Is a UK basic income pilot possible?

Is a UK basic income pilot possible?

This article is based on a research project conducted by a French student, Lucas Delattre, during the summer of 2016, and updated in October 2017

Introduction

A Citizen’s Basic Income is an unconditional, nonwithdrawable income paid to every individual as a right of citizenship.

In 2016, at a discussion on Nick Srnicek and Alex Williams’ book Inventing the Future: Postcapitalism and a world without work (Verso, 2015) at the New Economics Foundation, Ed Miliband was asked what needed to happen to move us towards the implementation of a Citizen’s Basic Income scheme. ‘A pilot project’ was the answer. Others have made the same suggestion.

Existing pilot projects

Many of the projects that have been claimed as Citizen’s Basic Income pilots do not satisfy the criteria of being universal, unconditional and based on the individual. Those that do pay unconditional incomes to individuals cannot be absolutely universal, since they necessarily exclude those outside the sample. This is also an ethical issue that cannot be avoided. And the short duration of most projects enables some short-term effects to be detected, but not long-run or life-time effects. (A project in Kenya is giving 23 US$ per month to 40 villages for 12 years, which is much longer than the two years for which most experiments run.)

Some projects call for volunteers, and so are unlikely to be representative. Mandatory involvement of a representative sample is to be preferred; and even better is a saturation sample, covering a defined geographical area, which can enable effects to be picked up at a local level. Projects that compare the experience of pilot groups that receive an unconditional income to the experience of control groups that do not are preferable to experiments that do not employ control groups.

In 2008 and 2009 a privately-financed pilot project was held in the small rural settlement of Otjivero-Omitara in Namibia. 100 Namibian dollars (£7) was paid each month to every member of the population for a period of two years, and significant results were achieved in relation to health, education, crime reduction, economic activity, and poverty reduction. There was no control group with which to compare these results.

Between 2011 and 2013, similar projects in India paid 300 rupees (£3) per month to every member of several pilot villages, and in India the impressive results obtained in the pilot project villages could be compared with those in the control villages.

The Alaskan Permanent Fund (APF) is a sovereign wealth fund based on Alaska’s oil revenues, and invested in the international stock market. It gives an annual dividend payment to every Alaskan citizen, who has been resident for at least a year in Alaska. The APF has usually been able to provide a dividend of between $1,000 and $2,000 each year. Obviously, it is annual and variable, and is not sufficient to take on the role of social security: but it has had beneficial effects on the population of Alaska.

A micro-level pilot project in Germany provides Citizen’s Basic Incomes to selected individuals for one year. In Finland, a random sample of 2,000 people aged 25-58, who were unemployed at the end of 2016, are receiving €560 per month Income for two years in place of existing benefits, and the sample subjects can keep their payments after they have found employment. However, while being based on the individual and unconditional, this does not fulfil the Citizen’s Basic Income criteria of being universal. A similar approach is being considered by some Dutch municipalities. The current experiment in Ontario, Canada, is a Guaranteed Minimum Income project where a means-tested household-based benefit targeted on subjects aged 18-64 is being tested.

The Negative Income Tax experiments in the USA and Canada during the 1970s were based on the household, and so did not fulfil the criteria as a Citizen’s Basic Income pilot projects.

None of this is to suggest that the projects that have been undertaken are not of value. They are. Valuable lessons have been learnt in Namibia, India, Alaska, and the various states in Canada and the USA where Negative Income Tax experiments have taken place; and additional useful lessons will be learnt in Berlin, in the Netherlands, and in Finland. But we still await a genuine Citizen’s Basic Income pilot project. It is arguable that the Indian and Namibian experiments were as near to genuine pilot projects as possible because they were of sufficient duration to enable trends in behavioural change to be evaluated and trajectories predicted.

