In this article the author examines the UK’s crumbling social security system, the growth of extreme poverty, and whether UBI is the solution to these problems or just another opportunist mechanism to further fuel the insatiable hunger of capitalism.
Introduction
The welfare benefit system in the United Kingdom has long been criticized for failing to protect people from poverty. Over a decade of austerity has had a devastating impact across the UK. Savage cuts to welfare benefits, the rise of precarious work, the dismantling of legal aid, and the starving of funding to public services have all resulted in obscene levels of poverty and inequality.
The introduction of universal credit, the benefit cap, the bedroom tax, 1 two-child limit, 2 the abolition of disability living allowance, and the localization of council tax benefit 3 has created a level of poverty not witnessed in the UK since the 1930s. The harsh conditionality rules such as the work capability assessment and benefit sanctions has led to thousands of unnecessary deaths. 4 Those in power suggest austerity is simply about living within your means. The reality is that it is a cruel dismantling of social protection. A system which prevents people from having the basic means to survive, and which punishes the already disenfranchised.
The onset of the COVID-19 pandemic cast a stark spotlight on poverty in the UK and the inadequacies of our social security system. The disease does discriminate, disproportionately affecting working-class communities and in particular black and minority ethnic communities. The impacts of COVID-19 were exacerbated for those living in poverty. They were more likely to be living in overcrowded, poor-quality accommodation. Many would be in low-paid precarious work in front-line jobs such as shop work, social care, and cleaning. This meant prolonged daily contact with others, which puts them more at risk of the virus. Many people who had never had to rely on benefits found that it was not as generous as some in the media had portrayed. There were often long delays before payment and when it did finally arrive it was inadequate to meet basic needs.
It is clear that, if we are to tackle such poverty and inequality, we need change on a revolutionary scale. Universal Basic Income (UBI) is hailed by some as an idea whose time has come. A guaranteed regular payment for every person that would ensure they did not fall below the poverty line even if not in work. No one would go hungry or be homeless and the indignity of means testing and conditionality would be but a distant memory. Although UBI might seem to be a radical idea born out of the COVID-19 pandemic, it is not new. A version of UBI was put forward as far back as the eighteenth century by Thomas Paine. 5 Nor is it something favored solely by those on the left. UBI has drawn support across the political spectrum, including from economists such as Milton Friedman, Friedrich Hayek, and Sam Bowman when at the Adam Smith Institute. In one survey 49% of Conservative voters favoured a UBI. 6
At the height of the pandemic a letter was sent to the Financial Times calling upon the government to establish a universal basic income as part of its economic response to the coronavirus crisis. The letter was signed by over 170 MPs and members of the Lords and signatories were drawn from Labour, Liberal, SNP, Green, and Plaid Cymru.
What is UBI?
The basic concept of UBI is that every person is entitled to a fixed amount of money from the state regardless of their income or need, and the payment is free of any conditionality. The same fixed amount is paid no matter how wealthy or how poor the person may be. It is not linked to any life event or risk such as unemployment, sickness, or old age. Instead, it is a payment made to everyone for life. Without any conditionality, it would allow those who choose to work to do so but others may choose to do something other than take up employment. There are variations to this model. Some are intended to replace all other welfare benefits and others simply to provide an additional layer to existing welfare schemes. Some paid to a defined group rather than the entire population.
Trial schemes
Several countries have trialed UBI schemes including the United States, Brazil, Canada, Finland, and Uganda. UBI was under serious consideration by the UK parliament, but the Work and Pensions Committee recommended in 2017 that parliament reject the idea. 7 The committee stated that the cost of introducing a UBI at a level that would be beneficial for the poor would be prohibitive, as equal benefits would go to the whole population irrespective of their income. It would require rises in taxes to a level not considered acceptable by any political party. It stated that, if parliament were to opt for a more affordable system, there would need to be a retention of the existing benefit system and a UBI layered on top. This would not achieve the aim of reducing complexity. The committee concluded that such a scheme would be scarcely distinguishable from universal credit 8 and that UBI would be an unhelpful distraction. Notwithstanding, the parliamentary report the devolved government in Wales is to undertake a pilot of UBI. 9
In Uganda, a Belgian charity funded a two-year project with payments to a limited number of households and, in Kenya, a scheme is to make a payment to people for a twelve-year period. Four years into the scheme it does seem to be making some inroads into alleviating poverty. 10
A trial in Finland found that recipients were happier and healthier than when they were on unemployment benefit. But the UBI had little impact on their employment prospects. A scheme in Brazil was paid at a low rate but, nonetheless, did reduce poverty.
