Basic Income: a guide for progressives

What is Basic Income? How much will it cost? Why should I care? Find out this and more in our guide to Basic Income.

By Charlie Young

What would a progressive basic income look like?

In its purest progressive form, basic income is a regular, unconditional payment made individually to every adult and child. Payments are not dependent on other earned or unearned income and are not taxable, means-tested or withdrawn as earnings rise. Earnings would be taxed in accordance with income tax rates (and national insurance).

A progressive basic income would constitute a wholesale shift toward universalism away from the punitive, withdrawable and conditional nature of contemporary benefits. It would replace the broken social safety net with a solid and stable floor from which people can build their lives; whether they want to earn, learn, care, or set up a business. At its core, the idea adheres to the ideals of civic republicanism: increasing personal and collective freedom and agency, while also providing the economic security for community engagement and creative flourishing.

How much would it be?

As the name implies, payments should be ‘basic’. This means they’d be sufficient to make a significant difference in peoples’ lives and help cover basic human needs. The RSA’s progressive baseline illustrative model outlined in 2015 was set at levels broadly in line with chosen contemporary benefits (e.g. JSA and Child Benefit) and the levels are intended to considerably reduce poverty and inequality.

Will a progressive basic income solve everything?

No, basic income is not a panacea. Only a small minority of the idea’s proponents see it that way. Instead, many, especially on the progressive end of the political spectrum propose concurrent policies such as wealth taxes, rent controls, reforms to minimum wage legislation, better representation for workers, state investment, job creation and the establishing of sovereign wealth funds (and indeed the RSA has proposed the latter as a means of moving towards a basic income). Alongside this we need to defend important state institutions, particularly the NHS.

If complemented by an imaginative roster of appropriate policies, basic income could potentially play a role in the transition to a new kind of economic system and reimagined social contract. But basic income alone, while inevitably having far-reaching implications, cannot be a silver bullet. Claiming otherwise is disingenuous, and arguing against basic income because it’s not a panacea is, in effect, erecting straw men.

What problems is it trying to deal with?

Different proposals have made various claims about positively impacting on issues from mental health, decreasing the use of food banks, remunerating care work and providing avenues out of domestic violence, to poverty (particularly child-poverty and in-work-poverty), inequality, precarious work and the macro-economic impacts of increased aggregate demand. The impact of a progressive basic income will also depend on its partner interventions — as previously outlined — and experiments and associated policies will need to be developed through deliberative discussion alongside other inclusive policies. Many of the promises of basic income are exactly that and research is needed if we’re to reach firmer conclusions in some areas.

What we do know is that various historical and contemporary experiments (on four continents) have demonstrated substantial beneficial impacts. These include reduced experiences of stigma, stress, and dependency, increased savings rates, decreased hospital admissions (particularly for A&E and mental health), students staying longer in school, increased economic security, and poverty reductions (see here, here, here, here,here). Basic income is fundamentally a systemic response to a series of systemic challenges and one that will start tackling the inequities of the current system. Honing in on the positive (and negative) impacts of the idea in situ is crucial if its emancipatory promise is to be realised.

Is it fair?

A common objection to basic income, namely its ‘universalism’, is that the rich shouldn’t receive it. A key part of the progressive model comes in the form of changes in the tax system (see ‘How should we pay for it?’ below) that would result in the rich paying more into the scheme than they get out. A recent Citizen’s Income Trust report found that a progressive basic income would redistribute money from the top 20% to the bottom 80% (see here). The RSA’s basic income report Creative Citizen, Creative State(here) found broadly the same. Making sure that the vulnerable benefit is of fundamental importance and could be ensured by instituting a charge for earners over £75,000 and cut-off of basic income payments at the £150,000 threshold. The retention and reworking of disability, child care, incapacity, and housing benefits — as well as increased childcare provisions — would also help better support all of those in need.

Giving a progressive basic income to all is a key facet of removing the stigma associated to benefit receipt, as well as for ensuring widespread buy-in. It is also bureaucratically simpler to give payments to everyone (or almost everyone). Another reason for universality is that the more people who receive it, the stronger the policy’s positive feedbacks will be. It’s been demonstrated that the cumulative, indirect impacts of a basic income can be greater than the sum of their parts (see here).

What do other models look like?

Basic income proposals and experiments vary widely. The contemporary Finnish trial only gives payments to the unemployed, while Facebook co-founder Chris Hughes’s proposal is for the employed only. The pilot currently running in Ontario gives payments to households rather than individuals, reducing individual autonomy, and the Dutch trials are experimenting with levels of conditionality. Historical experiments in the US and Canada all saw payments withdrawn as earnings rose. The table below outlines of how current and historical experiments fulfil or contravene the progressive principles outlined above in ‘What is a progressive income?’

