Universal basic income: Everything you need to know about £1,600 monthly payment trial

A handful of English households will receive £1,600 in cash every month from the government for doing nothing, if a universal basic income trial passes.

Universal Basic Income is the idea that automatically giving all citizens the same amount could reduce poverty and the cost to taxpayers of running a complicated system of means-tested benefits.

But it also faced fierce backlash from critics who believe the plan is costly and could backfire.

This week, the Autonomy think tank launched deep plans for how an English universal basic income trial might work.

Under the plans, 30 people will each be paid £1,600 a month for two years. The scheme is not yet live as Autonomy is seeking funding.

But the idea of ​​”money for nothing” has captured the country’s imagination and has sparked fierce public debate about the pros and cons of such a plan.

Here’s everything you need to know about the latest UBI plans.

What is Universal Basic Income?

Universal Basic Income is a system where all citizens are paid the same amount, replacing means-tested benefits.

To be eligible, these payments must be regular, not a lump sum.

The money should be spent in cash, not vouchers, so that the recipient can decide how to spend it. The payments must be for everyone, with no means testing or obligations.

Under the Autonomy plans, each person taking part in the trial would get £1,600 a month.

If they have no other income, that would mean paying £176 in tax each month and keeping the remaining £1,423.35.

The Autonomy scheme would cost £1.6 million to run over two years. The 30 claimants would be awarded £1.1 million and the rest would be spent on running the scheme.

What is the point of a universal basic income?

Fans of the system say it could have several benefits to society. First, it could help reduce poverty, as individuals can count on monthly payments even when they are not working.

These payments could also help children get an education, instead of leaving to find work to support their families.

That principle was recognized by the New Labor government, which introduced alimony payments to encourage children to stay in school. The scheme was dropped in England in 2010, but continues elsewhere in the UK.

Some say a universal basic income could also reduce crime, by reducing the need to break the law to get money to live on.

The periodic payments could also help carers and volunteers, who now have to work on top of unpaid responsibilities.

It could also help people who may become redundant due to increasing automation and artificial intelligence.

Most universal basic income plans provide just enough to cover basic needs like bills and food.

Paying everyone the same is also a simple system that reduces the cost of running multiple benefit plans.

It also removes the need to apply for benefits, which some people find difficult or impossible.

The idea of ​​the Autonomy pilot is to test universal basic income and see how it works on a small scale.

Will Stronge, research director at Autonomy, said: “A guaranteed basic income could be transformative for prosperity in this country.

“All the evidence shows that it would directly alleviate poverty and improve the well-being of millions of people: the potential benefits are simply too great to ignore.

“With the coming decades filled with economic shocks from climate change and new forms of automation, basic income will be a critical part of securing livelihoods in the future.”

What are the disadvantages?

The obvious drawback is the cost of running the scheme. Giving everyone free money could also increase inflation, which could negate the benefits by increasing the cost of food and bills.

Replacing multiple government benefits with one fixed payment also risks sidelining people who need more than universal basic income just to live.

Some say it also penalizes people living in more expensive parts of the country, as the amount is usually not adjusted, but consumers in some regions will have to spend more than others on things like housing costs and food.

There is also a risk that recipients will waste the money. That’s a potentially big problem under the UBI, as most plans for the scheme would supersede all other benefits.

The Autonomy report on UBI said, ‘There are potential risks to manage. These include those with regard to community cohesion, ‘hedonic’ spending of extra income on things like alcohol or cigarettes, and transitions to and from the payments.’

However, Autonomy added that “have a predictable a secure income actually promotes long-term thinking and reduces hedonism’.

Who is participating in the universal basic income trial?

Under the Autonomy plans, the money will be given to 15 people in Jarrow, south Tyneside, and 15 in East Finchley, north London.

They are paid ‘without working or showing willingness to work’.

Everyone who receives a benefit is 18 years or older.

If UBI is ever rolled out nationwide, in theory everyone should get the payments.

Has it been tested elsewhere?

Yes. Last year, 500 Welsh 18-year-olds leaving the care system were paid £1,600 a month, which will last until 2024.

Finland tested the UBI in 2016 with 2,000 randomly selected unemployed people. They were all paid the equivalent of £500 a month.

The scheme seemed to work. Employment rose, compared to another group of unemployed who did not receive payments.

People who were given £500 a month reported feeling happier and better off as a result.

However, the scheme has not been rolled out more widely.

Other countries have launched UBI-like schemes.

In the United States, the state of Alaska pays all residents between $1,000 and $2,000 (£806 to £1,612) per year since 1982.

In Brazil, a benefit program set up in 2004 provides the poorest 25 percent of citizens with payments worth about 20 percent of the minimum wage.

How does universal basic income affect pensions and benefits?

In the UK, UBI currently only exists in Wales.

However, in Wales it only covers benefits which are means tested.

So the AOW, or benefits such as Personal Independence Allowance (PIP) remain unaffected.

However, benefits such as Universal Credit are affected by UBI payments.

Can I still work and get a UBI?

Yes. UBI is meant to provide the ultimate safety net, but you are also free to work normally.