Benefits Street

Approximately 42% of the UK adult population (23 million out of 54 million) are in receipt of at least one state benefit. Of that number, a little over half (12.6 million) are pensioners, of whom 29% claim at least one additional benefit over-and-above the state pension. 40% of Universal Credit claimants are in at least part-time work. Across the UK, more than half of households are in receipt of one or more benefits in all regions bar London and the South East. While the composition of benefits has changed over time, e.g. the shift from unemployment to incapacity benefits in the 1980s and 90s, their incidence - i.e. who receives them - hasn't changed all that much. Demographic ageing has increased the number of pensioners as a proportion of the total, but among the working age population benefits remain concentrated among the poor (understandably enough) and the more deprived parts of the country. This has given rise to myths about inter-generational dependency, but the more accurate picture is of a national population that routinely moves between paid employment and welfare or that needs to claim benefits to augment low-paid work. 

The social history of the last century, from the Old Age Pensions Act of 1908, was marked by the steady expansion of welfare, not just in the broader sense of the provision of public goods such as healthcare, education and housing, but in the narrow sense of cash benefits. While the original pensions were non-contributory, it was the contributory principle that marked the ideological high-point of this expansion in the late-1940s with the reform of National Insurance. Thereafter, the growth of non-contributory schemes, such as National Assistance and Supplementary Benefit, would see the ideological frame of benefits shift towards questions of entitlement and abuse. The welfare reforms initiated by the Conservatives in the 1980s, and rebooted under New Labour after 1997, effectively conceded the end of the contributory principle as the central pillar of welfare, but instead of a frank acknowledgment that people should simply be given money to avoid destitution, in its place was substituted the moralising regime of workfare while welfare more broadly was subject to a culture of means-testing and bureaucratic hindrance.

The Covid-19 pandemic has led to many more people finding themselves in receipt of state handouts, such as the furlough scheme, but this probably hasn't changed the total number who will at some point in their life find themselves dependent on welfare payments, because that figure is already very high. What it has done is raise the question as to whether the state should simply respond to need. While there has been plenty of critical coverage of the government's poorly-managed and easily-defrauded business loan schemes, there has been little debate or media fuss about the deservedness of those in receipt of income support during lockdown. Similarly, it's clear that most people were sympathetic to the temporary Universal Credit uplift, and would support it being restored, not least because the proposed 3.1% uprating of benefits is clearly going to be inadequate in a year when inflation may touch 8%. The demand that the state protect consumers from high gas and electricity prices, particularly those already hovering above the poverty line and forced to make choices between heating and eating, is also close to universally popular.

This presents a challenge for a Conservative government committed to the free market. In a choice between direct market intervention and subventions, they will tend towards the latter for ideological reasons. Any gestures towards the former will be designed to maintain commerial relations, thus the proposed £200 discount on energy bills will be paid back through higher charges over the next five years, while the £150 council tax rebate is non-repayable. But this risks undermining another tenet of conservative philosophy, that people should not be dependent on state handouts, so those subventions must in turn be framed as exceptional and geared to virtuous behaviour, such as homeowning. The government's problem, which can also be seen in microcosm in its reaction to the P&O affair, is that the electorate supports direct market intervention, whether that be windfall profit levies or nationalisation of energy supply. It also believes that the government has a moral duty to protect the population from excessive price increases. This is a notable shift from previous decades when questions of morality focused on the legitimacy of benefit claimants.

The negative reaction to the Chancellor's recent budget statement has focused on the immediate increase in taxation (i.e. the previously-announced increase in the NIC rate), but what really distinguishes it is the disappearance of the activist government forced into existence by the pandemic. This is why the statement went down better with Tory backbenchers than the population at large. In terms of interest groups, Rishi Sunak's plan appears to be to get middle-earners back on board though the increase in the NI primary threshold and the cut in fuel duty, with his attention switching to pensioners next year when he presumably hopes to restore the triple-lock, ahead of a promised cut in income tax in 2024 just before the likely general election. What received less coverage were his announcements in respect of business, where increased reliefs on investment and the NI employment allowance for smaller firms were held up as steps towards addressing poor productivity growth, despite these being measures already tried on multiple occasions to little effect. In practice, these were simply reassurances that business is valued, which presumably is intended to head off any competition on that score from Labour's pro-capital turn.

Behind these short-terms tweaks and gestures lies a more significant secular change in the composition of welfare recipients since the 1970s. It's important at this juncture to understand that a welfare recipient is not just a benefit claimant. In a fiscal system centred on income and property taxes, any favoured group that receives a rebate or discount on their tax - for example, reliefs on investment or the employment allowance - is effectively a welfare recipient because they are being subsidised by other tax-payers. The term "corporate welfare" has gained currency over the last 50 years, but it might be better to speak of capital welfare given that one of the persistent features of the period has been lower rates of taxation on dividends and capital gains, which benefits the share-holding classes and homeowners. We can also see this capital welfare quite explicitly in housing benefit, where general tax revenues flow to landlords. Though claimants get the benefit of the housing, the property owner gets the benefit of the one cash welfare that has increased more steeply than incomes. 

This welfare is also extended to favoured groups in the form of employment income. The steady increase in the tax-free allowance on income tax and now national insurance, which higher earners receive the full benefit of, should really be seen as what the hardly-radical Fabian Society have taken to calling "shadow welfare". When these taxes foregone for individual income and housing (i.e. exemptions for CGT and VAT) are taken together at a national level, they amount to four-fifths of the total spending on social security and state pensions. The Fabians' Andrew Harrop correctly identifies what this startling fact points to: "The answer to the question ‘should the UK have a UBI?’ is that we already do, once tax-free allowances are taken into account. The ‘shadow welfare’ of tax-free allowances is a quasi-UBI, but one that excludes people who earn little or nothing: it is means-tested in reverse." But crucially, "When social security and ‘shadow welfare’ are looked at together we have a broadly flat-rate system, with middle and high income households being entitled to only slightly less than low-income households on average."

Where Harrop and the Fabians revert to type is in preserving the role of means-testing for all benefits beyond a "flat-rate universal allowance for each adult (evolving from today's tax-free allowances". In other words, they are arguing to formalise the current situation, in much the same way that they argue that national insurance should be merged with income tax and the myth that it is hypothecated for specific benefits or welfare services dispensed with. As ever with this argument, the unstated premise is that overall levels of taxation will not change, hence "While there is nothing wrong with the principle of universalism, it cannot be justified if it means resources are spread so thinly that those who rely only on state support must face extreme hardship". But this is a disingenuous argument given that the Fabians' own analysis shows that so much of "shadow welfare" is actually related to wealth, rather than income, such as capital gains, dividends and accumulated property. And if there is one stylised fact we know about fiscal policy during the neoliberal era, as detailed analyses by the like of Piketty et al have shown, it is that we have systematically under-taxed wealth.

