Would the payment of a regular income to every citizen work? Would it be a viable step towards reforming the current benefits system? Drawing on a recent report, Stewart Lansley and Howard Reed explain how such a scheme could be made to work.
Support for a universal basic income – the payment of a regular and guaranteed income to a country’s citizens as of right – is beginning to gather pace. Trials are being planned in several countries while Silicon Valley incubator Y Combinator is to test a scheme in California. In the UK, the idea is backed by the Green Party and the SNP, is being seriously examined by the Labour Party, and has support from the Royal Society of Arts and the pro-market think-tank, the Adam Smith Institute.
In the UK, growing interest is being driven by two deep-seated structural trends: the growing fragility of the jobs market and the inadequacies of the existing, increasingly punitive, intrusive, and patchy benefits system. With its built-in income guarantee, a universal basic income (UBI) would help relieve both problems. It would bring a more robust safety net in today’s much more precarious working environment while boosting the universal element of income support and reducing dependency on means-testing. A UBI also offers a way of providing income protection as the robotic revolution gathers pace, and could be used to help ensure that the possible productivity gains from accelerated automation are evenly shared rather than being colonised by a small technological elite.
Despite these benefits, the idea remains highly controversial. Although support spans the political spectrum, the Right and the Left embrace very different visions of a UBI. Left supporters view such a scheme as part of a strong state, and a recognition that all citizens have the right to some minimal claim on national income. Supporters from the libertarian right, and some Silicon Valley enthusiasts, in contrast, favour a basic income as a way of achieving a smaller state.
Some critics view UBI supporters as utopian zealots for a new workless nirvana. Yet one of the central merits of a UBI is that it is non-prescriptive. It offers more choice between work, leisure (not idleness), and education, while providing greater opportunity for caring and community responsibilities. Under a UBI all lifestyle choices would be equally valued. It would value but not over-value work. A UBI would both acknowledge and provide financial support for the mass of unpaid work in childcare, care for the elderly, and voluntary help. By providing basic security it would offer workers more bargaining power in the labour market.
A UBI would, over time, change behaviour, and the results of the national pilots will provide important new evidence of the likely impact. Some might choose to work less, take longer breaks between jobs or be incentivised to start businesses. Some might reject low paid, insecure work leading to a healthy rebalancing of wage structures. Some might retrain or devote more time to personal care or community support, in many cases producing more value, if currently unrecognised, than paid work.
The net effect is more likely to promote than weaken the incentive to work. Indeed, incentives will be stimulated by lowering dependency on means-testing while tackling poverty would become less dependent on the ‘work guarantee’.
But can a UBI be made to work? Critics claim that a UBI is simply not feasible because it would cost too much. Yet new evidence suggests that it could be made progressive and affordable. Our recent report for the think tank, Compass, modelled several different alternatives to see how affordable and feasible such a scheme might be. These simulations show that a full and generous scheme, one that swept away the existing system of income support in one go, would be either too expensive or create too many losers. This is because the current benefits system, partly because of its reliance on means testing, is able to deliver large sums to some groups.
However, our study also found that a ‘modified’ scheme, one that still provided a universal and guaranteed income, albeit at a moderate level, and that initially left much of the existing system intact, would be feasible. Such a scheme – while not a silver bullet – would offer real and substantial gains: a sharp increase in average income amongst the poorest; a cut in child poverty of 45 per cent; and a modest reduction in inequality, all at a relatively modest cost of £8 billion. This model would also strengthen the universal element of the current benefit system, thus reducing the reliance on means-testing.
This approach is not utopian – it is grounded in reality. It offers a piecemeal approach to reform, not wholescale replacement. Such an approach reduces the risks of big bang reform, while offering flexibility for gradual improvements over time. It could, for example, start with a UBI for children. This is evolution, not revolution.