What is the rationale for UBI?
Two main reasons are offered in support of UBI. Surprisingly, the broad rationale is largely the same for both the left and the right but perhaps for ultimately different reasons:
the failure of existing welfare benefit schemes;
and the increasing role of automation in the workplace.
There appears to be universal agreement that the existing benefits system is not achieving its aims; yet is vastly costly to the public purse. In addition, some critics say the system is unwieldly and the stigma of means testing deters many people from claiming what they are entitled to. Furthermore, the conditionality attached to most benefits ensures that large numbers of people simply do not qualify. The work capability assessment, for example, has been widely criticized and at times ridiculed for frequently assessing seriously ill people as being fit to work. Even when a person manages to navigate the system, there are often long delays in processing payments, particularly if a person’s circumstances change. Poverty has soared in the UK and we have seen a huge increase in people using food banks.
Despite its failures, spending on social security is large. In 2021–2022, spending was £298.70 billion, representing approximately a quarter of all public expenditure. 11 The cost to the public purse may explain why so many politicians adopt a rhetoric hostile to benefit claimants. However, the greater part of spending on social security is on the state retirement pension. According to the Office of National Statistics in 2016, 42% of all social security expenditure was on pensions and only 1% on unemployment benefits. Approximately 16% was spent on disability and incapacity benefits, 10% on housing benefits, 18% on family benefits, and 13% on other benefits. 12 As the baby boom generation reaches pension age, the amount spent on pensions will increase further. According to the government, in 2018 spending on state retirement pensions had risen to 55% of the social security budget. 13
The government also spends around £22 billion a year on housing benefit and the housing element within universal credit. Spending on housing costs has doubled since the early 2000s despite attempts by successive governments to reduce this bill. The problem, however, is that the measures designed to reduce expenditure have focused on restricting those benefits helping claimants pay their rent, rather than tackling the spiraling costs of private rented housing. This has created a shortfall between the benefit a person gets to help with housing costs and the actual rent. Increasingly, tenants are having to choose between eating or paying their rent. Inevitably many fall into rent arrears and then struggle to find alternative accommodation.
The cost of living may have hit crisis level in 2022, but most people have been struggling to keep up with rising costs, particularly in housing, for at least a decade.
During the Thatcher period of government two key things happened that affected housing. The right to buy council homes and the deregulation of private sector housing. The sale of council stock under the right to buy and the restrictions placed on local councils building new homes reduced available social housing (council housing plus housing owned by housing associations). Those on modest and low incomes were forced into the private housing sector, whereas once they would have relied on council housing. Private rented housing was regulated, making it relatively affordable and secure. A landlord wanting to increase the rent had to apply to a rent officer and the level of increase had to be reasonable.
In 1989 the Thatcher government deregulated the private rental sector. New tenancies generally were granted for only twelve months at a time and there were no longer any restrictions on what a landlord could charge. It was left purely to the market. Since wages did not increase to match rents, more and more people claimed housing benefit. This led to a huge increase in government spending on housing benefit. 14 At this time, housing benefit would usually cover the whole rent. A narrative began that this meant there was little incentive for tenants to resist landlords who wanted to raise rents or to shop around for cheaper accommodation. Politicians started to talk of the need to reduce the housing benefit bill. However, the reality for most low-income households is that they cannot shop around for cheaper rents. The shortage of housing means that landlords can pick and choose who to rent to and many of them exclude people on benefits.
Despite this, restrictions were introduced on housing benefit intended to force to tenants to shop around for cheaper accommodation.
A Labour government was the first to introduce what has become known as the “bedroom tax”. This initially only applied to private rented accommodation. A person living in a property deemed to be too big for their needs or too expensive would have their housing benefit capped at a level lower than the rent they were paying. In 2013, the coalition government, led by David Cameron, extended the bedroom tax to social housing. The restrictions have not reduced the cost to the government of housing benefit. It has caused a housing crisis. Families now frequently live in overcrowded, poor-quality accommodation because they cannot afford the rent on a property that is of adequate size. The days of slum accommodation in the UK have returned.
Socialist supporters of UBI say that it offers a solution to an overly complex and bureaucratic social protection system. It would alleviate poverty, reduce inequality, and offer protection to people as work is increasingly automated. And providing people with a UBI throughout their lives would empower workers, who would not be dependent on a job for survival, and help to increase pay and improve workplace conditions.