Basic income is now clearly visible in the Overton Window of legitimate political discourse, but what matters in the UK context is less the idea than its reinterpretation within the history of welfare, hence the Fabians insistence that we have long had a de facto basic income that combines benefits for some and allowances for others. But the acknowledgment of this does not promise an end to the popular culture of beasting benefit claimants, simply because the discretionary benefits that the poor rely on will still be means-tested. In this regard, it's worth noting that the focus on benefit fraud long ago shifted from income to housing, hence the introduction of the "bedroom tax" a decade ago. Behind this is a wider defence of wealth and capital, hence the strong correlation in attitudes between support for the bedroom tax and opposition to inheritance tax. The framing of basic income as the logical evolution of a parsimonious dole merging with tax-free allowances is an essentially conservative reading. It not only occludes the role of wealth in the growing inequality of the last 45 years, it also closes down any discussion of UBI's emancipatory potential, and I suspect it is the latter that most attracts the Fabians.

Fraudulent Activity

The measures the government took to protect employment, wages and businesses during 2020 and 2021 were a success. Unemployment was kept relatively low, the furlough scheme (together with the Universal Credit uplift) kept a lid on poverty, while the rate of business failure dropped. This last was partly due to the normal process of Companies House dissolution being in abeyance during the middle of 2020, but even after the catch-up in September, the cumulative number for the year was lower than in 2018 and 2019, though there was a subsequent above-trend increase in 2021. The closure of businesses on a scale not seen since the early 1980s did not transpire, though this may simply reflect the existing high number of zombie firms in the economy due to low interest rates since 2008. Perhaps surprisingly, business formation numbers were higher in 2020 than 2019, at 781k versus 691k. This was partly due to the creation of more online retail businesses prompted by the change in consumption habits during lockdown, but it also reflected a measure of fraud as fictitious companies were formed to take advantage of the pandemic financial support schemes. 

It now transpires that £5.8 billion of the £81.2 billion spent across those schemes has been lost to fraud and error, with £4.3 billion of that already written off. Though the government's own statement on the matter doesn't mention it, preferring to focus on the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS), the bulk of this relates to the Bounce Back Loan Scheme (BBLS), which accounted for £47 billion of the total spend and was managed by the Department for Business, Energy & Industrial Strategy (BEIS). The Public Accounts Committee anticipated in December 2020 that a third to a half of this would become bad loans (i.e. not repaid due to insolvency) and flagged the government's apparent difficulties in identifying, let alone stopping, fraud on top of this. It looks like the final fraud rate will be about 10% of the spend, which is remarkably high. The resignation this week of a junior minister in the Lords has brought the BBLS back to prominence, though the media seemed as interested in what this said about the Prime Minister's weakening grip as the ethics of British business.

Could this level of fraud have been avoided? While there has been stinging criticism of the attitude of the Treasury and the competence of the Department of Work and Pensions (DWP) and BEIS, the counter-argument has been that this was an emergency and not worrying too much about fraud was the correct policy in the circumstances, given that the alternative might have caused significantly greater unemployment, business failure and financial distress. However, this instrumental argument distracts from a more fundamental question, which is whether it made sense to approach the problem the way the government did. For example, the BBLS was designed to facilitate bank lending at commercial rates to SMEs by providing a state guarantee for the loans. Once in place, the banks had no interest in checking for fraud, whether the government wanted them to or not, as they weren't exposed to any losses. In effect, the state went with the grain of the banking sector's preferences and habits, providing what amounted to an advance bailout for bad loans.

Similarly, the CJRS scheme assumed that the state could most appropriately support wages during furlough by allowing employers to claim the cost back, rather than making use of an existing mechanism (PAYE) to calculate wages and pay employees directly, which if nothing else would have lessened the "red tape" burden on businesses. It is hard to avoid the conclusion that the government preferred this approach because it maintained power relations between employer and employee. For example, now that employers have started to demand that employees return to the office, despite continuing risks of infection in sometimes substandard working environments, employees have little leverage. This doesn't mean that direct payments would have preserved working-from-home for longer but that employees might have been more emboldened to ask for improvements in conditions as a quid pro quo for a return. That power relations were an important consideration is evident from the relaxed attitude towards corporate employment fraud compared to the more stringent policing of benefit fraud.

In the years leading up to the pandemic, benefit fraud and error was running at about £4 billion a year. The majority of this was for benefits not related to work, such as housing benefit, personal independence payments and pensions. Universal Credit (UC) has a systemic vulnerability to fraud (or honest error) because claimaints can increase their work hours, or otherwise change their circumstances, without this being correctly adjusted for. As UC has been rolled out, and as many more people have claimed during the pandemic because they didn't qualify for the furlough or self-employed schemes, the rate of fraud and error has shot up to 14.5% of expenditure. If nothing else, this highlights what an inefficient system UC actually is, as much as how easy it is to defraud it. The furlough scheme was also open to abuse by employers - e.g claiming for workers who had already quit their jobs, or adding friends and family as spurious employees - while the self-employed scheme was vulnerable to people who had already chosen to stop working, or had shifted to employment and were now on furlough, claiming for extra months of income. 

It's interesting to speculate how this would have been handled if we'd had a Universal Basic Income (UBI) system in place. This would have covered everyone (so no spurious employees), could have paid direct (so no payroll fraud), and could have smoothly compensated when paid employment income stopped (as it would be automatically reported via PAYE). But one of the reasons why we don't have UBI is that it provides workers with leverage: the ability to turn down crap jobs, to refuse intolerable or worsening conditions, and to vary hours to accommodate social responsibilities (such as isolation when infected or care-giving to others). As such, it is the antithesis of the government's preferred approach with its focus on maintaining the power of capital over labour. The importance of that dynamic is all-too evident in the government's insistence that employees should return to the office or factory as soon as possible. This wasn't simply in support of the narrow financial interests of commercial landlords and city centre retailers. It was a wider insistence on the restoration of the power relationship.

It wouldn't be fair to say that the government has turned a blind eye to corporate fraud in respect of the pandemic support schemes. It does expect to recoup £1.5 billion of the lost money, after all. However, it doesn't appear to have pursued it as vigorously as it has previously pursued benefit claim fraud (and overpayment errors), despite plenty of warnings over the last two years. This limited diligence stands in marked contrast to the government's much more tolerant, even lackadaisical, attitude towards the money lost via public sector outsourcing during the pandemic, most famously the VIP lane for PPE and other supplies contracts and the £37 billion test and trace programme. Of course, no one is suggesting that the likes of Deloitte and Serco have been guilty of fraud (though that word is not inappropriate in its non-criminal sense when applied to Dido Harding). This looting of the public treasury is all above board: exorbitant payment in return for ineffective or substandard services. And in overseeing this waste, the government is merely continuing the established practice of the state.

The common thread in all these phenomena is the determination of a Conservative government to defend and conserve existing power relations, from the control of employers over workers' incomes to the parasitic symbiosis of consultancies and the public sector. The talk of the Tories rediscovering the developmental state, just like the claims that Labour's current leadership is well to the left historically on economic policy and employment rights, mistakes the rhetoric intended to substitute for a discredited neoliberalism for a radical agenda. The reality is an absolute determination, across both parties, to preserve the structural asymmetry that has been established between capital and labour since the early-80s. We are witnessing two types of fraudulent activity: the opportunism of a capitalist class that sees profit in the pandemic and a political class guilty of hypocrisy and deceit. The charges laid against the Prime Minister do not provide a lighting rod for a cleansing jolt to the system but merely a distraction from the continuing institutional rot. A rot that put him into Number 10 in the first place.

