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Wales Online
Wales Online
National
Joe Harker

Could universal basic income help people during the coronavirus?

Tory MP Robert Halfon has warned that the coronavirus could be "potentially catastrophic" for low paid and self employed workers.

So many Brits are now stuck at home either working in isolation from their employer or unable to go into their workplace and stuck in limbo as a result. For others they have lost their jobs already, and many have little in the way of a safety net to fall back on.

The questions of how long people will have to go on like this and whether they will still be paid if they can't go into work hang above like the sword of Damocles.

Those who are self-isolating in accordance with government advice are entitled to statutory sick pay even if they aren't showing symptoms of the coronavirus, but at £94.25 a week it's nowhere near close to making up the gap potentially lost by earnings.

People who have suddenly found themselves without a place to work still need to be able to afford food, bills and their rent or mortgage, so what can be done to help them?

The Claim

Daniel Susskind, an economist at Balliol College of Oxford University, writes in the Financial Times that universal basic income is "an affordable and feasible response to coronavirus".

He cites the almost five million self employed Brits and around six million small businesses as among the "most threatened" by the economic damage the virus will cause.

Susskind recommends every adult in the UK should be paid £1,000 a month to provide "a direct and instantaneous burst of financial relief" to the many people across the UK who are worrying about making ends meet during the pandemic.

The coronavirus is keeping people out of work and forcing businesses to close but it is also significantly reducing demand for the work of those who are still busy.

A group of more than 500 politicians and academics across the world have called on governments to introduce UBI, citing the "unprecedented times" which call for extraordinary measures to ensure people can still afford to put food on the table and keep their homes, which they will be spending a lot of time in, supplied with water, gas and electricity.

A multitude of measures from the government which keep businesses afloat, provide relief from mortgages and help with bills but at the most basic level helping people with the money going out will likely need to be supported by guarantees that money will still be coming in.

The simple fact of the matter is people need to be sure of money coming in and UBI provides it.

The Counter Claim

However, former cabinet minister Iain Duncan Smith has denounced universal basic income as "unaffordable" and "impractical".

The former work and pensions secretary believes UBI "produces massive disincentives for people to work" and "won’t make any difference to poverty in this country", arguing that paying every over-16 in the UK a total of £5,000 would cost £260 billion, about twice the annual NHS budget.

He also argues that giving everyone the same amount of money regardless of circumstances would be putting money in the pockets of those who don't need it, while adapting UBI to be dependent on wealth would be an administrative nightmare which would effectively replace the benefits system.

At a time when public finances are weak and chancellor of the exchequer Rishi Sunak is having to borrow to spend, UBI is a cost which Duncan Smith fears the country might not be able to bear. Money is needed to provide the NHS with the equipment it needs.

It is a particular concern as the chancellor has already announced £350 billion worth of measures to keep the economy going and expects to have to spend more before the pandemic is over. £330 billion of which will be bank loans the government guarantees rather than spends themselves.

Duncan Smith insists people would be better off sticking to the much-maligned Universal Credit system, though it takes five weeks for the first payments to come in. He suggested employers should keep people on lower incomes and recommended employees topped up their income with benefits.

The Facts

Within the UK's population of around 66 million people there would be over 50 million who could receive universal basic income, meaning it would cost the government over £50 billion each month to afford UBI.

Prime minister Boris Johnson admitted that UBI was among the options on the table being considered for implementation to avoid dropping huge swathes of the population into poverty.

He said in the House of Commons that he would be willing to sit down with Labour leader Jeremy Corbyn and the SNP's Westminster leader Ian Blackford and discuss the proposal.

Economists are concerned that GDP could drop by around 20 per cent this year as many areas of the economy grind to a halt, with a recession expected and economic growth at the end of 2019 already nonexistent.

The government expects half of all coronavirus cases in the UK will be seen in a three to four week period either side of the peak of the pandemic, which England's chief medical officer Professor Chris Whitty expects will be in about 10 to 14 weeks time from now.

That would put the peak in the period between late May and late June, meaning the UK is expected to live with the coronavirus for several months at the very least.

At time of writing there are 2,626 confirmed cases of coronavirus in the UK with 676 new cases and 103 deaths. Those figures are expected to rise over the course of the day as the disease continues to progress through the country.

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