Foodbanks have seen a massive increase in users as a result of the Covid-19 outbreak

Alex Sobel says the coronavirus crisis reveals our broken social system needs a radical solution

With an extended coronavirus lockdown we are starting to see the devastation caused not only to our public health but to the very foundations of our economy. The Government’s measures are a welcome relief for many, but do they go far enough to ensure that no one is left behind and that our economy can recover?

We are on a wartime footing. We have correctly decided as a society that the most important priority is to protect public health and our NHS—at all costs. This is why I support the Government’s decision to implement lockdown measures and believe these should be observed for as long as necessary. That said, I hear regularly from people who are bearing the financial brunt of this sacrifice.

I support in principle measures such as the Job Retention (or ‘furlough’) Scheme and the Self-Employment Income Support Scheme. Never before has the government sought to underwrite the whole nation’s wages to such an extent. But I fear that by not fully embracing an emergency Universal Basic Income, this extraordinary outlay acts more as a sticking plaster than a genuine recovery agent and may prove to be the mother of all false economies as many people fall through the cracks.

Whilst many employers have furloughed staff, there are still many who have not been. For instance, I have received lots of emails from people who have only just moved from one job to another and are therefore unable to ask their new employers to be furloughed. There are also reports of HR departments who for one reason or another do not have the capacity or wherewithal to efficiently furlough their employees. 

Fundamentally, making the employers of Britain the arbiters of our welfare system is fraught with problems. Furloughed staff cannot work, meaning that organisations are having to make difficult choices about whether to keep a staff member on payroll to help the business survive or furlough and save the huge financial outlay at a time where income is all but lost. 

The measures for the self-employed are also welcome, but have some serious flaws. Basing payments on profit does not account for overheads that are not going away. It’s estimated that as many as two million of the 5.75 million self-employed will miss out altogether from the scheme.

It is for these reasons and more that Universal Credit sign-ups are exceeding one million and foodbank use is approaching record highs. Any means-tested system is complicated, bureaucratic and allows many who need it the most to fall through the cracks. This is why over four million low-income families and over one million pensioners have missed out on targeted support they were entitled to. 

An Emergency Universal Basic Income is, by contrast, a simple and efficient way of guaranteeing basic financial security for all during this crisis. It allows people to work and ensures universal coverage, meaning that nobody will slip through the net. Modelling from the Royal Society of Arts showed that 74% of the self-employed, particularly low earners, would have been better off under their emergency UBI scheme when compared to the Government’s support package for the self-employed. If put in place as a recovery measure, it will provide relief to millions of households and boost consumer spending in our local shops and businesses. There is a menu of options around how it can work and could be combined with use of the tax system to ensure that money given to those who do not need it is recouped fairly and efficiently.

We must also think long term. Coronavirus has exposed the fundamental weaknesses in our economy: driven by private and corporate debt, short term and zero-hours contracts and generation rent – as well as a broken social system that has been undermined by austerity. We cannot go back to business as usual once the immediate crisis is over. We must consider the way we work and how the state is involved in the productive capacity of the nation creating a much stronger stake in its economic resilience. We must have a debate about the way people are paid in this country but also about ensuring we have a decent social security system and Universal Basic Services, creating secure jobs, universal childcare and a healthier, more secure nation.

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