Why Universal Basic Income?

Discover why the time is right for a transition to Universal Basic Income

By Anthony Painter, Jake Thorold and Jamie Cooke

Follow Anthony, Jake and Jamie on Twitter @anthonypainter, @thorold_jake and @JamieACooke

This article is an extract from the RSA report Universal Basic Opportunity Fund: Pathways to Universal Basic Income

In the UK, millions of people circle in and out of poverty; are exposed to insecure forms of work; and rely on a welfare system which can seem more intent on punishing than helping. Meanwhile, productivity growth in the UK has been anaemic for more than a decade. The current model of political economy is not working. New and practical thinking is desperately needed.

This report is the third in an RSA series aiming to highlight economic insecurity as a central problem of our time. The first, Addressing Economic Security, offers a new way to think about insecurity, defining it as both an economic and psychological state influenced by a range of interrelated factors beyond merely employment status. This approach questions a notion that has underpinned public policy for quarter of a century, namely that there is a cast-iron equation between having a job and economic security. The second report, Thriving, Striving, or Just About Surviving?, used this approach to conduct extensive segmentation analysis to reveal the high numbers of British workers in economically insecure situations. It showed that 30 percent of workers face chronic or acute precariousness with 40 percent facing uncertain futures. This report considers a potential way of addressing the problem of economic insecurity.

The central proposition is the creation of a Universal Basic Opportunity Fund (UBOF): an effort to reimagine how society supports people to live meaningful, contributory lives. Its premise is simple: fund every citizen under the age of 55 with a £5,000 opportunity dividend for up to two years, taken at a time of their choosing over the course of a decade. The fund would initially last for ten years, with dependent children also eligible for the payment in the year a parent, or both, were receiving it.

Our intention is to consider how, through capturing asset wealth, the UK can begin to move to a system of support for incomes that genuinely equips citizens to adapt to changes in their lives, whether driven by economic change or personal circumstances. It is intended to encourage a discussion; we do not claim that what is contained here is a blueprint. However, the design principles and funding mechanisms we lay out could allow citizens to make major changes to their lives which they would otherwise be constrained from doing. A low-skilled worker might reduce their working hours to attain skills enabling career progression. The fund could provide the impetus to turn an entrepreneurial idea into a reality. It could be the support that enables a carer to be there for a loved one without the need to account for one’s caring to the state. We have included a series of illustrative case studies in an appendix to show the difference the payments could make in actual situations.

The UBOF would also constitute an opportunity to experiment with the kind of unconditional social support mechanisms advocated by supporters of the principles underpinning Universal Basic Income (UBI). As described in our 2015 report, Creative citizen, creative state: the principled case for a Basic Income, the RSA is among those advocating a full public dialogue and experimentation with UBI. Since we published Creative citizen, creative state discussion of UBI has grown at pace, placing it within the mainstream of progressive politics globally. Despite this welcome development, however, in a domestic political climate defined by the uncertainties of Brexit, we recognise that major transformative interventions such as UBI are unlikely in the immediate future. We suggest the UBOF therefore as a more feasible way to realise some of the benefits of UBI immediately — such as the ability to plan and create on the basis of secure income subsistence.

The UBOF could also constitute an important stepping stone in the direction of the UK adopting a full UBI model as the costs and benefits in relation to the current system are better understood. The UBOF should therefore not be considered as an end destination, but as an experimental prologue to an entire re-envisioned social contract between citizen and state, citizen and market, and citizen and citizen where security and creativity are combined rather than in conflict as they too often are in the current system.

Instead of citizens receiving support in a heavily targeted and conditional fashion underpinned by state paternalism, the Universal Basic Opportunity Fund begins the journey towards a system of universal support and trust in human freedom. The contract outlined here is not a libertarian model of small states and individualism, however. Very deliberately, the UBOF is designed as an investment in the creativity, contribution, and caring that should form the backbone of our economy and society.

