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Sources · Universal basic income

This house would introduce a universal basic income.

Fact bank v1 · 16 cards

  1. UBI-01True

    “Alaska has paid every resident an unconditional cash dividend for decades, and it has not reduced employment.”

    Confirmed: a study of the Alaska Permanent Fund Dividend (paid since 1982) found no effect on employment and a 1.8 percentage point (17%) rise in part-time work.

    The dividend is modest, about $2,000 per person a year in recent years, and the authors note it may be smaller than a full basic income. They link the result to the cash boosting local demand. A 2023 peer-reviewed study found small cuts in women's hours and more employment among men after payouts, a net 0.8% annual labour market contraction per extra $1,000.

    “we show that the dividend had no effect on employment, and increased part-time work by 1.8 percentage points (17%)”
    National Bureau of Economic Research·The Labor Market Impacts of Universal and Permanent Cash Transfers: Evidence from the Alaska Permanent Fund (NBER Working Paper 24312)Independent research institute · 1 Feb 2018 ↗

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  2. UBI-02True

    “In Finland's basic income experiment, unemployed people given an unconditional monthly payment did not work less than those on normal benefits.”

    Confirmed: 2,000 unemployed people were randomly given a basic income in place of minimum unemployment benefits, and their days in employment were statistically unchanged in the first year.

    Finland ran the trial in 2017-2018, paying €560 a month with no job-search requirements. It cut participation tax rates for full-time work by 23 percentage points, yet first-year employment did not rise significantly. A 2020 evaluation by Finland's VATT institute found 6 more days of employment from November 2017 to October 2018, but an activation model introduced in early 2018 complicates that result.

    “Despite the considerable increase in work incentives, days in employment remained statistically unchanged in the first year of the experiment.”
    American Economic Association·Removing Welfare Traps: Employment Responses in the Finnish Basic Income Experiment (American Economic Journal: Economic Policy)Peer-reviewed research · 1 Feb 2022 ↗

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  3. UBI-03True

    “In the UK, Universal Credit is cut by 55p for every extra £1 a claimant earns, which weakens the reward for working more.”

    Confirmed: above any work allowance, Universal Credit falls by 55p for each £1 of earnings.

    The taper was cut from 63% to 55% in November 2021. Claimants who qualify for a work allowance can earn £427 or £710 a month before the taper starts. Income tax and National Insurance come on top, so the effective loss on extra earnings is higher. Supporters of UBI argue that a flat payment would not be withdrawn as earnings rise.

    “For every £1 you earn from working, your Universal Credit payment goes down by 55p.”
    GOV.UK (Department for Work and Pensions)·Universal Credit: How your wages affect your paymentsGovernment / parliament · 24 Nov 2021 ↗
  4. UBI-04Mostly true

    “Means-tested benefits miss many people who are entitled but never claim, while a universal payment would reach almost everyone.”

    OECD modelling assumes a universal basic income would have near-complete take-up, unlike means-tested benefits. In the UK simulation, the poorest tenth of households gained, often because they were entitled to benefits they did not claim.

    Near-universal take-up is a modelling assumption, not an observed UK result. The same OECD analysis found that a budget-neutral UK basic income would still leave many other low-income households worse off.

    “Those in the lowest income decile would also gain, as these are often households that are entitled to means-tested benefits but do not claim.”
    OECD·Basic Income as a Policy Option: Technical Background Note Illustrating Costs and Distributional Implications for Selected CountriesIntergovernmental body · 1 May 2017 ↗
  5. UBI-05Mostly true

    “The OECD estimates that automation could wipe out about 14% of jobs and radically change another 32%.”

    This was the OECD's 2019 estimate: 14% of existing jobs could disappear through automation in the next 15-20 years and another 32% were likely to change radically. A 2023 OECD update that includes AI puts about 27% of employment in occupations at highest risk.

    The 2019 figures are OECD averages; the share of high-risk jobs ranged from 6% in Norway to 34% in the Slovak Republic. OECD researchers say the higher recent figure may reflect AI progress and a different method, and does not mean the risk of automation has doubled. In 2019 the OECD said mass technological unemployment seemed unlikely.

