What is a universal basic income and why is it being trialled in the UK?
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
by: Evie Breese and Liam Geraghty
13 Jul 2023
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Care-leavers in Wales are some of the first people in Britain to receive universal basic income (UBI), with the announcement of plans for further pilots in England and Scotland suggesting the idea is gathering pace across the UK.
A universal basic income (UBI) is a model 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, inequality.
Poverty and health are intrinsically linked, with supporters of UBI arguing that a basic income floor would ultimately save taxpayer money by preventing many of the mental and physical illnesses associated with very low-incomes.
Campaigners in England have drawn up plans for the first basic income pilots in the country with 30 people receiving £1,600 a month for two years in Central Jarrow in the North East and in Grange in East Finchley, London.
The Welsh government has launched a new UBI trial, targeted specifically at the 500 young people or so leaving care in Wales each year. With around one in five homeless people in Wales having been in care, the government has turned to UBI to see if it could offer them the “safety blanket” they need.
The Scottish government is also looking at introducing a form of UBI called a minimum income guarantee.
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A basic income pilot scheme has been introduced in Ireland to support people in the arts and creative industries affected by the pandemic. A total of 2,000 eligible artists are receiving payments of €325 (£280) over three years up until 2025.
For many a universal basic income is a way to tackle both poverty and inequality, for others it is an expensive waste of money.
Here’s how a universal basic income could work, what the critics say, 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.
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 benefits as everyone is receiving the same.
However, there are many forms of basic income and not all are universal – some are more targeted at certain sections of society. Rough sleepers have been included in past trials in London and Canada.
How much is a universal basic income?
There is no set amount to a universal basic income trial. Instead it is based on the needs of the people it is designed to support and the budget available.
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 universal basic income, 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 universal basic income.
What plans are in place for universal basic income pilots in England?
Campaigners from Basic Income Conversation have unveiled plans for the first universal basic income pilots in England.
Working with researchers at Northumbria University and think tank Autonomy, the campaigners want to raise £1.6 million to fund two trials in Central Jarrow in the north-east of England and Grange in East Finchley, London.
A total of 30 people would receive £1,600 a month for two years as part of the pilot.
Cleo Goodman, co-founder of Basic Income Conversation, said: “No one should ever be facing poverty, having to choose between heating and eating, in one of the wealthiest countries in the world.
“Basic income has the potential to simplify the welfare system and tackle poverty in Britain.”
How does the Welsh trial of universal basic income work?
The no-strings-attached money was put into the bank accounts of about 500 18-year-olds who have been in the care system to offer a “safety blanket” as they enter adulthood.
Launching the pilot, Jane Hutt, Welsh minister for social justice, said the Welsh government had chosen care leavers to be the subjects of the trial “because of the unique set of challenges they face”.
“By supporting this group with the security of a regular, guaranteed and unconditional monthly income as they leave care, we hope we will allow them to consider their lives beyond day-to-day concerns and look to their future,” she continued.
The monthly £1,600 payments, paid for two years, and totalling an annual “salary” of £19,000, is the “most generous” UBI allowance in the world. Hutt did not address how the payments would maintain their value in the face of the rising cost of living and inflation when asked by The Big Issue ahead of the pilot.
Wales first minister Mark Drakeford announced a universal basic income 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”.
Scotland is trialling a minimum income guarantee, what’s that?
Scottish ministers have also laid out their plans to create a form of universal basic income which they are calling a minimum income guarantee.
The difference between the two ideas is that the Scottish concept will be targeted at those on lower incomes, rather than being universal. It aims to create a stronger safety net by ensuring no one falls below a set income level.
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 then-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 at the time.
“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.”
A report into the steering group’s work so far, published in March 2023, said the guarantee would “move away from conditions and sanctions, limits, waits and caps such as those built into universal credit”.
There is currently no set date for the guarantee to be introduced as “work to explore what could be achieved under existing powers is ongoing”.
How much support is there for a universal basic income?
In recent years the Westminster government has not been as supportive of a universal basic income as devolved nations.
A DWP spokesperson previously told The Big Issue: “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.”
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.
The general public are more split on the idea. A YouGov poll from May 2022 found 48% of Brits were in favour of a universal basic income while 28% opposed the idea.
More people living in Germany, Spain and Italy supported the idea than opposed it while the opposite was true in Sweden, France and Denmark.
What impact could a universal basic income have on health and poverty?
The leading argument in favour of a UBI is that it would go some way towards tackling poverty, which is inherently linked to ill-health and increased mortality.
New research funded by the National Institute for Health and Social Care Research (NIHR) has found that a basic income scheme could drastically improve public health, saving the NHS tens of billions of pounds.
Using economic modelling, the researchers calculated that even a more “modest basic income scheme” of £75 a week or £3,900 a year, would “reduce child poverty to the lowest level since comparable records began in 1961 and achieve more at significantly less cost than the anti-poverty interventions of the New Labour governments”.
They also found that between 125,000 and 1 million cases of depressive disorders would be prevented or postponed, saving the NHS between £125 million and £1.03 billion (assuming 50% of cases were diagnosed and treated).
“As a GP, I increasingly find that my patients are in financially precarious positions, regardless of whether they are in work or on benefits, and this has a clear impact on their physical and mental health,” said report co-author Dr Jonathan Coates, Newcastle upon Tyne-based GP and NIHR in-practice fellow at Durham University.
“Basic income represents an opportunity to follow in the footsteps of previous bold interventions to address the causes, not the symptoms, of illness.”
Which countries have trialled universal basic income?
While universal basic income 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) gave 50 homeless people in Vancouver 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 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?”
Urgent action is needed to prevent even more people being pushed into homelessness. A secure home is the first step in addressing the cruel cycle of poverty to ensure people can fulfil their potential. Join us to keep people in their homes.
