John McDonnell's universal basic income idea is interesting – but will need a lot more thought

Like acquiring a family dog, the adoption of a universal basic income (UBI) may be an attractive project in principle – but how well it turns out in particle depends a good deal on its size and its nature. In his interview with The Independent today, the shadow chancellor John McDonnell floats the idea without giving much clue as to how substantial the UBI would turn out to be.

Politically, at this stage when the policy is still being formulated, this caution is wise. However, for the benefit of the public and transparency, if it ever does make it into a Labour manifesto a great deal more detail about its generosity will need to be provided.

In principle, and in a rational world, the notion has much to recommend it. It would remove at a stroke many of the income traps that deter people from moving from benefits and into work. If that sounds familiar it is because it the stated aim of the government’s universal credit scheme, though that has proven fatally flawed. The saga of universal credit, its cruelties not yet fully visited upon the nation as it is rolled out region by region, demonstrates how any radical reform to social security has to be well thought through and sound in practice as well as theory. Though superior in concept to universal credit, UBI requires a similar level of scrutiny, and care in its implementation.

So where should UBI be pitched? Too low, and the reform would be irrelevant. A UBI of, say, a couple of thousand pounds per annum would simply condemn many poorer families to instant poverty, even destitution if it was supposed to include housing costs. Set too high, however, and it could easily shred the incentive to take low-paid work, especially if the national minimum or living wage rate was raised substantially. Few have a work ethic so powerful that they would wish to, say, work unsocial hours in unpleasant conditions for £12,000 a year when their family can get £15,000 under UBI as of right.

UBI would then achieve precisely the opposite of its main attraction – restoring the incentives to take work – as it will not “taper” away as an individual’s earnings increase.

Besides, the increases in taxation that might be needed to fund a generous UBI could be so high as to destroy other incentives, render the economy uncompetitive and unattractive to inward investment, and endanger the sustainability of the public finances.

Eventually, in such circumstances, the experiment would fail.

UBI could also create some strange anomalies. Someone with huge wealth but relatively little income would be entitled to it, for example, which might look odd to some eyes. If applied per capita with no accounting for family size, it could lead to anomalous disparities, depending on the age at which citizens qualified for it. A one-person household could find itself in receipt of a sum, say, one quarter the size of the gross payments to a couple with two late teenage children next door, although the costs of running that household would unlikely be four times as great – and so on. Means testing might mitigate some of these anomalies, but would also erode the principle of universality at its core.

Politically, too, UBI is problematic. Despite everything that has hit the Conservatives recently, Labour is still distrusted on economic competence among the voters. Such is the visceral hostility to the welfare state generally in sections of the media, even extending to an insidious campaign to denigrate the work of the NHS, that the idea would be ridiculed as yet another example of “loony left” policies from Jeremy Corbyn’s “Marxist” Labour Party. It would be derided, even if set relatively low, as a “money for nothing” scrounger’s charter, wide open to abuse and sapping the nation’s moral fibre.

In truth, Labour’s next manifesto is bound to attract such opprobrium (and some of it may be justified), but if Mr McDonnell is serious about his reforms then he will need to have his answers ready. As things stand, he will find himself the object of a good deal of universal basic abuse.