A British Basic Income
July 1st 2020
That we are living through unprecedented times and unique circumstances will not come as a controversial statement. Sadly, although it is possible that the UK has overcome the worst of Covid-19 from a health perspective, we are yet to truly feel the force of the economic impact of Covid-19 and our enforced lockdown.
In times such as ours, previously radical policies and extreme solutions often enter into the mainstream. For any UK Government, let alone a Conservative one, to embark on its current 'furloughing' scheme would have seemed incredible just as recently as four months ago.
Soon, furloughing will inevitably tail off and we will see unemployment increasing to levels not seen in decades, alongside pay reductions for many lucky enough to remain in work. Such a dramatic increase in economic security will again likely lead to previously radical policies and extreme solutions entering the mainstream.
One of these is the idea of a 'basic income'. This is a long-standing idea, with probably thousands of different iterations but all based upon the fundamental principle of a precise income provided by the state to all citizens (or at least working-age adults) without condition.
In the coming months, as we begin to feel the real economic impacts of Covid-19 and our economic shutdown, the idea of a basic income will likely re-emerge as one of many potential approaches to managing the social and economic aftermath of the Covid-19 crisis.
Although there is a large philosophical literature supporting the idea of a basic income (with Thomas More and Thomas Paine famous advocates), there is far less available in terms of practical policy proposals for a government or an opposition party contemplating introducing a basic income.
This short ebook, by a former UK Government Economist and PwC Consultant with experience consulting for the UN, IMF, World Bank and DfID amongst others, sets out a practical approach for the UK to introduce a basic income of £500 per month (or £6,000 per year) per adult citizen.
This is primarily funded by removing personal income tax allowance and abolishing VAT zero-rating, exemptions and reduced rates. These are all structural reliefs in the tax system which are introduced specifically to enhance progressivity of the tax system but which are not effective ways of reducing poverty in comparison with a basic income since the cash value of such reliefs increases as income increases.
This is one swift measure which will enhance income security, increase cash-flow for the low paid and reduce inequality without impacting on incentive to work or increasing the fiscal deficit.
Over time, the BBI could be extended radically by further integrating the BBI with retained benefits, plus other changes to the tax system such as reducing NIC thresholds or pension tax relief or abolishing the capital gains tax on main residences.
A short paper at under 8,000 words, 'A British Basic Income' is now available via Amazon publishing:
The excel calculations are included in a downloadable excel sheet below: