Scrap benefits system and bring in universal 'citizens wage' basic income for everyone, think-tank recommends

The UK’s welfare system should be replaced with a single universal basic income paid to all citizens whether in work or out of work, a think-tank has suggested.

Researchers at the RSA say a standard flat payment made to every citizen would help reduce poverty traps caused by the benefit system, improve the lot of those in work, and improve fairness.

A proposed model for the scheme would see each adult paid £3,692 a year or £71 a week, with children also receiving a payment corresponding roughly to child benefit. Pensioners would be paid a citizen’s pension of £7,420 a year. Housing costs would be dealt with separately.

The scheme would be broadly similar in cost to the current welfare state but a slight increase in spending would be paid for by clawing back the benefit when people started earning over £75,000.

Crucially, the payment would not be conditional on “signing on” or attending a jobcentre. The payment would not be paid to those in prison, however, and only got to citizens.

Anthony Painter, the director of policy and strategy at the RSA and the report’s author, said the proposal would re-shape Britain’s welfare state to better reflect modern society.

“The welfare state has become incredibly complex whilst locking those it seeks to help in a vicious circle of low pay, insecurity and an intrusive state. The RSA doubts the current system can be fixed,” he said.

“A system of Universal Basic Income is the best alternative to help people improve their own lives over time – it provides better security to support people’s needs to work, learn, set up a business or care for their family.”

The researchers recognised that varying housing costs across the UK would present challenges for such a scheme but suggested ways in which it could be adapted to cope.

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They suggest keeping payments to cover the cost of rented housing separate – either by devolving housing benefit to local authorities who would be incentivised to build homes to reduce costs, or a separate “basic rental income” payment.

Universal basic incomes, also called citizens’ incomes, have long had proponents on both the left wing and right wing of politics. The Green Party has long argued for a similar change, and the idea is advocated by the Spanish left-wing party Podemos.

Similar ideas were also proposed by Milton Friedman, the free-market economist who inspired much of Margaret Thatcher’s programme.

Some campaigners against the Government's benefit changes have proposed a basic income a means of reducing what they say is the harmful impact of sanctions and aggressive work-search activity.

The policy also has many opponents, however. Declan Gaffney, who advised the last Government on social policy, said the lack of conditionality in a basic income could encourage people to work less and that this could lead to more poverty.

“Unless we are completely relaxed about long-term worklessness – and all the evidence tells us we should not be – some form of conditionality seems to be essential,” he wrote in an article for the Guardian.

“But if UBI were subject to conditionality much of what it aims to eliminate would reappear: sanctions, eligibility testing, welfare bureaucracy.”

He also said such a scheme might not be reasonably capable of addressing variable disability and housing costs.

Trials for similar schemes are being looked at in Finland and some Dutch cities.

During the Labour leadership contest Jeremy Corbyn, who now leads the party, said he was interested in the idea of a “guaranteed social wage” – a similar proposal – but that he believed there were issued that had to be worked through.

A poll by YouGov conducted at the weekend found quite strong public opposition to one description of the idea of a basic income.

When asked whether the Government should “remove all welfare benefits and state pension paid to people and give all British citizens a flat-rate monthly payment instead” 18 per cent of the public said they agreed and 53 per cent said they disagreed. 29 per cent said they did not know.