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Employment

What is a universal basic income? And which countries are eyeing a trial?

The idea of free money for everyone may sound attractive but does a universal basic income live up to the billing? Here’s everything you need to know

A universal basic income (UBI) is an idea that has attracted plenty of attention in recent years – not least as the impact of the Covid-19 pandemic has shone a light on poverty and inequality.

For many a UBI is a way to tackle both issues, for others it is an expensive waste of money. 

As the Scottish and Welsh governments both explore ways to bring a form of UBI to their respective countries, The Big Issue looks at the idea and how its supporters hope it will change UK society where the gap between the rich and the poor is one of the worst in Europe.

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What is a universal basic income?

A universal basic income is a regular payment that is given to everyone in society to create a minimum income floor. That means that everyone earns the same amount of money through the payment and, therefore, cannot earn less than that in income.

The money is unconditional with no strings attached to dictate how it should be spent and no guidance on how to act to earn it.

The idea is meant to alleviate poverty and reduce inequality and the stigma associated with state handouts as everyone is receiving the same.

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However, there are many forms of basic income and not all are universal – some are more targeted at certain sections of society. For example, Wales is rumoured to be considering a “Care Leavers plus approach” for people leaving care. Or rough sleepers have been included in past trials in London and Canada.

How much is universal basic income?

There is no set amount to a universal basic income trial and it is set based on the needs of the people it is designed to support and the budget available.

For example, a UBI experiment in Finland in 2017 and 2018 gave 2,000 people €560 (£490) every month for two years, targeting people who received unemployment benefits.

But in London Assembly deliberations over a UBI trial in the English capital in early 2020, UBI Lab London’s Daniel Mermelstein told the economic committee that modelling showed child poverty could be reduced by 40 per cent if everyone received between £60 and £75 per week (between £240 and £300 a month) regardless of income.

Writing for The Big Issue, UBI Lab Network’s Sam Gregory said: “Most proposals in the UK range between £50 and £150 a week for adults, and £30 to £80 a week for children. The highest earners would receive a UBI, but would also pay more in tax to fund a basic income for everybody.”

The figure changes depending on the model, its size, the people it is required to support and how much money is available to invest in the UBI.

Who will get universal basic income?

The clue is in the name. As a core idea, a universal basic income is universal and will be given to everyone in society, regardless of income, whether they are employed or otherwise or where they live.

However, there are different types of basic income models with some choosing to target different members of society rather than everyone.

Has universal basic income worked?

While UBI is touted as a way of tackling poverty it is yet to be trialled at a large enough scale to prove its potential as a society wide solution.

The Finnish trial of 2,000 people is one of the largest trials so far. Paid to people who were receiving unemployment benefit, many participants went on to find jobs even while on the trial and reported a greater sense of wellbeing. People who received basic income reported less mental strain, depression, sadness and loneliness as well as more positive perception of their ability to learn and concentrate.

Another trial in Canada claimed to show incredible results when giving a basic income to rough sleepers. A charity called Foundations for Social Change (FFSC) worked with four homeless shelters in Vancouver to give 50 homeless people a one-off cash transfer of $7,500 – working out at £4,336 – as well as setting them up with a free bank account and a mobile phone.

The trial found the 50 cash transfers freed up shelter spots and saved the Vancouver shelter system $8,100 (£4,739) per person over the course of a year after the experiment began in spring 2018 for a total saving of $405,000 (£236,950). A second trial helping 200 people is now on the way.

FFSC founder Claire Williams said of the project: “In some cases people haven’t started in the same position as us, it is that financial barrier that they can’t seem to transcend. So why don’t we give them that catalyst to move their lives forward?”

Is universal basic income coming?

A form of universal basic income is on the way in both Wales and Scotland.

Wales first minister Mark Drakeford announced a UBI would be trialled following his first speech after being re-elected on May 6 2021. Drakeford name-checked UBI in his speech in which he vowed the Welsh government would “take on board new and progressive ideas – from wherever they come”.

The Welsh leader confirmed that a trial was in development in the days that followed.

The trial will focus on care leavers after Drakeford told August’s Basic Income Earth Network Congress that“there are limits to the powers we have” under devolution. Drakeford said a basic income will allow care leavers to make decisions on their future without worrying about food or a place to stay.

