Sunday, 29 October 2017

Universal Basic Services

While the libertarian advocacy of universal basic income (UBI) tends to have a distinct whiff of bad faith about it, centred as it is on the dismantling of the state and the invigorating effects of self-reliance, the social democratic response has generally been argued in good faith, with an emphasis on social inclusion and the broadening of opportunity. However, this shouldn't blind us to the extent to which that response has been influenced by neoliberal ideology. Hard on the heels of the recent LSE paper that cast a sceptical eye over the relationship of UBI and social democracy comes a proposal from the UCL Institute for Global Prosperity that seeks to reconcile the two in the form of universal basic services (UBS). The idea is essentially an expansion of the welfare state (an "extension of the NHS principle") instead of a cash handout: "The UK should provide citizens with free housing, food, transport and IT to counter the threat of worsening inequality and job insecurity posed by technological advances". The appeal to the NHS indicates that this is a proposal concerned as much with political credibility as practicality (there are aspects of the NHS that you really wouldn't want to replicate), while the linked spectres of inequality and technology are insubstantial gestures towards the zeitgeist. It should be stated at the outset that housing and food would only be provided to the poorest in society, meaning that the truly universal element of the proposal is mainly bus passes, broadband and the TV licence.

UBS isn't just Spirit of '45 revivalism, as the inclusion of IT should indicate, though what it drops is as significant as what it adds. For example, further investment in education, the great hope of the Blair years, is dismissed on the grounds of diminishing returns and a recognition that the benefits to date were disproportionately captured by London and the South East. Another interesting omission is any reference to greater maternity or childcare support, suggesting the secular push of women into the labour market is no longer considered an unalloyed good. Though this isn't a return to 50s-style labourism, the patriarchal overtones of UBS compared to UBI are worth noting. While the LSE authors worried that UBI might reinforce traditional gender roles, essentially by providing wages for housework, they underplayed the possibility that a reliable income might encourage greater female independence and even household breakup (which is not necessarily a bad thing, either from the perspective of the individual or the labour supply). A UBS, by substituting household goods for cash, might have the opposite effect, which would presumably please Blue Labour types for whom family stability is synonymous with social cohesion.

The paper talks of the threat of technology to employment yet places great emphasis both on the social importance of work and the need for the tax system to make "previously marginal work viable", suggesting that it envisages a continued rise in employment. It is not clear how the "System would preserve incentives to work while building a more cohesive society" in the face of either technological unemployment or continuing job polarisation, though this is partly because the proposal does not analyse either development beyond the anodyne. While it recognises the paradox that increased automation has occurred alongside record levels of job creation, it provides no interpretation beyond the hypotheses of a transitional lag or displacement of labour into low-wage work. Were unemployment to rise, one possibility is that UBS could be combined with a job guarantee, though the mechanics of this would be complicated if rent-free social housing was available to only some of the unemployed. Should employment stay high but precarity and low wages increase, UBS might simply serve as an "in kind" extension to existing tax credits, thereby subsidising crap jobs. The latter seems more likely. Tellingly, the proposal suggests that UBS would help deliver "a more flexible labour market", without stopping to question what the drive for such flexibility over the last 30 years has actually produced (i.e. precarity and polarisation). This indicates the extent to which contemporary social democracy has absorbed neoliberal shibboleths.

The discussion paper by Jonathan Portes that provides the substantive backing to the proposal includes a number of liberal tropes, from the greater political acceptability of "necessities" (which echoes the myth of the fairness of wartime rationing) to the equalisation of capabilities (which echoes the 1980s approach to welfare economics championed by Amartya Sen). Central to this liberal tradition, which connects Beveridge to Blair, is the idea of rights and responsibilities. Consider the parenthetical aside in the following: "UBS – particularly if conditional on contribution or citizenship – is aligned more closely with public attitudes to citizens' rights and responsibilities, and hence are more likely to be politically sustainable over the medium term". This may well be true as a reflection of the grip of ideology, but it doesn't lessen the jarring contradiction of a supposedly universal system being conditional. It also ignores the tendency for those "necessities" to be downgraded (the poor don't deserve flat-screen TVs etc), which is likely to keep the principle of "less eligibility" central to discussion of universal basic services. The method of funding UBS - a reduction in the personal allowance from £11,500 to £4,300 - is progressive, but it will also create a conflict of interest with relatively low-paid workers who do not expect to fully benefit, such as stereotypical white-van drivers who never use buses and prefer Sky to the BBC.

