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Universal Basic Income

Some problems seem intractable; I love the promise of solutions that offer to cut such Gordian knots. One of those is the ‘benefits trap’ – people finding themselves in a situation where they can’t find a job that pays enough to make them feel safe to give up their benefits. If you could work forty hours a week and be barely any better off you can see how that would be a disincentive and more so if the time would mean running up other costs that would actually leave you poorer.

The potential sword is an idea called Universal Basic Income, which I recently read about in articles in The Guardian by John O’Farrell and John Harris. The concept is that everyone gets a small fixed regular income. It doesn’t matter if you are a millionaire, you still get the income. It will only be a tiny fraction of what you pay in taxes but you get the £100 a week or whatever the level works out to be. On the other hand, it would make a world of difference if you were on benefits and, because you wouldn’t lose it by getting a job, you could afford to venture into employment without losing out. Of course, you’d be that much closer to crossing the tax paying threshold but it wouldn’t put your baseline income in jeopardy in the same way.

How would it be paid for? Probably slightly higher taxes although some economic theorists suggest it might not even need that. People on a low income tend to spend all of their money, keeping it flowing round the system rather than seeking out clever ways to be ‘tax efficient’ that border on devious. Would people be less inclined to work for a living, placing a burden on the rest? Or would they live happier lives, able to make a living but have time to creative, inspiring things to benefit society and give time for more volunteering?

As the argument goes, it works okay for the Royal Family. And, other countries like Holland are already experimenting with the idea. It will be interesting to see how it works. There’s even a website dedicated to the idea.

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