Far from encouraging idleness, a UBI also offers greater flexibility in how to balance work-life commitments in a much more uncertain world and the gradual casualisation of much of the workforce. And far from promoting the end of work, a UBI would aim to tackle the greater risks of a weakened labour market, not aim to replace work. With opportunities likely to become ever more fragile, it is time that policy makers gave much more serious consideration to how a UBI scheme could be made to work.
Note: the above draws on the authors’ report A Universal Basic Income: An Idea Whose Time Has Come?, Compass, 2016.
Stewart Lansley is a Visiting Fellow at the University of Bristol and at City University.
Howard Reed is the Director of Landman Economics.
Yes, of course everyone who stands to benefit will nod their heads and agree with UBI. “Free money anyone?”.
I don’t understand how a decent UBI WOULDN’T dis-incentivise work. I’d love to quit my job, do nothing, and get paid for it. Who wouldn’t? And if this is funded through taxation or debt (paid for through taxation) the burden of the cost falls on those who earn an income, further dis-incentivising work through an additional tax burden. HIstory demonstrates that reforms to the tax-code generally fall on employees as businesses have the means to lobby to twist things in their favour or find loopholes, so the additional tax burden will fall on the middle classes (what’s left of them).
UBI is a feasible Global welfare measure as a percentage of global output and revenue of all nation-states under federal constitutional “world government”.It enables world of nation-states protection from mindless destructive world wars and climatic changes.
It will provide great stimulus to world of science and secrets of knowledge of laws of nature and universe.it takes mankinds inner urge reflected in all religious thoughts to Know God and Truth of this universe.
It provide the field for global free trade,commerce and intercourse with liberty and security to persons as equal sons and souls of God on earth a religious dream come true to humanity.
But has the time ripe to achieve such a goal in this greedy state of nature nation states in the present times?
It appears that the tecknology led globalisation has had two world wars trying to build or bypass the world government out of national greedy ambitions.
US and victorious nation states had become too greedy to their own economic and political interests and dwarfed UN and it’s empowerment as world government by ignoring the world intellectual opinion then prevailing.
Now it is time either do or die for the world intellectuals to resusticate the same to the advancement humanity and human civilization by overcoming the greedy and myopic negative national governments resistances like recent war like postures from some quarters.
What a great article with joined up thinking and radical financial proposals to increase opportunity whilst alleviating poverty, inequality and access to basic human rights across the globe. A debate to be had more widely in the UK? Well done California for leading the way!
UBI is a feasible idea is not merely feasible one and almost proved right in guaranteeing the right to dignified life of an individual meaningful in many developed countries.
But is it not correlated to national growth and state tax revenue share as well as the global growth and relative national and percapita income?
No country is immune to changes both technological and it’s economic distributive effects and so also the feasibility and efficacy over the time in any indidual country.
Or put it otherwise is the feasibility and efficacy of idea of UBI is subject over ding effects of global economic and political changes.
Recent after effects of financial crisis and austerity measures and wage freezes in some countries is a proof of it.
There is one more idea UBI at global level to all countries on earth under sovereign UN as a world government with its power to guarantee international peace and good governments and right to tax on international trade and transactions as precentage of global output.
The last one is not subject to any such economic and political changes as it can safely presumed that global output is subject only to reasonable restrictions like preservation of earth and it’s climatic conditions for life liberty of all living beings on it.
Those with a redistribution profiteering history… could be saboteurs of Universal Basic Income tests
Has anyone yet studied how a citizen’s basic income would interact with current British ideas about immigration? I can see intuitively a situation where a citizen’s right to a basic income would encourage making citizenship even harder to obtain than it currently is in the UK (on the grounds that “they” (new citizens) would then be entitled to more from “us” (existing citizens), And don’t some of the Arab petrostates have something akin to a citizen’s income already, where their own nationals get subsidies while much work is carried out by poorly paid guest workers who can never obtain citizenship?.
Not sure ‘piecemeal’ is the work you’re looking for there. Maybe ‘incremental’ or someting.