Brexit and Basic Income: Political Parallels and Implications

Dr Luke Martinelli, Research Associate, IPR

This post will consider two key issues: how the political forces underpinning support for Brexit and for basic income compare to one another, and the nature of the overlaps or parallels between their respective political dynamics; and the implications of Brexit for the prospects for basic income (and cognate policies) to be implemented in the UK.

Political parallels

At first glance, the political forces that motivated the Brexit vote and those behind growing (and increasingly ‘serious’) interest in basic income appear to be completely at odds. After all, Brexit can be viewed as a response to, or rejection of, liberal globalisation policies by those on the right of the political spectrum who hold a narrower conceptualisation of political community (i.e., one strictly delimited by national borders) and distrust wasteful government bureaucracy.

Support for basic income, on the other hand, appears to be motivated by very different values: universalism contrasting with the parochialism of national ‘welfare chauvinism’. Combined with the generosity of unconditional payments, basic income is an expansive welfare policy the likes of which fit more closely to the ideals of the political left.

Brexit has brought into sharp focus a new political dynamic less defined by the traditional arena of (distributive) class conflict, and more by a widening cultural divide between cosmopolitans and nationalists. This divide is reflected by the differences in support for Brexit between metropolitan centres and small towns, between the more and less educated, and between young and old. With respect to such divisions, support for Brexit and support for basic income appear to come from opposite sides.

But perhaps they have more in common than first meets the eye. Both can be seen as railing against disenfranchisement and the failings of an existing status quo; and both are responses to socio-economic currents that have given rise to historical levels of inequality and labour market insecurity.

Furthermore, on closer inspection, the political movements behind each represent a complex combination of right and left-wing thought. Support for Brexit is perhaps strongest within the traditional base of the left – the former industrial Labour heartlands of the north. And left-wing arguments against transnational corporate governance were an important feature of the Leave campaign; indeed these are arguments which Jeremy Corbyn advocated throughout his political career before his lukewarm backing of the Remain campaign.

Meanwhile, support for basic income can be found among minimal-state libertarians as well as pro-welfare progressives, feminists and Greens. Basic income represents a family of schemes which can be generous or residual, and which can be designed to replace other welfare payments wholesale, or supplement them. Political preferences are inherently multidimensional, and the principles underlying such multifaceted policy positions as Brexit and basic income arguably evade simplistic categorisation along a unidimensional political scale.

Overlap between the supporters of Brexit and basic income is borne out by political survey data. Based on the 2016 wave of the European Social Survey, those in favour of Brexit were less inclined to support basic income than those who stated their intention to vote remain – with 47% compared to 54% supportive. But it is striking – although perhaps ultimately unsurprising – that the difference is relatively small.

Table 1: Attitudes towards basic income by position on exiting the EU: United Kingdom (with population weighting).

Source: Wave 8 of the European Social Survey (Edition 1.0), available online: http://www.europeansocialsurvey.org/.

There is another interesting parallel between the political forces underpinning support for Brexit and basic income respectively. Both attract a slim majority of public support, 52% to 48% in the case of the EU referendum, and 51% to 49% in the case of basic income, according to the latest wave of the European Social Survey – which appears vulnerable to the move from abstract concept (‘leaving the EU’ / ‘implementing a regular, unconditional payment to all’) to more concrete policy detail. There are dozens of models for leaving the EU, in terms of the specific institutional arrangements that will supersede it, just as there are dozens of ways to design a basic income scheme in terms of its interactions with the wider constellation of social and labour market policies.

The crucial point is that polling methods that aggregate support for these political projects in the abstract – i.e. for all possible Brexit models or basic income schemes – clearly lead to greater levels of support than for any specific individual model or scheme. For example, in the case of Brexit, at least some of those who voted leave must surely have done so on the understanding (albeit perhaps misguided) that the UK would remain in the single market. In the case of basic income, our own polling data shows what happens when respondents are asked to consider the mode of funding: whether tax increases or elimination of other social security benefits. Predictably, net support falls by a huge margin, by 12% and 19% respectively for each funding approach. Considering that all realistic concrete basic income proposals utilise a combination of tax rises and benefit cuts we would be left, as in the case of Brexit, with the potential for a suboptimal democratic outcome – one which the majority would oppose – as a result of the binary ‘all or nothing’ question being posed.