The UBOF would begin the transition towards a social contract underpinned by civically-oriented Basic Income. A civic Basic Income interlocks with a range of other supports for the individual and households such as training, childcare, housing, and disability support alongside support in the community and from employers of many different types. Its purpose is to enable people to better adapt to changes in their lives, often from external forces such as economic flows and technology, through the creation of a more solid foothold on which to make changes, provide mutual support and care, and try out creative new ideas.

This approach distinguishes the RSA from both critics and advocates who consider Basic Income as a response to, or harbinger of, a post-work future. We advocate for the centrality of good work — often unpaid as in support for the family or one’s local community — in individual identity. Done correctly, a civic Basic Income provides people with a basis of economic security from which to find good work, not no work.

At the core of the UBOF idea is a conviction that people seek purpose and — if given the opportunity, freedom, and support to do so — will usually make the best decisions about their own lives. It does not subscribe to common political characterisations of citizens as lazy or in need of an overly paternalistic state to make decisions on their behalf through means such as strict welfare conditionality. In fact, such a state can impede good decision making as it encourages short-term decision-making, such as finding any work at all rather than good work over the longer-term. The costs of this are paid by individuals, households and society as a whole.

An absence of the kinds of hard conditionality so central to current systems of welfare is a principle of the UBOF. Those that opt to take it — as a choice not an imposition — would therefore be required to abstain from claiming any other government benefit while in receipt of the UBOF, aside from particular needs-based forms of support. By replacing other forms of conditional benefits the UBOF could demonstrate the differential outcomes that arise between conditional and unconditional forms of benefit. In effect, it would be a plausible nationwide experiment into what the impacts of a full UBI might be.

The UBOF would constitute a significant change, and would need to be introduced gradually to ensure administrative success and the establishment of effective support networks and institutions for recipients. Alongside UBOF, the state, civil society and business would have to provide a range of support services from training to advice, to support for entrepreneurship and a range of other supports both financial and personal in nature.

We suggest therefore that the Opportunity Fund begin with a lottery system whereby 25 percent of the adult population receive access to the fund for the first four years, with the rest of the population then introduced gradually as the programme ramps up. This would likely mean that the initial phase of the Opportunity Fund would last in the region of 13 years, to ensure that all recipients were given a ten-year window in which to elect to take their payments.

We estimate the cost of the UBOF to be approximately £14.5bn per annum over 13 years, with the cost each year dependent on how many citizens elected to take the payment and at what point in the year. By way of comparison, the pension triple lock introduced in 2011, where pension increases are protecting the highest increase of earnings, inflation, or 2.5 percent, now costs in excess of £6bn. This policy was targeted at less than 20 percent of the population. The UBOF could benefit up to 70 percent.

We have considered the possibility of a government endowment to seed the fund. This builds on the notional underpinnings of Norway’s sovereign wealth fund which is now worth over $1tn and has historically achieved a 4.1 percent annual return (post inflation and management fees). This level of return would need to be netted off with the cost of government capital to raise an endowment, which is currently 0.5percent. With these returns and costs, simply by way of illustration, the fund would achieve £7bn per year which would effectively fund the dividends in the early years and go a long way towards funding dividends beyond that.

The endowment itself could be invested in longer-term projects for public benefit. This could include housing, digital, energy, and transport infrastructure which need patient finance. In so doing, it could improve the UK’s physical infrastructure as well as supporting the dividend to help people to invest in their own skills and opportunities.

A longer term UBOF would require a sustainable funding model, options for which would be explored during the initial thirteen year phase. There are a number of potential avenues. These include levies on large corporates (along the lines of the apprenticeship levy), wealth taxes and increased taxes on higher incomes, or an equity levy. Novel ideas such as taxes on the use of common assets (for example the value of data transferred to major tech platforms) or some reimbursement for profits made dependent on public assets should be explored. All of these options are explored in this discussion paper. Essentially this is a model of funding support for citizens that moves away from the income tax and national insurance system and more towards funding via wealth and common assets whose value is as yet uncaptured for the public.

The UBOF could be the first step towards a new model of social security which puts faith in people to make decisions pertaining to the aspirations that they have for their lives. It represents an investment in human potential; measured not just in GDP or productivity growth but in security, fulfilment and wellbeing also. As a practical means of advancing the UK towards a Universal Basic Income system, the UBOF represents a stepping stone — to be enacted now — towards a better way of enabling citizens to live meaningful and contributory lives.

