Killer Arguments Against Citizen's Income, Not.

I've had a change of heart on how to 'sell' a CI, to deflect the KCNs that it would be 'unaffordable' and/or discourage people from working.

Whether it's 'affordable' (i.e. costs no more than the current system) or not depends entirely on:

1. How many people receive it.
2. How much the weekly CI actually is.
3. What the clawback rate is for people with some income.

As to 1, instead of saying:
"Everybody is entitled to claim it. There will be an income-related clawback equal to basic rate tax plus NIC. Those earning more than a certain amount (let's say the current income tax/primary NIC-free allowance of £12,570 a year), will quickly realise that the cash CI is equal and opposite to the extra tax they pay, so won't bother claiming it and will just claim the personal allowance instead i.e. be completely unaffected". All this appears to be too complex for the mathematically challenged.

I shall just say "Everybody earning less than (say) the personal allowance is entitled to claim it. This will be clawed back via PAYE from those with some earned income to ensure that claimants do not gain an advantage relative to non-claimants with similar low incomes.".

That reduces the number of claimants down to most existing pensioners plus 'about' 10 million adults out of a working age population of 'about' 45 million.

As to 2. We know the weekly rate is going to be more than £0/week (a massive saving, if we consider state pension to be a type of CI). Sensibly, we would take existing spending on welfare and pensions payments, net of clawbacks and tax paid by likely claimants and, first keep state pension at current levels, then divide the rest equally between 'about'10 million working age claimants. The answer would be 'about' £100/week (for sake of argument, depends what you do with disability-related top-ups and Housing Benefit).

Clearly, under this approach, there would be no change to the apparent 'cost' of welfare and pensions.

As to 3. we can then touch on the KCN that "people wouldn't bother working" and the clawback rate.

For sure, there are a few adults who can manage on 'about' £100/week. Most can't and will still have to work if they want the finer things in life (and rightly so, CI is a "hand-up not a hammock"). At present, as a matter of fact, clawback rates (benefits withdrawn and tax/NIC paid) are between 70% and 100%. This is where Working Tax Credits fail miserably. It might be worth officially working 16 hours a week (how the Hell do you prove that one way or another?) to get that bit extra; there is no point then doing 17 hours because you would only keep £2 or £3 for the extra hour. This is an example of the 'benefits trap'.

We know there is a Laffer Curve for taxpayers - if tax rates are too high, it's not worth running a business or working more, once you earn some bare minimum. So there is an optimum tax rate where the government can maximise tax revenues (we are at or past this point, as it happens). The same goes for welfare clawback rates - if the government wants to claw back the maximum total cash from claiamnts, it sets the rate not too low (not much clawed back and 'unfair' advantage for claimants vs non-claiming lower earners) and not too high (discourages working - not much clawed back either).

We also know that the CI clawback rate has to be set at such a rate that people working a small number of hours don't end up with more net income than people working more hours.

Taking all this into account, the optimum clawback rate is somewhere in the region of 30% to 40% (minimm wage earners keep £6 or £7 for every hour worked i.e. two or three times as much as now), which is, happily enough, the same as basic rate tax/NIC (depending on whether you include Employer's secondary NIC or not). So there is no need for a parallel means-testing/clawback system, we just give claimants BR codes for PAYE! And the work incentive has doubled or trebled at the stroke of a pen - and it's not just the extra bit of CI clawed back, their employers will also be making more profit and paying more tax!

* The German 'liberal' FPD party, which is socially AND economically liberal, unlike its UK sister party which is just soft-socialist, had exactly these proposals in its 2021 manifesto, the FDP are part of the ruling Coalition, and it seems not unlikely that this will be actually implemented next year (fingers crossed). I happened to see this in the ZDF evening news yesterday, which I watch occasionally for old time's sake.

Killer arguments against Citizens' Income, Not

I came across a link to Europe's New Social Reality: The Case Against Universal Basic Income and thought to check which killer arguments the author was using. They turned out to be three:

1. Public support for higher spending,
2. Deservingness and the welfare state,
3. Social norms around work.

KCN No 1 is easily dealt with. No evidence is given that higher taxation would be necessary, apart from an unevidenced claim that CI would cost £34Bn (Hirsch (2015)estimates that even by abolishing most existing benefits, an extra £34 billion would need to beraised each year.). There is no suggestion that CI could be implemented by removing the tax-free amount from claimants, for instance.

KCN No 2 is dealt with in the same way. Sure, the sight of the titled lady in her Rolls-Royce pulling up to the Post Office to claim the Child Benefit for her children was not a popular one, however, if CI is made conditional on the removal of the tax-free amount, then rich people would not be claiming it, they would have the tax-free amount instead.

KCN No 3 is the classic right wing argument that if you give poor people money, they won't work, completely ignoring the fact that it is abundantly obvious that this doesn't happen with rich people, who, whilst in receipt of more money that they know what to do with, still put in long hours.

In fact, from the short amount of time I spent reading the paper (I wasn't going to spend an estimated 78 minutes of my life reading the whole thing), it appears that it should really be titled, The Case for Universal Basic Income.

Killer Arguments against Citizen's Income, not (35)

I posted one of my usual articles here a couple of weeks ago pointing out that if you add up all the cash benefits paid out (incl. state pensions, excl. housing- and disability-related benefits); the value of the tax -free personal allowances; add on all the 'welfare for the wealthy' tax breaks; and then distribute that total pot equally across the UK population, you end up with something like £180/week for pensioners, £90/ week for working age adults and £45/week per child (+/- £10, no point arguing over precise numbers). Disability and housing top-ups can stay as they are for now.

To reduce 'churn', people would then have a straight choice between a) claiming the tax-free personal allowance, which most working age adults would do, and b) claiming the Basic Income amount. You can tweak the numbers to ensure that people in steady jobs are slightly better off sticking with the personal allowance. I then tweeted a link at Citizen's Income Trust, inevitably, the usual left wing argument came up: "So you are just redistributing between people on low or no incomes?".

To some extent yes, but so what? How is this an argument against? If we got accustomed to the Basic Income system, then there would be (say) five million working age claimants, getting £95/week each. If some innumerate lunatic suggested weeding out some subjectively 'undeserving' recipients and paying the remaining 4 million people £119/week each and letting the rest starve (for the same total cost), wouldn't that also be "redistributing between people on low or no incomes?"

How is that better? Marginal utility suggests that you reduce poverty most by paying everybody the same, end of. And seeing as part of the point of any welfare system is to reduce social unrest/improve social cohesion and give people the impression they are all equal citizens (same as one man, one vote), why not have a system where nobody can claim that one group is being favoured and some other group being disadvantaged?