In general, the more principles met, the more progressive the basic income (as expanded on in Realising Basic Income Pilots in the UK (being published in August, 2018) but regardless of their relative closeness to the ‘ideal’, each experiment has something to offer in our journey towards understanding basic income’s impacts and potential promise.

How should it be funded?

Funding mechanisms can broadly be divided into three categories (see here). First is cutting state spending. Libertarian basic income proposals of this kind have garnered much attention (including in film) for advocating for the wholesale dismantling of the welfare state. Progressive proposals are unsurprisingly very different. A progressive basic income must run alongside other targeted benefits and complement the essential role that the state plays in supporting collective flourishing. The second and third ways of funding are combined in the progressive approach: raising progressive income tax and creating new taxes that themselves take on inequalities of power and wealth.

Estimates of overall net cost vary greatly from 0.5% of GDP to 3% of GDP and they are very dependent on the type of scheme adopted and the tax and benefits system in place at time of introduction. A decent basic income will cost more in net terms than the current system but the benefits are likely to be significant and widespread too.

The RSA has demonstrated in multiple publications that a basic income can be funded via increases in income tax (though we have suggested that these should not hit earners below the median) and through new wealth taxes and data levies to stimulate the creation of a UK Sovereign Wealth Fund (see here, here). This would be done alongside the removal of some benefits, to be replaced with universal payments. These interventions would collectively act as redistributive mechanisms of considerable import. A sovereign wealth fund akin to Norway or New Zealand’s would allow for important long-term investments, including in renewable energy infrastructure. Funding a Universal Basic Opportunity Fund, an important step towards a progressive basic income, would cost less than the exchequer stands to lose out from reductions in corporation tax (see here).

Would people stop working?

Basic income isn’t anti-work. The Alaska Permanent Fund, which pays out something similar to a basic income, has demonstrably not reduced employment (see here). Historical pilots in Canada, the US and elsewhere have similarly shown very little change in employment levels (despite being withdrawn as high levels as earnings rise). It was also found that where work hours were reduced, they were often replaced with education, training and/or caring activities (see here, here, here). This is an important part of what the RSA refers to as a civic basic income, through which citizens have greater liberty to pursue their own conceptions of the good life.

The stability provided by a progressive basic income is also an invitation to engage in entrepreneurial risk-taking. It could also give workers more bargaining power. It might also incentivise more conventional forms of work given that conventional benefits are withdrawable — meaning that the amount awarded is reduced as earnings rise (Universal Credit reduces benefits by 63p for every £1 earned). Removing these poverty traps and disincentives to work could actively increase employment, people being given access to a much larger share of prospective earnings. Those using statements like ‘I believe in work so I don’t believe in basic income’ are clearly missing this point.

Would it not be better just to better fund public services like social care, childcare, and better housing?

Universal Basic Services (UBS) is an idea proposed by UCL’s Institute for Global Prosperity as a way to provide people with free food, housing, transport, mobile and broadband. It has been proposed as a cheaper and more egalitarian alternative to basic income, but in reality UBS is anything but universal (see here), instead being a very targeted proposal. UBS arguable hinges on rather paternalistic in-kind purchases instead of no-strings-attached cash and so could potentially be much less transformative than a progressive basic income. A progressive basic income places trust in people to be the authors of their own lives on the basis of genuine economic security.

How do we realise a progressive basic income?

Moving from general support (see here, here, and here) to possible implementation is a long road. Many believe the strongest arguments for the realisation of a progressive basic income are fundamentally moral ones, specifically those of universalism, social justice, freedom and basic security.

In practical terms there are two avenues to starting with a basic income. The first, as proposed in a recent RSA paper, is to give people access to a partial basic income (see here). This could be delivered on a temporal basis or by giving a smaller amount to everyone. Another avenue, as proposed by French Presidential candidate Benoît Hamon, would be to give a basic income to a particular group and expand from there. A third model, as outlined by the Citizen’s Income Trust and Compass is to introduce a basic income alongside means tested benefits. Whichever way is pursued, as has been found in Alaska and Iran (where a basic income of sorts is given out, funded by the governments’ oil revenues) once the idea of universalism is introduced into the polity, it becomes popular and engrained in the social contract.

A crucial part of realising this is through experiments. Testing the idea’s feasibility on a number of grounds — whether they be work incentives, the impact on poverty, or children’s health — will contribute significantly to public awareness, unpacking what a basic income could mean, and its refinement as a realistic policy intervention. There are experiments currently running around the world, with others under consideration and in the pipeline — including in Spain, France, Serbia, the US and Scotland.

Whether or not the results are miraculous, a series of UK experiments could improve our ability to grasp and tackle major endemic challenges — stubborn obstacles that are little understood and appear to be immune to the remedies so far prescribed. Positive evidence from basic income-type experiments, together with narrative momentum and political capital, could open the door to re-stitching the torn fabric of our socio-political and economic system. We can only find out if we try.