I think that UBI potentially addresses some of the criticisms that I mentioned. Supporters of UBI will raise a number of potential advantages but, for me, the key advantage is that the certainty of that income brings security, which has a number of benefits. In effect, it can help to redress some power imbalances between employers and employees. It means that people who are out of work do not necessarily have to take the first job that comes along, if that does not suit them—for example, if it is low paid or is not particularly good quality. It means that people have a degree more incentive and flexibility to change their employer, even if that means a temporary period in which they are not earning. Potentially, all those factors create a virtuous circle, which helps to improve pay and conditions in jobs.
The key problem with UBI, as many people have pointed out, is the sheer cost of it, if it is paid to everyone in society. Even a relatively low level of UBI can cost a huge amount.
At the Fraser of Allander institute, we did some modelling on that last year, and we found that even a UBI that was paid at basically the same level as JSA would cost £25 billion to £27 billion. Of course, some of the costs of that could be recouped by turning off various existing benefits, getting rid of the personal allowance in income tax and so on, but we would still be left with a pretty big funding gap—and that is for a policy that, for those who are out of work, would be no more generous than the existing one. It would not necessarily address all the challenges that we might want to address and, in fact, it would be an expensive way of addressing some of them.
Rather than thinking about a move to a full UBI, it might be better to think about how to make the existing system more generous, remove some of its focus on conditionality and think about how we can improve its responsiveness to income volatility.
Of course, with all the will in the world, we are not going to be able to implement a full UBI in time to deal with the current crisis. It might be good to have it in place for the next crisis, whenever that comes along. However, even if we had had a UBI when the Covid crisis hit—albeit that it would have helped a lot in reducing anxiety, providing certainty and security to people, and avoiding their having to make an application for universal credit and wait for the outcome of that—it would not have substituted for the furlough scheme, which was very much about maintaining employment, keeping people attached to employers and so on. Clearly, a UBI would not have done that.