Could a Universal Basic Income, help solve the Governments deficit problems?

[DireEmblem]

Some links:
https://www.bbc.co.uk/news/uk-scotland-52967720
https://en.wikipedia.org/wiki/Universal_basic_income_in_the_United_Kingdom
https://www.independent.co.uk/voice...s-pandemic-nhs-liberal-democrats-b404498.html
https://www.nationalgeographic.co.u...e-is-gathering-support-has-it-ever-worked-and

What level should the UBI be set at?
The only article I've seen reference to a value was for £2400, or £200 a month. Lets start with that.

Should this offset the state pension?

https://www.gov.uk/new-state-pension/how-its-calculated

The full state pension is £175.20 a week, earned by 35 years of qualifying work - £9.1k a year. The UBI of 2400 is approximately 25% of this, so could we reduce the 35 qualifying years down to 30 years, or reduce the number of hours required to work?

Its a difficult balance, and how would you even begin to model the impact across society?

The obvious advantage I can see, is that people would require less hours to support themselves in the UK, bringing the obvious bonus, that this could create more jobs for those on low pay, or free up more money for those on low pay.

Minimum cost of living
https://assets.publishing.service.g...attachment_data/file/28268/Cost_living_UK.pdf

"A single person in the UK needs to earn at least £13,400 a year or £157 per week for a minimum standard of living according to the Joseph Rowntree Foundation (JRF)"

So taking the figures as is, a single person would be required to earn £11,300 a year for a minimum standard of living in the UK.

UK minimum wage for those over 25, earn 8.72 an hour. This would work out to be approx 1300 hours, or 25 hours a week assuming holiday pay. A reduction of 5 hours work needed for a minimum standard of living.

Conclusion / next steps

A Universal basic income, could help simplify Job seekers allowance, and reduce the number of required hours need to work for those on minimum wage to cover the costs for a minimum standard of living. For those on minimum wage, working full time, it could allow them to afford cutting back their hours to study more to increase their skillset and potential to earn more, while at the same time, creating more jobs available in society to cover their hours lost. For those that remain working full time on minimum wage, they would have more free funds to spend in society, also potentially creating more jobs.

For those on a higher wage, if they were to contribute the UBI to their pension contributions, they could in theory be able to retire earlier at their same target pension funding level, also creating more jobs in society, or taking away some of the burden for firms to pay for highly experienced staff towards the end of their working life.

So the UBI could potentially create more jobs in my view, by reducing the working lifespan of those on a higher income, and reducing the minimum amount of hours required for workers on a lower wage needed to maintain a minimum standard of living. The question comes down to funding, and how this could benefit the government in the long run.

UK Debt is at 2tn, the key to reducing this, is ensuring we have a flourishing self supporting society to help us pay off the debt. Could Universal Basic Income be a step towards this?

 

[HACO]

Most UBI pilots and proposals (in developed countries) focus on this range of £200-800 per month per person, which is sensible.

Usually there's a point in the income scale where the extra tax needed to fund the UBI would equal the UBI payment, so those people are no better or worse off with or without UBI. Anyone earning less would be better off, anyone earning more would be worse off.

UK Debt is at 2tn, the key to reducing this, is ensuring we have a flourishing self supporting society to help us pay off the debt. Could Universal Basic Income be a step towards this?

Do we actually need to reduce it though? A good chunk of this we owe to ourselves, and the rest can be bought by ourselves, while that risks high inflation and currency devaluation, it's not an immediate risk. Most of this debt is long term at below inflation interest rates.

Once there's demand for the treasury bonds, the treasury will sell their balance sheet on the open market (the opposite of QE) to take liquidity out of GBP. it may not be for a while though. I don't think we should look at UBI as a way to reduce the debt (we're not going to get to a budget surplus anytime soon), but as a way to grow the economy, so that level of debt becomes smaller compared to our GDP.