Why UBI?

When the RSA published Creative citizen, creative state: the principled and pragmatic case for a Universal Basic Income in December 2015, mainstream debate about the policy idea was scant. Since that time, not only has the debate moved increasingly into the mainstream, but a number of experiments into elements of UBI have begun with more in the pipeline, including potentially in Edinburgh, Glasgow, Fife and North Ayrshire. In just the past few months, analysis on UBI has been undertaken by the OECD, the IMF, and the UN Special Rapporteur on Extreme Poverty and Human Rights.

As well as advocates, the growing prominence of UBI has attracted a number of critics. Some like the economist John Kay have argued that a Basic Income would not improve the lives of those most in need, providing more for the middle classes. Others, such as Labour MP, Chuka Umunna, have argued that a Basic Income would serve as a disincentive to working and would be tantamount to society ‘wash[ing] its hands of responsibility for the poor’ in favour of allowing them to subsist on the largesse of the state. This critique is shared by Labour MP, Jon Cruddas, writing with Tom Kibasi. A common criticism across all of the critics of UBI is that it would simply cost too much.

The truth is that on the basis of available data, it is difficult to compare a theoretical policy idea with existing systems. For example, the IMF concludes that in the UK and France, UBI would be inferior to existing systems in targeting poverty and inequality. However, their analysis notes that they are unable to take into account the impact of UBI on economic security and the consequent behavioural effects of such impacts. It also does not consider the behavioural impacts and long-term consequences of targeting and conditionality. For example, it is difficult to reconcile welfare efficiency calculations with the declining number of unemployed who claim out of work benefits and the growth in use of emergency support such as food banks in the last decade.

The unaccounted for behavioural mechanism — a contribution to a sense of security — is precisely why some, including the authors of this paper, see UBI as an interesting policy proposal and the current system as so flawed. Economic modelling of the nature undertaken hitherto does not account for behavioural change and is, therefore, far from sufficient alone. And behavioural impacts are precisely where the real debate is located; only through trials and experimentation can we get an initial sense of what these impacts could be.

The common criticism that UBI would lead to large scale withdrawal from the labour market is similarly without strong basis. Equally, fears that it could lead to people ‘languishing on long-term benefits’ are not substantiated by available evidence. While the long-term impact of Basic Income is impossible to discern with certainty, the impacts of a range of multi-year experiments in North America and the developing world do not support the conclusion that there would be significant withdrawal from the labour market. Withdrawal from the labour market in these experiments, other than amongst particular groups such as young men staying on at college or mothers of very young children, was rare. There was some small reduction in weekly hours within experiments — but these were correlated with higher rates of payment while the benefits in terms of health, education, family life, crime and substance addiction were significant and common across all experiments. Capturing this range of factors emphasises the need for good system design and high quality experiments. The caricature of ‘free money making people lazy’ should be treated with scepticism on the basis of available evidence.

The reasons why the United Kingdom should consider experimenting with a UBI as part of a wider reassessment of the current social contract — including a failed housing system — are multifarious. Economic insecurity, persistent wage stagnation, the burden of housing costs and families cycling in and out of poverty have become hallmarks of a failing social contract between state, society and market. The post-war contract was predicated on the equation of job security equalling economic security. By the 2000s, an extensive system of tax credits had been introduced together with employment increasing interventions. The employment rate is at record levels yet, despite this, the changing nature of work and the economy has meant that even if the state rows hard against market generated insecurity (and it has done so decreasingly in the ‘austerity’ of recent years), the situation seems to improve little. An approach that puts more power in the hands of individuals and families should be explored. UBI — a regular, unconditional payment made on an individual basis to each citizen — can be the bedrock of a new system that provides people with the power, security, and tools to create fulfilling lives.

The following sections outline the central reasons why now is the time to begin thinking seriously about transitioning to a UBI system.