    “14% of existing jobs could disappear as a result of automation in the next 15-20 years, and another 32% are likely to change radically”
    OECD·OECD Employment Outlook 2019: The Future of WorkIntergovernmental body · 1 Apr 2019 ↗

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  6. UBI-06True

    “A UK basic income paid at the level of existing minimum benefits would cost far more than the benefits it replaced.”

    Confirmed: OECD modelling found that such a scheme left a £44.3bn a year gap, even after scrapping most working-age benefits and the tax-free personal allowance. Closing the gap would take income tax rates about 25% higher.

    This is a 2017 simulation by the OECD Secretariat using figures for 2015. The 25% is a proportional rise in all income tax rates (for example 20% to 25%), not 25 percentage points. In Finland and France, by contrast, the same design was close to budget-neutral.

    “In the UK, however, a BI would be much more expensive than the existing benefits it would replace”
    OECD·Basic Income as a Policy Option: Technical Background Note Illustrating Costs and Distributional Implications for Selected CountriesIntergovernmental body · 1 May 2017 ↗

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  7. UBI-07Mostly true

    “A UBI the UK could afford without raising taxes would pay adults only about £230 a month.”

    OECD modelling found a budget-neutral UK basic income, paid for by abolishing most working-age benefits and the tax-free personal allowance, would be £230 a month per adult and £189 per child after tax, in 2015 terms. The OECD says this is 28% below the level of existing minimum-income benefits.

    The OECD itself describes abolishing tax-free allowances as a tax increase, so this is not a scheme without tax rises. A basic income at minimum-benefit level would pay £317 a month per adult after tax. Under the £230 version, lower-income UK households, including many lone parents, often lose out, though the very poorest non-claimants gain.

    “A revenue-neutral scheme would require the BI amount to be reduced to 28% below GMI levels.”
    OECD·Basic Income as a Policy Option: Technical Background Note Illustrating Costs and Distributional Implications for Selected CountriesIntergovernmental body · 1 May 2017 ↗

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  8. UBI-08True

    “The IMF estimates that a basic income worth a quarter of median income would cost about 6.5% of GDP in rich countries.”

    Confirmed: the IMF's October 2017 Fiscal Monitor put the gross cost of a UBI at 25% of median per capita income at about 6.5% of GDP in the average advanced economy and 3.75% in emerging markets.

    This is a gross cost on top of existing programmes. It ignores how the UBI would be financed and any behavioural responses. A payment at 25% of median income is far below a poverty-line income.

    “A UBI set at 25 percent of median per capita net market income would cost about 6½ percent of GDP and 3¾ percent of GDP”
    International Monetary Fund·Fiscal Monitor, October 2017: Tackling Inequality (Chapter 1)Intergovernmental body · 1 Oct 2017 ↗
  9. UBI-09True

    “The IMF has concluded that in rich countries with generous welfare systems, a UBI is unlikely to work well as a replacement for existing benefits.”

    Confirmed: the IMF said a UBI is unlikely to be an effective substitute where safety nets are generous and progressive. It advised fixing coverage gaps and take-up first.

    The IMF saw a stronger case for a UBI in emerging and developing economies whose safety nets have large coverage gaps and low progressivity, if it can be financed efficiently. It also noted that digital ID and payment technology make a UBI easier to deliver.

    “In advanced economies, where existing safety nets are often generous and progressive, a UBI is unlikely to be an effective substitute.”
    International Monetary Fund·Fiscal Monitor, October 2017: Tackling Inequality (Chapter 1)Intergovernmental body · 1 Oct 2017 ↗
  10. UBI-10True

    “A basic income funded by scrapping tax-free allowances would sharply weaken work incentives for people whose partner already works.”

    Confirmed: OECD modelling found this design would severely weaken work incentives for second earners in almost all countries studied. It would strengthen them for many lone parents and single-earner couples who now face benefit withdrawal.

    Second earners lose their tax-free allowance and gain little in return, because they were not receiving means-tested benefits anyway. The overall effect on work depends on the design and how it is financed.

    “A BI as outline above would severely weaken work incentives for those whose partner is in paid work.”
    OECD·Basic Income as a Policy Option: Technical Background Note Illustrating Costs and Distributional Implications for Selected CountriesIntergovernmental body · 1 May 2017 ↗
  11. UBI-11True

    “Giving every UK adult a basic income of around £9,600 a year would cost roughly £500 billion a year.”

