Written by Simon Zhou - LSE BSc Mathematics, Statistic and Business
The advent of the pandemic has heightened concerns about the social security system, prompting over 170 parliament members and lords to call upon the UK government to introduce UBI. Universal Basic Income (UBI) is a long-standing concept that proposes the state provides a regular, unconditional income to all citizens. This proposal has received widespread support within the UK, with a 2022 YouGov survey indicating that 48% of British adults are in favor of implementing UBI. In June 2023, the UK government embarked on two-year pilot programs in England and Wales to assess the impacts of UBI. Thus, this essay will first elucidate the positive effects of UBI on individual welfare and the welfare system, followed by an exploration of the potential challenges UBI faces in reality. In doing so, this essay aims to demonstrate that while UBI appears to theoretically promote individual and societal welfare, it still encounters numerous potential issues, necessitating further discussion and practical exploration for its introduction in the UK.
Figure 1 - The Independent
Proponents believe that UBI can enhance individual welfare, streamline the welfare system, and reduce poverty. According to Institute of Economic Affairs (2018), the current welfare application process is lengthy and fails to meet individuals' needs promptly and effectively, imposing psychological burdens. For instance, the tedious procedure required for assistance after job loss puts individuals and families in significant instability, whereas UBI would provide a genuine safety net, allowing people to focus on job searching. Furthermore, the UBI system simplifies the functions of the UK's Department for Work and Pensions (DWP), potentially reallocating DWP staff to the private sector to address employment market skill gaps (Institute of Economic Affairs, 2018). Additionally, many who are not unemployed but trapped in unsuitable jobs without the support of a safety system are unable to learn new skills to advance their careers. UBI offers these individuals a financial baseline, enabling opportunities to pursue interesting work and improve efficiency in their roles. Lastly, UBI presents a form of humanitarian care to society, allowing people to reduce working hours to care for family and encouraging risk-taking, fostering a conducive entrepreneurial environment.
However, the introduction of UBI seems to face several practical challenges, which are discussed from three aspects. The first is the cost; providing a fixed income unconditionally to a vast population incurs enormous costs and financial burdens. A 2018 report by the Centre for Social Justice found that offering every working-age adult in the UK £16,000 annually would cost five times the 2018-19 expenditure on the NHS (Hobson & Kulakiewicz, 2022). The second challenge relates to the impact of UBI. Offering unconditional funds to all working-age adults, including the wealthy, would be ineffective and wasteful, failing to alleviate the hardships of those most in need (Hobson & Kulakiewicz, 2022). Therefore, in reality, the amount of financial support needed varies among individuals, which is a fundamental reason why some oppose UBI. The third challenge comes from the failure of existing case studies. The Finnish trial revealed that external factors could not be excluded, leading the Finance Minister in 2019 to conclude that the UBI plan was shelved, emphasizing the need for conditionality in the social security system (Hobson & Kulakiewicz, 2022). Moreover, a 2017 OECD report found that UBI would increase poverty and negatively impact the poorest in high-income countries (Hobson & Kulakiewicz, 2022).
In conclusion, although UBI has the theoretical potential to enhance societal welfare, it faces numerous practical issues. Regarding cost, UBI might serve as a crisis management tool during specific periods, such as the pandemic. For the actual impact on individuals, perhaps the scope of UBI and the amount of assistance could be evaluated and adjusted for different groups to precisely aid those in need. The exploration of UBI's advantages and limitations, along with the potential problems and constructive suggestions, requires verification through practice. Therefore, this essay contends that while UBI may theoretically contribute to enhancing social welfare, its introduction in the UK necessitates further exploration and pilot testing.
Sources:
Institute of Economic Affairs. (2018). Should we support a Universal Basic Income? Debate: Should we support a Universal Basic Income?
Hobson, F., & Kulakiewicz, A. (2022). Potential merits of a universal basic income. House of Commons Library Debate Pack, 13 June 2022, CDP-2022-0104.
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