Drakeford said: “That [income] will undoubtedly have the impact of raising the incomes available to those young people and in the way that our Wellbeing of Future Generations Act tells us we must on the journey to a more equal Wales.”

Wales’ Future Generations commissioner Sophie Howe has backed a UBI trial in Wales, claiming it will improve wellbeing in the long-term.

Howe said: “UBI could protect not just those hit hard by Covid but every one of us from other shocks to come – like the climate emergency that’s going to cause more devastation via extreme weather like heatwaves and floods.”

Meanwhile, Scottish ministers have also laid out their plans to create a form of UBI which they are calling a minimum income guarantee.

The ruling Scottish National Party committed to the plan in their manifesto ahead of the May 2021 elections. Ministers started developing the idea in August as social justice secretary Shona Robison led the first steering group meeting to discuss the details of the guarantee.

“We are committed to progressing the delivery of a minimum income guarantee, which could be revolutionary in our fight against poverty. It is a clear demonstration of our ambition and aspiration for Scotland,” said Robison.

“The policy is innovative, bold and radical. It reflects our clear desire to do everything with our limited powers to deliver the change needed, using every lever at our disposal. Eradicating child poverty and building a fairer, more equal country must be a national mission, not just for the government, but our parliament and broader society.”

While there is plenty of support from councils across England, Westminster has not been as supportive.

A DWP spokesperson told The Big Issue in August 2021: “Universal credit has delivered during the pandemic, providing vital support to millions. Unlike a universal basic income, our approach to welfare recognises the value of supporting people into well-paid work while protecting the most vulnerable in society.”

There are also grassroots attempts to launch basic income pilots in the UK.

A first-of-its-kind basic income pilot is coming to London with campaigners Basic Income Conversation launching a £10,000 crowdfunding campaign to offer cash to families unconditionally.

The small-scale project will see at least 150 people given £50 payments to test the idea. The experiment comes as household finances are set to be squeezed in the months ahead with rising bills and taxes and falling universal credit payments expected to hit Brits hard this winter.

Is UBI a good idea?

The idea is still untested at large scale to show how it could impact on society but it has both supporters and detractors.

The leading argument in favour of a UBI is that it will go some way towards tackling poverty and close the gap between the rich and poor.

The conversation around both issues has intensified during the Covid-19 pandemic which has affected the world of work and seen millions of people turn to furlough and universal credit to make ends meet.

However, experts have been arguing that a model of UBI could make a difference long before the pandemic.

“I think it was crunch time a long time ago with this,” Cleo Goodman, co-chair of the Basic Income Earth Network Congress 2021 Local Organising Committee – the world’s biggest UBI conference. “I think a basic income makes practical sense, not just ethical sense, I think it would have been a better move than 10 years of austerity, certainly.

“But it would also have been a better move than piecemeal solutions to income support during the pandemic, which left people behind. The whole point of it is that it’s universal, that it’s comprehensive, that it is genuinely a floor that people can’t fall beneath. So it was always too late when we weren’t able to build that.”

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Goodman’s 2019 report, co-edited with Mike Danson, professor emeritus Heriot-Watt University into how a basic income could interact with existing housing problems in Scotland found a basic income could help to prevent homelessness through eviction. The report also concluded that people who live together are often “financially worse off” while means-tested benefits and a UBI could help to prevent that.

However, a number of concerns were also highlighted in the report, including that a UBI would not address the geographic discrepancies in housing costs or the relative high rate of inflation surrounding housing costs and implementation may lead to people being worse off financially.

The Westminster government has described the model as expensive and that fear has been echoed by MPs in the Work and Pensions Committee who also said a UBI would “not target support at people who need it the most”.

However, campaigners have disputed this claim, insisting that re-working the tax system could mean the money handed out in a basic income could be returned through tax on high-income earners who do not need the cash.

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How can you join the conversation about a UBI?

There is a growing grassroots movement behind a UBI.

The Universal Basic Income Lab Network is a campaign group made up of local decentralised groups across the world – as the pandemic broke out in March last year they had seven labs. Now they have 38 across the globe including 32 in the UK. To join or start a UBI Lab where you are, visit ubilabnetwork.org.

Meanwhile, campaigners in Wales have started a petition to ask the Welsh government to design a geographically-based UBI that includes children, the employed, the unemployed and pensioners, as well as targeting care leavers as is currently being touted.

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