This cuts both ways. Current claimants can't be stigmatised, they just get it as a basic entitlement. The unemployed and single parents have also the same right to vote or use the NHS as everybody else, AFAIAA. Daily Mailexpressgraph reading stay-at-home spouses get £90/week plus £45/week for each child as well, so they've no excuse for looking down on single parents etc.

Very feeble attempt at a KCN from the Tories

The Welsh have decided to trial a UBI scheme.

Bravo Wales, but, predictably the Tories are against it:

But the Welsh Conservatives said: "The Joseph Rowntree Foundation is clear that UBI is not the answer to solving poverty, in fact they claim it can actually increase poverty."

Well, clearly it isn't the answer, if you are a Tory and the idea of giving money to the undeserving poor is anathema. I'm sure there are a tiny minority of cases where UBI can actually increase poverty, but this is just the tired old political tactic of "it's not the perfect panacea, so let's just continue with the broken system we've got,shall we?"

"The first minister needs to get on with kickstarting the Welsh economy, creating long-term, well-paid jobs for people rather than using Wales as a petri dish for failed left-wing policies."

Well we could trial it in Scotland, but the Tories have that reserved as a petri dish for failed right-wing policies like the Poll Tax.

Killer Arguments Against Citizen's Income, Not (33)

Bayard emailed me this, from the comments section at Craig Murray's blog.

Our idiot of the day responds to this sentence: "A solid leftist wish list, with the notable exception of the promotion of Universal Basic Income".

Temporary Covid-related measures apart, people need and want jobs, not to be given £100pw, have all other benefits removed, and being told to then f*** off and go away.

1. People "need and want" food, clothes and warmth, and a couple of little extras like a mobile phone, a Netflix subscription and enough money for a couple of drinks with friends every week or two.

2. It's society as a whole that wants people to have jobs. Everything you consume has to be produced by somebody else. From my point of view, I'd rather win the Lottery and never work again - but I'll still need other people to work to produce stuff for me to spend my money on.

3. The £100 would be a straight swap for "other benefits" and come to much the same thing. So the loss of "other benefits" is a non-issue.

4. People who struggle through the welfare system to get a few quid Universal Credit and bits and bits and pieces are also "told to then f*** off and go away". Which is repetition. "F*** off" means "go away" AFAIAA.

A Job Guarantee, providing non-compulsory, government-funded, locally administrated employment, at a genuine living wage, with pension rights, sickness and holiday pay, and career advancement, achieves a far more humane and economically sound result.

1. These will all be made-up, degrading non-jobs of no benefit to society. If there is stuff worth doing of benefit to all, then the government should pay people a proper wage to do those things anyway. That's got nothing to do with the welfare system.

2. What's a genuine living wage? £10 an hour? If that's what you want, make the National Minimum Wages £10 an hour, job done.

3. For every non-job paying £300 a week, what are the overheads? They will need premises or equipment, supervisors and administrators, which will bump up the cost to (say) £500 per week per non-job.

4. What about all the people who don't currently "need or want jobs"; those who don't or can't do much paid work. Like stay at home parents; carers; people with severe disabilities; low-paid apprentices; full-time students; and dare I say it 'interns'? Are they supposed to survive on little or nothing?

5. For a given welfare budget of (say) £50 billion, is it better to give ten million (or however many) people £100 UBI a week each - or create two-million non-jobs and tell the other eight million "to then f*** off"?

6. How is JG "non-compulsory"? If the choice is JG or starve, then it's compulsory. As to "career advancement"? What? Move up to a better-paid non-job overseeing unmotivated adults doing low paid non-jobs?
[JG] forces the private sector to match the genuine living wage if it wants to bid workers away from the JG, it acts as a fairer inflation buffer than condemning 5% of the working population to sacrifice their social economic well-being, as well as their physical and mental health, to the fight against inflation under the neoliberal policy of the NAIRU...

1. So direct intervention in the markets? Draw lower-paid workers out of productive work and into non-productive work? Push up wages and make businesses bankrupt; putting even more people on the dole? Sounds like shit to me.

2. £100 a week UBI for a stay at home parents, carers etc will do wonders for their "physical and mental health", methinks.

... and, apart from the economic madness of a UBI pumping more money into the economy without a commensurate increase in productive capacity to absorb the extra spending...

1. He's trying to sound clever here and falling flat on his face. First he says UBI is part of the neo-liberal anti-inflation agenda. Then he says that UBI is inflationary. Twat.

2. UBI is no more inflationary than all the benefits it replaces. Funny how he overlooks that.

3. Each JG non-job pump five times as much money into the economy as one UBI claimant and *reduce* productive capacity. The UBI claimant is still free to get a proper job rather than being condemned to adult detention five days a week.

... and the absurdity of weekly giveaways to millionaires...

1. For millionaires, a UBI is just a refund of a few percent of the tax they pay. You can net them off and call it a "tax free personal allowance. Again, twat.

... a JG avoids the resentment of those who are still in employment towards others who simply take the money without making any contribution to the productive economy that benefits us all.,

1. But everybody gets UBI You'd have to be the most embittered Daily Mail reader to claim it and then resent other people getting it. Under this logic, people who don't make "any contribution to the productive econonmy" should be denied NHS care and their children should be denied state school places. And I'm not sure where that puts pensioners who all happily collect their UBI (aka State Pension) or people with severe disabiliites.

2. Stay at home parents, carers etc are doing valuable work and are making a contribution to society in general and "to the productive economy" (however indirectly).

UBI is a sop to neoliberal private capital interests; sustaining demand for its products, yet condemning workers to subsistence levels of survival.

1. He's descended into fuckwittery here. Most of the UBI supporters I know are Labour or Green Party members.

2. UBI means that low-paid workers will be up to £100 a week better off.

3. UBI covers subsistence, which means "demand for neoliberal private capital's products". If workers magically earned more (and that would be a good thing, given levels of inequality) then what does he imagine they would do with their extra income? Wouldn't they demand more of "neoliberal private capital's products"?
If in doubt, ask yourselves why there is such a high level of support for it amongst billionaire entrepreneurs and their think-tanks?

1. Because intelligent wealthy people realise that they are there largely by luck and need a cohesive society to underpin their wealth. They would rather hand over half their income in tax (or better, pay a shedload of LVT on their lovely big houses) than risk a revoution and lose the lot.

On behalf of two of your constituents

Email I just sent (some typos corrected), for the record. Direct quotes from the MP's email to her constituents in italics.
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Dear Ms M......

