Thomas Paine, the revolutionary mentioned in Volume 1, mentions poverty as a central theme behind the motivation for the dividend of his citizens, and it is the argument that has survived the test of time.
Proponents of UBI will say ‘UBI will reduce poverty,’ as much as Malcolm Tucker swears. The similarities between the fictional Tucker and the real UBI end here. While the former relies on spin and Machiavellianism, the ‘poverty-reduction’ defence of UBI makes headlines for its straightforward and intuitive nature - which does not rely on illusionary tricks.
The reasoning is simple: those experiencing poverty need money to get out of it, UBI gives them that money. Yet the evidence does not mean it is a foolproof argument that lacks opposition. Opponents ask why not just give targeted UBI (in other words, social benefits, or in the UK case, Universal Credit). It’s a fair critique: we could give more to those in need. Yet there are two reasons why a UBI is a better policy than Universal Credit.
The cost of administering targeted benefits is close to £200m as of 2020-21. £200m is a fraction of government spending on social security, but it is big-money on a local scale. Further is the administrative complexity. Means-testing can create an opening for fraud or overpayment of benefits. Losses from these sources amounted to £8.6bn in 2021-22 - a lot of money to miss out on.
UBI is far easier to administer, likely preventing the by-products of targeting.
The Joseph Rowntree Foundation published a report in 2010, discussing a three-pronged cycle of poverty. The initial stage is poverty and benefit-dependency. The next stage is finding a job, which gives you an income, but loses you your benefits payments. The third stage is you losing your job or the job not paying enough to sustainably live off. To no surprise, the JRF found that jobs secured in this stage tend to be non-permanent and low paying. You therefore return to the original stage of poverty. This is unsustainable, it doesn’t eliminate poverty, and remains a high human and financial cost to individuals and society.
By nature of being Universal, a UBI tethered to poverty would not be taken away - avoiding this problem.
Instead of finishing here, which may seem a good place to stop, I want to conclude by asking - what does a UBI linked to poverty look like? This is not only to generate a numerical value UBI (which I find useful for picturing how a UBI would affect our lives), but also to be used in Volume 4).
The UK government tends to use ‘less than 60% of the median income’ to determine poverty. The definition reduces poverty to a comparative measure, ignoring the bases of individual experience and lack of basic necessities. The Economic and Social Inclusion Corporation gives a good qualitative definition:
‘Poverty is about not having enough money to meet basic needs, including food, clothing and shelter.’
Economic and Social Inclusion Corporation (2009)
From this qualitative idea, we can create a quantitative estimate for the value of UBI, which requires us to work out the cost of food, clothing and shelter. Luckily, we have reports that give us these answers.
Average food at home is estimated at £28.90 per week, minimum clothing spending is estimated at £15 a week, and average local authority rent (in England) averages at £88.27 per week. All together, this adds up to £132.17 a week, or £6,872.84 per year (costing the government around £460bn a year).
Let me remind everyone that this is an estimate based on very general assumptions. There must be support for utilities, particularly during a cost of living crisis like the one we live in. There would be an opportunity for a decrease in UBI for those under 18. It’s clear that the exact value of a UBI to alleviate poverty would need high quantitative (and qualitative analysis), something I won’t do within #UBIwithUlysse to keep it short and sweet.
Hopefully, the estimate of £6,872.84 will help you, reader, imagine how UBI might affect your life and how you might use a UBI of this value.
As mentioned above, this value is useful for the next volume, where I attempt to deal with the strongest argument against UBI, and one that tends to be its downfall – at least until I attempt to answer it, of course – funding a UBI.
As a UBI advocate, Ulysse enjoy discussions about the model, to promote awareness and navigate ways to improve its effectiveness. Want to learn more about #UBIwithUlysse? Contact him here.