Basic Income

The Basic Income is a regular one-off payment to all UK citizens (and potentially EU citizens who work here) that is made without condition. It is intended to provide a minimum income, beneath which no citizen can ever sink, and also a platform from which everyone can provide for themselves without interference or punishment from the state. It will replace the bulk of the current welfare state, although some means-tested benefits will remain to support those who require additional assistance (namely pensioners, the disabled, lone parents, carers).

The amounts and full costs are laid out below with individual costs x numbers of people in that population group (see the About page for some of the assumptions made in making these calculations)

Basic Income recipients (Amount x number of people) Cost (£bn)
Basic Income to Working age adults (£4.8k x 36.2m) 173.76
Basic Income to 16-21 yr olds (£3.6k x 4.3m) 15.48
Basic Income to Pensioners (£7.6k x 12.3m) 93.48
minus non EU citizens adults (4.8k x 1.9) -9.12
minus non EU 16-21yr olds (3.6k x 0.1) -0.36
Basic Income Total 273.24

The total cost of the Basic Income is therefore £273.24 billion

Other Benefits

In addition, the Transformation Deal will restructure and retain £72.5bn in extra benefits to support those in extra need. Where possible, these benefits will be restructured to be non-means tested, simplified and universal.

This includes full housing benefit for all those who currently qualify and who are over 65 years old and/or have dependent children. For those recipients without children and under 65, housing benefit will be awarded at 50% of the current rate.This would cost £19.25bn – about £4bn less than now. Housing benefit is the only benefit that will retain the same means-tested nature, purely due the absence of anything better that can serve the purpose of supporting renters with artificially inflated housing costs. I accept that it is ultimately a subsidy for landlords, raises rents for everyone else and creates disincentives to earn more, but for the forseeable future it will be required to prevent the Basic Income from removing key support for those who are not easily able to move home in the short/medium term. Ideally, housing benefit will be phased out as the basic income rises and the housing market moves towards normality, but for the first few years at least it (or something like it) will be required to support some of the lowest paid in society cope with a dysfunctional housing market. Suggestions for something better gratefully received..

A Children’s Income of £2,700 per year will also be paid to the primary carer or guardian of all children aged 0-15 years. This will replace all current child benefits and, like the Basic Income, will not be means-tested. This will cost just over £31bn per year (12 million children in the UK).

There will also be a Carers’ Income of £1600 per year for all full time carers. This is half the current rate, but it will be an unconditional payment that will not be lost if the carer also undertakes work (the current maximum wage permitted is £100 per week). This means all full time carers will have an unconditional income of £6400 per year (made up of £4,800 in Basic Income and £1,600 in Carers’ Income) much higher than the current maximum benefit of £3224 per year). With around 1.6m full time carers, this will cost £2.5bn.

Disability Living Allowance/Personal Independence Payments will also continue at 2/3 of the current rate (i.e. a current recipient will receive 2/3 of their current benefit plus £4,800 basic income leaving the average claimant around £3,000 per year better off). There is another benefit which forms part of this (Motability) which permits recipients to use part of the benefit to help finance mobility solutions (i.e. the purchase of a car). If the DLA/PIP rate is reduce to 2/3, this would include the Motability payment, so along with their Basic Income payment the recipient would receive all their money directly and could procure their mobility solution themselves. This will cost £10.6bn (2/3 of the current total)

Attendance allowance will remain as it is, with an average annual payment of £3,827. It is currently not means-tested. This will cost £6.1bn (as it does now)

All lone parents will be able to claim up to £4,800 per annum from the absent partner (via the Child Support Agency or directly from the partner). On some occasions the absent partner will be unable to pay the full support for some reason (death, living abroad, imprisonment, insufficient income), in which case the government will pay it. There are 1.8 million lone parent households in the UK, and I am assuming the government will need to meet around one third of the cost of this (or £3bn)

These additional, targeted benefits will cost £72.5bn, taking the total basic income/welfare bill to £345.36bn

Other Benefit Cost (£bn)
Housing Benefit 19.25
Children’s Income 31.05
Carers’ Basic Income 2.5
DLA/PIP 10.6
Lone Parent Basic Income 3
Attendance Allowance 6.1
Grand Total 72.5

Conditions

The Basic Income is unconditional for those that receive it (i.e. it will not be clawed back as people earn income from other sources), but it does require that the recipient is a UK citizen (or EU citizen), and is resident in the UK.

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