As the debate rolls on about UBI, we look at the proven benefits of a welfare scheme that provides a level of economic security to everyone and how the evidence so far does not necessarily support critics’ concerns.

Universal Basic Income (UBI) hit the headlines this week, after it was announced the policy will be trailed in England for the first time. 30 people in central Jarrow, north-east England and in East Finchley, north London will receive £1,600 a month for two years, with no conditions attached. The aim of the pilot programme is to gain a better understanding of the impact of UBI on people’s lives.

The announcement sparked widespread commentary from the Right and the Left, posing different positions on the social welfare proposal which provides all citizens a guaranteed income.

“So exciting to see plans for England’s first ever basic income pilot. We need big, bold ideas to provide security and dignity for all – to tackle poverty, help job security, improve wellbeing & transform society,” tweeted Green MP Caroline Lucas.

Meanwhile, Annabel Denham, director of communications at the Institute of Economic Affairs, told TalkTV that she was sceptical that UBI is the solution. “The primary objection to this is cost. If a UBI provides enough money to live off, then it will bankrupt the government. It’s a bad idea!” 

Over the years, different countries have experimented with UBI with varying levels of success. As the debate rolls on about UBI, we look at the proven benefits of a welfare scheme that provides a level of economic security to everyone and how the evidence so far does not necessarily support critics’ concerns that it will disincentivise work, cheat economies out of productivity and be plain unaffordable for the government.

Health and wellbeing

As the Joseph Rowntree Foundation (JRF) states in a report on UBI, one of the potential benefits of the policy is the removal of stress caused by means-tests, conditionality and uncertainty about whether welfare support will be withdrawn, coupled with the de-stigmatisation of social security support.

“This could lead to better mental and physical health,” writes JRF.

In Finland, where the first nationwide randomised trial of basic income started in 2017, recipients reported lower rates of depression, loneliness, sadness, and overall mental strain.

In Germany in 2014, the non-profit Mein Grundeinkommen (My Basic Income) used crowdfunding to set up a basic income raffle. By the end of 2019, it had awarded almost 500 basic incomes to people worldwide who had submitted their names. Each participant received around $1,100 per month for a year. According to Fast Company, 80 percent of participants said the income made them less anxious. Over half said it enabled them to continue their education, and 35 percent said it had made them feel more motivated at work.

Reduces poverty and income inequality

There is evidence that UBI has helped reduce poverty and income inequality. In Brazil, for example, following the distribution of $100 a month to around 25 percent of the population from March 2020, poverty levels have fallen to the lowest level in 40 years, as reported by the British Medical Journal (BMI).

Positive job growth

Another argument for the introduction of UBI is that it protects people from low wages, sluggish wage growth and a lack of job security caused by the impact of the growing gig economy, and increased automation in the workplace. This is because UBI provides people with the financial security to leave a job.

A modest improvement in employment was evidenced during Finland’s two-year roll-out of UBI in 2017 – 18. Described as the ‘world’s most robust study of UBI,’ the scheme saw the Finnish government give 2000 unemployed people aged between 25 and 58 monthly payments of 560 euros per month with no strings attached. The study found there was a greater increase in employment for people in families with children, as well as those whose first language wasn’t Finnish or Swedish. People who received universal basic income instead of regular unemployment benefits reported better financial well-being, mental health, and cognitive functioning, as well as higher levels of confidence in the future.

Boosts school attendance and lowers dropout rates 

There is also some evidence to suggest that getting a basic income can boost school attendance, as well as trust in social institutions. In Namibia, which has long suffered from high levels of income inequality and poverty, a pilot Basic Income Grant (BIG) scheme was carried out in the region of Otjivero-Omitara from 2007 to 2009. All residents in the areabelow the age of 60 years received a BIG of NAD100 per person per month, without any conditions being attached.

The project found a number of positive results, including raising levels of school attendance, whichalmost doubled. This was because parents were able to sustain the cost of sending their children to school. School dropout rates fell from 40 percent in 2007 to 5 percent in 2009.

Reduces crime

The same study in Namibia also found that the basic income grant contributed to a significant reduction in crime.

“Overall crime rates – as reported to the local police station – fell by 42 percent while stock theft fell by 43 percent and other theft by nearly 20 percent,” said the Namibia NGO Forum in its Basic Income Grant Coalition report.

Gabrielle Pickard-Whitehead is a contributing editor to Left Foot Forward

Image credit: YouTube screen grab

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