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Montevideo, November 21st 2018 - 05:54 UTC

Proposal to give £10,000 per year to every UK citizen under 55

Friday, February 16th 2018 - 09:53 UTC
Full article 11 comments
Scotland is already piloting UBI schemes in Glasgow, Edinburgh, Fife and North Ayrshire. Scotland is already piloting UBI schemes in Glasgow, Edinburgh, Fife and North Ayrshire.
The RSA report says the payments would come from a British sovereign wealth fund in the form of two annual £5,000 dividends. The RSA report says the payments would come from a British sovereign wealth fund in the form of two annual £5,000 dividends.

The United Kingdom government should give £10,000 per year to every citizen under 55, a report suggests. The Royal Society for the encouragement of the Arts, Manufactrurers and Commerce (RSA) says it could pave the way to everyone getting a basic state wage. The Labour Party has also said it is looking into similar arguments for a Universal Basic Income (UBI).

Scotland is already piloting UBI schemes in Glasgow, Edinburgh, Fife and North Ayrshire. The RSA report says the payments would come from a British sovereign wealth fund in the form of two annual £5,000 dividends.

The payments would not be means tested, and applicants would only have to demonstrate how they intended to use the money. Most state benefits would be cut under the scheme. The RSA said the dividends would help steer people through the challenges of the 2020s.

Anthony Painter, director of the RSA's Action and Research Centre, said: “The simple fact is that too many households are highly vulnerable to a shock in a decade of disruption, with storm clouds on the horizon if automation, Brexit and an ageing population are mismanaged.

”Without a real change in our thinking, neither tweaks to the welfare state nor getting people into work alone, when the link between hard work and fair pay has broken, will help working people meet the challenges ahead.“

The report says the fund could help people: ”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.”

The fund would be built from public debt, levies on untaxed corporate assets and investments in long term infrastructure projects, and be similar to Norway's $1 trillion sovereign wealth fund.

Because the dividends would replace payments such as Child Benefit, Tax Credits and Jobseeker's Allowance, the savings for the government could also be ploughed into the fund.

Anyone receiveng the “dividends” would not be able to claim any tax allowances, which the RSA says would act as a disincentive to wealthier earners wanting to apply for the handout.

In all the RSA puts the cost of the scheme at £14.5bn a year if it is fully subscribed to, and a total of £462bn over 13 years, more than half of which would be paid for by government savings.

The Labour Party said it was looking at similar proposals.

Jonathan Reynolds MP, Labour's shadow Treasury minister, said: “This new report from the RSA raises the right questions about the future of work and the long-term challenges we face, including making sure automation and the changing nature of work deliver a fairer, more prosperous society.”

The history of UBI can be dated back to Thomas Paine's essay, Agrarian Justice, where he proposes the idea as part of a social security system.

More recently the idea has been put into practice in limited ways. For instance, in Alaska all residents have been entitled since 1982 to a yearly cash dividend from the Alaska Permanent Fund.

Finland is half way through a two year nationwide pilot scheme, giving 2,000 unemployed Finns a monthly income of €560 (£497) which continues even if they find work.

Scotland is piloting similar schemes in four local authorities.

In the US one Democrat presidential nominee hopeful, David Yang is proposing his version of UBI, a $1,000 a month “Freedom Dividend”.

Even so, some economists believe full UBI can't work.

Brexit campaigner Patrick Minford from Cardiff University's Business School said UBI is “not a workable scheme because it's far too expensive. It creates a tremendous tax, a disincentive for the average person further up the income scale who's paying for it all.”

There are questions over how much of a social security system UBI would replace. Would citizens still be able to claim disability allowance or help with housing?

The RSA believes that properly done UBI would help people get into work, give them an opportunity to rethink their lives and contribute to better health and wellbeing.

Categories: Economy, Politics, International.

Top Comments

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  • Equality4All

    I am so very upset at this unjust suggestion, it is a kick in the teeth for all people aged over 55, every citizen should mean just that everyone. People over 55 need it the most, so if your over 55 you can just stay in poverty and watch younger people have a more fruitful life, what an utter disgrace I’m so ashamed of this country. There should NEVER be an age restriction on who gets financial help or the message is after 55 you are worthless. People are in more poverty after 55 with many health and unfair discrimination about jobs so re- think letting people over the age of 55 down in this way it’s the most upsetting and unjust idea I have ever read.

    Feb 16th, 2018 - 04:26 pm +1
  • HughJuanCoeurs

    I worked hard all my working life (which began at fourteen for those cosseted youngsters amongst us) and scraped everything I could together to give my family a good start and to provide for my retirement plus the care for my parents and my in-laws. My pensions are being eroded constantly and now some f*ckwit Think-tank wants to give everyone younger than me a £10k annual handout? This sounds like a real “Think” piece... ill-considered.

    Feb 16th, 2018 - 10:19 pm +1
  • Enrique Massot

    Would never expect distinguished MP commentators to be in support of an universal income concept.

    However, in spite of this progressive, forward-thinking group of individuals, this is an idea that is slowly but surely making its way as one possible way to provide a firm safety net preventing extreme pauperization and therefore keeping society functioning in a better way than the current one in which if you fail, you fail - too bad for you.

    It also is an appropriate response to the deep transformations of the concept of work that automation and robotization are bringing along. You sure don't want to marginalize people who lose quality jobs through no fault of their own and we all fare better if they keep properly living and eating, in a word, keep spending.

    Hey, someday we'll go back to thinking as community instead of behaving like a bunch of Troglodytes fighting for the water hole.

    Oh, and Juan, are you mad at the idea just because you are already retired and could not take advantage of it?

    Feb 19th, 2018 - 01:11 am 0
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