It is perhaps not immediately obvious why those on the right, the cheerleaders for free markets and small government, would also favor UBI. Libertarian and Conservative supporters of UBI offer a freedom of choice argument – people would be given money to spend on what they want. But it would also cut the cost of administration. Everyone would be added to the system at birth and removed on death. No staff needed to check whether a person meets the conditions, no need to help them into work or apply sanctions if they do not comply. No need for expensive judges at tribunals or large fraud teams.
For the right, far from giving employees greater power in the workplace, it is viewed as a mechanism to keep wages low and employment contracts flexible. Employees may be less inclined to demand higher wages if they already receive a UBI. And subsidized services such as council housing, free education, and free health could be scrapped. Everyone would have sufficient income to pay for whatever they needed when they needed it.
A long-standing reason promoted in support of a UBI is the prospect that increasing automation will render many unemployed. Our work will be done by robots as technology develops. UBI would free up people to have more leisure time and devote themselves to useful activities.
Almost a century ago, John Maynard Keynes predicted his grandchildren would enjoy a shorter working week of 15 hours along with a better quality of life, better health care, and a better standing of living. Keynes prediction was wrong. Despite a financial collapse in 2008, we have not witnessed high levels of unemployment, such as those of above 20% in the 1930s. The UK Conservative government has been able to claim that their austerity policies were working. The reality is that poverty has extended to include those in work due to the increase in insecure and informal work. It is now common for people to be working at two or three jobs and still be unable to manage. The explosion of food banks across the UK is a stark reminder of this.
Successive governments have supported a low-pay economy, subsidizing employers’ low pay by offering in-work benefits such as family credit, housing benefit, working tax credits, and now universal credit. Informal, insecure, non-unionized work benefits employers. Mass unemployment – a reserve army of labor – enables employers to keep wages down. The eroding of employment rights and weaker trade unions have seen a downward spiral of wages and an increase of people working on zero hours or short-term contracts. Workers are dismissed before they gain employment rights, or, like so many delivery drivers, are forced to accept self-employed status.
Current social security system
Our current system of welfare is rooted in the Beveridge report of 1942. William Beveridge, an economist working in the East End of London, wanted to address the vast social inequality in the Britain of his day. He was commissioned by the government during World War II to lead an inquiry into social services. His vision was to battle against what he called the five great evils: idleness, ignorance, disease, squalor, and want. His “cradle to the grave” social program included a call for a free national health service. The plan was taken up by Clement Atlee and formed part of the Labour Party manifesto of 1945 which secured a huge parliamentary victory and the first majority Labour government.
The Beveridge plan, implemented by Labour, was an ambitious and radical program. However, it was based largely on the traditional Western family model of a working man supporting his wife and children. It has been criticized by feminists as being a system which puts money in a wallet than a purse. 15
There was a less gendered model on offer at the time, a type of UBI, put forward by Lady Rhys-Williams. Rhys-Williams was a leading campaigner in the maternity and child welfare movement. She stood for election as a Liberal National candidate in 1938 advocating family allowances and cheap milk. She also served on a committee which investigated unemployment in South Wales. She was concerned with poverty and inequality. In her paper “Something to Look Forward to” she proposed a form of UBI. It was not taken up by the Labour Government. 16
The model based on the Beveridge report remained largely intact until the 1980s, when Thatcher promised to roll back the state. But successive UK governments, of all colors, have turned the benefit system into a political football and sought to penalize and demonize benefit claimants. The promise of simplification and targeting to those most in need means making life for those claiming benefits as difficult as possible. The most recent iteration of these reforms has been the introduction of universal credit. Simplification has proved a pipedream. Universal credit, and before them tax credits, 17 have made social security even more unwieldly and punitive.
There is no denying the complexity of the current UK social security system. It is comprised of a variety of benefits each with complex rules and conditions for claimants. They largely fall within three categories:
Means-tested benefits require an assessment of a person’s income and capital, and are usually only paid to those with a very low income or no income at all. If you have capital, such as savings, depending on their size, you may be excluded completely from benefit, or your benefit may be reduced. The main means-tested benefits are universal credit and council tax support. Some people remain on what are referred to as legacy benefits, 18 including housing benefit, income-related employment and support allowance, and income-based job seeker’s allowance.
Contribution-based benefits are conditional on you having paid an appropriate amount of national insurance contributions over a defined period to qualify for the particular benefit. In 1948 most benefits were contributory. But increasingly such benefits have been abolished and replaced with means testing on the premise of targeting those most in need. Remaining contribution-based benefits include job seeker’s allowance and state retirement pension.
Non-contributory benefits are neither means-tested nor dependent on national insurance contributions. They are paid mainly for disability and include personal independence payment and attendance allowance.
