UBI information briefing from the UBI Lab Network
This briefing gives an overview of UBI as an idea, as well as its impacts and some practical proposals for it. It should be useful for you and journalists - to ensure they have all of the information at their fingertips.
Summary briefing and review of evidence.
A UBI would be a regular and equal payment to everyone every week or month. Just like the basic state pension guarantees some basic financial security for pensioners and the NHS guarantees healthcare for all, a UBI guarantees a basic level of financial security for everyone. Like the NHS and the state pension, nobody falls through the cracks, everyone who needs support gets it and higher earners will pay it back through taxation.
Universal payments and services guarantee support for everyone. The problem with means-tested benefits is that they are complicated and bureaucratic, meaning that millions of low-income households miss out on means-tested benefits they are eligible for (1), while arbitrary cut-off points can punish those who are ineligible. This is what has happened with the Government’s proposals during this crisis. While they are welcome, millions are still falling through the cracks of the Government’s coronavirus measures (2a 2b). A UBI is a fair and effective way of guaranteeing support for everyone.
A UBI would effectively be a raise in incomes for millions of lower and middle income households, many of whom are one unexpected payment away from debt. Indeed a study in 2016 found that 16 million in Britain have less than £100 in savings - this included half the population in Yorkshire and the Humber, West Midlands, Northern Ireland and North East England. (3) A UBI would help people pay their bills or cover unexpected payments without going into debt. It would reduce poverty and help to achieve a situation where nobody in this country would have to rely on food banks or become homeless because they can’t pay their rent. A rise in food bank use, homelessness and mental ill-health have all been linked to Universal Credit (4a 4b), while a Lancet report found a link between Universal Credit and worsening mental ill-health (5).
With wealth inequality at its highest levels since World War II (6), and regional inequality among the highest of western european countries (7), a UBI would ensure that wealth and opportunity is more evenly shared across our country.
Putting more money in many people’s hands will provide a boost in consumer demand that will benefit local businesses and high streets. It would provide an economic boost for communities across the country, especially those that have been hit the hardest by a decade of austerity and the Covid-19 crisis. This is why Chief Economics Editor of the Financial Times, Martin Wolfe, has described a ‘temporary UBI’ as an ‘obvious option’ to support economic recovery (8). A permanent UBI will continue to stimulate consumer demand in communities after the recovery.
Evidence from trials (in places like Finland, Canada, India and Namibia) have shown a number of positive effects of a UBI, including significantly improving mental health, reducing indebtedness, reducing crime, increasing school attendance, while trials also found evidence for a UBI supporting local economies, encouraging people to start or expand small businesses and take on further training and education (9a 9b). In a 1970s Canadian trial, the UBI was linked to an 8.5% reduction in hospitalisations in the area that was trialled, saving significant amounts in healthcare costs (10a 10b). In the more recent trial in Ontario, Canada (2017-18), 88% reported reduced stress and there was a 73% drop in those experiencing depression during the pilot (11). The pilot in Ontario was discontinued for political reasons and not the evidence.
The evidence from trials is that there is no negative impact on employment - people still work, but are more financially secure. This is what happened in the Finland trial, mental health improved and people did not work less (12). A UBI has never disincentivised work in any trial. Indeed, a UBI rewards and incentivises work, as people keep it (it is not withdrawn) as they get a job and earn more. A UBI also supports people doing valuable unpaid work, such as caring for loved ones.
Support is growing across the country, at a grass-roots level, local groups are being set up across the country calling for a UBI; three local councils in England (Hull, Liverpool and Sheffield) and four local councils in Scotland have backed UBI trials in their area; and public opinion polls are showing majority support for a UBI across the UK public (13a 13b). Politicians are listening. Last week, 110 MPs and Peers from six different political parties signed a joint statement in support of a UBI to support our economic recovery and to provide a permanent foundation for a social security system that ‘provides genuine security.’ Conservative MP, Sir Edward Leigh has also publicly expressed support during the Covid-19 crisis (14).
