Economics

In the News

The Swiss said 'No' but could the UK have a Universal Basic Income in the future?

Jonny Clark

6th June 2016

Just days after Switzerland had a referendum on the introduction of a Universal Basic Income (and rejected the idea), Labour's John McDonnell is starting to consider such a scheme, backed by politicians from the Green Party.

The concept in its simplest form would give every adult a guaranteed basic income no matter what their employment situation is. It would then mean that the Government could remove its welfare benefit system and complex tax relief methods. It would (hopefully) allow for an improved equality within society (as all citizens receive a living wage) and some would argue that creativity in the workplace would be improved as people may have greater income stability and be more inclined to take risks.

It is receiving greater consideration as policy makers attempt to plan for a world that becomes increasingly more technologically driven and where low-skilled tasks become more likely to be undertaken by machines and robots.

An article on McDonnell's thoughts is available on here, and further analysis on the concept is available here.

For those A2 students about to take their macro papers, it is an interesting policy choice to add to the mix. It is very unlikely that the concept will appear as an exam question but it may be a policy consideration if you are answering a question on equality, productivity or the relative impact of the current welfare system in the UK.

The counter arguments are fairly obvious: how would an economy afford such a measure (perhaps an increase in corporation tax for businesses using high amounts of technology - pick that one apart!)? Could the system reduce motivation for people to find work or work more productively if they have a guaranteed (albeit basic) income?

Jonny Clark

Jon Clark has been teaching economics and business studies for over 25 years primarily in the Further Education sector. Before joining tutor2u, he was a senior manager at South Cheshire College in Crewe.

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