Universal Basic Income: The UK May Host One of the Biggest Trials Yet

The Labour Party is backing a trial.

Union Jack and a few Fivers

A major universal basic income trial could come to the United Kingdom, if the opposition Labour Party wins power at the next election.

The idea, which would see every adult receive a fixed monthly sum regardless of their situation, has been lauded by campaigners as the key to reducing inequality in an increasingly-automated world where robots and A.I. take on more roles. John McDonnell, the party’s finance spokesperson (or “shadow chancellor”), announced plans Sunday to trial the idea in three areas.

“The reason we’re doing it is because the social security system has collapsed,” McDonnell told The Mirror. “We need a radical alternative and we’re going to examine that.”

Similar trials have shown promising results, leading to growing support from political movements. A trial in Finland showed people receiving a small monthly sum felt happier and more secure on the same total levels of income as non-recipients, while also reporting higher trust in politicians. An Ontario experiment found people could afford to eat better-quality food, improving health.

With the U.K. nearly a decade into a tough austerity program, and parliament wrapped up in the intricacies of Brexit, it’s a policy that could offer an enticing vision of a future economic structure. Sam Gregory, a member of the UBI Lab Sheffield campaign, described the announcement to Inverse as “really exciting news.”

“Since the financial crash I think there’s growing recognition that we need more radical and innovate solutions to problems like inequality, poverty and low pay,” Gregory says. “UBI is just one of many exciting new ideas that are now being talked about in the mainstream, like the Green New Deal and the four day week.”

Shadow chancellor John McDonnell.
Shadow chancellor John McDonnell.

Universal Basic Income: Why the United Kingdom Could Benefit

The British government has been led by the Conservative Party since 2010, which has followed a policy of cutting back public spending in the wake of the financial crisis. A United Nations envoy in November 2018 decried the austerity policies as “punitive, mean-spirited, and often callous,” leaving a fifth of the population in poverty. Official figures suggest spending on working-age social security will have shrunk by £37 billion ($47.9 billion) by 2021, around a quarter less than before.

Campaigners have called for a basic income to help alleviate some of these growing issues. Sheffield, a 500,000-strong city in northern England that narrowly voted to leave the European Union three years ago, is home to a group calling for the city to host England’s first such trial. Local groups have outlined three proposals for a trial, including a complete replacement of the tax and benefits system that gives £6,000 ($7,838) per year to everyone and ensures those earning £25,000 ($32,600) or less per year would see a net gain.

McDonnell did not provide specifics about Labour’s policy, except for the fact that it would replace all investigations into someone’s finances to see if they qualify for monetary support— except for the investigation related to the housing benefit. Every adult would receive a fixed amount per week, plus extra for each child. This marks it out as notably more radical than the Finland trial, which let 2,000 unemployed test participants receive €560 ($634) per month while still receiving standard unemployment benefit.

Liverpool.
Liverpool.

The shadow chancellor expressed interest in making Sheffield one of the three test areas. He also suggested Liverpool, a northern city of a similar size to Sheffield. The third area, McDonnell said, could be somewhere in the midlands, a vaguely-defined swathe of England that normally includes Birmingham, the United Kingdom’s second-largest city, with over one million inhabitants.

“There is something especially far-reaching about UBI,” Sam Gregory from UBI Lab Sheffield says. “It has the potential to transform the lives of people who have been left behind by a decade of austerity. You can particularly see the effects of austerity in Sheffield and Liverpool, where people haven’t benefited from economic growth in London. That’s why we’re especially excited that the shadow chancellor wants to run pilots in these cities, where they could do the most good.”

The policy announcement came in the same week that economist Guy Standing shared his report on basic income with the shadow chancellor. In the same report, Standing dismissed the idea of a jobs guarantee, championed by Bernie Sanders and others, as coming with numerous issues. Basic income, Standing argued, is a much more promising means of reshaping economics.

“Of course it’s a radical idea,” McDonnell said. “But I can remember, when I was at the trade unions — campaigning for child benefit and that’s almost like UBI — you get a universal amount of money just based on having a child. UBI shares that concept. It’s about winning the argument and getting the design right.”

With Andrew Yang running for the American presidency on a basic income ticket, it may not be long before senior politicians in the United States also take up the cause.