The first in a series of articles highlighting some of GWLAD’s main policies for the upcoming Senedd Election. We kick off with our Citizen’s Income Policy.
WITH Wales reeling from the social and economic effects of lockdowns, Gwlad’s flagship policy of a Citizen’s Income could hardly have emerged at a more auspicious time.
The ground-breaking Citizens Income policy, or UBI (for ‘Universal Basic Income’) is one of the party’s founding principles, which will provide the people of Wales with the safety and security needed to achieve their individual aspirations.
In this article, I will explain what a Citizens Income is (UBI for short) and why I feel it is the most urgent policy of our time.
I recently discussed UBI on the Rich Politics show and I wish to thank Richard for the invitation.
A UBI is a regular, equal and non-returnable cash benefit which is received individually by all citizens, regardless of their material and occupational situation.
I see it as an investment policy which values and dignifies human life in a world which has increasingly sought to commodify and allow exchange value to triumph over experiential value to an alarming degree.
The UBI has a long history going back to the 1940s where a ‘social dividend’ was proposed in the UK. Similarly, the esteemed economist Milton Friedman supported a ‘negative income tax’ which would be very similar to UBI in practical terms.
Unfortunately, austerity-driven macro economic thinking has slowed down the progress of UBI in recent decades, despite it having the potential for cross-spectrum support.
An existential tragedy in Wales is the increasing number of people living in poverty, both ‘in work’ and ‘out of work’. Among the obvious reasons for this is the self-defeating nature of our tax and benefits system. The ‘in work’ people have to endure an inflexible and bureaucratic public sector or a rapacious corporate sector to make ends meet.
Those who claim welfare payments whilst also working must be careful to ensure they do not increase their salaried hours, if only by a tiny amount, as they would risk some of their welfare payments, including tax credits.
The UBI policy provides the optimal antidote as it tackles both issues simultaneously. It gives the ‘in work’ people greater bargaining power in the labour market, while the ‘out of work’ population can seek apprenticeships, training and upskilling opportunities, without the fear of losing welfare payments.
Critics of UBI commonly cite it as fiscally irresponsible and unproven policy. For context, furlough has cost £46 billion from March to December 2020, and the DWP’s annual budget is £200 billion. A UK wide UBI of £500 a month per person would cost £143 billion annually.
Extrapolation of furlough cost to an annual figure, combined with savings achieved across various government departments, e.g. social care, show we are not far off the figure needed to achieve mathematical equivalence with a workable UBI.
Gwlad also want to introduce a flat income tax at the same time to ensure that a UBI would be fiscally neutral in Wales. This would protect against inflationary pressures as well as maximising the tax intake as per the Laffer curve.
UBI has been fully implemented in the state of Alaska for many years by now, and has more recently been trialled in Canada and Finland, leading to positive outcomes in various social measures, e.g. education, mental health and employment.
The urgency of a UBI cannot be over-stated right now because of the accelerated loss of jobs to automation and global outsourcing of work. We can see the inroads made by automation all around us-driverless cars, smartphones, video conferencing, robotics, 3D printers etc.
All are technologies which have and will replace most jobs once legislation is passed and the retail price of these technologies drop.
Secondly, laissez-faire economic models have fuelled the global flow of capital to find the highest rates of return. Quite simply, employers have been heavily incentivised to relocate and outsource work to cheaper international locations, thus in effect erasing even more jobs in Wales than through technological change.
A UBI can address this problem directly by guaranteeing people a basic subsistence, regardless of the long term effects of automation and globalisation.
We also need to think of UBI as a good investment which will increase economic activity and thus increase the tax collected by a Welsh treasury. Greater economic activity could also help revive our dilapidated high streets and give small businesses a greater chance of success.
In addition, those who work would have more flexibility to take part in community activities, volunteering and training as they would be able to negotiate better working conditions.
Finally, a UBI would allow the free market to develop a post-Covid economy in an equitable and sustainable way without the malignant heavy-handed mess of state intervention.
As a party, Gwlad believes in a small-business driven economy which gives all stakeholders an equal opportunity within a free market.
By moving this UBI policy forward in a period where Covid 19 has created so much economic uncertainty for everyone, we hope to create a Wales which has a stronger and more independent economy.