Universal Basic Income

What is a Universal Basic Income?


Universal basic income, commonly abbreviated as UBI is a program in which the government regularly grants every adult citizen a set sum of money with the aim of meeting their basic needs.

How much is Universal Basic Income?

Figures vary across places where UBI has been implemented.

The Welsh government’s new UBI trial will pay around 500 people £1,600 a month, for 2 years from their 18th birthday. However, this is the highest rate of any previous large-scale UK pilot.

The US-based UBI centre has suggested a Universal Basic Income is set at $1,000 per month.

Where is there a universal basic income?

As of now, Finland is the only country where a nationwide randomised control trial of UBI has been tried, with 2,000 job seekers being paid €560 a month over 24 months.

Canada, Uganda and Kenya have also trialled UBI.

Ontario has piloted payments to 2,500 people, granting them enough to receive $1,320 per month.

A Belgian charity trialled monthly payments of $18.25 per adult and $9.13 per child in Uganda.

In Kenya, the GiveDirectly charity funded by Facebook co-founder Dustin Moskowitz issued monthly payments equal to £18 to 6,000 people across one year.

In 2022, the Welsh Labour Government has introduced a ‘Universal Basic Income’ scheme for care leavers is kicking off this year.

What does a UBI cost?

In 2017 the Institute for Policy Research estimated that a UK UBI scheme would cost over £427 billion a year if it were geared toward significantly reducing poverty. This figure is around double the Department for Work and Pensions’ current budget.

Anti-poverty charity the Joseph Rowntree Foundation has admitted that “It would require significant increases in tax rates, which people may be reluctant to accept, even if many of those on low- to middle-incomes would be better off overall once receipt of their UBI payment is accounted for.”

Arguments around a Universal Basic Income?

Supporers of a UBI

Supporters argue that the main case for a minimum income guarantee is as a social policy that would reduce poverty.

A 2021 study run by the Autonomy think tank concluded that a UBI would decrease overall poverty rates in Wales by 50 per cent and child poverty would decrease by 64 per cent, pulling it under 10 per cent.

Proponents of a Universal Basic Income maintain that people could use their time that might previously have been spent working to undertake other useful things such as studying or caring for family members. It is argued that having economic security through a guaranteed income would also support mental health.

The basic income conversation isn’t just limited to the left. The free-market think tank the Adam Smith Institute has argued that Univeral Basic Income trials are justifiable stressing that “current welfare systems are ill-suited to adapt to the challenges presented by automation and globalisation”.

Otto Lehto, who authored the Adam Smith Institute’s 2018 paper on the matter, argued that: “UBI streamlines the provision of welfare services and improves the autonomy and incentives of individuals. Allowing poor people to spend their money as they see fit stimulates bottom-up market solutions and cuts down on bureaucratic red tape. All this pulls resources away from wasteful rent-seeking into wealth creation.”

Opposition to a UBI

A Universal Basic Income also has its detractors. One argument made against the proposal is that its universality means it will benefit people who do not necessarily need income assistance.

The New Statesman’s Stephen Bush wrote in 2020 that while he was open to pro-UBI arguments: “To give higher earners an extra £960 a month, however, would hand them serious financial firepower to entrench their advantages, whether in saving to buy property, paying for private education, or any number of other socio-economic advantages.”

The huge overall of this proposed social security system is also a sticking point. It is argued that implementing the policy in the United States would cost $3.9 trillion a year.

People also argue that Universal Basic Income payments on par with earned income discourage people from working. This would then further back fire as a UBI scheme would require taxation (itself generated from economic activity such as income tax) to fund itself.

Might a Universal Basic Income be introduced in the UK?

As detailed above, the Welsh government is currently trialling a Universal Basic Income scheme involving a cash transfer for care leavers.

During Jeremy Corbyn’s leadership of the Labour party, shadow chancellor John McDonnell said the party planned to pilot a Universal Basic Income in Liverpool, Sheffield and the Midlands, should they get into government.

The current Labour leadership do not have any clear UBI policy.

Ahead of the 2019 general election, the Green Party announced a UBI pledge as part of its manifesto for the United Kingdom.

In 2018, the Scottish government  agreed to allocate £250,000 to assess the feasibility of a universal basic income pilot scheme in Glasgow, Edinburgh, Fife and North Ayrshire. They currently have plans to introduce the cah payment scheme, but only to low-income people.

Councils in Sheffield and Liverpool have also shown interest in the idea.

What is the history of the Universal Basic Income?

Some argue that the idea of UBI can be traced as far back as the Roman Republic.  Indeed, following a 46 BC victory, Julius Caesar granted every common Roman citizen 100 denarii, and in the wake of his 44 BC assassination, the dictator-general’s will left 75 denarii to each citizen.

English humanist scholar Thomas More’s 1516 “Utopia” envisioned a New World society where the population all received an income regardless of their work or status.

Throughout the subsequent enlightenment period, a range of notable thinkers including Thomas Paine tabled such ideas.

However, it was only amidst the societal and financial watershed of both world wars that serious discussions surrounding social insurance increased, especially in England.

In the UK, the Beveridge Committee at the end of the Second World War, suggested a range of welfare policies such as means-tested benefits, many of which came to pass in post-war Britain. It also proposed unconditional allowances for minors, and committee member Lady Rhys-Williams said adult incomes ought to be similar to a “basic income”.

Various politicians, campaign groups and research projects have sought to bring the issue to widespread attention, especially following Switzerland’s 2016 referendum on the matter, not to mention the direct payments many governments made to their citizens at the height of the Covid-19 pandemic.

In 2021 the former US Presidential candidate Andrew Yang, ran for the position of New York Mayor on the back of proposals for a Universal Basic Income.