1. A dysfunctional political economy

It is a timely moment to consider new ideas. The difficulties thrown up by the roll-out of Universal Credit (UC) have highlighted a welfare system unfit for purpose. It is important to recognise that the vulnerable situations into which UC recipients have been pushed are not simply teething problems that will subside; they are consciously designed into the system. Our welfare society produces insecurity by design, not accident.

By, for example, requiring recipients to provide detailed information on their circumstances every month, UC places the burden of complexity on the individual rather than the system. Additionally, the imposition of new conditionality measures for in-work UC recipients produces unnecessary stress for those attempting to find financial stability. The requirement for in-work UC recipients to earn the equivalent of minimum wage at full-time hours, for example, places an undue burden on single parents with children of secondary school age without easy access to childcare. Intended as incentives, these features actually produce feelings of insecurity, impairing an individual’s ability to think creatively about the optimum way to improve their situation.

For these reasons, we do not accept the description applied by the IMF to the UK’s welfare system as ‘well-functioning’. Indeed, we would suggest that it is well-functioning in model only. The reality is that Universal Credit and the remainder of the welfare system too often exacerbates economic insecurity — which we define as the ability of an individual to thrive and financially survive even in the face of economic risks.

Universal Credit — even with the adjustments made in November 2017 — works in harmony with a wider political economy in the UK predicated on insecurity. Those in low paid work are often not supported by productive relationships between employers and trade unions, now greatly diminished. Similarly, opportunities to acquire skills to provide a surer footing at work are too seldom available for those stuck in low pay, low productivity employment. UK employers’ record on investing in continuing vocational training is close to half that of the average of our European counterparts. Finally, as discussed, those out of work are subject to the anxiety that one misstep will render them disqualified from benefits.

As the RSA’s Atif Shafique has explained, economic insecurity is “just as important as poverty, inequality and poor social mobility in understanding the challenges faced by families in Britain today. But it does not receive the same level of policy attention.” As demonstrated by the following statistics, economic resilience to any unanticipated financial shock are worryingly low for large parts of the population:

· Unsecured consumer debt amassed by British households is projected to reach 47 percent of household income by 2021, eclipsing the pre-crisis level of 45 percent of income in 2007.

· RSA data released in January 2018 reveals that 41 percent of the working population had accessible savings of less than £1000.

As Shafique points out, the knowledge of being just one bad piece of luck away from economic peril can create significant harm. Studies suggest, for example, that economic insecurity directly contributes to, or is closely associated with, major health problems such as obesity, depression and anxiety, and risky or harmful behaviours such as substance misuse. While the extent of a person’s susceptibility to the psychological impacts of economic insecurity is dependent on other factors, the harm being perpetrated by a political economy predicated on insecurity must not be overlooked.

Much could be learned from Denmark’s ‘flexicurity’ model. Here, employers have agency to hire and fire employees, but workers are entitled to up to 90 percent of their previous salary as they search for jobs, and are supported by a generous training regime co-designed with unions. The result is that a quarter of Danes in the private sector switch jobs every year, arguably leading to better job matching. Conditionality is a part of the Danish approach but it is embedded in a system that provides much stronger wage support and training, underpinned by social partnership. By contrast, the UK’s system layers conditionality on top of both in and out of work insecurity. One could describe this as ‘flexinsecurity’ as opposed to Danish-style flexicurity. In this context, a UBI could provide one means of ‘security’ balanced against a ‘flexible’ labour market balancing job creation better with individual agency and security.

The Taylor Review of Modern Working Practices has suggested this way forward: with an employment model that affords both flexibility and security to not just employers but to ordinary people too. As well as a more productive labour market, this model offers an important means of tackling a growing spectre of economic insecurity.

As the UN Special Rapporteur on Extreme Poverty and Human Rights has concluded:

“Economic insecurity represents a fundamental threat to all human rights. It calls for the rights to work, social security, and an adequate standard of living to be accorded prominence on the human rights agenda. Linked to this is the need to acknowledge the central role of the State, of fair and progressive fiscal policies, and of redistributive justice. Most importantly, the debates over social protection floors and Basic Income [our emphasis] need to be brought together. They have thus far been kept largely separate, in a counterproductive and ultimately self-defeating way.”

