UK state should pay for housing, food, transport and internet, says report

Free housing, food, transport and access to the internet should be given to British citizens in a massive expansion of the welfare state, according to a report warning the rapid advance of technology will lead to job losses.

Former senior government official Jonathan Portes and Professor Henrietta Moore, director of University College London’s Institute for Global Prosperity make the call for a raft of new “universal basic services” using the same principles as the NHS. They estimate it would cost about £42bn, which could be funded by changes to the tax system.

The recommendations include doubling Britain’s existing social housing stock with funding to build 1.5m new homes, which would be offered for free to those in most need. A food service would provide one third of meals for 2.2m households deemed to experience food insecurity each year, while free bus passes would be made available to everyone, rather than just the over-60s.

The proposals also include access to basic phone services, the internet, and the cost of the BBC licence fee being paid for by the state.

John McDonnell, the shadow chancellor, said the recommendations would “help inform Labour’s thinking”.

“This report offers bold new thinking on how we can overcome those challenges and create an economy that is radically fairer and offers opportunities for all,” he added.

Although British workers are expected to be put increasingly at risk from technological automation in the coming years, leading to job losses and a potential requirement for more state support, such wide-ranging reforms are likely to face tough opposition.

Voters may balk at the higher taxes required, with the report earmarking a massive reduction in the personal tax allowance from the current rate of £11,500 to as little as £4,300 to pay for the changes.

Steady increases to the threshold at which people start paying income tax have proven popular in polling, while the Conservatives claim about 4 million people have been lifted out of income tax altogether since 2010. Lowering the rate by £7,200 would also set the personal allowance at a level unseen since the turn of the millennium.

However, the recommendations come amid growing calls for greater levels of state intervention, including nationalisation of utilities. A major study of public opinion following the general election by the rightwing Legatum Institute and pollsters Populus found as many as 83% would support public ownership of the UK’s water, while 77% back nationalisation of the railways.

The findings could increase pressure on Philip Hammond ahead of his budget next month, even as fresh figures show the amount of money available to the exchequer at risk from weaker levels of productivity in the UK since the financial crisis. The Conservatives have however pledged to increase government spending on housing and university tuition fees, as they attempt to counter growing support for Jeremy Corybn’s Labour party.

The universal basic services report suggests the private sector, charities or the state could operate the new raft of benefits. The value for an individual using all services would represent £126 of net weekly earnings, which would also stand to benefit the poorest in society most.

The authors of the report also argue their recommendations would be more affordable response to potential disruption to the labour market from technological automation than a universal basic income, which would see cash payments given to all UK citizens. They said focusing on more comprehensive service provision rather than handouts would also mean there remains a strong incentive on citizens to find work.

Portes, of King’s College, London, said: “The role of the state is to ensure an equitable distribution of not just money, but opportunity to participate and contribute to society. For that to be meaningful, there are likely to be certain services everyone should be able to access.”