Basic Income

The idea of a basic income is that every UK citizen will receive a standard amount of money to live on, effectively a basic wage. Any money they earn will go on top of that basic income.

How the Basic Income works

An example of how the Basic Income could work

A basic income is used by several countries around the world, usually to address significant levels of poverty, and it has been found to help advance health and education. It has also been tried in economically developed countries. In the town of Dauphin in Canada a basic income was paid for four years. Politicians mainly wanted to see if people would stop working. There was only a slight decline in work – mostly among mothers, who chose to stay home with their children, and teenaged boys, who stayed in school longer. There was also a 10-per-cent drop in hospital admissions and fewer doctor visits, especially for mental-health issues. Dauphin resident Amy Richardson, now 84, was then trying to run a beauty parlour out of her living room, with four kids, an elderly mother and a disabled husband who could work only at odd jobs. The money eased the burden of costs such as school textbooks. “It helped out,” she says. “It just made things easier.” The programme was only recently evaluated, politicians having got nervous and pulled the plug on the whole scheme when the Canadian economy entered a recession.

One of the arguments for a Basic Income is that it removes the stigma of claiming for benefits and recognises that everyone has a stake in society. It is likely to both reduce absolute poverty and reduce the impacts of income inequality. This is especially the case if the money was redistributed from those on high wages, on the basis of land ownership, or wealth.

Sheffield Equality Group has been running a survey on the principle of a Basic Income. The report findings are summarised in the infographic below.

BasicIncome

We hope this research will lead into a more comprehensive research programme exploring attitudes in the UK, with the aim of informing work towards a Basic Income. For the full report, please go to Exploring A Future Welfare State (PDF 939KB).

For more about Basic Income, see the Basic Income UK site or read the recent Guardian article. For more information about the survey and the report, please contact the author.

8 thoughts on “Basic Income”

  1. Funding a basic income from conventional taxation is problematic, especially if the tax money comes from productive commercial activity (VAT, income tax, NI, etc.) which we need to encourage rather than penalise.

    While researching ideas for wider economic reform I was looking for ways to recycle money through the economy on a monthly basis and came up with a solution which includes a universal basic income of c.£1,000/person/month that is wholly sustainable and encourages productive commercial activity.

    The proposal is described as the Common Cashflow Fund in my book, Our Money, which is available in paperback and eBook: http://www.amazon.co.uk/Our-Money-government-business-eliminate/dp/0992628512

    If you prefer I can send you a pdf of the relevant chapters.

  2. Thanks for that. We do need to be cautious about recommending any particular funding mechanism for a basic income. By its nature our group would perhaps lean towards a tax that rebalances income, hence the graphic, but I realise there pros and cons to any approach.

  3. I appreciate your caution but, in my expericnce, as soon as people get over the idea of “giving everyone something for nothing” they bring up the challenge of funding a UBI. If we don’t have a plausible answer then UBI is dead in the water. You must offer a sustainable funding solution or your aspiration for UBI will remain just that.

  4. hotairmail said:

    If you do not fund a Basic Income with a Land Value Tax (LVT), that income will be sucked up rising rents. Due to the special physical features of land, it creates its own proximate monopoly and is able to suck up local incomes. Hence why rents are higher in London than in Birmingham,say.

    Essentially the system needs to be turned on its head. For requiring exclusive access to land, people need to pay into a common fund.

    This would be a double benefit as it also helps to put a cap on land values/property prices. Landlords would not be able to pass the LVT on to their tenants as that is limited by incomes/the local market.

    The third pillar of a new economy would be to pass money creation to the state and that private banks operate full reserve banking as set out in the Chicago Plan of the 1930’s and originally in Irving Fisher’s book “100% Money”.

    It is important to note that these changes are neither ‘left’ nor ‘right’ wing. In fact they are essential to making capitalism work in the long run. It has been very successful for us but desperately needs to be improved. I would add that Milton Friedman supported a Citizens’ or Basic Income for all.

    • One of the issues with communicating the Basic Income is what to do about housing costs. Housing costs are a big part of expenditure, however they vary massively between, for example, a young adult living in a flat and a single parent needing a three bedroom house. A mixed model where a LVT funds a universal housing benefit dependent on area and house footprint whilst a wealth/income tax funds a universal income might be one option.

      Whilst the options and models are diverse and rapidly become complex, the argument on how it is funded needs to take people from a very simple start. In exploring the options there is a question of whether unfamiliar concepts such as banking reform/LVT/negative interest rates can be explored as part of a public discussion about Basic Income – or whether the concept of a Basic Income should be supported first and then the ‘experts’ discuss the best way to progress it. Possibly the best is a mix of the two, but the risk is that the waters become muddy fast and people reject the idea because of uncertainty over how it might be funded rather than over any concerns about the principle (though there doubtless are some concerns over that).

      • It’s a conundrum with no easy answers.

        I’ve had some success in communicating the concept of UBI within the wider economic context using this video:

        When UBI is presented as a mechanism for recycling spending money that’s an essential component of a healthy market economy some people “get” it. Others struggle.

        I think that enthusiasts such as ourselves have to work harder and smarter at finding more attractive ways of communicating the ideas.

        My DIY video is clumsy and flawed but it has prompted collaboration on a professionally produced version for a US audience which I hope will be a lot more accessible. Another strand of the collaboration is a novel that includes UBI as part of the plot, I believe.

        I think there’s a lot of scope for communicating these ideas through comedy but it will need people with a lot more skill than me to take it on.

  5. Shirley Nicholson said:

    As a pensioner, I have cash in savings accounts for a rainy day. They are already losing value as the interest paid is less than inflation. But I am not going to spend this money before I have to, because I do not know how much longer I will live and what my future needs will be. A negative interest rate would make this even worse. In practice, insecure people will still hang onto their savings if they have no realistic prospect of future earnings.

    • Shirley,

      I appreciate your concern. I’m creeping ever closer to pensionable age with no pension whatsoever apart from what the state might offer me, which won’t be much if we keep on with the same system.

      I too had savings but saw their value shrink as the de facto negative interest of inflation picked away at them, so I’ve invested most of them and now get a net income.

      The UBI that I propose would give you and me £1,000/month of spending money. I can live comfortably on less than this (because I own my home and don’t feel the need to buy lots of stuff).

      So I could use the surplus UBI along with the income from my investments to maintain a cushion of savings.

      For example, if I have £10,000 in the bank at the start of the month the negative interest rate will take about £230 of it by the end of the month. If my investments pay me £130 a month and I can afford to put aside £100 of my UBI then I can maintain the £10,000 balance indefinitely.

      If my luck runs out, if the rain day comes and I have to spend my £10,000, and my investments fail, I still have £1,000/month off which I can live.

      That’s a lot better than the current system where our money in the bank is losing value and when it’s gone we’re left with nothing but the inadequate state benefit system.

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