Levelling Up

While there are plenty of competing explanations for Labour's loss of Hartlepool, one that nearly everyone agrees on is that the constituents were in favour of "levelling up". I'm not so sure. Were a UK government to undertake a massive programme of industrial investment and urban regeneration for the North and Midlands it would predominantly (and assuming it acts rationally) be putting money into the large cities, as that is where most of the industrial capacity already is, where the skilled labour is to be found, and where the multiplier effects would be greatest. Newcastle and Manchester would benefit far more than Hartlepool or Wigan, not just in absolute terms but in relative terms too. What it's not going to do is bias investment towards small towns that were once mono-industrial (reliant on shipbuilding, mining or steel production, or on a single large manufacturer) but which now lack much potential outside of local provisioning (warehouses, logistics etc). At best, these will be dormitory towns for the conurbations (so what investment they'll get may be focused on transport links and possibly schools). 

It's also worth noting that "green jobs" will not generally mean former shipbuilders making windmills or ex-miners installing geothermal heat pumps. There will a bit of that, but the bulk of the work will be in loft insulation and other forms of energy efficiency, so they will be distributed where the current population is. It's also the case that the loose definition of a green job (a net benefit to the environment versus assumed alternatives) means that it will encompass rail transport, electrification for cars and other activities that are most intense within large cities. Green manufacturing (of solar panels, for example) will mainly happen where manufacturing already happens and where there are established distribution networks, which means a lot of it will be offshored to the Far East (China already accounts for two-thirds of the global production of photovoltaic technology). Green jobs will not provide the direct and indirect employment opportunities that a shipyard or a colliery once did.

Retired homeowners in places like Hartlepool see "levelling-up" in terms of public spending rather than industrial investment. The now infamous vox-pop on BBC Breakfast, in which an older resident blamed Labour for the loss of the local hospital A&E department and the magistrates' court, despite these closures having nothing to do with the council, was interpreted by many as either stupidity or bias (i.e. the failure of the interviewer to challenge the misunderstanding), but it also suggests that Labour's historic identification with quality public services is weakening. This isn't because Labour has failed to deliver - there were real gains under Blair and Brown - and certainly not that the Tories are seen as more credible after a decade of austerity. Rather it's because voters in these areas still seek to articulate their interests in the language of the collective rather than the personal. But while they want a healthy economy and improvements to local services (bread and roses), I suspect what they want above all is a guarantee that property values will be maintained and social care will be better funded, which is highly personal. 

If the Tories only manage to do the former, and there is plenty of reason to believe that this will be the limit of their ambition, hence the absence of social care from the Queen's Speech this week, then it will probably be enough to retain the support of this electoral bloc. Failing to "level up" will not prove as damaging as some fear. It is clear from a revealing Conservative Home post by Rachel Wolf, who co-authored the Tories' 2019 manifesto, that the party recognises that what this demographic chiefly wants is a sense of value and security, hence reviving the high street and addressing crime are prioritised over employment and apprenticeships. This view receives support from a number of unlikely quarters, such as Peter Mandelson commenting on the "smartness and tidiness" of privately-owned homes in his former constituency (without perhaps appreciating that this is orthogonal to civic pride), and George Monbiot noting how the erosion of the state's capability to enforce the law has left the old feeling vulnerable and anxious (without perhaps appreciating how press reports on "online scams" are no less a moral panic than tales of rampant knife crime).

The Tories know that retired homeowners, who spend a disproportionate amount of their time lamenting the disappearance of familiar shops and fretting about burglary, are a pivotal vote in so-called "Red Wall" constituencies. And because these deindustrialised towns aren't going to be reindustrialised, an ageing population and high rates of home ownership are likely to be persistent features. One of the reasons why retired homeowners religiously visit the high steet is to view the windows of estate agents. Many interpret the relative affluence of the high street itself as a window onto the town's intrinsic value and therefore a reflection of their own asset's potential. In contrast, Labour has (yet again) vowed to focus relentlessly on "work and jobs". This is fine, but it fails to acknowledge that the levelling-up issue for its potential voters (i.e. the actual working population rather than nostalgic retirees) is more about wages than unemployment. To be fair, some get this and it's likely that pay will become another area of friction with a leadership whose instincts are to revive the business-friendly mantras around skills and education that distinguished New Labour. 

The claim that Labour "cannot win the votes of left social conservatives because their social values are more important to them than their economic interests" mistakes the situation. Social conservatism isn't a novelty, and it didn't dissuade "traditional voters" supporting Labour administrations in the past. Had it really been so much more important, Harold Wilson wouldn't have risked supporting the abolition of the death penalty nor Tony Blair repealing Section 28. What is new is the now former working class fraction of retired homeowners anxious about inheritance and care costs. This is a demographic that has grown to significance since the 1980s and whose class consciousness has been shaped by the media's focus on property and financial risk. If anything, their economic interests are even more salient because of the potential uncertainty of property values subject to both the vagaries of the wider economy and a more localised erosion due to crime (real and imagined) and declining amenities. They may express their concerns through a variety of media-friendly social and cultural tropes, from immigration and statues to travellers and trans rights, but these are clearly symbolic of more personal concerns over control and stability.

Though a significant element of the population, it's important to recognise that this is a pivotal electoral bloc only in certain constituencies, specifically those where retirees and homeownership are high and many of the young have left town. James Kanagasooriam's original coinage of the "red wall" recognised that these demographics meant certain seats should probably already have drifted to the Tories before 2019 (Hartlepool was trending that way), but later media usage has reduced the label to little more than "In the North, previously staunch Labour, collapsed overnight" (this narrow focus ignores the seats in the West of England where a similar dynamic helped the Conservatives supplant the Liberal Democrats in 2015). The framing has led Keir Starmer to think that these seats can be flipped back to Labour by adopting socially conservative policies in conjunction with a (slightly) more interventionist economic programme. But this ignores the underlying trend and that such a strategy dissuades potential voters as much as it persuades. Is there a different approach Labour could adopt that might reverse the trend? If there is, it will depend on enthusing the actual working class in seats like Hartlepool, as happened as recently as 2017.

What might this alternative approach look like? Rationally, Labour should be appealing to working people on pay and job quality. Over and above promises on green jobs and apprenticeships that will benefit only a minority, one policy that has the potential to improve wages and encourage more secure work for many more people is UBI. Evolving the furlough scheme and pre-existing tax credits into a basic income has the transformative potential that Right to Buy had in the 1980s, both in the sense of dramatically altering the circumstances of substantial numbers of people and in providing a profitable electoral dividing line between the Conservatives and Labour. Just as it was the latter who made tentative steps towards the allowing council house sales in the 1970s, only to be gazumped by the Tories, so there is a risk now that if Labour doesn't champion a more systematic and less punitive approach to income support, the field will once more be left to an opportunistic Conservative Party that could introduce a more discriminatory scheme that rewards their own electoral coalition, much as they did with the pensions triple-lock. 

