Universal Basic Income is gathering support. Has it ever worked – and could it work in the UK?

OCTOBER is a good month if you live in Alaska: That’s when the state gives you free money. In October last year, every man, woman and child in this American state had $1,606 (£1,300) automatically deposited into their bank accounts. The year before it was a few dollars less at $1,600. 2015 was a particularly good year when everyone received $2,072.

It’s called the Permanent Fund Dividend. Paid out since 1982 to every Alaskan resident – young or old, rich or poor, employed or not – it is funded by a share of the profits from the state’s oil industry. Alaskans aren’t obliged to do anything to receive it, and they can spend it in any way they wish. Many economists consider this the world’s best example of what’s known as universal basic income, or UBI.

In a global economy threatened by coronavirus, UBI is gathering support fast. On 18 May, Spain announced its intention to bring in 'Guaranteed Minimum Income' to ease the pressure of coronavirus on poorer families. Many believe this is a step towards full UBI, and will outlast the COVID-19 pandemic and become permanent. 

Across the UK, it has its champions: previous Labour Party administrations have flirted with the idea, while the Green Party and SNP both currently advocate it. On March 19th, a cross-party group of 170 or so MPs and peers wrote to the government, urging it to introduce an emergency universal basic income “which would give everyone the financial support they need to provide for themselves and their families during this crisis”. They expressed particular concern for the self-employed and those in “precarious” roles.

What is UBI?

So what exactly is a universal basic income? Guy Standing is an economist, lifelong advocate of UBI, and co-president of the Basic Income Earth Network. In his book Basic Income: And How We Can Make It Happen, he defines it as “a modest amount of money paid unconditionally to individuals on a regular basis; intended to be paid to all, regardless of age, gender, marital status, work status and work history”.

It’s an economic idea that has been championed over the ages, spiking in popularity at times (like now) when the economy is frail. First mooted by Sir Thomas More in his 1516 fictional work Utopia, it has been much experimented with, but never fully implemented across an entire nation – which makes Spain's plans an interesting development. Alaska’s Permanent Fund Dividend, although not without its hiccups, is arguably the most widespread, longest-lasting and successful example. 

There have also been some intriguing pilot schemes of UBI, in all corners of the planet. In 1974, for example, the Canadian province Manitoba launched a five-year experiment called Mincome. 

In 2008, a two-year experiment in Namibia provided around 1,000 people in the villages Otjivero and Omitara with 100 Namibian dollars (around £10 at the time) a month. 

In 2010 a project – designed by Guy Standing and funded by UNICEF – was launched across 20 villages in the Indian state Madhya Pradesh. In his book he describes its “overwhelmingly positive” effects: “Improved sanitation, improved child and adult nutrition, better health, better healthcare, and improved school attendance and educational performance. In general, people spent the extra money sensibly.”

He claims social equity improved, with marked benefits for people with disabilities, women and those from lower castes.

Finland saw a two-year pilot scheme of UBI launched in 2017, with 2,000 randomly selected unemployed people awarded an income of 560 euros (£500) a month. 

In 2016 a charity called GiveDirectly, funded by private donors and foundations, launched a basic income experiment in just under 300 villages across rural Kenya. It’s running currently, with some villagers receiving monthly payments for 12 years, some for just two years, and others benefitting from an up-front lump sum. The plan is to allow researchers to study the effects of UBI on all sorts of human behaviours, from food security, employment, mental health, aspirations, village infrastructure, crime rates, business start-ups and political participation.

There have also been UBI experiments for users of cryptocurrencies. The nearest any entire nation has come to implementing UBI is when, in 2016, Switzerland held a referendum on the idea. But it was rejected by a 77 per cent majority.

UK citizens don't seem so averse. A YouGov poll in mid-April this year found that 51 per cent of the population support a universal basic income “where the government makes sure everyone has an income, without a means test or requirement to work”. Councils in Sheffield, Leeds, Liverpool, Hull, Glasgow, Edinburgh, Kirklees, Fife and North Ayrshire have all expressed enthusiasm for pilot schemes. 

“More sustainable economic growth.”

Like any radical economic policy, UBI has its supporters and detractors, many vehement in their opinions. Supporters point out how it raises everyone above the poverty line; discourages low wages; allows people to care for their relatives; frees women from domestic abuse; and helps those who lose their jobs through automation. In fact, until coronavirus raised its destructive head, this latter argument was perhaps the strongest.

In his book Basic Income, Standing argues that UBI is an economic right “paid from the collective wealth of society created and maintained by our ancestors”. He outlines the economic advantages: “Higher, more sustainable, economic growth… and protection against possible large-scale unemployment as a result of disruptive technological change.”

Detractors worry UBI discourages people from working; is unaffordable for most governments; makes low-paid, unpopular jobs impossible to fill; risks being spent irresponsibly on vices; and is wasted on the very rich who don’t need it. 

“Not the answer.”

In a recent article in The Independent, former Liberal Democrats leader Vince Cable argued against UBI, claiming it requires “unaffordable generosity and extreme levels of taxation” and “destroys the incentive to work”.

Patrick Spencer is head of work and welfare unit at a centre-right think tank called the Centre for Social Justice. “It is right that we have this debate on how we best support the economy and our poorest neighbourhoods during this national crisis,” he says. “But UBI is not the answer. It’s too expensive, inefficient and goes to all the wrong people. It would be a bureaucratic mess too.”

One of the most convincing arguments against UBI is its overall cost to the economy. Spencer and his colleagues claim the maths simply don’t add up, indicating how irrational it would be for “wealthy pensioners and higher earners” to benefit.

Standing, however, believes a British UBI could easily be paid for by diverting revenue lost in tax relief – and by establishing a fund paid for through carbon tax.

As ever, the financial devil is in the detail. And economists on both sides of the political divide never agree on exactly how much UBI will cost the taxpayer. Besides, is there something in the British psyche that naturally rejects or embraces the idea of UBI? Does some national sense of fair play make it attractive, perhaps – or does work ethic make it stick in the throat?  

“I think this pandemic is going to revive values that I regard as deeply embedded in our culture,” Standing tells National Geographic UK. “Among the interesting and potentially good things that will come out of the pandemic is a greater appreciation for the community, for care work that is unpaid, for the slow movement, for a sense of community and solidarity, rather than egotism; and for basic security. People with basic security are more altruistic, energetic, innovative, more tolerant of the other. I feel once we have introduced basic income, even on a pilot basis, you will see a surge of people saying this is what we need for our society.”

Patrick Spencer is far more cautious. He says the YouGov poll that shows 51 per cent of the British public favour UBI “should be understood in the context of the current public health and economic crisis”. He told National Geographic UK: “Our own internal polling – which is not publically available – shows the public is in favour of a welfare system that incentivises work and focuses financial support on the most in need; the most vulnerable in society.” 

The idea of universal basic income often emerges when the economy is suffering. That’s nothing new. Nevertheless, Standing is convinced that coronavirus is the catalyst that will finally bring it about.

“In the course of my 40 years of work on UBI, there have been half a dozen moments when it could have come. Each time I thought there had been a five or 10 per cent probability of having UBI accepted. It was that low. This time, in Britain, I think we’re up to a 60 per cent chance.”

Dominic Bliss is a London-based journalist who writes regularly for National Geographic UK. Follow him on Twitter.