Universal basic income: What it is and why people will be given free money for doing nothing

Thirty people in England will be given £1,600 a month – no strings attached – in the country’s first trial of a universal basic income (UBI).

© PA Inflation and rising food prices means most people are now worse off

But what is a UBI, how does it work – and why is it being trialled?

What is universal basic income?

The clue really is in the name – it’s a guaranteed income for everybody in society, designed to cover people’s basic needs and create a minimum income floor.

A UBI is paid to individuals, rather than households, and is issued at regular intervals rather than as a one-off sum.

There is no means testing or requirements people have to meet. Everyone gets it, regardless of how much they earn.

It is also paid as “cash” – money that goes into a bank account – rather than as vouchers or in the form of food or services.

What will the trial look like?

During the trial, the income won’t be truly universal – with 30 people in two areas selected to take part.

They will be given £1,600 a month, with no strings attached.

The people taking part live in central Jarrow, in the North East, and East Finchley, in north London.

The trial is being run by think tank Autonomy. Researchers will work with the recipients to understand how the money affects their lives.

The pilot will also recruit a control group who will not get UBI, so researchers can compare the experience of people receiving a basic income with those not getting one.

Why is universal basic income being trialled?

Supporters of UBI say it could simplify the welfare system and tackle poverty.

Will Stronge, director of research at Autonomy, said: “All the evidence shows that it would directly alleviate poverty and boost millions of people’s wellbeing: the potential benefits are just too large to ignore.”

A potential benefit of UBI is that it removes the stress of support being means-tested and takes away the stigma of receiving a benefit.

UBI is also a way of guarding against potential future disruptions to how we live and work – things like climate change, AI and automation.

What do critics say about UBI?

It’s expensive. Giving every adult in the country £1,600 a month clearly does not come cheap.

It would require a big overhaul of the tax and social security systems.

Critics also argue it would de-incentivise people from working and direct money to people who don’t need it, diverting support from the most needy.

What have other countries done?

Wales is running a basic income pilot for 18-year-olds leaving the care system, who get £1,600 a month for two years after turning 18.

The Welsh government chose to focus on care leavers because of the barriers they face transitioning to adulthood.

Around 500 people are eligible for the scheme, which will cost about £20m over the three years it is set to run for.

The Scottish government ran a feasibility study to see if introducing a UBI could work in Scotland and started work on plans to off a Minimum Income Guarantee by 2030, which would ensure no one falls below a set income level.

Finland ran a two-year trial of UBI in which 2,000 people were paid a monthly stipend of €560 (£490). However, the government declined to extend the trial to all citizens and scrapped it at its conclusion.