Researchers from the independent think tank Autonomy are seeking financial backing for a two-year pilot programme to see how a basic income would change the lives of participants drawn from Jarrow in north-east England and East Finchley in London. Universal Basic Income (UBI) is a government programme in which everybody regularly receives a set amount of money, regardless of their employment status.
Although this research project is still at the design stage and has not yet had funding agreed, the proposal has received anxious media coverage, with many Tories and some academics expressing disquiet. These reactions could cause a casual observer to think the Government had been reprogrammed and was implementing a radical policy to address poverty and inequality.
If funding is agreed, thirty people will participate in a pilot scheme and receive £1,600 a month – no strings attached – for two years. In addition to Autonomy, the scheme is supported by the charity Big Local and Northumbria University. Researchers will observe the impact the money has on the recipients, their physical and mental health and whether they choose to work or not.
Will Stronge, Director of Research at Autonomy, said: “A guaranteed Basic Income could be transformative for welfare in this country. All the evidence shows that it would directly alleviate poverty and boost millions of people’s wellbeing: the potential benefits are just too large to ignore. With the decades ahead set to be full of economic shocks due to climate change and new forms of automation, basic income is going to be a crucial part of securing livelihoods in the future.”
A number of basic Income projects have been tested in various countries and regions, such as Kenya, Iran, Alaska, Germany, Finland, Canada, India, and Namibia. The effects of the project on different outcomes vary depending on the context, design and implementation, but some common findings are:
- It tends to improve happiness, health, mental wellbeing and trust in social institutions.
- It does not generally reduce work effort or labour force participation, except for some groups such as students, caregivers or older workers.
- It can reduce poverty, inequality and vulnerability, especially for marginalised groups such as single parents, children living in poverty and ethnic minorities.
- It can also have positive effects on the local economy, such as increasing consumption, entrepreneurship and innovation.
However, the concept of UBI faces several challenges. Former Tory London mayoral candidate, Shaun Bailey, was particularly vocal. He said he was worried that the recipients would blow the money on drugs. Others fear that taking away the extreme stress of not knowing whether they can feed or clothe their children will remove participants’ incentives to work in low paid jobs, despite all the evidence from trials across the world contradicting these views. Ashwin Kumar, a professor at Manchester Metropolitan University, who previously advised Gordon Brown and the Department for Work and Pensions, while accepting there are some benefits on mental health, says adopting a universal basic income would require taxes to rise significantly and would not prevent poverty or boost employment. He questions the validity of the existing pilots of UBI, stating they are not truly universal or representative of the wider population.
Despite these concerns, the Welsh Government has outlined plans to extend support for care leavers through a basic income pilot in Wales. The pilot means all young people leaving care at 18 are offered the chance to get £1,600 a month for two years. Around 500 people will be eligible for the scheme, which will cost the Welsh Government £20 million over the next three years. This will hopefully be offset by reduced spending on mental health and other benefits, including income support. The Welsh Government has said £1600 a month represents the most money offered in a trial of this kind.
The Green Party is supporting the latest pilot in England. It has advocated UBI for everyone in the UK since 2017. In 2019, they planned a fully costed UBI of at least £89 per week for everyone by 2025, with additional payments for groups experiencing barriers to working. They would scrap Universal Credit and the benefit sanctions regime.
Let us hope that these trials will be carefully evaluated, ensuring that the costs are offset against both quantitative and qualitative factors. It is naïve to assume that, even if implemented, a Universal Basic Income will change deep-rooted structural inequalities. However, it could offer increased security and dignity for those currently struggling. There is no doubt that radical solutions are needed to cope with the increasing poverty and inequality. The current benefits system is cruel, complex, and not fit for purpose. Our underfunded mental health and court services are straining under the weight of the huge numbers unable to cope with the poverty of their existence.
In her review of what she described as “cash transfer”, Anna Popova from Stanford University said that there may be valid arguments against the concept, but the idea should not be dismissed, thinking the poor will use the money on temptation goods. They won’t. To quote the last line of her paper: “We do have estimates from Peru that beneficiaries are more likely to purchase a roasted chicken at a restaurant or some chocolates soon after receiving their transfer (Dasso and Fernandez 2013), but hopefully even the most puritanical policy maker would not begrudge the poor a piece of chocolate.”
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