We agree. It is now critical that the conversation in the UK and elsewhere moves beyond debates about welfare into a discussion about economic security and support for the majority who require some support to adapt and grow in an environment of continuous and significant economic and social change.

2. Pay, poverty and productivity

A status-quo of low-paid, low-skilled, and low productivity work is producing a British economy characterised by stagnant wage growth and limited routes for progression.

Low-paid work is increasingly defined by precariousness and insecurity. Over 30 percent of UK individuals experience poverty in any four year period.The Joseph Rowntree Foundation reports that 55 percent of families living in poverty have at least one parent working, showing the old assumption that employment insulates from poverty to be no longer valid. Alongside a rapid expansion of zero hours and agency based contracts since 2008, there have been indications of similar shifts towards insecurity for those in more traditional work. The British Social Attitudes Survey, for instance, has shown that between 2005 and 2015 the percentage of ‘routine and semi-routine’ workers who felt they had job security fell by 11 percent. Recent RSA survey data suggests that 28 percent of all workers feel less secure in their jobs than they did five years ago, which is all the more remarkable considering that five years ago the UK was in the early stages of emerging from recession.

Some of this trend could in part have been driven by a growing use of particular technologies in the workplace: more observation of workers, less variety of tasks and greater fear of automation among workers. A quarter of the workforce reports a lack of autonomy of work, in part due to the introduction of new technologies in the workplace. This is underscored by a further finding by the British Social Attitudes survey showing that the percentage of routine and semi-routine workers reporting that they were ‘not free to decide how my daily work is organised’ increased from 42 to 57 percent between 2005 and 2015.

A UBI could provide people with options to progress out of work that is increasingly defined by insecurity and intrusive control from above. Rather than an unrelenting battle with the stress of insecure work and an intrusive welfare state, a Basic Income could provide the financial breathing space to permit thoughts of career changes and progression as well as additional bargaining power with current employers.

There is a sound economic rationale behind inducing a more mobile labour market to aide better skills matching and thus improved productivity. A recent OECD report showed that of 19 high income countries, Great Britain had the highest percentage of employees with skills underutilised, comprising 35 percent of the workforce. Self-reporting paints an even starker picture: 51 percent of UK employees report that their skills are being underutilised, among the highest levels in the EU. This compares to 33 percent in France, 36 percent in Netherlands, 37 percent in Sweden, 38 percent in Denmark and 45 percent in Germany. Quite simply, the UK is doing badly at getting the right people into the right jobs.

It is well documented that the UK’s productivity growth is poor, with output per worker currently sitting only just above the rate prior to the 2008 financial crisis. The period between 2007 and 2017 produced Britain’s worst 10-year period for productivity growth since 1822, with knock-on effects on pay growth, which is set to be the lowest this decade for 210 years. Many of the skills that Britain needs to unblock its productivity problem are already there; a UBI could provide the means through which to unlock them by providing a safety net of security with which people could find work commensurate to their skillset, not just the first job going that will pay the rent or mortgage.

3. Technology

It is essential that we equip people with the means to prepare for impacts that automation and artificial intelligence (AI) may have on the labour market, often the subject of undue hyperbole concerning job obsolescence. There are very good reasons to promote automation; it can enhance our capabilities in a range of fields, dramatically boost productivity growth and free people from unfulfilling work. A recent RSA report has indeed advocated for the UK to speed up its adoption of automation technologies, adopting a human-centred approach to technology in order to deliver wide social benefits.

As the report recognises, “AI and robotics, if deployed on a large scale, would result in both losers and winners. Some geographic areas, demographic groups, occupations and sectors would be hit harder than others.” Realising a human-centred automation is a major challenge, and will require new interventions to assist those in occupations most likely to change. While in the medium term we do not see the aggregate impacts on employment from AI that many have forecast, we do see a challenge of skewed impacts, and that is why people need to be given the support that enables them to adapt; to learn, try new ideas, move to a new job, assume caring responsibilities without facing the insecurity of the welfare system as currently configured.

