Donald Hirsch (2023) raises important questions about building a more effective system of income support. Central to this debate is the question of whether the best way forward is via improvements to the current means-tested system of Universal Credit (UC), or whether it’s time to bite the bullet of a guaranteed, non-means-tested income floor – a ‘Plimsoll Line’ for incomes below which no-one would fall. Social reformers have long called for such a guarantee and Beveridge believed his 1942 plan would deliver it. Yet 80 years on, the mass means-testing involved in the current UC system fails to come close to offering such a guarantee.
Hirsch is strongly associated with the development of the Minimum Income Standard (MIS) and favours reaching it through a more generous Universal Credit. This would be a step forward but would retain many of the flaws of the present system and leave many falling below an acceptable minimum.
Our fiscally neutral basic income starter scheme offers a more fundamental alternative, if more costly reform of UC (Reed et al, 2023). It would rebalance the present system in favour of the post-war principles of universalism and entitlement and crucially would finally introduce an income base that would cut poverty among children and pensioners to an historic low. This would more than reverse the regressive trends of the last four decades and also restore the redistributive power of the tax–benefit system which has been so badly eroded over these years.
In Beveridge’s 1942 term, ‘patching’, in this case by increasing Universal Credit levels, would cut poverty by less, would further entrench a highly intrusive and divisive means-tested system and fall well short of providing a secure, guaranteed minimum. Our illustrative starter scheme would carry a higher cost, but would also provide distinct benefits above and beyond patching, including additional income security that would bring wider dynamic gains, especially in health, and offer greater lifetime choices. Given criticism of progressive policy with high up-front costs, the starter scheme is an effective means of rebutting claims of unaffordability.
Public evaluation of the different basic income schemes examined has shown, however, that the decade of crisis, and the expansive pandemic response has transformed calculations of feasibility (Johnson et al, 2022). Hirsch suggests that resources ought to be directed at supporting the worst off. Our research suggests that, since those in work – the vast bulk of the electorate – regard means-tested support as an out-group issue, they would reject calls for increased generosity because its funding comes from their earned resources. The more expensive schemes are more popular precisely because they address workers’ needs for concrete social security measures that close the perceived fairness gap, transforming welfare into an in-group issue. Crucially, our model 3 (Johnson et al, 2021) under which everyone reaches the Minimum Income Standard threshold, is much more expensive (funded, for example, by closing inequality-increasing reliefs, and by taxing land, wealth and socially damaging economic activity), but would produce higher future returns in improved public health, productivity and efficiency savings.
Policymakers need to catch up with voters whose perceptions have been transformed by the Furlough Scheme and a range of other costly interventions – people’s loss aversion is no longer to abstract tax and upfront cost, but to everyday destitution from market forces.
Note
This article is part of a debate. To view the full debate, see issue 31.1.
Conflict of interest
The authors declare that there is no conflict of interest.
References
Hirsch, D. (2023) The big tax hikes that make UBI ‘affordable’ could be used to cut poverty in more targeted ways, Journal of Poverty and Social Justice, 31(1): 163–5, doi: 10.1332/175982721X16702576209751.
Johnson, M., Johnson, E. and Nettle, D. (2022) Are ‘red wall’ constituencies really opposed to progressive policy? Examining the impact of materialist narratives for Universal Basic Income, British Politics, doi: 10.1057/s41293-022-00220-z.
Johnson, M., Johnson, E., Webber, L.F., Reed, H. and Wildman, J. (2021) Modelling the size, cost and health impacts of Universal Basic Income, Health Services and Outcomes Research Methodology, 459–76, doi: 10.1007/s10742-021-00246-8.
Reed, H., Johnson, M.T., Lansley, S., Johnson, E.A., Stark, G. and Pickett, K.E. (2023) Universal Income is affordable and feasible: evidence from UK micro-economic modelling, Journal of Poverty and Social Justice, 31(1): 146–62, doi: 10.1332/175982721X16702368352393.