3.1 The furlough scheme meant that government provided employers with a grant that allowed employers to pay up to 80% of each employees salary for hours not worked (up to a maximum of 2,500 per month).

Outline what is meant by a universal basic income and explain two ways that the furlough scheme differs from a universal basic income.

Extract 1: Covid job losses lead MPs to call for trials of universal basic income

A cross-party group of MPs has called on the government to allow councils to run universal basic income (UBI) trials in response to mass unemployment triggered by the Covid-19 pandemic.

A letter to the chancellor, Rishi Sunak, signed by more than 500 MPs, lords and local councillors says pilot schemes are urgently needed as the pandemic unleashes widespread economic disruption and drives up redundancies at the fastest rate on record this winter. Launching a UBI would mean the state paying every adult a basic sum regardless of their income.

The letter says issues with the benefit system and the end of the furlough scheme mean Britain is ill-equipped to support people through the financial insecurity of the Covid recession.

We must trial innovative approaches which create an income floor for everyone, allowing our families and communities to thrive. The pandemic has shown that we urgently need to strengthen our social security system. The creation of a UBI a regular and unconditional cash payment to every individual in the UK could be the solution, the letter states.

One UBI option flagged by the group would be to launch an initial 48 per week payment

Critics argue that a UBI would be too expensive to operate and would discourage people from looking for work. There are also calls for alternative policies to meet the same goals as a UBI, such as significantly raising funding for public services or expanding the benefit system and targeting it to support the neediest in society.

Source: Partington (2020)