    Confirmed as arithmetic: Full Fact calculated that £504bn is equivalent to about £9,600 a year for each UK adult aged 18 or over, before administration costs.

    This is a 2019 gross figure, before savings from replaced benefits or extra tax. The ILO then put the UK poverty threshold at about £8,800 a year per adult. The £504bn came from unpublished Conservative analysis of Labour plans, and Full Fact noted that Labour had only pledged trials.

    “£504 billion is the equivalent of providing a universal basic income of around £9,600 a year to each adult aged 18 or over”
    Full Fact·Claim about cost of Labour's welfare policy is unsubstantiatedFact-checker / wire service · 26 Sept 2019 ↗
  12. UBI-12Mostly false

    “A universal basic income would end poverty in the UK.”

    OECD modelling found that a budget-neutral UK basic income would raise working-age poverty. Even a version paid for by much higher income taxes did not significantly reduce it.

    Flat payments spread money across everyone, including those who are not poor, and replacing targeted benefits leaves some people worse off. A UBI set above the poverty line could cut income poverty, but at a far higher cost. The result depends on the payment level and how it is funded.

    “it would not prove to be an effective tool for reducing poverty”
    OECD·Basic Income as a Policy Option: Technical Background Note Illustrating Costs and Distributional Implications for Selected CountriesIntergovernmental body · 1 May 2017 ↗
  13. UBI-13Mostly false

    “Automation is set to wipe out around half of all jobs.”

    The OECD's 2023 estimate, which accounts for AI, puts about 27% of employment in occupations at highest risk of automation; its 2019 estimate put 14% of jobs at high risk. The 'almost half' figure (47%) is Frey and Osborne's estimate for US jobs.

    Being at high risk does not mean a job will disappear. In 2023 the OECD found little evidence of significant job losses from AI so far, though most of that research predated the latest generative AI. ONS analysis put 7.4% of jobs in England at high risk of automation in 2017.

    “Taking the effect of AI into account, occupations at highest risk of automation account for about 27% of employment.”
    OECD·OECD Employment Outlook 2023: Artificial Intelligence and the Labour MarketIntergovernmental body · 1 Jul 2023 ↗

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  14. UBI-14False

    “Finland has introduced a universal basic income for all its citizens.”

    Finland ran a two-year trial from 2017 to 2018. 2,000 unemployed benefit recipients received €560 a month in place of their minimum unemployment benefit. It was never a national, universal scheme.

    The trial covered only unemployed people chosen at random, so it cannot show the cost, tax or work effects of a truly universal payment.

    “2,000 unemployment benefit recipients were randomized to receive a monthly basic income”
    American Economic Association·Basic income and welfare trapsPeer-reviewed research · 28 Feb 2022 ↗
  15. UBI-15False

    “People given unconditional cash mostly waste it on alcohol and tobacco.”

    A review of 19 quantitative studies by World Bank researchers found that, almost without exception, cash transfers had no significant effect on spending on alcohol and tobacco or reduced it. The only two studies that found a significant rise were non-experimental, and the effects were small.

    The evidence comes from cash transfer programmes in developing countries in Latin America, Africa and Asia, not from rich-country basic income trials. The authors found the result held for both conditional and unconditional programmes.

    “Almost without exception, studies find either no significant impact or a significant negative impact of transfers on temptation goods.”
    World Bank·Cash transfers and temptation goods: A review of global evidenceIntergovernmental body · 28 May 2014 ↗

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  16. UBI-16Mixed

    “Basic income trials show that giving people free money does not make them work any less.”

    Some schemes found no fall in employment, including Alaska's dividend and Finland's trial. A large US randomised trial paying $1,000 a month for three years found income excluding the transfers fell by about $1,900 a year, labour market participation fell 4.2 percentage points and work fell by 1-2 hours a week.

    The US study randomised 1,000 low-income people to get $1,000 a month and 2,000 controls to get $50 a month, in Illinois and Texas. Partners also cut their hours, and leisure rose most. Because it targeted low-income people, it is not a test of a universal payment; the Alaska study links its result to the cash boosting local demand.

    “The transfer caused total individual income excluding the transfers to fall by about $1,900/year relative to the control group”
    National Bureau of Economic Research·The Employment Effects of a Guaranteed Income: Experimental Evidence from Two U.S. States (NBER Working Paper 32719)Independent research institute · 1 Aug 2026 ↗

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