The UK

Might it be possible to run a Citizen’s Basic Income pilot project in the UK? A genuine Citizen’s Basic Income pilot project? Multiple problems present themselves:

  • the project would have to be for a sufficiently long period for a sufficient number of assessments of behavioural change to be made to enable trajectories to be plotted and reliable estimates made of the likely behavioural changes that would accompany a permanent Citizen’s Basic Income scheme;
  • any Citizen’s Basic Income viable in the short to medium term in the UK (and in any developed country) would have to be funded wholly or in part by changing income tax and social insurance contribution levels and thresholds. So a genuine pilot project would require government departments to make those adjustments just for the individuals involved in the project, and to recycle the savings into pilot project participants’ Citizen’s Basic Incomes – a somewhat unlikely proposition;
  • the project would need to involve a cross-section of the population if it were to stand some chance of modelling a genuine Citizen’s Basic Income; and
  • because any revenue neutral or almost revenue neutral scheme would impose losses on some households (- preferably on households in the higher income deciles), some participants in the pilot project would lose disposable income at the point of implementation.

A feasible Citizen’s Basic Income experiment

What would be feasible would be to provide a genuine Citizen’s Basic Income to a small community on top of existing benefits provisions and without altering National Insurance contributions or Income Tax payments. This would avoid government departments having to change current tax and benefits provisions: but it would require additional funding and it would not mirror the tax and benefits changes that would be required to fund a genuine Citizen’s Basic Income. This is why I have called it an ‘experiment’ rather than a ‘pilot project’. Important lessons could be learnt: but nobody would be able to regard the experiment’s results as evidence for how a Citizen’s Basic Income would work in practice.

A further feasible option would be to give a Citizen’s Basic Income to all sixteen to eighteen year olds and not give them an Income Tax Personal Allowance. This approach would create minimal problems for the tax and benefits authorities and for employers, and it would result in almost no losses at the point of implementation. The important question would be whether to promise permanence – in which case it would be a genuine pilot project; or whether to limit the experiment to a stated number of years – in which case it would be an experiment. (Microsimulation research on such a pilot project/experiment can be found in a recent working paper. )

SWITZERLAND: Zurich city parliament decides to examine a Basic Income pilot project for two city districts

SWITZERLAND: Zurich city parliament decides to examine a Basic Income pilot project for two city districts

In a 2016 vote regarding a Basic Income initiative in Switzerland (rejected by 76% of the people), two districts in Zurich voted in favor of the initiative. In November of 2017, the Zurich parliament accepted a parliamentary postulate that proposes the launch of a Basic Income pilot project in these two districts. The city council has two years to examine the proposal and to evaluate the conditions and necessities of such a pilot project. It may be likely that the city council will reject the proposition since the Councilor in charge, Raphael Golta, has already expressed his negative stance towards the principles of Basic Income as well as towards the postulate—which was brought to parliament by his own social-democratic party.

One week later in a newspaper interview, Philip Kovce rejected the proposed Basic Income pilot project in Zurich as well as pilot projects in general. Kovce is the co-author of a manifesto on Basic Income and of other publications, together with Daniel Häni, one of the leading promotors of the 2016 popular initiative. Kovce argues that the principles of a Basic Income should not be experimented with on a small scale, but rather fully understood through large popular discussions. With this view, he stands in opposition to the majority of Swiss Basic Income supporters, namely those of “Dein Grundeinkommen”, a spin-off of the “Generation Grundeinkommen”, which was the movement carrying the popular initiative.

 

More information at:

[In German]

Strad Zürich, “Auszug aus dem Protokoll des Stadtrats von Zürich [Excerpt from the minutes of the City Council of Zürich]“, May 17th 2017

Strad Zurich, “Existenzsicherung durch Erwerbsarbeit? Ein Beitrag zur diskussion über ein bedingungsloses grundeikommen [Livelihood through employment? A contribution to the discussion on an unconditional basic income]“, May 4th 2017

RSA Article: How Has Basic Income Progressed from Radical Idea to Legitimate Policy

RSA Article: How Has Basic Income Progressed from Radical Idea to Legitimate Policy

Anna Dent, fellow of the RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce), recently wrote an article titled “How has Basic Income progressed from a radical idea to a legitimate policy?” In this article, Anna Dent looks for an explanation of why Basic Income developed from a fringe idea to a popular policy proposal.