Appointing Rachel Reeves as Shadow Chancellor doesn't augur well. Not only has she built her political career on a punitive approach to welfare, but she's a former Bank of England economist who is most comfortable with fiscal orthodoxy. The report that Keir Starmer intends to spend his summer talking to people who don't vote Labour (i.e. those retired homeowners again), rather than rallying the party's supporters, is also dispiriting. The problem in 2019 may have been ex-Labour voters attracted by the Tories promise to "get Brexit done", but the problem in Hartlepool last week was more about Labour supporters staying home in the face of a party with no plan or enthusiasm to get anything much done. Levelling up the country will probably turn out to be no more than rhetoric, but the term might have more significance for the Labour Party if it can be persuaded to build its policy offer outwards, rather than focusing on the Red Wall (which now plays a similar "moderating" role to the swing voter of old) or by retreating to the Blairite learned helplessness of exogenous change (globalisation then, technology now).

The Nightmare Before Christmas

What difference would it have made if Jeremy Corbyn had become Prime Minister just before Christmas? The bumptious Matt Chorley at the Times recently imagined a Corbyn-led government as both dithering and hyper-interventionist but above all "crankish", which is another way of saying that he is still suffering nightmares about it. Of course, what he really feared was not Carry On Social Democracy but opportunistic "disaster socialism", in which crisis provided the excuse for radical change to the social and economic order (this is clearly projection by those who relish disaster capitalism). Ironically, this concept enjoyed a brief vogue last year among British liberals and the soft-left who wished to dismiss the assumed utopianism of Lexiteers, though it has been revived in the US in a more positive way lately to suggest that the pandemic might nudge the country towards a better social safety net. Amid the stale jokes and gratuitous insults, Chorley did at least concede a good point: that we have even less idea of what a Starmer-led government would look like.

Jeremy Corbyn in Number 10 is obviously a counterfactual, but it's one that allows us to think about what a Labour government might have considered the outer limit of the possible: how far it could have pushed the Overton Window under propitious circumstances. This is useful in that it may provide a benchmark against which to measure Labour's offer at the next general election. I have no doubt that the offer will be more modest, and not just because of Keir Starmer's emphasis on competence (i.e. a change in personnel rather than a change in policy), but the gap between the two provides the basis for a critique of substance rather than form. An important caveat with this counterfactual is that a Corbyn-led administration might also have been less radical than expected, not just because of resistance by the establishment and likely sabotage by the PLP, but because of Corbyn and McDonnell's own caution and desire for consensus. But that's boring. Instead, let's imagine that they followed their instincts in full and that they specifically saw the Covid-19 crisis as an opportunity to advance the recognisably socialist policies that would give Matt Chorley night-sweats.

As a "new broom", any non-Conservative goverment would probably have paid more attention to the national risk register and contingency plans on taking office after a decade of Tory mismanagement than the Johnson regime did, if only as part of an audit of the previous administration for the purpose of easy point-scoring. This means there would have been a decent chance that some of the holes in the planning would have been spotted earlier (the first reports from Wuhan were on 31st December, the first WHO bulletin on 5th January) and that rectification might have been initiated some weeks before March (e.g. buying ventilators and replenishing PPE supplies). It's also worth noting that senior public health officials operate in a political field. It's not pure science. We saw that with their willingness to indulge the nudge unit and "herd immunity" in the early communications, which was a concession to Tory ideology and the assumed preferences of Number 10. In contrast, I suspect they would have assumed a Labour goverment to be more supportive of a strict public health approach and would have advised accordingly. This means there would be have been more likelihood of an earlier lockdown.

A Labour government might have insisted that all care home staff remain in situ and isolated with residents. This would have made sense in terms of shielding and reducing infection (we now know that agency staff moving between homes was a key vector in the spread), but it would also have highlighted the failings of the care sector. It would have disrupted the agency labour market, required increased staffing to allow rotating shifts and prompted calls for state support as care homes at the margin of profitability became unviable. This would have intensified the "crisis in care" that has been developing over the last decade and allowed a Labour government to accelerate its plans for a National Care Service. Consistent with this approach, a Labour government might also have had the good sense to rule against elderly patients in hospital being returned directly to care homes in the early stages of the pandemic rather than being tested and quarantined in the under-utilised Nightingale hospitals.

Responsibility for test and trace could have been immediately assigned to local government and existing regional public health bodies. The "world-beating" app would have rightly been relegated to an adjunct of the programme. This would not only have marginalised outsource providers like Serco and inexperienced figureheads like Dido Harding, it would have provided the foundation for a more thorough devolution of power from Whitehall. That the Health Secretary, Matt Hanock, wants even more private sector involvement in public health going forward, despite the failures to date, shows the sort of nerve that you would hope (absent the failures) a Labour government would display, but in the opposite direction. This devolution could be extended to local job guarantee schemes, to provide useful (but non-coercive) work and training during the developing recession, and an expansion of local authority resources and responsibility for workplace inspections in respect of both employment rights and public health and safety (those Leicester sweatshops).

The GCSE, BTEC and A-level mess could have been avoided by awarding grades based on teacher assessment and then allocating university slots pro-rata across all schools, so that a "bog standard" comprehensive got as many places per capita as Eton in the first pass. Russell Group universities could have been obliged to set quotas on offers between state and independent schools, so the latter would only get 7% of the "cream". This would have met the ostensible goal of the infamous algorithm - to ensure student demand matched the supply of places - while also making a real contribution to social mobility. It would, of course, have marked a radical departure from the systemic bias of the past and thus relatively disadvantaged private schools, but a reforming Labour government should relish that. Having made such a change, it would be palpably unfair to then revert back to the old system next year. Indeed, the smarter parents of the privately-educated would be looking to transfer their 16 and 17-year olds to the state sector. The independent school sector wouldn't disappear overnight, but it would probably rapidly shrink to focus on pre-14 education.

Though the Conservative government did act to provide business and income support, the manner in which it did so produced lots of omissions and anomalies that have led to individual hardship, particularly for those in the more "flexible" sectors of the economy that the Tories have historically lauded. The design of an across-the-board taper for the furlough scheme means that we are now facing the prospect of rapidly rising unemployment and poverty in a matter of weeks, affecting all sectors. The obvious opportunity for a Labour government would have been to cut the Gordian knot of wage support by introducing a universal basic income (and associated tax clawback for the employed) as a temporary measure. The cunning plan would be to allow this to run on naturally until the recession was over, rather than terminate on a specific date, which would inevitably lead to calls next year for it to be made permanent and for the rump of Universal Credit to be disassembled into separate, contingent benefits.

One reason for a UBI would be to make the churn in businesses easier. Rather than committing to propping up firms, a Labour government could argue for reduced state support for capital in favour of increased support for labour, the better to facilitate exit and entry. Failing firms could fail gracefully, while freed-up labour would have the confidence to reject poor quality and precarious jobs and could instead opt for further training or explore freelancing. Ceteris paribus, this should lead to an improvement in national productivity, though that may be initially obscured by the effects of the recession and the changes in working practices that the pandemic appears to be triggering. However, such an approach would also provide a more flexible and forgiving environment for those changes to work through and would also help maintain aggregate demand. A UBI would require reform of the taxation system were it to become a permanent feature, but that could be deferred for a couple of years to allow the principle to be established.