I am the Secretary of the Citizen's Basic Income Trust (formerly "Citizen's Income Trust").

Two of your constituents (I have bcc'd them in, in case they wish to pursue the matter further) have asked me to contact you regarding certain unsubstantiated claims you have made about Basic Income in general and our research in particular.
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"The question of feasibility is one we should consider. No matter how desirable a UBI-style programme might be, it must also be feasible in the present context of our economy. When considering feasibility, we must address... whether it could be introduced in a manner that prevented losses amongst the most vulnerable in our society."

We agree entirely!

We assume that when you say "the most vulnerable" you mean existing welfare claimants. Three points here:

1. It would be easy to set the basic income at a level which such people's welfare payments do not fall significantly or do not fall at all. Whether we call it "income support" or "universal credit" or anything else, £1 paid out as "basic income" costs the DWP LESS than £1 paid out as "income support" or "universal credit" because there is little or no admin cost involved (short of basic fraud detection, which as we know from Child Benefit is nigh undetectable with flat rate benefits).

2. These people are particularly vulnerable because they know that benefits are very conditional, if there is the slightest administrative hiccup or they inadvertently breach a certain condition, they can lose their welfare income for weeks or months. A reliable non-withdrawable weekly payment of £90 each and every week is worth far more than knowing you will get £100 in most weeks but sometimes you will get nothing at all for a month or two.

3. You ignore the most "vulnerable" of all. For example those who have just lost their job, those who do irregular low paid jobs (zero hour contracts), and many more who do not receive any welfare payments at all because they do not meet the bureaucratic requirements (the homeless), or are discouraged from claiming because they know - or reasonably believe - that they might have to wait for several weeks to receive their Universal Credit, by which time they might have found a new low paid job and have to pay everything back, thus compounding the misery.
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"could dramatically increase the number of children living in poverty (as was also found in modelling by the Citizen’s Income Trust)"

We have published lots of examples of Basic Income systems. Some replace most existing mainly means tested benefits with a single payment; others replace fewer such benefits and pay the Basic Income in addition, which automatically reduces the entitlement to and cost of means tested benefits. It would have helped your constituents in forming a decision had you actually provided full details of the particular example you were referring to.

Some of our examples do indeed show that certain groups (in particular unemployed single mothers) would receive £10 or £20 less a week. Others show that they would be largely unaffected. It is up to the government of the day to decide which system to choose.
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"The report found that the additional tax revenue required to support such a system could be as much as £160 billion. Such a figure would indicate that UBI systems would be unaffordable..."

I will let Compass and JRF speak for themselves.

In none of our workings has the additional "cost" amounted to anything like that much - and none has required any change or at least any significant change to the rates of income tax and National Insurance (depending which example you choose).

Clearly, most adults are in steady paid employment and earn more than the income tax personal allowance of £12,500. We have always said that the Basic Income would be a straight swap for the personal allowance and the NI lower earnings threshold, so most adults would barely notice a difference - they receive a Basic Income of £70 - £100 per week, but pay extra tax of £70 - £100 per week. This could be dealt with via PAYE (as was the case in Ireland until recently) so this is not an extra "cost". It would be foolish to consider the £160 billion as a cost and the extra £160 billion as extra tax revenues.

(So this step is purely administrative - for the time being, it is easier just to exclude people in steady jobs from Basic Income and let them keep their personal allowance and lower earnings threshold, but they know that Basic Income is there if they suddenly need it. As the Adam Smith Institute has pointed out, for the majority of people there is no difference between the current system, Basic Income and Negative Income Tax).

The cost of paying the Basic Income to existing claimants (group 1 above) would barely change, depending on the precise level and which benefits it replaces.

There will more payments made to group 3 above - those in low paid and irregular work, but at least half of this will be clawed back by the PAYE system (the tax free allowance and lower earnings thresholds would be zero). This clearly obviates the need for a parallel means-testing system.

As you must know, clawing back benefits via the PAYE system is already part of the UK's overall system - for example student loan repayments and the higher earner child benefit charge. The PAYE system can easily be adapted to claw back all benefits automatically by adjusting each individual's PAYE code. The simpler the benefit system, the easier it is to adjust PAYE codes, they can be uprated each year automatically.

Any residual additional "cost" can be offset against the admin costs incurred by the DWP and HMRC, including losses due to fraud and error and student loan write offs, which are in the order of £20 billion - £30 billion a year. The net cost will be a drop in the ocean when set against UK government spending overall.

And whatever system you choose, the welfare state costs this country nothing. Some citizens pay in, others get money out, some pay in and receive similar amounts (people on Working Tax Credits). Workers pay in now and get a state pension when they reach retirement age. No sensible system is "unaffordable". I pay my children pocket money. That superficially costs me money, but it costs us as a family unit precisely nothing, and clearly improves our overall happiness - £20 a week is not much to me but £10 a week each means a lot to them.
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"even when the effect on individual behaviours in the labour market are not considered... Our current welfare system, built around Universal Credit, seeks to incentivise claimants to move off benefits and to provide tailored support to help people find work and increase their earnings".

That is a major advantage of a Basic Income. There is no poverty trap. If a claimant finds a job, short or long term, low paid or well paid, they know that they will be better off. They can move seamlessly into work without having to wait weeks between their last welfare payment and their first pay cheque. If they lose their job, at least they know that their Basic Income is still coming in to cover essentials. The value of this goes above and beyond the pure cash value. It is good for peace of mind and a general sense of well being. Like home insurance - you hope that nothing ever happens and you will never have to make a claim - but it's nice to have the reassurance and it's worth a few hundred pounds a year.

Nearly everybody wants to "increase their earnings"! Most people receiving £100 basic income would prefer to have £100 basic income and another £100 in net wages after tax. Most people earning £20,000 want to do overtime or get pay rises or be promoted and earn £25,000 and so on. Persecuting low and non-earners does not add to this basic human instinct. The minority who do not want to or cannot increase their earnings because of caring duties and disabilities should not be punished. And yes, there is a residual group who live a very modest lifestyle and will stay on welfare. Trying to cajole them into work is pointless, no employer wants them. It's like expecting wealthy heirs and heiresses to lift a finger.
--------------------------------------------
May I also take you up on this:

"the new Winter Grant Scheme which will deliver £170 million of funding to councils in England to provide vital support to the most vulnerable children and families"

There are nearly thirty million households in the UK. If that £170 million is paid equally to households in the lowest decile, that means about £60 each. Over a ten week winter, that makes £6 per household per week.
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[Please note - in all our calculations we have assumed that welfare payments for housing costs and additional payments to people with a disability would continue as they are and be paid in addition to the Basic Income]
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I hope this is food for thought

Yours faithfully

Killer Arguments Against Citizen's Income, Not (32)

From The Guardian:

The Conservative candidate for London mayor, Shaun Bailey, has been criticised for arguing people paid a universal basic income (UBI) would blow the money on “lots of drugs”...

