclude, a real positive to me of the UBI would be to create a more secure and substantive safety net for people ensuring they can afford both food and heating. To have the growing number of foodbanks we have in the UK shows there is something broken in the current system.

HeraldScotland:

Jo Kennedy Lead Partner, Animate Consulting

Consultancy practice working with the NHS, local authorities and voluntary sector on leadership, strategy and engagement

My friend, Jane, has five children, two of whom have a disability. She has also suffered from mental health problems for the last 10 years. She doesn’t claim any benefits, because she doesn’t think she deserves or needs them as much as others do. But she is looking for work to supplement the income of her husband, who is a teacher. She has had a succession of low paid jobs, none of which allowed her to contribute in the way she really could – providing support and advice to other parents with disabled children, or using her own experience to help mental health professionals learn from those they work with. She has a lot to contribute but no one is willing to pay.

I have another friend who, despite looking for work to support her own family, takes time to visit her 90-year-old neighbour, two or three times a week, just for a cup of tea. I don’t visit my neighbour – even though I know she is lonely and isolated. I work hard and never seem to find the time.

No one pays us to care for people who are lonely or despairing, or to use our own experience to give advice to others in similar situations. As a society, because we don’t pay for it, we don’t value it, whatever platitudes politicians and others utter about it. I don’t think we should be paid to care. But at the same time, I don’t think we should be incentivised by the benefits system not to care. And currently that is what happens. Benefits are conditional on people prioritising the search for jobs, which are often low paid and menial, over more meaningful contributions to people in our neighbourhoods – ultimately we can’t afford to care, we are too busy trying to make ends meet for ourselves. At the same time, loneliness and isolation, are growing problems that are inadequately served by our overwhelmed health and social care services.

If the UBI would enable more of us to free up more time to care for one another then I would support it, even if I had to pay a bit more tax in the short term. Ultimately, it might lead to more people being able to make the contribution they want to make to their neighbours and their families, and if I am really dreaming, perhaps it could lead to more inclusive, compassionate communities.

HeraldScotland:

Caron Dunlop Head of Community Engagement, Multiplex

Oversees supply chain engagement and stakeholder networks to ensure social responsibility commitments are met on 24 projects.

It is interesting to see Glasgow City Council and Fife Council taking the lead in the UK by investing in the Universal Basic Income workshop to consider what a pilot scheme might look like. As the UBI notion gathers traction, the impact on industry is still being evaluated. Currently in the construction sector we are facing a massive skills shortage. A few years ago this was referred to as a ‘GAP’ but this has now been up-graded to a CRISIS.

We have an ageing workforce and sadly, many young people do not consider the construction sector to be a career of choice but instead, more like one of last resort.

A recent report published by Arcadis highlighted that in order to meet the needs of housing and infrastructure in the UK we need to recruit over 400,000 people a year. Add into the mix a Hard Brexit and the UK construction sector could miss out on as many as 214,000 EU workers.

Perhaps the rising skills shortage in the construction sector could be addressed in part by UBI proposals that include caveats that are targeted at the country’s need for skills, training and job development which in turn will contribute to economic growth, vibrant communities, stability and prosperity.

HeraldScotland:

Sean Duffy, Commercial Director, Newsquest Scotland & NI

Strathclyde Business School Advisory Board, non-executive director of the Crichton Trust in Dumfries and South Lanarkshire College

The concept of Universal Basic Income is one which, on the surface, appears to deliver the utopian dream. At a stroke poverty vanishes, the inefficiencies, inconsistencies and unfairnesses endemic within the current welfare system are removed overnight, while the most vulnerable are given a safety net which protects and guards their dignity and the most basic of human rights.

Proponents of UBI claim many other gains such as increased opportunities to study, volunteer and care while offering protection from the onslaught of automation within an increasingly technology-dependent society. However, idyllic and laudable though these outcomes sound, the reality would, when viewed through the prism of practicality and pragmatism, be something very different. Without doubt UBI would be used by some unscrupulous employers to drive down wages, making less attractive jobs even less attractive.

And, while the benefit appears to provide the opportunity for training and, by extension, for entrepreneurship, the more likely outcome of providing such a financial safety net is the suppression of the motivation for career progression and, ultimately, innovation. Rather than curing society’s ills, UBI would create more problems than it could resolve and would ultimately place the UK at a disadvantage when competing with more entrepreneurial, driven and competitive rivals.

HeraldScotland:

Gordon Matheson CBE Institute for Future Cities, University of Strathclyde

Also honorary professor at Caledonian University’s School for Business and Society and former leader of Glasgow City Council.

eware those who offer easy solutions to complex problems. Given the vaulting claims made for Universal Income, it is notable that none of its proponents have implemented the policy, instead tentatively launching a series of regional pilots or feasibility studies. Perhaps that is because the costs would have an eye watering impact on levels of taxation. Whatever the reason, the fact is that tackling inequality is a long, hard grind. It can be done, but there is no silver bullet. The last time there was a marked reduction in child and pensioner poverty in Britain was during the Blair/Brown years. It resulted from minimum income guarantees, combined with record investment in public services, a growing economy and the introduction of a minimum wage.

Today, the hard left is preparing to insert UBI into the heart of Labour’s manifesto for the next election, calling into question the party’s continued belief in full employment, an industrial struggle for work that pays, and the targeting of support at those who need it most. The SNP boarded the UI bandwagon at their recent conference.

Meanwhile back in the real world, educational and health inequalities are becoming more severe with every passing year. Repeatedly claiming that Scotland is a progressive beacon does not appear to make it so.

At the global level, Silicon Valley’s IT companies have been among the most vocal in their support of UBI. The same corporations that are obscenely under-taxed now expect the state to assume the cost of meeting the basic needs of the worker.

Rather than being distracted by utopian fads that appeal to a coalition of political populists and corporate tax dodgers, perhaps the efforts of progressives could be more fruitfully focused on: fighting for dignified work with decent pay and prospects, securing global regulation of big business, redistributing wealth and opportunity to the many, and targeting help at those most in need.

Send your suggestions for June's Big Idea to businesshq@heraldandtimes.co.uk