All three categories of benefit come with many complex rules and conditions that a person must meet before qualifying. Some are linked to a specific issue such as disability, housing, industrial injury, or raising children.
In the past, some benefits had a degree of universality. For example, child benefit was paid irrespective of income to all those responsible for a child. Most people knew about it and it was cheap to administer. This was changed in 2013 as part of the UK coalition government’s cuts to welfare benefits. 19 Those with incomes above £50,000 were no longer automatically entitled to child benefit.
Adding to the confusion, there are a variety of agencies that administer benefits. Some are administered by the Department for Work and Pensions (DWP) or its agencies the Job Centre or Benefits Agency. Others are administered by the Inland Revenue and some by local authorities.
Given the complexity of the system and rising poverty in the UK, it is not surprising that the system is subject to considerable criticism. UBI is seen as a potential answer. Surely a single benefit would cut through the complexity. And would not a benefit paid to cover basic needs end serious poverty and inequality? But is UBI really the answer?
Would UBI fix the problems of our existing system?
UBI may offer a solution to some of the problems of poverty in the UK. But this depends entirely on the type of UBI scheme that is introduced. It is only likely to end poverty if it is paid at a sufficiently high rate to cover the basic needs of a person and is paid to everyone. But there has been a reluctance to do this on the basis that such a scheme would be completely unaffordable.
It is difficult to see how a UBI of any form would solve the problem of poverty and inequality without looking at issues such as the costs of housing and other services. If everyone were to receive an increase in income, landlords would likely see an opportunity to increase rents. Consider, for example, how the housing benefit bill has soared since the deregulation of the housing market. 20
However, the true cost of a comprehensive UBI scheme in the UK has never been fully assessed. The current benefit system causes enormous stress resulting in poor mental and physical health. If people had decent housing, sufficient food, and less money worries it might well be the case that there would less poor health and consequently less demand on mental health services, social services, general practitioners, and hospitals.
People with higher incomes might decide to do more in their community or help with caring for extended family or friends. So as public expenditure goes up in some areas, there is a good chance it will reduce in others.
There is also a danger that, as UBI is supported by both left and right, it is a concept that means all things to all people. A UBI introduced by a right-wing government for example might decide that the UBI replaces all other universal services, such as free education and health or social housing. In such circumstances, how much better off would we be as individuals and as a society in the UK?
Public attitude toward benefit claimants
UBI might help in dispelling some of the myths about benefit claimants but would only do so it if were universal. A system that is ring-fenced for a defined group or one that is layered on top of existing benefits schemes will not rid us of the problems we have identified.
The major problem we have is that our benefit system in the UK is largely set up to deter people from getting benefits. Consider the harsh benefit sanctions, the ever-more-onerous conditionality, and the means testing designed to impoverish. Our system bears more resemblance to the poor law provision of the 19th century than what should be achievable in a modern wealthy economy.
Over the last three decades, the public have been fed a daily diet by the media and most politicians that those on benefits were other than everyone else: they were the something-for-nothing brigade; “skivers” rather than “strivers”. Each political party has sought to show they will be tougher on benefit claimants than anyone else. It was the Liberal Democrats in coalition with the Conservatives who introduced massive cuts to welfare benefits. This included a freeze on the uprating of benefits for five years as well as excluding advice on welfare benefits from the scope of legal aid. 21
Such attitudes were not confined to the political right in the UK. It was Tony Blair’s Labour government that cut payments to single parents, removed asylum seekers from accessing the benefit system at all, and introduced the work capability test.
In 2013 Rachel Reeves 22 in her first interview as Labour’s shadow work and pensions secretary promised that Labour would be tougher than the Conservative on benefit claimants. She said that under Labour the long-term unemployed would not be able to “linger on benefits” for long periods. In 2015 Reeves again gave the clear message that Labour viewed benefit claimants as somehow bad when she stated “We are not the party of people on benefits. We don’t want to be seen as, and we are not, the party to represent those who are out of work. Labour are a party of working people, formed for and by working people.” Of course, this is a complete misrepresentation of the formation of the Labour Party but the message was loud and clear.
Research by the national centre for social research shows 23 that the hardening in public attitudes towards welfare and welfare recipients took place over a 30-year period between 1983 and 2011. The decline in support for welfare and the recipients was particularly pronounced amongst Labour Party supporters and those aged between 18 and 34. This is not surprising. For decades social security has been used as a political football by all main political parties and most of the media. Barely a week goes by without talk of getting tough on benefit “scroungers”, ending the “something for nothing” culture, and encouraging the public to report their neighbors for benefit “fraud”.