4. A step towards Universal Basic Income

In short, in the face of economic, social and technological challenges, the UBOF is designed to create a strong platform of freedom and security through which people can build a better life for themselves and their communities. It offers a gradual, practical and principled way to move towards a full UBI in future, while claiming some of its benefits so sorely needed now.

It is important to note here that, in opposition to those who see in Basic Income a route to a post-work world, we advocate Basic Income as one of the institutions supporting good work: that which is fairly remunerated, respected, providing of purpose and with scope for progression. Work is important above and beyond pay; it contributes to identity, embeds us in human relationships and provides purpose and development. Configured wisely, Basic Income and good work go hand-in-hand.

However, political will and questions of funding mean that a decent Basic Income sufficient to meet people’s needs is difficult to achieve in the short-term. What’s more, Basic Income would constitute a major shift in conceptions of the state’s role, and require a suite of other new institutions alongside to maximise its success; a revamped lifelong learning model among them. Developing these interventions will take time.

Progressing to a Basic Income model sufficient to the challenges outlined is therefore a long-term project and will necessitate further thinking. As critics have pointed out, an unanswered question is how a UBI could be funded. Many models proposed so far have either relied too heavily on funding through the income tax system alone or do not adequately remove the current disempowering system of welfare and tax credits or risk losses to those on very low pay compared to the current system.

Funding UBI

Realistically, Basic Income will not be introduced wholesale overnight; rather it will consist of a series of steps through which impact and sustainable financing models can be assessed. The UBOF represents one of these steps, and offers time for a range of potential funding options for a full UBI to be explored. These might involve the following (albeit this is not exhaustive):

· Introduce a Wealth Tax: A modest increase on the taxes of the wealthiest in our society could generate substantial income to put towards a Basic Income. The National Institute for Economic and Social Research has assessed that a tax of 1.2 percent on net assets over £700,000 per year would generate £43bn annually for the Exchequer. With concerns over societal inequality persistent some form of wealth tax may also win favour as a redistributive mechanism. More work is needed, however, on how this could be most effectively implemented to address concerns around capital flight — for example, whether it would be levied on all assets, property or in the form of inheritance tax could have significant impacts on its receipts.

· Create a Sovereign Wealth Fund (SWF): Various countries around the world, including Norway and New Zealand, have set up SWFs. As defined by Stewart Lansley, these are ‘collectively held funds, socially owned, established initially by the state from the pooling of existing or new resources, and used for the wider benefit of society.’ By borrowing around £200bn at historically low interest rates the government could establish a fund, potentially able to pay itself back through economic growth engendered by investment in human capability from the fund. The returns for these funds are way above current interest base rates. For example, Norway’s fund has enjoyed an annual return of 4.1 percent since inception. SWFs are attracting increasing attention from various standpoints. In November 2017, Tristan Hanson and Eric Lonergan of M&G Investments outlined the case for a British SWF, arguing that the government should take the opportunity to invest in a substantial programme of economic growth by issuing government bonds while interest rates are low. While Hanson and Lonergan don’t advocate for a UBOF or UBI, an SWF could be used to fund it.

· Introduce levies on company assets: IPPR’s Mathew Lawrence has advocated for the introduction of a ‘scrip tax’, whereby companies with a certain level of assets would be required to issue some of that equity into a government fund in the form of shares. While Lawrence suggests that this should apply only in certain circumstances, such as major private mergers, it could also be applied as a type of levy in the vein of the recently introduced apprenticeships levy. In this framing, the levy might apply to FTSE 350 companies and capped to 5 percent of equity. An intervention of this kind could mobilise some of the vast deposits of capital held by major corporations.

· Introduce taxes on transfer of data assets: A final option that the government should consider exploring is the introduction of some form of tax on usage of public data or the transfer of data assets to tech platforms and others. Companies such as Amazon, Facebook and Apple generate considerable profit from UK residents’ data, and options should be explored for how some of this could be reclaimed for public benefit. While new models of valuing data usage would have to be developed, this would be a response to the realities of a digital, data-driven age.