 

[touch]

Most UBI pilots and proposals (in developed countries) focus on this range of £200-800 per month per person, which is sensible.

I don't agree with that. If it isn't enough to live on then it's more "income support" than "basic income" - people will still need to work or claim benefits in order to meet basic living costs.
I would say it should be the £13,400 minimum required which OP quoted - everybody gets this regardless of their wage. It could replace any other benefits or jobseekers allowance, etc (with exception of disability allowances and things like that)

Usually there's a point in the income scale where the extra tax needed to fund the UBI would equal the UBI payment, so those people are no better or worse off with or without UBI. Anyone earning less would be better off, anyone earning more would be worse off.

If you increase tax so that somebody earning average salary is taxed £13k more but gets their £13k basic income so effectively they're in the same position. People who earn more than average would end up paying a bit more in tax than their £13k basic income so they'd be a bit worse off and people earning lower salary would pay less in tax than the payments so would be a little better off.

 

[StriderX]

Negative taxation up to whatever is considered reasonable, then progressively tax people above the threshold. Also get rid of the minimum wage.

It really has to be as unambiguous as possible when it comes to administering, i'm sick to death of hearing about how obtuse the bureaucracy is or subsequently how it's so easy to exploit as a result. Don't give people a chance at all and it should resolve itself.

 

[Lakeland]

Has anyone ever introduced this type of system successfully?

 

[HACO]

I don't agree with that. If it isn't enough to live on then it's more "income support" than "basic income" - people will still need to work or claim benefits in order to meet basic living costs.
I would say it should be the £13,400 minimum required which OP quoted - everybody gets this regardless of their wage. It could replace any other benefits or jobseekers allowance, etc (with exception of disability allowances and things like that)

Move on from semantics and look at actual policy proposals. All UBI policy proposals are supplemental incomes, by design. They don't want people to be able to fully live on it in the long term. It's there to help people in between jobs, short periods of unemployment, or help them if they want to take a career risk, start a business, etc...

If you want a policy that permanently removes the incentive to work for meeting basic life's need, that's a discussion we can have. But none of the actual UBI policies that are seriously considered would do that.

If you increase tax so that somebody earning average salary is taxed £13k more but gets their £13k basic income so effectively they're in the same position. People who earn more than average would end up paying a bit more in tax than their £13k basic income so they'd be a bit worse off and people earning lower salary would pay less in tax than the payments so would be a little better off.

That's exactly how UBI policies are intended to work. That point doesn't have to be average salary, the tax can also be progressive, etc, but there is that point in all proposals.

 

[HACO]

Negative taxation up to whatever is considered reasonable, then progressively tax people above the threshold. Also get rid of the minimum wage.

It really has to be as unambiguous as possible when it comes to administering, i'm sick to death of hearing about how obtuse the bureaucracy is or subsequently how it's so easy to exploit as a result. Don't give people a chance at all and it should resolve itself.

I agree. All means-tested benefits suffer significantly from fraud and administration costs, it's usually just more sensible to save on those costs and give it to everyone, and tax it away later from richer people.

Has anyone ever introduced this type of system successfully?

There are pilots but never in a large scale in a major country.

 

[Roar87]

I don't think removing incentive to work and progress is good for society. There's a lot of people who would be perfectly happy to sit at home playing on their Xbox and getting **** faced on a weekend with their UBI money who currently are actually forced to contribute to the economy. The social implications are quite radical, not everyone is a good actor who will use their UBI money to start a small business or spend more time raising their children, people will also take UBI while selling drugs on the side or shop lifting to supplement their UBI money.

 

[StriderX]

It doesn't remove the incentive to work, if people want to earn more money and most people generally do, then they can.

The fact that money moves mostly due to demand from the bottom/middle of society means that opportunities should increase so long as the wage depends only on market forces.

Also forget about drugs altogether, it's been a total waste of everyone's time, legalise it and the criminal's income disappears.