However, the reality is there are very few people in the UK who will not be a recipient of a social security benefit at some point in their lives. From child benefit, job seeker’s or maternity allowance, to the state pension for the retired, most people during their lifetime will benefit from the social security systems. UK governments could choose to give positive messaging about welfare benefits, but they do not. Forcing people into low-paid work is the preferred option for parties of all colors.
Indeed, when the COVID-19 pandemic forced more people into the benefit system, attitudes began to change. However, research by the University of Kent 24 shows that COVID-19 welfare claimants were perceived as more deserving and less worthy of blame than other claimants.
Conclusion
We have obscene levels of poverty in the UK. This is by design, not accident. Workers are increasingly subjected to zero hours contracts on very low pay. Welfare benefits have been reduced to such a low level that those who cannot work due to ill health, disability, or caring responsibilities cannot meet the basic needs of keeping a roof over their head and food on the table.
With the decimation of council housing and “affordable” housing that most cannot afford, we have returned to the days of slum housing. Far fewer people can ever hope to own a home. Instead, an ever-increasing number of people will forever pay extortionate rents to landlords for poor-quality, overcrowded accommodation. The short-term nature of tenancies means that families cannot put down roots in a community because they are moving from one area to another every year.
Young people who study and gain qualifications find the only jobs available to them are bar or shop work on zero-hour contracts. Yet they will have accrued eye-watering levels of debt for the privilege of going to university.
Domestic abuse has soared. Women are trafficked into prostitution on an industrial scale. Yet savage cuts to legal aid and support services mean that women are often forced to remain with their abusers.
The scant regard for the lives of working-class people is vividly illustrated by the government’s lax response to the COVID-19 pandemic, while ill-designed and barely supervised contracts allowed donors to the Conservative Party and mates of cabinet members to make a fast buck.
Even prior to the pandemic, working-class people were dying in their thousands due to poverty. The Government’s own figures 25 show that over a period of four years a staggering 81,140 people died as a result of benefit cuts and sanctions.
The UN special rapporteur on poverty, Philip Alston, said, 26 “ideological cuts to public services since 2010 have led to tragic consequences”. He reports that the UK’s social safety net has been “deliberately removed and replaced with a harsh and uncaring ethos”. He goes on to say, “The bottom line is that much of the glue that has held British society together since the second world war has been deliberately removed.” He charges that government policies have led to the “systematic immiseration (economic impoverishment)” of a significant part of the UK population and says that some observers might conclude that the department for work and pensions had been tasked with “designing a digital and sanitized version of the nineteenth century workhouse, made infamous by Charles Dickens”.
We are moving back to a time when working-class lives are of little value; to a support system so basic to be more akin to that of the Victorian poor laws than the rights-based social security system that Beveridge and the 1945 Labour government fought for. Those without money must rely on charity or the help of family and neighbors rather than the state. The poor must accept what they are given rather than demand what they are entitled to.
Nothing personifies this parlous state more than the growth of the food bank industry. Food bank Britain is dehumanizing. Very often those receiving food parcels are described as “needy” or “vulnerable”, as if their predicament represents a personality trait or a personal failing.Those without food are not “needy” and they are not poor by accident. The level of poverty we now see is deliberate – it is structured into the system. This system encourages poverty wages and insecure work and a benefit system that has been dismantled while at the same time rents have soared and council housing decreased.
Everyone in the UK should have a roof over their head, with rents that are genuinely affordable and with long-term security of tenure. Everyone is entitled to food on the table without the indignity of queuing up at a food bank. Everyone is entitled to work at a decent wage and to expect that a comprehensive social security system will be there for the times when they are unable to work. These are the basic necessities of life in a decent society.
In the UK, we are suffering a housing crisis, a health crisis, a poverty crisis, and our services are collapsing around us. It should be obvious to all that what is desperately needed at this time is not a UBI but a socialist government.
It is difficult to see how a UBI may could work in a capitalist environment. It may initially offer some relief to the problems of low pay and insecure work. But only if it were set at a level that would cover basis needs and there seems to be no political will to do so. Without controls on the cost of housing, transport, energy, and other basic services, it is likely that landlords and others would see a UBI as the cash cow that simply keeps on giving. UBI, of itself, will therefore never offer the solution to poverty and a housing crisis. What is needed is an end to the low-pay insecure work culture and a return to genuinely low-cost housing, a nationalized integrated transport system, and for other essential services to be renationalized and run on a not-for-profit basis.