Bailey also questioned whether it could “drive prices up for basic goods when we know people could just buy them because the money’s there”. He added he was “concerned about work incentive” and a UBI was not clearly defined.

There's not much point responding to that, apart from pointing out that Bailey has proved himself to be totally clueless or an utter shit. Or both.

Killer Arguments Against Citizen's Income, Not (33)

I have fallen into this trap far too many times. A lot of the KCNs are arguments against any form of welfare paid out in cash.

So from the right, we get things like "It will just make people lazy" and from the hard left we get things like "A Jobs Guarantee is much better" or even "The government should provide 'universal basic services'" (whatever they are supposed to be, it's never really clear).

Those aren't KCNs and there's no point engaging with people like this, as you are arguing on several fronts and the proponents can constantly change the topic. All you can say is "Those are arguments against any form of cash welfare payments, and if you don't accept that these are a necessary part of a democratic, capitalist system, there is no point me explaining why things like means-testing, the couples penalty and conditionality are ultimately pointless"

These non-KCNs are quite distinct from genuine KCNs, where somebody accepts that there have to be cash welfare payments to certain people in certain circumstances and are merely arguing over who gets them and how they are calculated. So things like "It will be unaffordable", or "why give money to rich people?", or "means-testing helps to reduce the cost of welfare, so means a lower tax burden on everybody else" (the latter two neatly cancel each other out), while completely without foundation are at least proper KCNs and it might be worthwhile addressing them. It usually isn't, because most people have a poor grasp of maths and logic, but hey.

As I've said many a time, if I hadn't taken a few weeks to try and understand our welfare system and how it inter-acts with the tax system, on the level of individuals and on the national level (total cost and revenues) and realised that's it's perfectly affordable (no increase in tax and NIC rates) and do-able (i.e. the UBI would be a £ for £ replacement of Income Support and Working Tax Credits etc), I wouldn't be so keen either.

What is equally annoying is that some UBI supporters see UBI as a matter of principle and are very vague on how it would be paid for or how much each individual could be paid, I spend a lot of time explaining to supporters and opponents alike that if you look at it in totality, the UK has something approaching a UBI or Negative Income Tax. There are just far too many kinks, conditions, complications, loopholes and overlaps, mistakes, non-earners who fall between various stools and get nothing, and to be fair, claimants who completely take the piss. If you ironed all these out and removed the opportunities for fraud and mistakes, you'd end up with a UBI. Few people would be noticeably better or worse off; and total costs and revenues would be much the same.

Killer Arguments Against Citizen's Income, Not (32)

With my Citizen's Basic Income Trust hat on, I had a Zoom call with somebody doing an MA on the topic yesterday.

He asked me about "political feasibility", given all the other (spurious) objections.

The answer is, do it softly-softly behind the scenes. For example (ignoring the fact that they are trying to lump a lot of this into Universal Credits), to get down to the tedious details:

1. There is a significant couples penalty in the welfare system. A single adult gets £74/week Income Support (in its various guises) and a couple gets £117/week. So just hold the single person rate fixed and gradually bump up the couple's rate to £148 and allow them to put in two separate claims. Then get rid of the tick box that asks whether you have a 'partner' or not.

2. Gradually align Working Tax Credits (basic amount £3,040 a year for a single adult working more than 16 hours/week or £3,865 for a single adult working more than 30 hours/week) with Income Support Rates and reduce the 16 hours/week threshold down to 1 hour.

3. So Working Tax Credits would end up at £74 x 52 weeks a year = £3,848, even if you are only working 1 hour a week.

4. Gradually reduce the earning threshold for Working Tax Credits withdrawal down to £nil, while at the same time gradually reducing the total withdrawal rates for Working Tax Credits, Income Support and Universal Credit down to 32% for every £1 of income (from their current overall rates of about 60% to 100%).

5. 32% is of course the current real basic tax rate (income tax + Employee's NIC). At this stage, you no longer need a parallel means-testing system - claimants are just given a PAYE code with no personal allowance (a BR code) with a tick in the box for "Income Support/WTC claimant - no NIC threshold". They do this with the extra 9% tax for people with student loans, it's perfectly realistic . So they get full amount of benefits and these are "means tested" or "clawed back" via normal PAYE.

6. Gradually reduce Statutory Maternity/Paternity Pay (£151/week for 39 weeks) to the same as Income Support or Working Tax Credits, while extending the eligibility period from 39 weeks to "until you decide to stop claiming or are old enough to get the old age pension". Claimants get the same adjusted PAYE code as above.

7. Married people who earn less than the Personal Allowance can transfer part of the notional tax saving to their working spouse, it's a tax saving of a laughable £250 a year. This one will keep the Daily Mail readers happy. Allow the lower earner to transfer the entire unused part of their personal allowance, and/or allow the lower earner the claim the lost tax saving on the unused part as a cash payment (to the extent they are not getting Statutory Maternity/Paternity Pay, see above) and gradually bump up the cash payment to the same as Income Support - WTC - SM/PP rates.

8. Gradually phase out all the "looking for work" conditions, do interviews every three months instead of every week, reduce the number of hours people have to pretend to be looking for work down to 1 hour a week.

9. Gradually increase the normal NIC thresholds to £12,500, so that the value of the NIC and income tax allowances for somebody in full-time work - not receiving IS, WTC, SM/PP etc - is £4,000 (£12,500 x 32%) and then get rid of the allowances and deduct tax and NIC from the full amount of earnings with a monthly "tax credit" of one-twelfth of £4,000 (mathematically exactly the same thing - they used to do this in Ireland), then increase the IS, WTC and SM/PP rates to £4,000 a year as well so that people are heartily indifferent which system they're on.

And so on - in five or ten years, we'd have a UBI system (or Negative Income Tax system) and nobody would have noticed. Most people wouldn't have a clue what all these things mean, so won't have a strong opinion if some obscure sections in some obscure social security acts are amended a bit every year.

Killer arguments against Citizen's Income, Not (31)

Recently I was sent a link to an article, entitled "Europe's New Social Reality: The Case Against Universal Basic Income" which was long and not very interesting, but did contain this gem:

One of the most profound concerns around UBI is the impact it could have on diminishing the scope of existing social policies and the potential for new programmes. Most modest models of UBI – which offer guaranteed payments at relatively low levels – account for the withdrawal of many existing benefits and allowances, often with the exception of housing and disability payments.