The UBOF represents one step in this potentially far longer process towards a full Basic Income. We should not wait to secure the benefits of Basic Income; the pace of change in a globalised, digitalised world can already be unpredictable. Downsides for particular groups are already becoming apparent. The Opportunity Fund secures some of the benefits of Basic Income now, but also signals a progression toward a sustainable model of a full Basic Income.

Conclusion

At a time in which new ideas are sorely needed, the Universal Basic Opportunity Fund provides the basis for a revised and enlightened social contract underpinning a modern notion of citizenship. This is a progressive form of citizenship that believes in the ability of people — when adequately supported — to fulfil their potential, make a societal contribution, and live meaningful lives. By providing people with a better basis of security, the UBOF can better support people to participate fully in society, for the enrichment of all.

The UBOF is an ambitious effort to re-envisage the relationship between citizen and state, emphasising trust in people as opposed to a default of suspicion as is the case currently. It also represents a practical step and valuable experiment on the possible road towards a more permanent Universal Basic Income model. It is an opportunity to demonstrate that when it comes to life decisions the best people to decide are the people themselves, when properly supported to do so.

Yet the UBOF should not be a standalone measure. Rather, it should be one element of a range of innovative government interventions seeking to reconceptualise social support mechanisms for a new context in a society that faces technological and economic change with economic insecurity already at intolerable levels. Place-based UBI experiments, as currently being explored amongst other options by the Scottish Local Authorities, should be supported by government as a means of testing other aspects of UBI alongside the UBOF.

Similarly, a reconfigured model of welfare must come with a transformed provision of lifelong learning. While we do not predict that automation will lead to mass job losses, it seems inevitable that the labour market will be reconfigured and require many to adapt. A strong system and culture of lifelong learning must be developed. Those who see the UBOF as a means to retrain must have good opportunities to do so. Other interventions such as stronger mechanisms for sectoral coordination, childcare provision, and better protections and supports for key groups of workers such as the self-employed, as recommended in recent RSA reports, will also be vital.

In contrast to some, often libertarian, advocates who envisage UBI as the harbinger of a drastically reduced state, in our model the UBOF consists just one aspect of a reconceptualised state. And nor do we see UBI as a means of replacing work as some ‘post-work’ and futurist accounts have done. We should make investments in technology and continue to embrace the welcome return of industrial strategy as means to drive economic and productivity growth. It is also imperative that we confront social challenges with new civic innovations, such as mechanisms to support the growing numbers of carers associated with an ageing population.

As with UBI, there are aspects of the UBOF that will appeal to all major British political parties. Those of the left are likely to be attracted to the unconditional economic security and investment in people offered by the UBOF, whereas the right will see liberal conceptions of individual agency enshrined in the UBOF as preferable to state paternalism. It is our hope that this common interest can generate cross-party momentum to introduce the UBOF.

The UBOF is an intervention designed to address an increasingly concerning reality of people cycling in and out of poverty, being subject to employment and financial insecurity and without adequate opportunities to reconfigure their lives as they wish. The risk of not taking concerted action to address these trends is further growth of disenchantment and anger among those who feel ignored or left behind. If not confronted, forces including automation could become hugely divisive social, economic and political forces further entrenching a dangerous societal schism between those who have security and those who have insecurity. This is not merely a vision of a dystopian future. In many respects it is already in train and requires action now.

What has been proposed here is one possible pathway towards a UBI embedded in civic support and good work. Faced with an insecure future for many, the UK will need ambitious ideas. We hope that the Universal Basic Opportunity Fund will be one of them.

This article has introduced the founding tenets of the Universal Basic Opportunity Fund and explored why it is time to consider a transition to a Universal Basic Income economy. But how would the Fund ease this transition? What would the Opportunity Fund look like in practice? And what are the technicalities of such a Fund?

We explore how the Opportunity Fund would be a step towards Universal Basic Income in more detail in another article — Universal Basic Opportunity Fund: A step towards Universal Basic Income

To find out more about our research, please contact Anthony Painter

For full references and bibliography please visit the RSA website to download the full report