Just as the Second World War made salient both Beveridge's "five great evils" and the potential for change, so the pandemic has shone a brighter light on the vulnerabilities of the health and care sectors, the inequities of education and the precariousness of the economy, while also revealing that there is a magic money tree after all. Things could be different and the political battle leading up to the next general election is likely to focus on whose vision of change or continuity catches the electorate's imagination. For all the revolutionary talk of the sunny uplands of Brexit and the "levelling up" of the North of England, it has become apparent over the last 8 months that the Conservatives remain the party of entrenched privilege and social neglect. What is less obvious is whether Labour is still the party of reform and progress outside of neoliberal technocracy. In particular, you have to wonder why Keir Starmer isn't taking the opportunity afforded by the pandemic to build a public consensus for the sort of radical change that pushes beyond the 2017 and 2019 manifestos (National Broadband now appears a quite modest idea).

One of the characteristics of Labour's 1945 manifesto was that it was comprehensive, even if it was light on detail in many areas. At the time, this was seen as entirely appropriate to the circumstances: the UK needed root-and-branch reform and it was the broad thrust of policy that energised voters not the minutiae. In 2019, the party's manifesto was dismissed as over-stuffed and incredible. This was not just an unflattering comparison with the Tory's sketchy offer of "Get Brexit done", but a conservative lament against comprehensive change: a view apparently echoed by many in the Labour party, including the soi-disant "soft left". Where the two differed is that the 1945 version could skip the detail because much of it had already been publicly discussed, for example by the 1942 Beveridge Report and the plans for the NHS. Labour failed to adequately prepare the electorate between 2017 and 2019, but the pandemic has perhaps now achieved more in this regard than any number of reports and social media memes could. The question is, will Starmer build on this or will his critique remain "I would have done the same, just more competently".

You Can't Take It With You

The government's bellicose language around Covid-19 has raised the spectre of rationing and triggered panic-buying. While this may partly reflect a realistic fear about the fragility of supply-chains, it also reflects a folk-memory about the unwillingness of the state to protect the people. Despite the mythology of welfare and collectivism, the state's strategy since the start of the 20th century has been to talk about protection while doing little of substance, all the while treating people as an expendable resource. In practice this only differed from the aristocratic disdain of the 19th century, most famously on display during the Irish and Scottish famines, because of the need to pay lip service to popular security in the democratic era. For example, little provision was made to protect the population from the bombing that had long been anticipated in the 1920s and 30s, hence the London Tube had to be used during the Blitz in place of the deep shelters that weren't built, while the public issue of essentially useless gas-masks was little more than a PR exercise.

There was a time when the welfare state provided adequate social security, though this was largely limited to the 1960s and 70s, and there is clearly substance to the argument that the capability and capacity of the state has been stripped back during the neoliberal era, but that was also a period when civil contingency for a national existential threat was little more than the now-traditional "Britain can take it" defiance, culminating in the ridiculous Protect and Survive leaflets of the 1980s. This habitual attitude was all-too evident in the clumsy discussion about "herd immunity", which highlighted both the instrumentalism of the state's strategy and its fundamental disregard for the safety of the population. The suggestion that this changed once they appreciated the likely scale of fatalities is not evidence of sympathy but of a fear that crashing the NHS would be politically damaging. Of course, such cynicism is not confined to just the Tory party. Consider the latest centrist calls for a government of national unity.

The current crisis is not like a war. In wartime, the priority is supply - chiefly of military personnel and materiel - and its deliberate destruction. To that end, demand is artificially suppressed. For example, in World War Two Britons ate a basic diet and wore plain clothes not because there wasn't enough food to go around, or because all the silk was requisitioned for parachutes, but because foreign currency was diverted from food and cloth imports to weapons and oil while marginal domestic production was switched from non-essentials to the war effort. The current supply shock - the absence of labour due to self-isolation - will be temporary and quickly reversed (fatalities will be relatively light and will disproportionately affect non-workers), and it is already apparent that many businesses are able to operate while maintaining "social distance". The far bigger issue is the demand shock, notably in non-essential sectors such as leisure and entertainment.

That shock will be amplified by uncertainty over future income. Basically, a lot of people fear being laid off or asked to take a pay cut and are therefore loath to continue spending at their normal rate or make significant financial commitments. While it's true that people aren't going to up their frequency of going out to restaurants or the cinema later in the year, in order to catch-up on what they missed during their isolation, it is also true that monies saved over this period are likely to be spent, even if some is used to pay down household debt, which means there will be a boost in demand after the epidemic is over. This is the point at which a fiscal injection might be helpful, as a way of turbo-charging that growth in demand and offsetting any increase in household saving, but how best to do this is a debate about ends as much as means - i.e. the resulting balance between labour and capital. Two ideas have gained traction in the discussion of means over the last week: basic income and helicopter money.

The sudden rediscovery of the state's ability to directly intervene in labour markets is striking, as is the absence of the usual "How will we pay for it?" bleat, but the idea that one simple trick can get us through the hard times indicates that UBI is being thought of not just as equivalent to a cash handout but as an exceptional bridging loan. Implicit is the expectation that this would eventually be clawed-back at the aggegate level through higher taxes on income and spending. This is to misunderstand that basic income is a permanent social dividend, not temporary relief. It is the counterparty to accumulated wealth, so it can only meaningfully be funded by capital, not by labour. The sudden liberal interest in basic income appears to be partly motivated by a desire to avoid burdening businesses and asset-owners with any social responsibility. Like Richard Branson's plea for a state bailout of the airline sector while threatening redundancies, it privileges capital.

The alternative solution of helicopter money, such as the US proposal to send everyone a cheque for $1,000, is similarly wrong-headed, but at least has the virtue that it doesn't corrupt the concept itself. This is a solution whose time has not yet come. It might be appropriate in the period after the epidemic has passed when you want to stimulate demand and supply is no longer constrained by missing workers, but prior experience suggests that a flat cash grant has a weak effect. The US Economic Stability Act of 2008, which provided tax rebates of $300 per person, was aimed at averting recession after the financial crash. In the event it was relatively ineffective as much of the money was simply used to pay down existing household debt, pointing back to one of the underlying causes of the crash. The issue today is not the need to stimulate demand but the need to compensate workers who are unable to earn because of "social distancing", but the amounts being mooted are woefully inadequate even for a furlough as short as a month.

There is an ideological division between those proposing UBI versus those advocating helicopter money, with the former favoured by centrists and the latter by the right. The reason for this is that basic income has gradually been framed in recent years as a benefit, while helicopter money remains conceptually linked to tax rebates. The liberal mangling of the concept of basic income has come in two flavours: an optimistic one that sees it as a means of smoothing labour market frictions in the modern economy, such as gig-working and the impact of automation, and a more pessimistic one that envisages it as another necessary reform of welfare focused on efficient targeting. As a benefit nominally funded by tax (i.e. by the working population), this would inevitably be parsimonious and might even be largely payment in kind - "universal basic services" rather than cash.

