Advocates of Universal Basic Income have long touted its potential for reducing poverty. A new report by the Basic Income Conversation and Compass again makes the case for its poverty-busting credentials.
The authors argue that UBI could cut poverty by half with no net cost, which would reduce poverty in the UK to its lowest level in 60 years.
Cost-effective
The report suggests that UBI would be fiscally neutral, with the costs born by the extra payments covered by the additional revenue raised by internal changes to both tax rates and National Insurance contributions.
If UBI was introduced, the authors argue that child poverty would fall by half, working-age poverty by around a quarter, and poverty pensioner by 54%. What’s more, the Gini coefficient would also fall by around 12%.
“Here is the evidence that a Universal Basic Income is affordable and beneficial —imagine how good it would feel to be tackling child poverty while enhancing everybody’s financial security,” the authors say. “This could be a giant step forward to a better post-COVID world.”
Fiscal changes
Achieving this would require a couple of key changes to the tax and benefit system. The first of these would be the introduction of guaranteed weekly payments of £41 per child and £63 per adult of working age. This would provide a family of four with a guaranteed income of nearly £11,000.
This would be accompanied by a reduction in the personal allowance of £750 and a rise in existing tax rates of 3 pence. There would also be a change in the system governing National Insurance Contributions. It’s a change that would pay for the costs of the UBI, and the authors believe, ensure that the poorest in society get the help they need.
“At a time of skyrocketing poverty, this report shows universal basic income can take us back to the lowest level of child poverty in over 50 years at no net cost to the Treasury,” the authors conclude.
“In showing universal basic income can deliver record low levels of poverty with no extra burden on the nation’s finances, this report makes transformative change a political decision not an economic one.”
