Basic Income, an idea whose time has come

A wide array of different approaches to a Basic Income have been proposed over the years. But perhaps one of the most credible and immediately possible proposals has recently emerged in a new report by the RSA.

In their report they show a fully costed way in which every UK citizen would receive several thousand pounds a year. The Basic Income would be paid as follows (on the basis of 2012-13 prices):

  • Basic Income of £3,692 for all qualifying citizens between 25 and 65
  • Pension of £7,420 for all qualifying citizens over 65
  • A Basic Income for children aged 0-4 of £4,290 for the first child, and £3,387 for other children aged 0-4. This is comparable to the benefits available to low-income households before the child begins school
  • There would be a reduction in the Basic Income for a third child or more, potentially to zero
  • A Basic Income of £2,925 for those aged 5-24 years-old

How would this be paid for? The report offers the following savings to meet the financial burden of paying everyone a Basic Income:

  • Ending Child Benefit and Child Tax Credits
  • Ending Working age benefits (Income Support, Jobseekers Allowance etc)
  • Ending Working Tax Credits
  • Administrative savings and Tax credits written off
  • Student grants and loans written off
  • Abolishing personal income tax allowances
  • Changing primary threshold & self-employed national insurance reliefs
  • State Retirement Pension, SERPS, S2P, Pension Credit, and MIG
  • Ending higher rate tax relief on pension contributions

The report very clearly says the amounts of Universal Basic Income offered excludes housing support, some elements of support for children and for disabilities. In other words the Basic Income wouldn’t be intended to cover your rent. Even so, there are a number of interesting thoughts which arise from the Basic Income approach. …

Particularly for a freelancer or sole trader with unpredictable earnings the Basic Income approach is far simpler and fairer. What you earn wouldn’t affect the Basic Income so you would have some firm financial support to depend on, no matter what your business is doing.

Another possible benefit of the Basic Income is that it might encourage more people to make the leap to running their own business.

Will a Basic Income turn us all into entrepreneurs?