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A Universal Basic Income: What would it mean for charities?

By Peter Harrison-Evans 16 August 2016

The men’s premier league kicked off this week. For many it’ll be the season that determines whether Leicester FC’s remarkable win was a fluke, or the beginning of a bright future for the team. Either way, the rather alarming sight of Gary Lineker presenting last Saturday’s Match of the Day in his boxers is a lesson to us all: that even people with good reason to doubt can be proved wrong.

All of this gives me a little bit of hope for the potential of Universal Basic Income (sometimes referred to as Citizen’s Income)—an idea quickly dismissed by critics, but that isn’t going away. So a bit like a hopeful football fan let me indulge, for a moment, in the possibilities.

What is Universal Basic Income?

Universal Basic Income (UBI), is ‘unconditional, non-withdrawable income paid to every individual’. Recently, a number of charities and think tanks have published research on UBI, including the Citizen’s Income Trust, the RSA, and Compass. Other countries in Europe, namely Finland and the Netherlands, are going further than this with concrete plans to pilot a form of UBI in 2017.

The reason UBI—not a new idea—is now rising back up the agenda is a product of the profound and ever-quickening societal changes that we all know about: the effect of technological change on the labour market; the result of an ageing society on the caring burden for an average household; and the impact of 30 plus years of neoliberal economic consensus on levels of inequality. UBI represents a way to begin the process of decoupling income from the labour market and creating a more level playing field for every citizen.

What would it mean for the voluntary sector?

The introduction of a UBI—which the RSA estimates could cost the not implausible figure of 1% of GDP—would represent a radical change to the current welfare system. This change could have significant implications for the charity sector, and in particular it could affect:

  • Volunteering levels. A guaranteed income would provide basic security giving people more choice around work and leisure, and this could impact on volunteering. The 2010/2011 Citizenship survey found that ‘work commitments’ were by far the biggest reported barrier to volunteering. How UBI is implemented could influence this, with the RSA’s model including a public ‘contribution contract’ that 18–25 year olds must sign before receiving UBI.
  • Charity sector employment practices. Giving people greater choice in the labour market would make low paid work harder to fill. This could impose a paybill cost on some charities, but it may also make them confront how they fill and remunerate certain roles. It could also create recruitment problems for low-paid outsourced functions, such as telephone fundraising, which may be another reason why charities would look to review these practices.
  • Social need. Charities often have to pick up the pieces from a failing benefits system. The Trussell Trust, for instance, estimates that 42% of its referrals are due to benefit delays, sanctions and other changes.  A universal, unconditional payment would help to address the negative consequences of means-testing and conditionality. More broadly, the report by Compass estimates that their preferred model could reduce child poverty by 45% and working-age poverty by 14%.

On the flip side there are likely to be some losers from a UBI scheme. Who this will be would be dependent on what kind of scheme is implemented. If UBI replaces rather than supplements (as some models suggest) the existing benefits system, then this could have regressive effects, particularly if the UBI rate is set at the current level of Jobseekers’ Allowance. In particular this could hit people with higher living costs, such as people with a disability or those living in areas with high housing costs currently reliant on housing benefit.

So where next?

As the above point on social need shows the devil is in the detail. What’s more there are clearly a lot of assumptions and guess work behind this, together with the argument that many of these gains could be funded much more cheaply through targeted measures.

All of this means that UBI in the UK still looks very far from being realised. But, just like Leicester showed last season: you have to believe, don’t you…