 

[HACO]

I don't think removing incentive to work and progress is good for society. There's a lot of people who would be perfectly happy to sit at home playing on their Xbox and getting **** faced on a weekend with their UBI money who currently are actually forced to contribute to the economy. The social implications are quite radical, not everyone is a good actor who will use their UBI money to start a small business or spend more time raising their children, people will also take UBI while selling drugs on the side or shop lifting to supplement their UBI money.

If you pay £20k a year? Sure. If you pay £5000 a year? No. You'll still need to work.

It doesn't remove the incentive to work, if people want to earn more money and most people do, then they can.

Depends on the policy. An extra £400 supplemental income per month wouldn't remove the incentive to work, an extra £1500 a month would, as a family of 4 would get £3000 for adults (and maybe another £1500 for children).

 

[Irish_Tom]

Has anyone ever introduced this type of system successfully?

There have been numerous trials around the world dating back as far as the 60s.

‘Success’ is somewhat subjective but there appears to be a range of positives and negatives.

A couple of pros:

• Improvements to mental and physical health.
• Improvements to educational attainment.

A couple of possible cons:

• A preliminary report on a recent trial in Finland found that it made no difference in terms of increasing employment rates.*
• A trial in the USA back in the 60s/70s saw an increase in divorce rates, so the trial was cancelled early.

*It’s worth noting with the trial in Finland that the people receiving the UBI had to be unemployed to qualify for the trial, and Finland has/had particularly high unemployment rates anyway, so it’s not altogether surprising that UBI wasn’t a panacea for the problem.

 

[Stu999]

I don't think removing incentive to work and progress is good for society. There's a lot of people who would be perfectly happy to sit at home playing on their Xbox and getting **** faced on a weekend...

There are people like that already in the current system. Plus I think Covid is going to result in people losing jobs who then struggle to find another.

I would like to see the bureaucracy reduced significantly by combining NI and income tax and having a single flat rate of tax. Also allow people to claim benefits like JSA online and not force them to jump through hoops under threat of sanction (apply for jobs they are not suitable for). Could cut a lot of civil service bloat that way.

 

[DireEmblem]

It doesn't remove the incentive to work, if people want to earn more money and most people generally do, then they can.

The fact that money moves mostly due to demand from the bottom/middle of society means that opportunities should increase so long as the wage depends only on market forces.

Also forget about drugs altogether, it's been a total waste of everyone's time, legalise it and the criminal's income disappears.

Couldn't agree more. Tell people the risks, charge them for 'safe drugs', safe being you know exactly what is in them, and they're not mixed, and you take away the profit from crime.

 

[rawuk]

UBI only makes sense once unemployment reaches record levels in a similar fashion to when the USA implemented the 5 day working week in the 1930s although from my understanding you are looking for more of a "top-up" variation?

If that is the case it would be simpler to use the levers we already have to combat lower end lifestyle issues imho:

• Increase the minimum wage
• Increase the Personal Allowance
• Bring Class 2 NI into general population and increase the standard NI band to PA (Enables State Pension Stamps even if under PA)
• Decreasing standard working week duration (hours or days)

I think the only way UBI or similar systems work is if we move from an individually taxed society into a family or joint relation taxed structure. Especially as the job market shrinks as it becomes more globalised / AI etc. There will have to be some fairly radical changes to our taxing philosophy.

As a high earner I contribute more into society via taxation then I receive out of it (so far). As it should be in any progressive society. However I would find it abhorrent if I have to work 5 days a week as the business requires and 100% of my tax then goes to a handful of individuals UBI so they can sit around playing games all day smoking weed.

Which is the real issue with UBI. Someone has to earn the money which is taxed to enable someone else to receive said UBI. The only solution I see to this is once mechanical based systems and AI replace jobs wholesale we start taxing those devices as "workers" such as creating another tax that avoids the dodge-able tax of CT. Even then I expect it will be quite difficult.

