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21 March 2020
This is a proposal for an Emergency UBI that covers every adult and child. We have recommended implementation in two stages:
- Stage 1: £500 per month per working age adult (1) and £200 per month per child for three months. This complements the measures recently announced by the government, in particular the Coronavirus Job Retention Scheme to subsidise wages during the period of economic lockdown. While the Job Retention Scheme is welcome, it leaves large gaps in the protection of other workers and citizens, including 5m self-employed workers. This would be in addition to Statutory Sick Pay and other means-tested benefits like Universal Credit.
- Stage 2: £1,000 per month per adult (2) and £500 per month per child for two months. This begins after the end of the Job Retention Scheme and lockdown and lasts two months. It provides more extensive support for households and gives a much-needed demand boost after lockdown as businesses reopen. This would be in addition to Statutory Sick Pay and other means-tested benefits like Universal Credit.
A Universal Basic Income is an unconditional and regular cash payment to everybody. Although there are slight differences, it works in a similar way to other payments like the basic state pension and child benefit.
While a permanent UBI would have provided vital security during this crisis, this is a proposal for an ‘Emergency UBI’ to quickly support households and our economy during Covid-19.
The Covid-19 crisis is putting significant financial pressure on households, businesses and local economies across the country.
The scheme to avoid layoffs by subsidising employee wages is vital, as are measures to financially support those suffering from the virus. But these measures leave out significant sections of the population, including the self-employed, workers in the gig economy, freelancers and those taking time out to care for loved ones. They do nothing for job seekers who have seen their prospects drastically reduced.
The need for financial support and security during this crisis is urgent. We need a quick and effective way of putting money into people’s hands, to provide relief to households and to limit the economic damage of this crisis.
Other countries are putting money straight into people’s hands to support households and provide a stimulus to the economy. A proposal for an Emergency UBI of $1,000 per month for every adult and $500 for every child is gaining cross party support in the US.
We are proposing an Emergency UBI to go alongside other measures such as wage subsidies, rent and mortgage holidays, and sick pay. It should be implemented in two stages:
- Stage 1: £500 per month per working age adult (3) and £200 per month per child. This stage runs alongside the Coronavirus Job Retention Scheme which is projected to last around three months. This would be in addition to Statutory Sick Pay and other means-tested benefits like Universal Credit.
- Stage 2: £1,000 per month per adult (4) and £500 per month per child. This stage begins at the end of the Job Retention Scheme when it is also anticipated that the lockdown restrictions will be eased. It lasts for a further period of two months. This would be in addition to Statutory Sick Pay and other means-tested benefits like Universal Credit.
During Stage 1, while the Job Retention Scheme protects most employees, other groups are left very exposed. These include the self-employed, freelancers and workers in the gig economy, as well as unpaid carers struggling with the extra burden of dealing with coronavirus. With the economy in lockdown, the priority in this period is to keep households afloat financially and able to pay their bills. Under the current arrangements, a self-employed person with no work will get maximum Universal Credit of only £408 per month – the Emergency UBI would more than double total income to £908. For a family of four, the Emergency UBI would mean a payment of £1,400 per month and £4,200 over the three months. It would provide vital relief, enabling households to keep up with basic payments and buy essentials.
Stage 2 begins after the Job Retention Scheme has finished and when it is hoped that economic restrictions will begin to be lifted. At this point employees will again be exposed to income loss and will rely on a solid economic recovery to get back into work. The Emergency UBI provides even more extensive support for households and at the same time gives a boost to consumer demand to stimulate a recovery. A family of four would receive £3,000 per month and £6,000 over the two months in emergency UBI payments.
This Emergency UBI should be tax-free and should not be included as income for the purposes of means-tested benefits. It should go on top of any other payments an individual or household may be entitled to. The amount for every child should be paid to every household with children, just like child benefit.
The upfront cost of an Emergency UBI, without any tax and revenue changes, would be £69 billion for the three months of stage 1 and £118 billion for the two months of stage 2. Both these sums are less than the £137 billion spent on the bank bailout during the 2008 financial crisis.
In reality an Emergency UBI would cost less than this, as it would help to boost consumer spending in the recovery, increase tax revenues and limit the considerable economic damage that this crisis will cause. A universal payment is the quickest way to get money into people’s hands.
Closing some of the 1,156 tax loopholes in the UK, many of which disproportionately benefit the wealthiest households, could be explored as a means of ensuring that the highest earners don’t financially gain from an Emergency UBI.
An Emergency UBI could be paid to all adults and households with children through HMRC, the DWP or via employers through PAYE.
The monthly UBI for children could be easily paid to all households currently in receipt of child benefit.
The self-employed and those in receipt of tax credits or Universal Credit could have their UBI paid to them via HMRC and the DWP respectively. Those in paid employment could be paid by HMRC via the PAYE system.
Those without an online bank account could be issued cheques, while those without any bank account could be provided with emergency bank cards with the UBI payments added to them.
The UBI Lab network
1 The £500 per month payment will only be paid to working-age adults, as pensioners are supported on the basic state pension, which is a similar level in payment.
2 The £1,000 per month option includes pension age adults, as this payment is significantly higher than the basic state pension.
3 The £500 per month payment will only be paid to working-age adults, as pensioners are supported on the basic state pension, which is a similar level in payment.
4 The £1000 per month option includes pension age adults, as this payment is significantly higher than the basic state pension.