Indicating another departure from historical social democracy, the proposal frets about incentives, using the language of the "benefits trap" critique that was pioneered in the 1960s by the anti-welfare right: "Common to both UBS and UBI is the idea that minimum wage levels denigrate and crowd out a multitude of small activities that are the foundation of prosperous and sustainable human society, by raising the lower limit on any activity that delivers less monetary value. Basic Services, on the other hand, actually deliver on the promise of a common floor to the standard of life of any citizen, replacing living costs for those that use the services, and increasing retained pay. This lowers the limit on marginal activities, making all kinds of small work worthwhile". The clumsy wording points to fuzzy thinking. The premise is that pro-social work is discouraged by a minimum wage, though no evidence is provided to support this "idea". The implication is that both a UBI and UBS would allow minimum wage rates to be reduced or even abolished as marginal pay would largely be retained rather than clawed-back through tax-credits or reduced benefits. This is arguably true of a UBI, but it is less obviously the case for a UBS where some goods are targeted. If most low-paid workers continue to have to pay rent, we'll still need a minimum wage.

The proposed model is a mixture of universal services, targeted services and a small supplementary basic income. The universal services are focused on communication (broadband, a basic phone and the TV licence) and transport (primarily buses but also Tube and light rail where relevant). The targeted services are rent-free social housing for 1.5m households (including a utilities allowance and zero council tax) and food support for 2.2m households. The former presumes the building of 1.5m new homes while the latter assumes that charitable food-banks would be largely replaced. The paper envisages that the services "might be provided publicly, by private companies, or by the voluntary sector", which tells us little. It's possible that the infrastructure of the communication services would be nationalised, perhaps by folding BT Openreach into an expanded public corporation with the BBC, but most of the application-layer services are likely to remain within the private sector. Likewise, the bus companies might be generally brought back into public ownership, mirroring the successful model of Transport for London, not least because this would accommodate the need to expand services to hitherto less profitable routes to satisfy the reasonable demand for equality of provision.

The obvious danger in the revival of social housing as a service for the poorest, rather than a truly common offering for all social classes (as originally envisaged by Aneurin Bevan), is that the new properties will be seen as "sink estates" from day one, regardless of their build quality or the calibre of the tenants. Unless maintenance costs are ring-fenced, future pressure for council spending cuts is likely to turn the myth into a reality. A better strategy would be for councils to build a lot more than 1.5m new properties (ideally two to three times that number) and then simply vary rents based on household circumstances. In other words, a property might be charged at a standard rent for someone in work and at zero rent for someone who is temporarily unemployed, thus flipping the housing benefit dynamic to one in which a charge is waived rather than money handed over to a landlord. Of course this would significantly increase supply (and encourage housing benefit claimants to quit private rentals), leading to at least a stagnation in house purchase price and private rent growth. This might be healthy in the long-term, but it will be unpopular in the short-term with homeowners.

The supplementary income - a mini UBI - would be £20 a week. This is expected to provide flexibility for citizens with needs outside the scope of basic services and existing benefits, though the odds must be that it will simply disappear into routine living costs rather than providing the basis for building a fund. It is too small to have the beneficial effects suggested by proponents of a full UBI, such as the ability to turn down crap jobs or commit to further education. The cash would be offset by increased tax on the employed and reductions in child benefit, JSA, pensions and disability payments for others. In theory it still represents a net gain as UBS removes the cost of certain basic services, such as a phone or TV licence, that have to be met out of benefits or income today. Of course this cost isn't equivalent in all cases, because of individual variation in service usage. Pensioners, many of whom already get free buses and the TV licence, will benefit less than the young, which may well be fair but isn't likely to be politically popular. I suspect this is one area that may be vulnerable to further refinement, to the point that the mini UBI will simply turn into a means-tested credit, as obscure in its rationale as NIC thresholds.

People tend to be both in favour of the collective provision of public goods and sceptical about the collective provision of welfare. This is why the NHS is popular while attitudes towards social insurance continue to harden. The distinction appears to reflect different perceptions about free-riding. The NHS is thought to be generally fair, hence the power of the myth of "health tourism" as an affront to the principle of entitlement. Sympathy for benefit claimants is grudging, but once a claim is judged legitimate there is an expectation of fair-dealing by the state, hence the disgust at the Universal Credit 6-week lag, which strikes most people as punitive. Parallel to this is a related perception of efficiency and value for public money, hence rail renationalisation is seen as sensible while the "principle" of Universal Credit (all benefits combined into one) remains persuasive even as the evidence mounts that it is impractical. In this environment, advocating increased public goods would appear to make more political sense than advocating "free money", so UBS looks like a more achievable goal than UBI. In practice, it may prove to be more problematic because it demands just as much of an intellectual victory to secure support, but also requires a degree of state activism that is likely to be resisted by vested interests, from transport firms to the BBC. A key selling-point of UBI is personal autonomy. £20 a week pocket-money sends an altogether different message.

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