The term "helicopter money" originates with Milton Friedman, who wasn't advocating it as such but merely conducting a thought experiment about the money supply (in other words, it is an artefact of monetarism). However, that he was also an advocate of negative income tax is not coincidental. The term's popularity on the right as an unconventional measure owes much to his authority as a critic of fiscal policy and the historic growth of the welfare state. Consequently, much of the vulgar justification has revolved around "giving people their money back", while the current proposal has also been hitched to a three-month tax deferment. The unstated assumption is that the cost of this addition to the national debt would be recouped after the epidemic has passed not through tax rises but through further cuts in government spending.

What the economy needs today is comprehensive income support. It is reasonable for the left to advocate increased benefits for the sick and unemployed - every opportunity should be taken to reverse austerity - but we shouldn't lose sight of the fact that what is most urgently needed is security for those in employment who provide the bulk of economic demand. How this is done is a secondary issue, but the debate should avoid notions such as basic income, where the emphasis will inevitably gravitate to "basic" and thus inadequate, and arbitrary helicopter money. More fundamentally, the debate should focus on who should ultimately pay for this: capital or labour. Given the historic shift in power between them over the last 50 years, Covid-19 offers the opportunity to genuinely rebalance the economy before more lasting reforms, such as UBI, are considered. Every indication to date suggests that the government will have to be dragged kicking and screaming to any consideration of increased taxes on capital or the expropriation of historic wealth. That's one parallel with wartime that will not be highlighted.

Why Don't We Have a Job Guarantee?

Basic income is often derided as impractical despite the evidence of success in past (albeit limited) trials and the willingness of governments to conduct further experiments. In contrast, the job guarantee is advocated as being more realistic (because closer to our belief in the value of work), and tends to enjoy more favourable coverage in the media, yet it has never been successfully trialled let alone implemented. Why is this? One explanation is that basic income experiments are often limited in scope to the unemployed, reflecting an ideological assumption about the desirability of integrating them into the labour market or bypassing the perceived disincentives of traditional welfare. In other words, schemes sold as basic income trials are often no more than attempts to reform existing unemployment benefits in a "market-friendly" way. A universal basic income (UBI) trial would need to address a full cross-section of society (the majority would be employed) and would necessitate a parallel tax and benefits system. In order to gauge pro-social benefits and the wider effects on the labour market, such a trial would need to run for longer than a couple of years.

The problem then is one of scale and the same challenge has historically limited the opportunity for a job guarantee (JG) system to be trialled. It's worth emphasising at this point that temporary job creation schemes, such as India's rural employment guarantee, or those aimed at the young or long-term unemployed in developed nations, are not job guarantees in the sense that the term is used by JG advocates. The chief feature of the JG is that it provides a permanent option that any adult can choose rather than being a temporary, counter-cyclical programme or a targeted relief. This make it particularly suitable for unemployment black-spots in an otherwise buoyant economy - for example, where a large plant closes or a major employer goes bust in a small town. When a worker is laid off by the private sector, she can immediately get a job provided by the public sector (this may actually still be a job operationally in the private sector, in that the provision of work projects may be outsourced, but her wage is paid by the state). Once the private sector starts hiring again, the worker would be incentivised to move back by the prospect of better pay and a better career fit.

The traditional arguments against the JG are essentially critiques of government: the enormous cost and potential for waste, the state's managerial incompetence and the crowding out of the more dynamic private sector. The solution to government is usually "the market", but this suffers in the case of a JG because the actual jobs market has already passed judgement in the form of unemployment, which leads some on the right to insist that the only solution to worklessness is to abolish minimum wage levels and severely reduce benefits to price labour back into the market. This has proven socially disastrous when tried. While the anti-government argument is plausible its material significance is rarely assessed. There is plenty of waste in the private sector and the social benefits of maintaining local communities may be considerable, so all of these imputed downsides might be tolerable given the upside benefits of employment and demand stimulus. A more honest criticism would be that capitalism still requires a "reserve army" of the unemployed, whether to maintain its political power (per Michael Kalecki) or to guard against inflation in the interests of rentiers (the NAIRU concept).

A key macroeconomic argument in favour of a JG is that it is a form of automatic stabiliser, maintaining aggregate demand in a recession and unwinding naturally through the labour market during a recovery. In counterpoint to this, JG sceptics fear that the system could become too attractive, thereby making labour "sticky" - i.e. reluctant to move into the private sector when vacancies arise, which would drive up the cost of labour for the private sector and so impede any recovery. The automatic stabiliser then becomes a fetter. While JG schemes often propose payment of the minimum wage, this could still make them more attractive than many private sector jobs because of a less stressful working environment or because of better fringe benefits. For example, schemes proposed in the US would provide access to healthcare, which is significantly better than what most minimum wage jobs in the private sector provide, though some advocates admit that this is intended to force the private sector to offer comparable benefits. In the UK, the NHS means that employment benefits would not be as great a differentiator (though they might be in the case of childcare). Even so, there would still be the possibility that some workers would prefer tidying-up public gardens to delivering pizzas.

The implied dynamic is that workers smoothly move between regular employment and the JG of their own volition, but for this to happen they must generally consider a JG job a second-best alternative to regular employment but must also be prepared to upgrade from the JG as soon as regular vacancies become available. The wage paid for a JG job must be sufficiently attractive to prevent recourse to residual benefits (assuming these are still available for hardcore refuseniks), while also being sufficiently unattractive to ensure almost no one would stick around once there were employment opportunities in the private sector. This implies both a significant differential between unemployment benefit and the JG, and between the JG wage and the minimum wage available in the private sector. The former is easily achieved (there would be widespread support to be parsimonious with those who refused to work) but the latter less so. In an era when low-wage private sector employment is precarious and fringe benefits have largely disappeared, the JG wage would have to be significantly lower to prompt workers to leave the security of a JG job.

One way round this is to make the JG wage variable, turning it up to the minimum wage level during periods of high unemployment and turning it down during periods of private sector jobs growth. But this assumes that labour is largely fungible and ignores the possibility of differential employment growth across sectors and geographies. If construction is expanding, should we reduce the pay of retail workers currently on a JG scheme? If London and the South East is booming, should we reduce JG wage rates in the North to encourage mobility? An answer might be to make rates variable by sector and location, but that is potentially destabilising for workers (it undermines the concept of a "guarantee") and may even end up producing sub-optimal behaviour, such as encouraging people to move to high unemployment areas to guarantee a liveable JG wage. The suspicion is that a JG can only work if it is both parsimonious (to encourage movement back to the private sector) and coercive (to prevent mass non-cooperation in the face of low pay). This might be one reason why it has never been fully trialled.