As Figure 5.1 shows, the RSA’s model – drawing upon prior work by the Citizen’s Income Trust – proposes the abolition £272 billion worth of existing UK programmes and allowances. Thus in order to finance a very modest UBI, many existing structures of the welfare state would still have to be swept away.

So what is a feature of UBI, simplification of the welfare system, is being presented as a bug.

Preumably the author, Daniel Page, thinks that the ability of politicians and bureaucrats to tinker with and micromanage welfare payments is essential. There is also the "UBI is too expensive" KCN which is presented as a given, without any justification, apart from another paper based on the same KCN.

Killer Arguments Against Citizen's Income, Not (30)

One argument from the hard left, who want the state to control everything, is that UBI supporters want to scrap state education, NHS and so on and replace it with vouchers for the private sector to soak up. Some neo-liberals clearly want to do this - so they sold off council housing at undervalue and are now overpaying Housing Benefit to the people who snapped it up.

But this is clearly untrue for most mainstream UBI supporters, who tend to be centre-left, centre-Georgist or centre-right.

I had to deal with such an objection on behalf of the Citizen's Basic Income Trust recently.

To clarify our/their position, I drafted the following article, which will hopefully be added to their FAQs soon:
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Would UBI replace other public services?

Like most countries, the UK provides 'free' state education and 'free' (or very low cost) healthcare. These are similar to a UBI. They are universal, non-means tested, non-taxable, easy to access and there is no stigma attached.

There are clear social and economic advantages to this:
- If left to the private sector, the quality would probably improve for those who can afford it, but the cost to parents and patients would double or treble (see US healthcare system and UK private schools). Lower income households would clearly lose out.
- Health and education businesses can make super profits (a form of 'rent'), because the value of healthcare or education is vastly greater than the cost of providing them. As a near-monopoly provider, the government can keep costs low and pass on the savings to the general population.
- Health and education are public goods and merit goods. We all benefit from everybody else having a reasonable level of education. Employers benefit from having healthy workers, as do members of patients' families. Even if you have no children, it is worth paying some extra tax to pay for other children's education (who will be paying for your state pension1)

So the answer is, no, of course not!

The UBI we envisage would primarily replace existing  benefits which are paid out in cash. The UBI would cover the costs of things which the private sector can provide more efficiently, at lower cost or at higher quality than the government - such as food, utilities, clothing, mobile telephones...

The UBI should not be earmarked for particular items (such as food vouchers or travel passes for the over-60s). For most households, the UBI would only be a small part of their total disposable income, and each individual household is in a far better position to decide how to spend it than the government. The mix changes every week and as children grow up. Some areas have good public transport, so a travel pass in London is worth much more than a travel pass in a rural village with an infrequent bus service.

The other downside of earmarked benefits is that the private sector will respond by increasing prices to soak them up if prices are not capped, so private providers will extract super-profits or rent.

For example, the UK has gone from a situation where over a quarter of households lived in social housing to mainly private provision. In the 1970s, social tenants paid affordable rents and local councils made a modest profit. This was replaced with Housing Benefit after much of the social housing stock was sold off. So instead of the council incurring the modest annual maintenance costs for a council house occupied by a low income household claiming rent relief, the government pays five times that amount to a largely unregulated private landlord, a huge cost to the taxpayer.

Killer Arguments Against Citizen's Income, Not (29)

From The Scotsman:

Helpfully, the former Edinburgh SNP MSP and local government minister Marco Biagi has done some sums, calculating that rolling in all benefits currently paid out in Scotland would cover £19bn and on the basis that the Scottish Government won’t stop spending £19bn on schools, hospitals, police and all the other services for which it is directly responsible, the rest of it would have to come from higher tax, almost all on income.

It doesn’t sound too bad when you say it quickly enough; a bit more income tax and everyone gets £9,000 a year with no strings attached. The rich can easily afford it, so what’s not to like?

What’s not to like is the scale of the tax rise. Most appraisals of CBI presume the £12,500 tax-free personal allowance would go and National Insurance would be paid by everyone, and Mr Biagi’s calculations produce a basic income tax rate of between 42 and 44 per cent.

The Office for National Statistics estimates average gross earnings in Scotland to be £470 a week, £25,000 a year give or take a quid or two, and income tax at 40 per cent would mean the average worker paying £10,000 a year in tax and getting £9,000 in return.

He appears to be suggesting that UBI is bad for two reasons:

1. It would increase basic rate of income tax to 40%, and

2. The net cost of income tax minus UBI to an average taxpayer would be £1,000 a year.

The problem is, he is a fucking moron who doesn't know what he is talking about and isn't comparing like with like.

1. At present, the total marginal withdrawal rate (PAYE deducted plus means-tested benefits foregone) for an average earner is at least 75%. They might not know it, but it is. £9,000 a year is a very generous* UBI, so I hope it would replace all means tested benefits, in which case the effective withdrawal rate is reduced to the new higher PAYE rate of about 55%**, which is a big improvement. You end up 45p better off for every £1 you earn, not 25p.

2. The current net cost of income tax minus UBI to an average [Scottish] taxpayer is £2,480. They pay £2,480 income tax and receive £zero UBI. So reducing that net cost to £1,000 is a big improvement.

* I would say overly generous, but hey, I'm using other people's figures.

** Basic rate tax and NIC are bad taxes, but not the worst. That's VAT, and in this context, means-testing.

Killer Arguments Against Citizen's Income, Not (28)

I'm sure I've covered this before, but it has raised its ugly head again (@CentreThinkTank on Twitter, who are otherwise pretty sound on all sorts of issues).

For some reason, they (like a lot of centre-right people) think Negative Income Tax is better than Citizen's Income because it can be 'targeted' at lower earners and so it is cheaper than paying it to everybody, including people 'who don't need it'.

As Sam Bowman at the Adam Smith Institute explains, The Negative Income Tax and Basic Income are pretty much the same thing.

His article is logically and mathematically correct, but I find it helpful to look at a real-life example...

A real life example

Ireland used to have* a hybrid system as follows, which I think is the best combination of the two:

1. Unemployment benefit was €300 a month.

2. There was, officially, no income-tax free personal allowance.

3. People in work received a 'tax credit' of €300 per month against their PAYE liabilities.

4. PAYE was calculated as follows:

step 1: multiply gross pay by 30% on all earnings (up to the higher rate tax threshold) = PAYE due.

step 2: reduce each person's PAYE by €300 each month (but not below zero)

5. If an unemployed person took on some some part-time work, he continued to receive the unemployment benefit but didn't get the tax credit as well. He had PAYE deducted at the flat 30% on all his earnings.

