A Labour-backed report has called for the launch of universal basic income trials across the UK.
Universal basic income (UBI), which takes the form of regular cash payments from the government to all adult citizens, has emerged as a popular concept in recent years because it could top up low pay and reduce inequality. A feasibility study commissioned by the shadow chancellor, John McDonnell, said a pilot scheme would work in the UK.
Although the report does not represent Labour policy, its publication is likely to be viewed as moving the party closer towards testing a form of UBI should it be voted into power.
Welcoming the launch of the report on Tuesday, McDonnell said the study by professor Guy Standing, a member of the Progressive Economy Forum – a group of left-leaning economists – was an “important contribution to the debate around inequality, austerity, poverty and how we establish a fair and just economic system”.
“Whatever mechanism we use [to achieve this], whether ‘basic income’ or another, we have to lead in developing a radical mechanism aimed at eradicating poverty, but also means testing,” he added.
The new report, Basic Income as Common Dividends: Piloting a Transformative Policy, puts forward a roadmap for the introduction of UBI tests in Britain, which would follow several other countries around the world that have trialled basic income policies.
Finland has conducted among the most extensive tests, although findings published earlier this year suggest that basic incomes did not materially help recipients to get a job. While a UBI could form part of a benefits system to support low-income workers and households, it could also replace unemployment benefits.
The Scottish government has worked with the RSA thinktank to pilot a UBI programme. Headed by Matthew Taylor – who conducted a review into the gig economy for Theresa May – the thinktank is expected to publish the findings of its pilot in Scotland later this week.
Anthony Painter, the director of action and research at the RSA, said that its work would “show how Scotland can proceed with its proposed pilots in a way that is progressive, affordable and would halve destitution”.
Supporters of UBI believe cash payments could help to support workers as advances in technology put growing numbers of jobs at risk. There are, however, fears that a UBI programme could dissuade people from seeking work.
Some economists argue the money would help empower individuals, enabling them to invest in their skills or to start their own company, and to avoid becoming trapped in low-paid work. Others argue UBI would be too expensive and would be difficult to set at the right level, with higher spending on public servicesa more efficient alternative.
Standing, an academic at SOAS, University of London, and a UBI specialist, suggested that the costs could be met by adapting or abolishing the system of personal tax allowances – similar to the findings of a study from the New Economics Foundation thinktank earlier this year.
He also suggested a number of possible pilot scenarios, including providing an economically deprived community with a basic weekly income instead of existing means-tested benefits – with the exception of housing benefit.
The pilots would include payments on a weekly or monthly basis to every person lawfully resident in the UK on an individual basis, paid without conditions on how the money is spent, or with any means testing to determine eligibility.
The report said: “It could dramatically reduce poverty, insecurity and the use of food banks while saving on the bureaucracy of current social welfare administration.”