(from the Financial Times article) ‘The 110 signatories include Ed Davey, acting leader of the Liberal Democrats, Ian Blackford, Westminster leader of the Scottish National party, senior Labour figures such as former shadow chancellor John McDonnell, and all MPs from Plaid Cymru and the Alliance, SDLP and Green parties.’ The authors argue that a universal basic income — paid on top of existing benefits or wages — would ensure economic security for everyone.’
A local UBI trial. A Universal Basic Income should be paid to all UK residents. We need it now more than ever, but at the very least, it should be trialled or piloted within our local council area. Ideally, this would be the whole city or at least a number of communities within the city, but the details of the trials should be worked out by the Council in collaboration with stakeholders and residents in the local community.
Proposals for a short-term UBI to support the economic recovery after lockdown.
There is a case for a short-term UBI stimulus at a high level, to boost consumer spending and support our economic recovery. But this is different to a long-term permanent UBI, which will provide a foundation for a decent social security system. Dr. Mark Bryan of the UBI Lab Network has proposed a 2 month stimulus of £1000 per month for every adult and £500 per month for every child on top of existing benefits (15). This is ambitious, but a bold fiscal stimulus will be needed to kickstart our economy and prevent a deep recession after lockdown. This short-term stimulus would cost considerably less than was spent on the bank bailout in 2008 and far less than was spent by the Bank of England on quantitative easing for the financial sector.
The Royal Society of Arts think tank have developed an Emergency UBI of a one-off payment of £1500 followed by £100 per week per adult and £50 per week per child. 74% of the self-employed, particularly the low paid, are better-off under this scheme, when compared to the Government’s scheme (16). Compass think tank have developed a short-term recovery UBI of £150 per week per adult and £40 per week per child (17), while the Citizens Basic Income Trust (CBIT) have developed a short-term ‘Recovery UBI’ of £196 a week for every individual (18). Both the Compass and CBIT reports argue for moving towards a permanent UBI (at a lower payment level), as a foundation of financial security for all, once economic recovery has been achieved.
Proposals for a permanent UBI, as a foundation for a reformed social security system that guarantees a basic level of financial security for everyone.
In the long-term, a UBI should provide a permanent foundation for a decent social security system. Proposals for a permanent UBI generally range between £50-150 per week for adults and £30-80 per week per child. Reform Scotland, for instance, call for a UBI of £100 per week per adult and £50 per week per child. There are some proposals that are more modest and some that are more ambitious (See proposals for a permanent UBI at the end).
All credible UBI proposals would reduce poverty. The Compass proposal would reduce child poverty by more than a third, working-age poverty by a fifth and pensioner poverty by almost a third (p. 18) (19). The RSA proposal (A Basic Income for Scotland) would eliminate destitution and reduce household poverty by 33% (p.4) (20). Dr. Malcolm Torry’s report for a ‘Citizens Basic Income’ would reduce working age poverty by over 30% and child poverty by 25% (p.11) (21). Even the NEF’s more modest basic income proposal would lift 200,000 families out of poverty (22).
All credible UBI proposals, combined with progressive taxation, would boost the incomes of lower and middle income households while higher earning households effectively pay their UBI back in tax. In the Compass proposal, households from the first to the eighth income decile would financially gain from a UBI, with the lowest earning households benefiting the most (p. 19). The impact of Dr. Malcolm Torry’s proposal is similar (p. 12). In the RSA’s Basic Income for Scotland scheme, all income quintiles would gain, with the lowest earning households gaining the most and the highest gaining the least (p. 32).
No UBI proposal would replace all means-tested benefits. Lower levels of UBI will be paid on top of existing benefits. Higher UBI payments would still retain means-tested housing benefit and disability benefit. Housing benefit and disability benefit will be retained under any UBI scheme.
How would a permanent UBI be paid for?
