To save the most vulnerable from missing out on financial aid during the Coronavirus crisis, the government could use four straightforward methods, says a University of Greenwich expert.
The UK will have to cope with an increasingly severe reduction in economic activity, so money needs to be guaranteed for those who are eligible for in-work or out-of-work benefits, according to economist Dr Robert Calvert Jump.
Dr Calvert Jump, a researcher at the university, is one of three economists whose new paper addresses shortfalls in the Chancellor's financial plans, announced last week.
He says: "Payments need to be fast, need to reach as many people as possible in all sorts of employment situations, and need to reach the most vulnerable to the present crisis first.
"Among the measures available are negative taxation, where HMRC transfers money directly to people's bank accounts. This method would primarily target those who are self-employed, many of whom are already struggling as a direct result of the current crisis. The amount payable could be a proportion of past taxable income as declared to HMRC.
"This method could also be extended to those whose PAYE details are known to HMRC and those who receive child benefit. For those who are self-employed, all tax bills for 2020 should also be suspended for the foreseeable.
"The next option is using existing payroll. This will address those whose up-to-date bank details are not held by HMRC. This is most likely because these people pay tax by PAYE, so by targeting that HRMC guarantees their income.
"HRMC has details of how many people work where, so money could be transferred immediately. A condition of the payment should be that people are kept on so an unconditional weekly payment can go to all employees. The state should bear the cost for keeping payrolls running.
"Thirdly, means testing needs to be removed from current social security payments. Jobseekers or those with disabilities face the added stress of having to apply for means-tested benefits. The most vulnerable members in society are significantly affected by this pandemic, and we are morally obliged to care for them.
"Lastly, the government could use the banking system. Over 90 per cent of UK adults have an account with the 'big six' banks. People who are not covered by the three earlier points could have a universal income paid to them by their bank, with the Treasury reimbursing them in the first instance.
"For the 8-9% of the population who do not have bank accounts, post offices could give cash over the counter, provisional on some form of identification. Alternatively, another option would be to outlaw gambling, both online and offline, and turn all bookmakers into cash tellers - which would utilise existing infrastructure that already reaches many people."
For more on Guaranteeing incomes: modes of delivery, by Rob Calvert Jump, Research Fellow at the University of Greenwich Institute of Political Economy, Governance, Finance and Accountability; Jo Michell, Associate Professor in Economics at UWE Bristol; and Will Stronge, Co-director of Autonomy Research Ltd, see: https://autonomy.work/wp-content/uploads/2020/03/UBI_coronavirusfinal.pdf
