{"id":5658,"date":"2020-04-08T16:16:15","date_gmt":"2020-04-08T15:16:15","guid":{"rendered":"https:\/\/blogs.canterbury.ac.uk\/expertcomment\/?p=5658"},"modified":"2021-06-15T16:16:20","modified_gmt":"2021-06-15T15:16:20","slug":"covid-19-and-the-case-for-a-universal-basic-income","status":"publish","type":"post","link":"https:\/\/blogs.canterbury.ac.uk\/expertcomment\/covid-19-and-the-case-for-a-universal-basic-income\/","title":{"rendered":"Covid-19 and the case for a universal basic income"},"content":{"rendered":"\n

Dr Richard McManus explores the possibility of implementing a universal basic income.<\/em><\/strong><\/p>\n\n\n\n\n\n\n\n

A universal basic\nincome (UBI) refers to a periodic, monetary payment from a government to county\ncitizens independent of financial circumstances or employment status. In this\nrespect, it is similar to a pension which is paid to everyone in the economy\n(or at least all adults) independent of age. <\/p>\n\n\n\n

UBI has recently\nreceived significant political and academic attention to the extent that a\nnational referendum has been held in Switzerland and several pilot projects\nhave been introduced (Canada, Finland) or are planned\/proposed.<\/p>\n\n\n\n

Covid-19 has both\nstrengthened the case both for and against a UBI. On the one hand, were a UBI\nin place much of policies enacted by western governments would not have been\nrequired as the social safety-net would already be in place in the economy.\nFurthermore, in response to the pandemic, the US government have agreed to pay\nevery adult  $1,200 (approximately \u00a31,000) with an extra $500 (approximately\n\u00a3400) for each child under 17 they have, representing something close to a UBI\n(although those with incomes above $75,00 or \u00a361,000 do not receive this). <\/p>\n\n\n\n

This policy is similar\nto a UBI in the sense that the same payment is given to all households. This is\nin contrast to the UK who have agreed to support 80% of incomes up to \u00a32,500\neach month, meaning the support is proportion to income levels prior to the\nvirus. <\/p>\n\n\n\n

On the other hand, the\npolicies enacted in response to the coronavirus are unprecedented in their size\nand scope. These include the payments discussed above, loan guarantees and\nsubstantial (and natural) support for health care systems. These will lead to\nsubstantial increases in the level of government debt in these countries, which\nputs a strain on the economy as future taxes will need to rise and\/or\ngovernment spending fall. This strain makes UBI schemes less affordable and\nrequires either more trade-offs to achieve the same level of UBI or a lower\noverall UBI. <\/p>\n\n\n\n

As of March 2019, UK\ngovernment debt is \u00a31.8 trillion, representing over 85% of the total production\nin the economy. This resulted in over \u00a341 billion of annual expenditure to\nservice the interest on this debt in 2019\/20. Were there no government debt,\nand this spending distributed to adults in the UK, each working-age adult could\nreceive nearly \u00a31,000, however, this period is one of historically low-interest\nrates. <\/p>\n\n\n\n

The biggest obstacle to a UBI in the UK – and more broadly in western economies – is the current tax system and levels of spending. <\/em><\/strong><\/p><\/blockquote>\n\n\n\n

Despite nearly a\ndecade of a Conservative government elected on a manifesto of removing the\ngovernment deficit in their first term, government debt has increased\nthroughout this period. The highest tax revenue collected in the UK was 36.7%\nof total income in 1982; spending by the government has not been below this\nlevel since 2002. There appears to be a cap on how much revenue it is possible\nto collect in our current structure and spending for over two decades has\nexceeded this. <\/p>\n\n\n\n

A sizeable UBI could\nbe possible in the UK but will require compromise and trade-off. These\ntrade-offs have become further amplified through the impact of further\ngovernment borrowing as a result of COVID19. <\/p>\n\n\n\n

One hopes that another\nimpact of the virus is that there can be a more concerted effort to discuss\nimportant issues in a non-partisan way after this crisis has averted, including\nfiscal sustainability and redistribution policy. <\/p>\n\n\n\n

Dr Richard McManus is Director of Research Development for the Christ Church Business School<\/a>.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Dr Richard McManus explores the possibility of implementing a universal basic income.<\/p>\n","protected":false},"author":242,"featured_media":5666,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[533,3902],"tags":[3358,3365,537,3430],"class_list":["post-5658","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-research","tag-coronavirus","tag-covid-19","tag-taxation","tag-universal-basic-income"],"acf":[],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t