Economists and think tanks - including Compass, the Royal Society of Arts, Professor Guy Standing from the Progressive Economy Forum and UBI Lab Sheffield, the New Economics Foundation - have developed detailed proposals for a UBI and how it will be paid for (see references for permanent UBI proposals at the end). Funding options include progressive taxation, so that higher earners pay their UBI back in tax; closing some of the 1,156 tax loopholes that are registered by HMRC, many of which disproportionately benefit the wealthy; increasing corporation tax to 2010 levels; as well as other options such as a carbon tax, which would tackle the climate emergency and distribute revenues to everyone in the form of a UBI (23); or the creation of a sovereign wealth fund, which has funded the modest UBI in Alaska since 1982.
For responses to common claims and misunderstandings about UBI, see this blog post from the UBI Lab Network
References for permanent UBI proposals, amounts and costings
Stewart Lansley and Howard Reed (2019), Basic Income for All: From Desirability to Feasibility , Compass.
Anthony Painter, Jamie Cooke, Ian Burbidge, Aima Ahmed, ‘A Basic Income for Scotland’, The Royal Society of Arts (RSA)
Professor Guy Standing (2019), ‘A Basic Income as Common Dividends - Piloting a Transformative Policy: A Report for the Shadow Chancellor of the Exechequer,’ The Progressive Economy Forum.
Alfie Stirling (2019), ‘Nothing Personal’, New Economics Foundation https://neweconomics.org/2019/03/nothing-personal
Dr. Malcolm Torry (2020), ‘Evaluation of a Recovery Basic Income, and of a sustainable revenue neutral Citizen’s Basic Income, with an appendix relating to different Universal Credit roll-out scenarios’ - Citizen’s Basic Income Trust.
Reform Scotland, ‘One for All: a Basic Income Guarantee https://reformscotland.com/wp-content/uploads/2020/04/basic-income-briefing.pdf
UBI Lab Sheffield pilot proposal for Sheffield https://static1.squarespace.com/static/5a7b08c0d0e628f80b2cce36/t/5c83ceb1eb393173c6d99354/1552142005024/SheffUBI+proposal+working+paper+FINAL.pdf
The interim report from Citizen’s Basic Income Network Scotland on a UBI pilot for Scotland
Citizen’s Basic Income Network Scotland interim report on a Universal Basic Income pilot for Scotland
UBI Lab Network in the press
UBI Lab interview with James O’Brien https://www.ubilabnetwork.org/blog/ubi-lab-interview-on-james-obrien-lbc
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References
1) Here's how four million UK families have missed out on the benefits they're entitled to https://www.independent.co.uk/voices/uk-families-people-benefit-entitlements-dwp-department-for-work-and-pensions-claiming-a7955706.html
2a) Two million self-employed Brits could miss out on £10bn coronavirus bailout designed to help them https://www.bmmagazine.co.uk/news/two-million-self-employed-britons-could-miss-out-on-10bn-coronavirus-bailout-designed-to-help-them/
2b) Millions slipping through the cracks’ https://neweconomics.org/2020/04/millions-slipping-through-the-cracks?mc_cid=897525246c&mc_eid=acb1e3f9d3
3) Millions have less than £100 in savings, study finds https://www.bbc.co.uk/news/business-37504449
4a) Universal Credit leading to a rise in food bank use, charity says, https://www.theguardian.com/society/2018/nov/06/universal-credit-surge-in-food-bank-use-trussell-trust
4b) Universal Credit and the broken housing safety net https://england.shelter.org.uk/__data/assets/pdf_file/0003/1827021/From_the_frontline_Universal_Credit_and_the_broken_housing_safety_net.pdf
5) Effects on mental health of a UK welfare reform, Universal Credit https://www.thelancet.com/journals/lanpub/article/PIIS2468-2667(20)30026-8/fulltext
6) Inequality 'worst since second world war' https://www.theguardian.com/news/datablog/2012/jun/27/century-income-inequality-statistics-uk
