ourEconomy: Opinion

Finland has shown why a response to pandemic should involve Basic Income

A Basic Income would not be a panacea, but it could be part of a bridge to a new social contract between citizens and the state after Covid-19.

Anthony Painter
20 May 2020
Juha Jaervinen, participant of the experiment Basic Income in Finland, rides past Checkpoint Charlie on a rented bike in 2018.
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Gregor Fischer/DPA/PA Images

The case for a universal basic income is increasingly clear. In recent years it has moved from a fringe idea to a mainstream one: discussed by political leaders in the UK and abroad. Since the beginning of the lockdown and the resulting economic fall-out, it looks closer than ever to becoming a political reality.

The First Minister of Scotland, Nicola Sturgeon, has become an out and out advocate. Mayor of London Sadiq Khan has expressed interest. Google analytics shows several spikes of interest in ‘Basic Income’: none greater than in the past few weeks. Over 100 MPs and Peers from Labour, the SNP, the Liberal Democrats, Plaid Cymru and the Greens signed a letter backing a ‘Recovery Basic Income’ in recent weeks.

The logical case for a basic income now has further empirical support. In Finland, the results of the first nationwide, randomised Basic Income trial in the world were recently released. The scheme did not have the negative effects on employment forecast by critics; if anything, it was positive. Crucially, those who received a Basic Income experienced significant uptick in their mental health, reporting a greater feeling of autonomy over their lives, trust in society, alongside a reduction in depression and loneliness. Wellbeing is a vital measure of economic insecurity: these results show the importance of this and in the current situation, getting cash to people is vital.

These results mirror findings from past experiments in Alaska, Canada, North Carolina, Kenya and India. And so, with the evidence of positive impact stacking up is now the time to consider a Basic Income as part of the Covid-19 response? Quite probably.

A basic income would provide a response to three problems. Firstly, it would help alleviate financial stress – as we are experiencing now and have been experiencing since the financial crash. Research by the RSA has shown that even a modest Basic Income of £60 per week for adults and £30 for children ­­– almost £10,000 per year for a family of four – would halve destitution, reduce poverty by almost 10% and reduce inequality. Such a Basic Income would cost roughly 1 percent of GDP a year: a modest sum for the gains we have seen in Finland and elsewhere. We don’t have to choose between impact and affordability with Basic Income, as some critics claim.

Secondly, it would tackle risks to public health. At present the logic for this is obvious, but in the longer-term Basic Income could make lives easier for those with chronic physical and mental health problems. Finally, it would help us weather changes in the economy at large, such as the movement of much of our manufacturing sector to East Asia, and automation causing a drop in demand for certain tasks and occupations.

Most of all, even pre-Covid our economic situation was characterised by economic insecurity for too many both in and out of work – of unseen risks and vulnerabilities, financial pressures, and fear of a changing job market. This is emphasised very clearly in the context of a pandemic. The increasing use of foodbanks is the ever-present emblem of deep insecurity.

Our existing means-tested systems are complex by design and governments cannot resist fiddling with processes and criteria. These complexities create barriers and errors and so diminish confidence in the system. Many turn away altogether, not wishing to go through the process. This loss of trust embeds unnecessary economic insecurity.

To get access to Universal Credit, for example, you must go through a complex application process, five-week delays, complex rules, and conditionality that has led to millions of sanctions for individuals creating humiliation and hardship. This is why ‘targeted benefits’ miss: just because you aim for a treble twenty on a dartboard it doesn’t mean you hit. And Government is not very good at darts.

These problems have been made all-the-more clear this week, with warnings of depression-era levels of unemployment when Rishi Sunak’s furlough scheme is wound up. Basic Income alone is not enough: we will need a good job creation scheme at scale, investment in health and care, and support for businesses that work hard to not pollute and haven’t chosen to base themselves in tax havens. Basic Income helps families get by during hard times, and provides security and even new opportunities when the going is good.

A basic income will not be a panacea – it will form one element of a bridge to a new social contract between citizens and the state after Covid-19. In an era of uncertainty, it could provide desperately-needed financial security, for all of us.

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