Worked examples:

The unemployed person gets net income €300 a month.

An unemployed person takes on some part-time work, €500 gross a month. Net of 30% tax he earns €350 and keeps his €300 unemployment benefit. Net income €650.

A low earner on exactly €1,000 a month looks at his payslip and sees PAYE deducted zero (the 30% x €1,000 and the tax credit exactly cancel out), net pay €1,000.

A medium earner on €2,500 a month looks at his payslip and sees PAYE deducted €450 (30% x €2,500 = €750, less €300 tax credit).

Conclusion

The final outcome (in terms of net income) is exactly the same whether you call the €300 'unemployment benefit' or 'tax credit' or 'negative income tax', or 'citizen's income'.

The 30% is the same whether you call it 'means-testing' or 'claw-back of unemployment benefit' or 'income tax'.

The majority earning more than €1,000 a month couldn't care less if you call it a €300 'tax credit' or a €1,000 'tax-free personal allowance'.

The part-timer on €500 a month should be indifferent whether he gets net pay €350 and €300 unemployment benefit; or whether he gets €500 gross pay and €150 negative income tax (being 30% x the excess of the notional tax-free personal allowance over his gross pay).

The difference here is psychological. We want the unemployed to take on low-paid or part-time work. If we say "You can keep your €300 unemployment benefit and keep 70% of your gross earnings", they won't miss the 30% tax deducted because they never had it. That is more of an incentive than saying "You can keep all the €500 you earn, but we will make you fill in some forms and will reduce your unemployment benefit by half".

It is impossible to say whether the Irish system was more like Citizen's Income or more like Negative Income Tax. Because in terms of the final outcome, they are identical and indistinguishable!!

It's just a question of administrative simplicity and minimising fraud and error. With NIT, you need a separate system for calculating NIT and clawing it back; with CI, the claimant just gets a BR tax code, so pays tax on all his earnings - the clawing back is done via the normal PAYE system. So the CI system makes life easier for the minority at the margins of employment, and those are the people we should be concerned with. For the long term-unemployed and the majority earning more than €1,000 a month, NIT and CI are the same.

With the Irish system, there would have been some people in work who continued to receive the unemployment benefit and get the tax credit. Boo. And there would have been some people who didn't get unemployment benefit and earned less than €1,000 a month, who didn't get the full value of the tax credit. Also boo.

Well, sure, but there will always be fraud and error in a welfare system and there will always be tax evasion if you try to tax output and earnings. And payroll departments and the tax office will always make a few mistakes.
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* I've simplified this a bit and am doing this from memory. It's now more complicated, but you can recognise the basic model.

Killer Arguments Against Citizen's Income, Not (27)

From The Independent:

51 per cent of the public also support a universal basic income, "where the government makes sure everyone has an income, without a means test or requirement to work". Just 24 per cent are unsupportive of the idea, with 9 per cent saying they do not know how they feel.

The idea a basic income has been backed by dozens of MPs from across the political spectrum as a solution to workers falling through the cracks of the current government support scheme - including the self-employed. Former work and pensions secretary Iain Duncan Smith has however criticised the idea, suggesting it would be a disincentive to work during the crisis (1) and would be badly targeted (2).

Christ on a crutch.

1) The whole point of the lock down is to disincentivise people from working! If you are furloughed, you are forbidden to do work for your employer. (Note: I got talking to a builder recently who is on furlough from a large construction project; he's now working part time for his dad instead. Good for him). The majority of adults are still in paid work; receiving a state pension; or are already on some state benefit or other. They clearly wouldn't get anything extra.

2) Compare the UBI with the Furlough Scheme, which his own government introduced. The cost to the taxpayer of a furloughed worker on an average wage is £1,260 per month - the more that person was earning beforehand, the more they get now - a kind of negative means-testing. Means-testing is bad enough, but negative means-testing is worse. That's really badly targeted. A sensible UBI would be in the region of £300 - £400 per month, just enough to live off, assuming there is a rent/mortgage freeze, i.e. very well targeted. It does the job at minimum cost.

Killer Arguments Against Citizen's Income, Not (26)

Just to remind us that it's not just the authoritarian Right but the authoritarian Left who are digging their heels in.

From The Morning Star:

For years the Universal Basic Income (UBI) campaign lurked in the libertarian undergrowth: give everyone a basic wage, unconnected to their labour or their needs and get government off their backs. But over the last 5 years or so the idea has crept into the left-wing of the Labour Party. It was a relief that it didn't feature in the last two manifestos.

It has been depressing, therefore, to see recently on social media so many people who consider themselves socialists calling for UBI. Finally today I was horrified to see good MPs like Sam Tarry and Rebecca Long Bailey joining the throng.

UBI was always a snake-oil policy but suggesting that it is a sensible response to the Covid-19 crisis is frankly crazy. The problem that needs to be solved is maintaining people's incomes if they cannot work because of illness or temporary redundancy. People, as best they can, adjust their outgoings to their incomes.

UBI is a one-size-fits-all payment. The correct response is for the government to underwrite payrolls for the duration of the emergency. If that were done there would be no need for rent or mortgage holidays for workers or tax/National Insurance holidays for employers.

Carol Wilcox, Labour Land Campaign
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So somebody who loses a higher paid job deserves higher welfare payments (or a higher government guarantee) than somebody who loses a low paid job? That's what she seems to be saying. Strange.

UBI is not about replacing income from work. Most recipients will continue working (the UBI would be low compared to average wages).

UBI is not supposed to be 'targeted' at those who have lost their jobs, it's not a kind of unemployment benefit. For sure, it would benefit the unemployed, but "universal" means "universal". It goes to children, students, workers, unemployed, stay-at-home parents, the disabled, pensioners, recently released prisoners... and the few people who are content with a really, really modest lifestyle and can't be bothered.

UBI goes to everybody. Same as the universal right to vote, use a public library, state education, NHS, whatever. If you genuinely oppose UBI, you should oppose all these as well.
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Also, to say that there'd be no need for a tax/National Insurance holiday if the government underwrote wages is a bit arse-backwards.

Killer Arguments Against Citizen's Income, Not (25)

The tired old arguments are being trotted out again:

From City AM:

DEBATE: Is now [i.e. during coronavirus pan{dem)ic] the time for the UK to trial a temporary Universal Basic Income?

YES, says Julian Jessop, an economics fellow at the Institute of Economic Affairs...

Good stuff from the IEA.

NO, says Matt Kilcoyne, head of communications at the Adam Smith Institute...