There has recently been a tendency to consider a basic income and a job guarantee as complementary rather than as alternatives: "the only cost-effective policy for comprehensive welfare is a combination of a modest basic income with job offer by local authorities below the minimum wage." In effect, the basic income would be parsimonious - enough to live on but not enough to flourish - making the JG wage sufficiently attractive to maintain employment, while the differential between the latter and a minimum wage job would encourage a speedy return to the private sector. This appears to combine the best of both worlds: security from destitution, meaningful employment and incentives to re-enter the labour market. A more progressive interpretation of this idea is that "Pairing a job guarantee with a UBI would mitigate the risk that the 'guarantee' would transmogrify under political pressure into a punitive workfare program. Pairing a UBI with a job guarantee would mitigate the risk that we neglect the broader project of integrating one another into a vibrant society, that we let a check in the mail substitute for human engagement".

Leaving aside the assumption that a UBI is anti-social (most basic income advocates emphasise its pro-social benefits), I'm not convinced that a basic income safety net would make the JG less coercive, even if it is no longer technically workfare as the entire income is not dependent on cooperation. The problem is that most of the unemployed would be obliged to accept JG jobs because the basic income would be insufficient, but those jobs are unlikely to be of high calibre because they would be paid at a much lower level that the worst jobs in the private sector. They won't be intrinsically rewarding or entail training in marketable skills. This is by design - the aim is to keep any viable minimum wage jobs in the private sector - but the result is more likely to be demoralising make-work jobs with little social benefit. There is also the challenge of preventing JG jobs being covertly used to service the private sector at a cost below the minimum wage. Given the public sector's reliance on outsourcing, drawing a clear line between public and private jobs is hard at the best of times. If the JG system was highly devolved, as most schemes propose, there would be obvious scope for corruption and abuse.

While basic income has remained conceptually consistent over the years, but has been given salience by the growth in precarious work and fears of technological unemployment, the job guarantee has had to reinvent itself to keep up with contemporary concerns. One significant change in JG advocacy is the move away from the idea that it will discipline labour (by institutionalising the reserve army of the unemployed) towards the twin ideas that it will embolden private sector workers in an era of weak unions (because they have an alternative) and provide upward pressure on private sector wages and employment benefits (to encourage mobility). This reflects both the growth in wage inequality and (more locally) the prominence of healthcare as an issue in the US, though there are clearly easier ways to address both problems than using the JG as a Trojan Horse (e.g. reversing anti-union laws and implementing universal healthcare). This latest iteration assumes that JG jobs would be relatively attractive, but the whole premise of the JG as an automatic stabiliser is that they would be sufficiently repellent to avoid sticky labour. It's not obvious that this fine balance can be struck, given the difference across sectors and geographies, while the notion of JG pay rates being selectively varied to address differences and encourage movement into the private sector undermines the idea of an automatic mechanism.

The job guarantee remains a superficially attractive idea that plays to our beliefs that work is intrinsically beneficial, that welfare should entail some quid pro quo, and that maintaining the calibre of labour for the benefit of the private sector is the responsibility of the public sector. All are dubious beliefs, in my view, but they are clearly commonly-held. Despite this broad acceptance, proposals for a comprehensive job guarantee system have invariably dwindled into marginal or targeted schemes that look remarkably like workfare or make-work. This probably reflects the dominance of the anti-state argument: a fear that a comprehensive job guarantee system would disrupt the "natural" labour market and lead to the harmful expansion of the public sector. Schemes that attempt to mitigate this fear through public sector jobs that would be non-competitive with the private sector ignore that the boundary between the two is not permanently fixed. Capital will not support a JG system that is in any way attractive to workers, or that restricts its ability to extract rents from the public sector, even if it helps support aggregate demand. As Michael Kalecki noted, it's about power.

The Case Against a Basic Income

The case against a universal basic income was put yesterday by two very different thinkers. Nick Boles is a well-connected Tory who since his election to Parliament in 2010 has served as Minister for Planning and now Minister for Skills (his achievements have been negligible but he remains a fixture of various think-tanks). Daniel Zamora is an academic sociologist who has made a name for himself with a critique of Michel Foucault's attitude towards neoliberalism and the welfare state (in a nutshell: too admiring of the one and too dismissive of the other). Both are against a basic income, but for different reasons. Apart from the simple coincidence of publication, I have decided to contrast their positions because of the difference in approach it highlights between UBI sceptics of the right and the left. Beyond the issue of affordability, the right tends to resort to arguments that mix old notions of the sin of idleness with newer psychological theories of self actualisation. In contrast, left sceptics question whether UBI is truly transformative, suggesting that it may simply entrench capitalism. The one is concerned with individual salvation, the other with social revolution.

Here is Boles's case in its (apparent) entirety: "The main objection to the idea of a universal basic income is not practical but moral ... Its enthusiasts suggest that when intelligent machines make most of us redundant, we will all dispense with the idea of earning a living and find true fulfilment in writing poetry, playing music and nurturing plants. That is dangerous nonsense. Mankind is hard-wired to work. We gain satisfaction from it. It gives us a sense of identity, purpose and belonging … we should not be trying to create a world in which most people do not feel the need to work". This isn't a robust argument, not least because it fails to explain why a poet, a musician or a gardener is incapable of earning a living, or why society should tolerate the idle rich. Despite it opening assertion, it fails to explain how work is moral, probably because the traditional arguments for this (essentially biblical homilies) sound ridiculous today.

Even the argument for self-actualisation is dubious. I can achieve a sense of identity, purpose and belonging by joining a criminal gang, which would hardly be moral in the conventional sense. I can also achieve those same ends by devoting myself to unpaid charitable work, which would be conventionally moral but would require financial subsidy by the community were I not one of the otherwise idle rich. The essentialist argument, that work is part of human nature, is also demonstrably untrue. We are not hard-wired to work, we are hard-wired to survive, which is why levels of labour in pre-industrial societies tended to differ across geographies, reflecting the varying demands of local environments. Beyond achieving survival and social reproduction, we work (if under no external pressure) out of self-interest and for self-satisfaction, at which point work can look a lot like play. This means that there are always two types of work: necessary labour and surplus labour. As Marx pointed out, it is the struggle for control of the latter that drives society.

Daniel Zamora makes a more coherent case in Jacobin, first of all putting the growing interest in UBI in a historical context: "Paradoxically, then, UBI seems to be a crisis demand, brandished in moments of social retreat and austerity. As politics moves to the right and social movements go on the defensive, UBI gains ground. The more social gains seem unreachable, the more UBI makes sense. It’s what botanists would call a 'bioindicator': it indexes neoliberalism’s progress. Support for basic incomes proliferates where neoliberal reforms have been the most devastating." This is interesting because it suggests an interdependency between UBI and neoliberalism. Though the idea predates both that particular style of capitalist reasoning and its political hegemony from the 1980s onwards, it is true that modern UBI advocacy often adopts neoliberal tropes, such as personal utility and human capital (the "entrepreneur of himself", as Foucault put it). That, however, should make us cautious of accepting descriptions of UBI that ignore its history (e.g. the regular misrepresentation of Thomas Paine's concept of an endowment) or claim a special relevance because of recent technological developments (them robots).

