Universal basic income – an idea whose time has come?

//Universal basic income – an idea whose time has come?

Universal basic income – an idea whose time has come?

Author Mark Fairlie

The universal basic income has hit the headlines again as nearly half of Britons would now support its introduction, according to a poll carried out by the Institute for Policy Research at the University of Bath.

First proposed back in 1795 by economist Thomas Paine, the idea is gaining traction across the political spectrum with commentators from both the left and the right backing the idea in principle.

What is a universal basic income?

At its simplest level, universal basic income is a regular payment that every adult below the pension age would receive directly from the Government, regardless of whether they were in work or not.

There is much debate about what level that payment would be set at. In their report, the IBR suggested £73.10 per week be paid to adults of working age.

How would it be paid for?

In the IBR’s report, as featured this article from the Independent, support for a universal basic income fell if it meant that tax would have to rise or if it meant cutting funding to those currently on benefits.

Paying a universal basic income of £73.10, as mentioned above, would cost “an additional £143bn over existing social security expenditure”.

1p on the basic rate of income tax raises about £4bn for the Government, according to the BBC. If the additional £143bn was raised solely from a rise in basic rate income tax, the rate would increase from its current 20% to 55.75%.

Why is universal basic income being talked about more and more?

Since the financial crisis of 2007/2008, the income gap between the richest and poorest in society has increased.

In addition, according to the Financial Times, while the economy has grown, wages have contracted and the UK is the only advanced country in the world to have experienced this.

The universal basic income

There are concerns, recently expressed by the Archbishop of Canterbury and as reported on Sky News, that the UK’s “economic model is broken” and where economic growth is only going to corporations and the richest in society. Instead of being paid out in wages, economic growth is now paid out as profits.

There are growing worries too about mechanisation of the jobs market. Mechanisation is the process whereby machines do the work that people would normally do. As computing power gets greater, the number of jobs at risk of mechanisation grows. For example, consider the recent developments of driverless lorries and drone deliveries of goods to homes.

As mechanisation and the development of artificial intelligence mean that companies need to employ fewer people, many economists and sociologists worry, according to the FT, that

“robots weaken the chief engine of growth – middle-class demand. As labour becomes uneconomic relative to machines, purchasing power diminishes.”

In other words, nearly everyone will get poorer.

Who supports universal basic income?

Universal Basic Income is now Green Party policy in the UK. Scottish First Minister, Nicola Sturgeon, is working with councils and funding research into local schemes in parts of Scotland.

Nobel Prize economists Christopher Pissarides and Angus Deaton have expressed support, as have Yanis Varoufakis, the former Finance Minister of Greece, Mark Zuckerburg, founder of Facebook, and Pierre Omidyar, founder of eBay.

Who is against universal basic income?

In 2008, Susanne Wiest started an official petition for a universal basic income in Germany, as reported by German newspaper Bundestag. It won a hearing at the German parliament’s Commission of Petitions which then closed the petition as “unrealisable”.

In 2016, a referendum in Switzerland rejected a universal basic income with a majority of 76.9%.

Support for a universal basic income among political parties is still very small and, although increasing, commentators do not expect the idea to become a major political issue at forthcoming elections for some time to come.

By | 2017-09-26T11:38:49+00:00 September 14th, 2017|Personal Finance|0 Comments

About the Author:

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Journalist, Mark Farlie, provides cutting edge articles with a focus on plain English & zero jargon. With a breadth of interests, Mark writes on topics such as; personal finance, commercial finance, B2B, marketing, law and technology.

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