We need liquidity for households and struggling firms — a kind of state-backed insurer of last resort — but money must be targeted where it can do most good. Don’t splash cash, target limited resources at those who need it the most.

The question isn't so much about how much people who are suddenly out of work get (that is a different debate); it is about how quickly they can get it.

If you don't want to increase total spending or transfers (and I don't), then you offer a UBI to everybody, pitched at a sensible amount similar to current Income Support levels... but the quid pro quo is you forego the income tax personal allowance/National Insurance Threshold if you do.

So the extra tax/NIC you'd pay is equal and opposite to the UBI you'd get. Those in steady jobs won't bother; those who have lost their jobs, or worry that they might, or are on benefits anyway, can opt to get the UBI. They'll have to fill in a form or two, but payments can start more or less immediately, like Child Benefit starts the week a child is born, and after that there is no more form filling ever again.
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Emailed in by ShineyMart, from CityUnslicker:

To give an example, the NHS costs around £2200 per person, with UBI we would have to give say £500 a month for it to be realistic - so £6,000 a year. That plus the NHS is £8,2000 [sic] per person per annum. At over £750 billion, that is more than the UK Government's entire spending and 250% more than we currently spend on all social benefits and the NHS added together.

*Sigh*

[His calculator must be broken - £8,200 x pop. 66.4 million = £550 billion, a bit more than one-quarter of GDP]

The NHS costs what it costs; it's cheaper than a US style system, and we can clearly afford it. And that has nothing to do with UBI. No extra cost.

Where does he get the figure £500 from? It's easy to prove that something is unaffordable if you set an arbitrarily high amount.

A UBI is, or should start off as, a replacement for existing 'stuff'. There is little or no extra cost.

Pensioners already get a UBI of an average of £160/week, it's called "state pension". No further UBI needed. No extra cost.

If you add together Child Tax Credits and Child Benefit, that's enough to pay a UBI of £75/week to the first child in each household and £50/week to second and subsequent children (average £60/week). No extra cost.

Putting Housing Benefit and child benefits to one side, existing welfare claimants already receive on average £75/week each. No extra cost.

For people in steady jobs, who are lucky enough not to lose them, see above. No extra cost.
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Even if you are no good at maths, surely you grasp that UBI is mainly just income smoothing, and not particularly redistributive? The people paying the tax now were children once (and got child benefit); are adults now (and are getting part of their tax back as UBI); and will be pensioners one day (and will get pension/UBI). Average earners get their money back, they are paying back their child benefit and pre-paying their pension.

Can average earners 'afford' so spread their income like this? Of course they can.

For sure, that's over-layered with some redistribution from high earners to low earners, but that is a relatively small chunk of the total collected and paid out.

And can high earners 'afford' to hand over some of their income to be shared between the far larger number of low earners? Of course they can.

Killer Arguments Against Citizen's Income, Not (24)

One of the worst I've ever seen, from Mediun.com, a veritable car crash:

Sounds great, right? … it does, until you look under the hood:

How Yang proposes paying for it is by introducing VAT (Value Added Tax) of 10%, that’s a $100 on every $1,000 you spend! The VAT will hit the middle class the hardest, those making and spending $120K per year break even. Those who make and spend $40K per year, will really only be effectively getting $8K per year, $153.85 per week.

His maths is rubbish. Assuming VAT paid is proportional to income/spending, the actual net Freedom Dividend minus VAT for...
- a non-earner would be 'only' $10,800;
- a middle-earner on $40,000 would be $6,800. FD = $12,000; minus 10% VAT on spending $40,000 + $12,000 = $5,200;
- a higher earner earning $120,000 would actually be negative $1,200. FD plus $12,000; minus 10% VAT on spending $120,000 + $12,000 = $13,200.

That seems very progressive to me, if that's what you are into. (Yes, VAT is the worst kind of tax, but let's stick to his static calculations).

[Quoting Yang] "We currently spend between $500 and $600 billion a year on welfare programs, food stamps, disability and the like. This reduces the cost of the Freedom Dividend because people already receiving benefits would have a choice between keeping their current benefits and the $1,000, and would not receive both."

So everyone on Welfare, SNAP, Disability or any other government assistance just gets excluded from the “Freedom Dividend” club, unless they give up their “current benefits”. This further widens the income inequality gap, pushing those less fortunate deeper into poverty.

Nonsense.

Yang's whole point is that if his FD is an alternative to existing welfare, to keep the overall additional cost down*. Somebody who is currently entitled to more than $12,000 a year in various welfare payments, they can keep them.

It's hardly "giving up" if you can choose a higher figure. Nobody is "excluded" and everybody with other earnings up to $108,000 would be better off . That narrows income inequality gap and pushes nobody further into poverty (again, glossing over the dead weight costs of VAT), the precise opposite of what he claims.

* Somebody worked out that all the various overlapping state and federal welfare schemes already average out at $7,200 per adult per year, so bumping that up to $12,000 is no biggie.

Killer Arguments Against Citizen's Income, Not (23)

Summary of thread started by James Medlock on Twitter.

JM: One of the most underrated parts of a universal welfare state is the income-smoothing effect. Even if you pay in just as much as you take out, there’s an efficiency gain in redistributing from yourself at peak earning years to yourself when you’re sick, old, young, or unemployed.

Steven Hart (first half of KCN): Only if you suppose the utility of income is relatively flat across an individual's lifetime, which is a massive assumption.

Me (with my Citizen's Basic Income Trust hat on): Is marginal utility the same across a lifetime? For most yes, for some they'd prefer it earlier, others later, it all averages out. It's safe to assume that the marginal value of income is highest when your fixed costs take up most of our income. So smoothing income, assuming fixed costs are fixed, must increase overall utility.

SH: In theory perhaps, but in practice absolutely not. For example, the marginal value of income increases significantly when you have a family. This is not merely an issue of discounting.

JM: The whole point of a comprehensive welfare state is to redistribute to you during periods where marginal value of income increases. So you have a Child Allowance to increase your income at that point, paid during your childless years.

SH: But there is no way of determining the marginal value of income. In such a system, a bureaucrat decides for you*. Such a system *may* benefit citizens, but it is by no means a guarantee, even under a great number of simplifying assumptions.

JM: It's a safe bet that marginal value increases when you're a parent. You just said so yourself. And peak earning years don't match up with peak child rearing years. A child allowance is clearly beneficial here.

* I didn't respond to this, which is clearly nonsense. Marginal value of income just is whatever it is. No bureaucrat decides it. Any income smoothing must, by definition, increase overall marginal utility of spending.
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SH (second half of KCN): The less taxation, the more an individual has the ability to distribute income according to his or her own preferences.

