A universal basic income just isn’t workable – no matter how many times it’s tried

Of all the distractions from achieving social justice, the idea of a universal basic income is the most persistent. It is a zombie policy, impossible to kill off, no matter how many studies or experiments are carried out, or how many economists point out that it won’t work.

It flared back to life at the beginning of the coronavirus crisis. A large group of opposition MPs of various parties urged Rishi Sunak to bring in a temporary basic income as the solution to the economic shock of the lockdown. Fortunately, the Treasury ignored them and devised a furlough scheme to support the incomes and preserve the jobs of affected workers.

This month, a German institute is launching the country’s “largest independent academic research project”, by giving people a basic income with no strings attached. The idea is that by paying people selected at random €1,200 (£1,083) a month unconditionally, it will encourage the recipients to fulfil themselves, by making it easier for them to retrain, set up a business, change jobs or work different hours.

Other benefits claimed for basic income schemes are that they would simplify welfare payments, and help people adjust to the “inevitable” job losses caused by artificial intelligence. Neither of those will be tested by the German scheme, as it is a private initiative by a campaign group called Mein Grundeinkommen (My Basic Income), whose 130,000 supporters are paying for the experiment.

“So far the debate has resembled a philosophical salon at best, and a religious war at worst,” said Jurgen Schupp, who heads the experiment at the German Institute for Economic Research, as if his institute is going to bring about the Enlightenment and the Reformation at once.

I admire their altruism, but I despair that it is so misdirected. There is no need for another experiment to find out if a basic income would work. There have been many experiments since the 1970s and they have all come to the same conclusion, summed up three years ago by John Kay, one of the great economists of our time: “Either the level of basic income is unacceptably low, or the cost of providing it is unacceptably high. And, whatever the appeal of the underlying philosophy, that is essentially the end of the matter.”

Yet the appeal of the underlying philosophy is so powerful that well-intentioned people continue to try to push their magic water uphill. It is a lovely idea: that you could give every citizen enough to live on, as of right, thus ending means-testing and liberating people to find their own productive and fulfilling economic destiny.

The same impulse inspired some of Jeremy Corbyn and John McDonnell’s programme: they looked to universal benefits rather than means-tested ones, for student fees, childcare and even broadband. Each of them progressive and enlightened in principle but in practice a huge subsidy to the better-off.

A similar belief in the virtues of simplification and computerisation lay behind universal credit as a well-meaning reform of the benefits system. (“Well meaning” may seem an unfamiliar phrase to attach to something designed by Iain Duncan Smith, but there was a strong dose of Christian idealism behind the scheme, until George Osborne decided to use it as the means by which to make huge cuts in welfare.)

The tragedy is that all the effort and cash put into lobbying for basic income schemes could be devoted to practical reforms of existing policies to support people who have lost their jobs through no fault of their own. As the (targeted) furlough scheme is unwound, it is much more important to devote our reserves of compassion to designing (targeted) schemes to help people into the jobs of the future.