 

[Rroff]

I don't think removing incentive to work and progress is good for society. There's a lot of people who would be perfectly happy to sit at home playing on their Xbox and getting **** faced on a weekend with their UBI money who currently are actually forced to contribute to the economy. The social implications are quite radical, not everyone is a good actor who will use their UBI money to start a small business or spend more time raising their children, people will also take UBI while selling drugs on the side or shop lifting to supplement their UBI money.

It doesn't remove the incentive to work, if people want to earn more money and most people generally do, then they can.

The fact that money moves mostly due to demand from the bottom/middle of society means that opportunities should increase so long as the wage depends only on market forces.

Also forget about drugs altogether, it's been a total waste of everyone's time, legalise it and the criminal's income disappears.

There are a lot more factors to it but I'm finding increasingly the school leavers who we take on at work are content to do their 16 hours a week and claim UC and social housing. Seems increasingly few who have any desire or motivation to better themselves or earn any more money. Though I think quite a lot of that is due to things like house and rent prices and so on just making it such a prohibitive outlook for many they've just given up before they've even started.

 

[StriderX]

There are a lot more factors to it but I'm finding increasingly the school leavers who we take on at work are content to do their 16 hours a week and claim UC and social housing. Seems increasingly few who have any desire or motivation to better themselves or earn any more money. Though I think quite a lot of that is due to things like house and rent prices and so on just making it such a prohibitive outlook for many they've just given up before they've even started.

Whatever reduces the complexity of the state is something i'm going to support regardless of the circumstances, so long as it maximises democratic enfranchisement and general well-being.

In terms of the lack of drive or motivation of people, there's quite a lot to unpack with that, generalising it as 'societal failure' is probably too vague, but it includes mostly negative changes in family life, education, role models, social media and culture, which on top of the depressing state of the environment, economy and political discourse. All of that amidst the constant bombardment that comes from the internet nowadays should in my view make quite a lot of people exhausted by the time people leave school, obviously depends on the person, but even the most extroverted person is not getting through that without issue.

I'm being overly cynical though, maybe it's not so bad...

 

[mmj_uk]

Surely if everyone has more money but less work is being done then prices of everything will go up due to demand outstripping supply? if you are making less products you also have less to trade. Even if it somehow works in theory I think the problem is if any country ever reaches the point of implementing UBI they'll have socialist governments who will have made private property illegal and confiscated everything by then anyway, everyone will just end up with food vouchers for breadlines and have to find happiness in poverty.

 

[Energize]

I think more proven ideas like a flat tax need to be implemented before more radical ideals like universal income.

 

[Irish_Tom]

Surely if everyone has more money but less work is being done then prices of everything will go up due to demand outstripping supply? if you are making less products you also have less to trade. Even if it somehow works in theory I think the problem is if any country ever reaches the point of implementing UBI they'll have socialist governments who will have made private property illegal and confiscated everything by then anyway, everyone will just end up with food vouchers for breadlines and have to find happiness in poverty.

There are plenty on the right who support some form of UBI, primarily because they see it as a way to remove all other forms of benefits (and thus the state’s responsibility to its citizens if they still manage to **** their life up despite the UBI).

To suggest that it would only be possible after the abolition of private property is rather short sighted.

I mean, Nixon had a UBI plan back in the 60s and he was hardly a communist.

 

[R.P.L]

So the general idea that I'm getting is that UBI would basically be a way of simplifying the benefits system, rather than being fundamentally different. I mean, obviously to be universal it means that everyone receives it, but then I assume that all but the poorest pay for it through tax anyway, so the net result is that only the poorest benefit. If the idea is that it makes everyone richer, then it's pie in the sky.
I feel like the more useful conversation to be had is how we pay for stuff currently (taxes vs building up debt and letting future generations pay for it). I'm not sure UBI will do anything that benefits currently don't or do anything better that they do, but if anyone has specific examples then I'd be interested to hear them. I have read a bit about it and read a couple of the articles linked in the OP, but I'm still not getting it TBH.