Me: Citizens income is a tax rebate. It's negative taxation, not taxation. Total income the same, as the original tweet said.

SH: That's irrelevant to the critique. If it helps you, replace "taxation" with "incoming smoothing" in my Tweet. I'm saying that the same income redistributed equally throughout a lifetime is not necessarily superior to non-redistributed, even absent any consideration of incentives.

That's not a practical example. There is no thought experiment you can run to prove or disprove this. It's a simple fact that people can cope very well with sudden large increases in income (or falls in fixed costs) but can't cope so well with sudden falls in income (or increases in fixed costs).

A welfare state shouldn't flatten income too much because that would be a disincentive to working (and that would be bad for society/the economy), but just leaving people to their fates and allowing massive and increasing inequality is bad for society/the economy as well. Pitch it somewhere in the middle and you won't be far wrong.
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Anyway, it's a good argument FOR a Citizen's Income, I'll expand on this in future posts.

Killer Arguments Against Citizen's Income, Not (22)

Emailed in by Sackerson, from the Foundation for Economic Education. The first paragraphs are just lies and distortions, skip those and get to the KCNs:

Second, universal basic income payments would be given to all citizens, including middle- and high-income earners. By not targeting payments to those with low incomes, the proposal would transfer funds away from the vulnerable to the relatively affluent.

Bollocks. It's the middle- and high-income earners paying all the tax to fund the UBI, from their point of view, it is just a modest tax refund. By and large, it is downward redistribution.

To defuse this, all you would need is to give people the choice between
a) Claiming the UBI but not also getting a tax-free personal allowance; and
b) Waiving the UBI and getting a tax-free personal allowance instead.

For example, UK income tax rate 20%, UBI = £50/week. If the personal allowance is £12,500 (which it is in the UK), then anybody earning more than £12,500 wouldn't bother claiming £50/week UBI and would choose a £50/week higher net wage instead. They will literally not receive a UBI, end of discussion.

Only those who are pretty sure they won't be regularly earning at least £1,000-odd a month for the foreseeable will claim the UBI. Which is the much same people as those currently entitled to some form of welfare payment.

But the most apparent flaw with the concept is that it fails to require work or work preparation for its recipients. Although the current welfare system does little to encourage self-support, a comprehensive universal basic income policy would remove the idea of personal responsibility entirely.

What the heck does that have to do with it? There are loads of benefits which do not require people to be looking for paid work - the right to vote at elections, use a public library or call the police, entitlement to state-school place or NHS treatment, maternity pay, sick pay, redundancy pay, child benefit, old age pensions, carer's allowance, student grants, incapacity benefit (which I think is being phased out, it was disguised unemployment benefit without a requirement to look for work), plus all sorts of variants at different times and in different countries.

It’s a misguided approach.

No it's not, and the very next paragraph explains why:

People Enjoy Working

Public opinion and social psychology indicate that adopting policies with a demonstrated track record of discouraging work would be a bad development. In the 2016 General Social Survey, for example, 70 percent of Americans agreed that they would enjoy working in a paying job, even if they didn’t need the money.

So why waste column inches explaining that UBI would destroy the work ethic when real life shows us otherwise? We see that most people want to (and do) earn much more than the bare minimum they need to live, which is all a UBI would pay for. It's not going to change a thing for those with regular earnings of more than the personal allowance, who wouldn't bother applying for the UBI, that is just needless bureaucracy.

If the KCN held water, then nobody would bother earning more than a bare subsistence level.

Killer Arguments Against Citizen's Income, Not (21)

This one keeps rearing its ugly head:

"If we pay out a universal Citizen's Income at a flat rate to all adults, this will go straight into higher rents so landlords will be the only beneficiaries"

Clearly not true as it ignores the basic rent setting process (and it ignores the real world, in which UBI would be a straight swap for many existing welfare payments and tax reliefs, a few winners and losers, most households break even to within £10 or £20 a week).

(Clearly, a UBI, like nearly any type of government spending, good or bad, ist best funded out of LVT but that is a side issue.)
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1. The main driver of rents is the extra income you can earn for a similar amount of effort by moving to a higher wage area. If you do not understand or accept this, go to jail, do not pass Go, do not collect $200. This is easily observable in the real world, what it boils down to is that the net disposable income, after paying rent, is pretty much the same all over the country.

This must be true, or else what's stopping everybody from moving to higher wage areas? Answer: the equal and opposite force of higher rents!

2. In the lowest wage area, the location rent is always nil.* There are vast swathes of land/housing, even in developed countries where the location rent/site premium is £nil i.e. where you can buy a house or flat for less than it would cost to build, or where some homes/shops have been abandoned. This is easily observable in real life.

That is our fixed point, call it Town A, where average wages are £10,000 (or those in work earn £15,000 but one-third of adults are unemployed, for example).

People in Town B have average wages £11,000 (could be higher wages or lower unemployment/more jobs, doesn't matter).

People in Town A would like to earn that extra £1,000, so they are willing to move to Town B, provided the extra rent is no more than £1,000.

People in Town B would like to save rent by moving to Town A, but they know that wages are £1,000 lower, so they expect rents to be at least £1,000 lower in Town A (and at least £1,000 higher in Town B).

So the equilibrium point is where the rent in Town B is £1,000 more than in Town A, the same as the difference in average wages between the two.

This applies to all areas up to Town Z, with the highest average wages in the whole country.
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OK, so let's imagine the government pays the UBI out of thin air, like some new royalty income (oil, 3G 4G 5G licences etc), so requires no change to taxation which would confuse the discussion.

Town A is still the least desirable area, so location rent is still nil. That is a fixed point.

Average wages (even including UBI) and rents in Town B are still £1,000 higher than in Town A, i.e. unaffected.

The incentive to move from Town A to Town B (higher wages) and to move from Town B to Town A (lower rents) are unchanged and still in the same equilibrium as before.

This applies all the way up the chain to Town Z, the highest wage area in the whole country.
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* Imagine an outdoor concert with so many rows of seats that there are more seats available than the number of people with even the slightest interest in seeing the show.

The front row seats will go for £100, the second row for £95, the price/value will drop slightly for each row further back, and so on until the seats are so far back that people aren't willing to pay anything for them (not even the price of the bus ticket to the venue) and the promoter can't even give them away.

The marginal location is the last row where people want to sit, even for free. Their location value is £nil. Any further in, and you'd have to pay at least £1. Any further out and there are no takers at all, as the last few people with an interest in the show have already taken a free seat in the back row.