Before making his central argument, Zamora rehearses a few of the usual criticisms of UBI. First, that "No existing economy can pay for a generous basic income without defunding everything else." This doesn't automatically follow, but the claim highlights how thinking about the funding of a UBI tends to focus on the state's fiscal position (current expenditure versus revenue) rather than the nation's accumulated wealth, and thereby ignores the power of the sovereign to radically reapportion that wealth (something it can easily do, as shown by the bank bailouts and QE after 2008). A meaningful UBI would be in addition to, not instead of, the welfare state, and that necessarily means it would be funded from national wealth rather than exclusively from current income. In effect, the state would expropriate wealth now held in land, property and equities. That might sound extreme, but it is merely retroactively implementing a sovereign wealth fund along the lines of Norway or Alaska. Alternatively, a UBI can be funded out of current taxation, but just as it should be additional to current expenditure, so that taxation should come from capital assets currently privileged by the tax regime, such as land, offshore holdings and equities (this can build a fund quite quickly - consider the rapid growth of China's SWFs).

Zamora's second conventional argument is more credible: "If UBI does take shape, current power relations will favor those who have economic power and want to profit by weakening the existing system of social protection and labor market regulations. Who will decide the monthly amount and who will dictate its terms and condition? Who do today’s power relations favor? Certainly not the worker." This is very true, but that is why the question that should be asked of a UBI scheme is not "Is this affordable?" but "How will it be initially calculated and then uprated in future?", because that will tell you where the power lies. If a state adopts a sovereign wealth fund approach, then the dividend would probably be set through a transparent calculation under democratic control. As GDP grows, the fund dividend should grow likewise (if a portion were invested abroad and produced yields higher than UK GDP, the excess could be reinvested in the fund without affecting the dividend). A tax-based approach could also be geared to GDP, which in turn would encourage tax to shift from below-average growth revenue such as income to above-average growth revenue such as property and equities, which would also be more progressive.

Unlike Boles, Zamora is alert to the issue of surplus labour and thus the importance of work time, though he sees it in terms of the distributive justice of work as much as the distributive justice of income: "That’s why a universal job guarantee and a reduction in work hours still represent the most important objectives for any left politics. Collectively reducing work time is politically and socially preferable to creating a socially segmented pool of unemployed workers, a situation that would have serious consequences for the employed. It’s not hard to imagine how this situation could foster divisions within the working class — as it already has over the last several decades". A UBI and a reduction in work hours are not mutually-exclusive, indeed the best scheme would see a portion of growth remitted as reduced time, which incidentally would be a spur to productivity. Keynes saw a progressive reduction of work hours (and by implication a UBI) as the product of growth and "the power of compound interest". Zamora is right to highlight the potential for friction between the employed and the unemployed, but in doing so he omits another character in the story.

The modern dichotomy of the working class - strivers versus skivers - is not the same as the old dichotomy of the deserving and undeserving poor, even if the characters involved appear to be the same. The latter assumed a third party, the rich, whose largesse was to be apportioned sparingly, whether through charity or taxation, as a moral judgement on the behaviour of its recipients. The newer dichotomy is a product of the welfare state and the idea that the working class, as the largest part of the population, must meet its welfare needs through the collective insurance of social security. This essentially liberal design succeeded in removing the third party from the equation, leaving an increasingly bitter struggle between workers suffering compassion fatigue and a "welfare class" (or underclass), that came into sharp focus in the 80s. It was no coincidence that this period saw the emergence of the ideological demand that insurance, for loss of income as much as health, should be optional and subject to market provision. That was the rich figuratively slamming the door as they went out.

The heart of Zamora's case against UBI is the deleterious effect it would have on the welfare state and thus working class solidarity: "The institutions workers established after World War II did more than stabilize or buffer capitalism. They constituted, in embryonic form, the elements of a truly democratic and egalitarian society, where the market would not have the central place it now occupies". There are obvious echoes of Karl Polanyi in this broad historical sweep, which Zamora further elaborates: "Isn’t the best way to fight against capitalism to limit the sphere in which it operates? Establishing a base income, by contrast, merely allows everyone to participate in the market". This is true, and it highlights why talk of UBI as "the consumer of last resort" (or its attractiveness to Internet companies seeking a universal monopoly) is essentially neoliberal, but the implied alternative of non-market exchange is both utopian and potentially even more socially divisive. Restricting some people's access to the market is not the same as restricting the scope of the market in all our lives.

Zamora's final argument is oddly Hayekian, imagining a new coordination problem arising because a UBI would undermine the price signal of wages: "Under capitalism, the division of labor is set in a brutal fashion, relegating large sectors of the population to jobs that are difficult and badly paid, but often of great value to society. A 'utopian' UBI, by contrast, simply assumes that in a society liberated from the work imperative, the spontaneous aggregation of individual desires would yield a division of labor conducive to a properly functioning society; that the desires of individuals newly freed to choose what they wish to do would spontaneously yield a perfectly functional division of labor. But this expectation is assumed rather than demonstrated." The assumption behind a UBI is that the increased power of workers to refuse shit jobs would increase wages for those jobs, achieving either a new equilibrium (closer to the work's true social value) or increased capital investment in automation. The point is less that people can choose what they wish to do (they would still be constrained by their ability and qualifications) but that they can more easily choose what they refuse to do.

Zamora is wise to reject the moralising that accompanies arguments both for and against a UBI and to concentrate on the way that New Labour-style poverty alleviation and the isolation of a segment of the working class serve capitalist interests: "Combatting poverty thus permits the inclusion of social questions on the political agenda without having to fight against inequality and the structural mechanisms that produce it ... both the Left and the Right want the 'surplus population' to be the problem, thereby supplanting those old, out-of-date, dogmatic ideas that placed exploitation at the heart of the social critique". However, this leads to a pessimism about the potential of UBI to directly address accumulated wealth and capitalist power: "It is much easier to imagine what a different form of social organization could look like on the basis of the more progressive elements within the welfare state than it is to start from abstract ideas that are quite often disconnected from the reality of workers. It’s always easy to imagine different worlds and communist societies in a theoretical and abstract way." This apparently pragmatic view puts a lot of weight on the persistence of those "progressive elements", but that seems equally abstract when faced with the reality of Universal Credit.

Ultimately, Zamora's case doesn't convince because he starts from a narrow, neoliberal definition of UBI, essentially because his professional interest is the neoliberal critique of welfare. This produces a rhetorical UBI that is parsimonious, funded from income tax, and that seeks to reduce the scope of the traditional welfare state. None of these are actually givens. A better UBI would be generous enough to effectively empower labour in negotiation with capital, would be funded from accumulated wealth, and would be additional to existing conditional welfare (it would also require a major investment in social housing). If Zamora exhibits a left pessimism, Nick Boles displays a conservative lack of imagination. The news that Silvio Berlusconi is trying to resurrect his political career by proposing a "dignity income" (a UBI of €1000 a month) does not mean that the Italian right is more developed in its thinking, but rather that it too is fitting the concept into existing political forms, in its case clientelism. The political problem for UBI in the UK is the right's continued reliance on moralising, the centre's antipathy to the welfare state, and the left's residual labourism. That the Labour party is showing an interest owes much to Corbyn and McDonnell's grounding in the marginalised, post-labourist socialism of the 1970s.

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.