7) UK has higher level of regional inequality than any other large wealthy country https://www.sheffield.ac.uk/news/nr/uk-higher-regional-inequality-large-wealthy-country-1.862262
8) We must focus attention on our next steps https://www.ft.com/content/b427db58-77e6-11ea-af44-daa3def9ae03
9b) Basic Income Grant (BIG) in Namibia https://www.centreforpublicimpact.org/case-study/basic-income-grant-big-namibia/
9b) Survey report of Ontario Basic Income recipients https://assets.nationbuilder.com/bicn/pages/42/attachments/original/1551664357/BICN_-_Signposts_to_Success.pdf
10a) Why Basic Income Is a Mental Health Issue https://www.vice.com/en_us/article/a3akm4/why-basic-income-is-a-mental-health-issue
10b) New questions, new data, old interventions: The health effects of a guaranteed annual income https://www.sciencedirect.com/science/article/abs/pii/S0091743513001928
11) Survey report of Ontario Basic Income recipients https://assets.nationbuilder.com/bicn/pages/42/attachments/original/1551664357/BICN_-_Signposts_to_Success.pdf
12) Preliminary results of the basic income experiment: self-perceived wellbeing improved, during the first year no effects on employment https://www.kela.fi/web/en/news-archive/-/asset_publisher/lN08GY2nIrZo/content/preliminary-results-of-the-basic-income-experiment-self-perceived-wellbeing-improved-during-the-first-year-no-effects-on-employment
13a) 84% support the introduction of a Universal Basic Income https://www.mirror.co.uk/news/politics/millions-family-budgets-already-hit-21759336
13b) 51% in favour of universal basic income - twice as many as those opposing https://www.independent.co.uk/news/uk/politics/coronavirus-poll-universal-basic-income-rent-control-job-safety-a9486806.html
14) Coronavirus: Tory MP urges Government to adopt universal basic income to support self employed https://inews.co.uk/news/health/coronavirus-tory-mp-universal-basic-income-self-employed-2516697
15) Beyond the Lockdown: A proposal for a recovery UBI during Covid-19 https://www.ubilabnetwork.org/blog/beyond-the-lockdown-a-proposal-for-a-recovery-ubi-during-covid-19
16) 74% Better off under ‘emergency basic income’ then trailed government proposals, RSA modelling shows https://www.thersa.org/about-us/media/coverage-press-releases/2019/74-better-off-under-emergency-basic-income-than-trailed-government-proposals-rsa-modelling-shows
17) Meeting the economic and livelihood crisis: From a recovery basic income to a permanent income floor https://www.compassonline.org.uk/wp-content/uploads/2020/04/BasicIncomeFloor_SL_FINAL.pdf
18) Evaluation of a Recovery Basic Income, and of a sustainable revenue neutral Citizen’s Basic Income, with an appendix relating to different Universal Credit roll-out scenarios https://citizensincome.org/wp-content/uploads/2020/04/UKMOD-working-paper-April-2020-Malcolm-Torry-for-CBIT-website.pdf
19) Basic Income for All: From desirability of feasibility https://www.compassonline.org.uk/wp-content/uploads/2019/03/Compass_BasicIncomeForAll_2019.pdf
20) A Basic Income for Scotland https://www.thersa.org/discover/publications-and-articles/reports/basic-income-scotland
21) Evaluation of a Recovery Basic Income, and of a sustainable revenue neutral Citizen’s Basic Income, with an appendix relating to different Universal Credit roll-out scenarios https://citizensincome.org/wp-content/uploads/2020/04/UKMOD-working-paper-April-2020-Malcolm-Torry-for-CBIT-website.pdf
22) Nothing Personal: Replacing the personal tax allowance with a Weekly National Allowance https://neweconomics.org/2019/03/nothing-personal
23) The Future of Carbon Pricing https://policyexchange.org.uk/wp-content/uploads/2018/07/The-Future-of-Carbon-Pricing.pdf
More about the author
Jonny Ross-Tatam - @JRossTatam
Passionate about #basicincome & drug policy reform. Founder @BuchananInst. Ambassador @LabourDrugRef & @TeachFirst & #BasicIncomeNorth.