Implications

In any case, is the implementation of basic income likely, and has the possibility become more or less remote as a result of Brexit? It is now clear that the implications of the EU referendum result look set to have far reaching economic consequences. Already, well in advance of the exit date, we have witnessed a significant fall in Sterling’s value and some divestment by large multinational corporations, while the UK’s growth performance in 2017 was bettered by that of the Eurozone for the first time since 2010. These worrying trends have been sparked by uncertainty surrounding the nature of the trade and investment relationship to be negotiated between the UK and the EU. But even once this uncertainty has dissipated, whatever relationship is finally agreed will undoubtedly be inferior to the current status quo; Brexit will impose transaction costs and labour shortages on firms, while the opportunities to forge new trade deals independently will surely not come close to replacing the trade flows hampered by the erection of tariff and non-tariff barriers between the UK and our closest trading partner, even if we were to conclude deals with every non-EU country.

Adverse economic conditions inevitably delimit the ‘policy space’ – defined as “the effectiveness of national policy instruments in achieving national policy objectives” – available to the government to pursue its goals in crucial respects. But the flipside is that Brexit may also expand policy space in other ways, by enhancing the de jure legal autonomy of state to pursue alternative policies currently curtailed by EU rules. Furthermore, these very economic challenges appear in part to have motivated the ascent of previously overlooked policy areas up the policy agenda – as Felicia Fai described in a previous IPR blog in relation to renewed attention towards active industrial strategy in the UK.

Arguments about how Brexit will affect the prospects for the implementation of a basic income in the UK follow a similar logic, in that we can identify effects that pull in opposite directions. On the one hand, strains on fiscal resources due to the inevitable growth slowdown mean that welfare reforms imposing greater burdens on the public purse – a category in which basic income must surely be included, despite significant variation across alternative schemes – are less likely to be fiscally feasible or politically palatable in the coming years. Austerity may also create an environment in which welfare spending is afforded low priority amidst competition for scarce fiscal resources, leading to cuts to benefit levels and increasing stringency of conditions and sanctions. In the UK, which has historically high employment rates, there is likely to be limited sympathy for unemployed, able-bodied welfare recipients in particular, and little appetite for a policy that entitles the hypothetical ‘lazybones’ to an unconditional income. In these ways, Brexit appears likely to limit the already fairly distant prospects for basic income’s implementation.

On the other hand, it may be precisely growing labour market dysfunction and dissatisfaction with the harshly punitive sanctions regime that is fuelling support for basic income in the UK. To the extent that this interpretation is correct, Brexit may paradoxically give rise to important ‘negative policy feedback’ effects and thus challenge the prevailing orthodoxy of ‘creeping conditionality’ and welfare cuts. Furthermore, Brexit may eliminate some tricky legal constraints on basic income’s policy features. As Frank Vandenbroucke has commented, basic income may be “incompatible with a consistent and legitimate logic of free movement and non-discrimination”. EU laws do not permit discrimination against non-nationals with respect to labour market participation; a basic income paid to nationals only would create a ‘two-tier labour market’, undermining the goal of basic income to strengthen workers’ bargaining positions vis-à-vis employers. On the other hand, if basic income were to be provided for all residents, as most proposals suggest, it would not be possible to refuse it to so-called ‘benefit tourists’; basic income is by definition non-contributory and “is not like social assistance that can be refused to non-active non-nationals” under EU rules. In this context, freedom from EU law could protect basic income from the charge that it would simply fuel benefit tourism, thus becoming rapidly unsustainable. Indeed, given that we know that the possibility of immigration erodes support for basic income, Brexit might be an unexpected (and unwanted) gift to the policy’s advocates.

This blog post is part of the Brexit, Money and work series, a new series of IPR Blogs with a focus on employment and skills, trade and business, industrial strategy, tax and pay that highlights some of the crucial issues policymakers may face in the coming years. Subscribe to the IPR blog to get the latest blog posts, or to keep up to date with our activities, connect with us on Twitter, Facebook or LinkedIn.