Automation is changing the labour market and policy-makers are having to address this change. With the prospect of mass unemployment resulting from widespread automation, we need to come up with innovative ways to keep money in people’s pockets. One such proposal is a universal basic income (UBI) which would provide everyone in a society with enough to live on irrespective of whether they are in employment. It appears that this policy may soon be introduced in the British Isles.
The city councils of Fife and Glasgow are currently considering proposals which would introduce a universal basic income in 2017 on a trial basis. Initially the councillors were not sold on the idea but Matt Kerr, Labour’s lead anti-poverty campaigner on Glasgow City council, said to the Guardian: “like a lot of people, I was interested in the idea but never completely convinced, [but] kept coming back to the basic income”. As well as tackling poverty, Kerr said that the measure would also greatly simplify the UK’s welfare system as it would “[redefine] the relationship between the individual and the state”.
I believe this is positive for two important reasons: materially; and politically. The first reason is fairly simple as such a measure would lift people out of poverty and would provide people with the opportunity to pursue more leisure activities, and thus improve their quality of life.
In terms of the politics of the situation, the implementation of UBI in Fife and Glasgow would be a big deal and here’s why. Delegates at the SNP spring conference voted to adopt UBI as official party policy, but it has so far not been included in any policy document or manifesto. If implemented in Fife and Glasgow, UBI would not be a crazy pipe dream but a legitimate anti-poverty policy prescription. Indeed if popular with the people in these areas, the Scottish government could role out a scheme nationally, and if prevented to by Westminster would be an excellent stick to beat unionists with in a second independence referendum.
Furthermore, Shadow Chancellor John McDonnell has previously indicated that UBI could be in Labour next general election manifesto. If Labour councillors work with the SNP to put UBI into practice Labour activists would be emboldened and would lobby conference delegates to adopt UBI as official Labour policy. Despite their recent polling problems, the Labour Party has a lot of clout around the country and if the Shadow Chancellor announces that UBI will be introduced if Labour are put in power, a national conversation is started.
Let’s look at the idea of a nationally provided UBI for Scotland. In Finland the government are piloting a UBI scheme for 2,000 people with the findings from the trial influencing future policy. The Finnish scheme will provide each person with £480 per month, so if we use for Scotland we can make an estimate for how much it would cost Scotland. According to the National Records of Scotland in 2016 it was estimated that 4,341,904 people live in Scotland aged 18 or older. If all these people are provided with the same amount as offered in Finland (£5,760 per year) this comes to a total cost for the Scottish taxpayer of slightly over £25 billion.
This is a very large amount of money and given that currently Scotland spends £17.2 billion on all types of welfare including tax credits and state pensions, there would have to be some measures put in place to make up the difference. It’s hard to suggest what policies should be implemented in order to close this fiscal gap as devolution ties one hand of the Scottish government behind its back.
If Scotland were an independent country I would increase the rate of corporation tax to around 25%, put the top rate of income tax up to 50%, and reverse some of the changes the Tories have made to the other income tax brackets. I’d also change the inheritance tax and stamp duty brackets to generate more revenue. Although HMRC publish a breakdown of the revenue provided by each constituent country of the UK, these figures don’t go into specifics like how much revenue is generated by those people in Scotland paying the highest rate of income tax. As such I can’t really give an estimate on how much money would be raised by these measures.
Irrespective of this lack of fiscal information, it’s worth pointing out that introducing UBI would inevitably change the way work is perceived by people. The living wage outside of London is £8.45 and if we say that the average working week is 40 hours per week, we can estimate an annual living wage as £17,576. If everyone receives a UBI of £5,760 then people only need to earn £11,816 in order to live a good life. If legislation was brought in saying that the minimum wage must be a living wage, employers couldn’t reduce wages and workers could work fewer hours. The additional leisure time would improve everybody’s quality of life and indeed may increase employment in areas like in entertainment and/or retail.
The prospect of UBI being introduced to Scotland on a national level is a long way off yet but I don’t think the idea is as far-fetched as it’s opponents claim. The first step will be getting these trials up and running in Glasgow and Fife. If more trials are begun, we can measure how this policy plays out in a real-world context rather than constantly speak about what could possibly happen. Automation and other changes to the labour market are coming whether we like it or not so we need to be ahead of the curve when it comes to solutions. UBI is something that shouldn’t just be considered but embraced, and Scotland could be at the forefront of this change.