Dent researched four different current Basic Income pilots in order to learn what motivated them. The pilots analysed were in Finland, the Netherlands, Ontario and Scotland. Dent found that even with the disparity of location, all the pilots shared “a striking number of common factors” from which more can be learned about the rising popularity of the idea of Basic Income.

Common factors between all pilots were: 1) The feeling that poverty, precarious work and unemployment have grown and that traditional policy solutions are not working; 2) Basic Income is considered as an innovative solution that can help with a wide range of problems; 3) Experimenting with Basic Income enables places to “project positive qualities such as innovation, progressiveness and leadership” and something that serves local cultural identities, the prime example being Scotland; 4) The pilots involve a lot of different people and organizations, from activists, to experts and academics, “providing a critical mass of engagement and interest in basic income, which helped to legitimise it as a solution.”; 5) All pilots were interested in evidence-based social policy.

Dent’s analysis indicates that the countries currently performing of preparing pilots are doing so because of current issues, poverty, precariousness, unemployment and dissatisfaction with traditional yet failing social security solutions. The policy is considered innovative, wide reaching and having a positive impact for the country’s status or social identity. Finally, Dent notes that overall the diversity of people involved, including experts and academics, has given Basic Income additional credibility; therefore, the policy is thought of as a more legitimate solution.

 

More information:

Anna Dent, “How Basic Income progressed from a radical idea to a legitimate policy?”, October 11th, 2017

RSA on Basic Income.

CANADA (LINDSAY, ONTARIO): Delegates pass ‘Lindsay Declaration’ on basic income

CANADA (LINDSAY, ONTARIO): Delegates pass ‘Lindsay Declaration’ on basic income

Ontario Basic Income Network delegates. Credit to: Lindsay Advocate.

 

On November 4th 2017, the Ontario Basic Income Network (OBIN) held its annual meeting in Lindsay, Ontario, Canada. Lindsay is one of the sites of the Ontario basic income pilot project, with approximately 2,000 residents registered in the experiment. Delegates at the November 4th meeting unanimously passed “The Lindsay Declaration for a Progressive Basic Income.”

The Lindsay Declaration draws from human rights outlined in the United Nations Universal Declaration of Human Rights and the Canadian Charter of Rights and Freedoms. It also highlights what it considers the benefits of basic income and the momentum built by the Ontario government’s three-year basic income pilot (ongoing).

The Declaration proposes nine principles to guide basic income policy. These state that basic income must be promoted as justice rather than charity, and as abundance rather than austerity. The principles further assert that basic income must be reliable, based on cost of living and protected from creditors. Finally, the Lindsay Declaration supports basic income that does not preclude a “comprehensive social security system,” and that aligns with progressive “personal and corporate taxation.”

After the meeting, delegates voiced their intention to use the Lindsay Declaration as a tool for basic income advocacy across Canada. The Declaration has received attention from regional news and social media.

 

 

More information at:

The Lindsay Declaration

Basic Income Canada Network endorsements

Ontario delegates pass ‘Lindsay Declaration’ on basic income,” Kawartha Lakes This Week, November 7th 2017

Roderick Benns, “‘Lindsay Declaration’ on progressive basic income passed by delegates,” The Lindsay Advocate, November 7th 2017

Town of Lindsay chosen to host basic income pilot program,” Global News, October 12, 2017

UNITED STATES: Stockton, California plans a Basic Income Demonstration

UNITED STATES: Stockton, California plans a Basic Income Demonstration

Stockton, California and Mayor Michael Tubbs announced plans for a Basic Income trial – the Stockton Economic Empowerment Demonstration (SEED). The project is still in its initial stage, and the design phase of the project will be launched in January 2018. The design period will last 6 to 9 months, and according to a Sukhi Samra, representative of the SEED project, the design phase is being used to “solicit community input and to ensure that SEED is really reflective of the needs of the Stockton community.”

The concrete outline of the project is still in the early stages, but there are some starting points. The basic income stipend will be $500  per month and  will apply to anywhere  from 25 families for 5 years to 100 families for 1.5 years. The project has secured a $1 million grant from the Economic Security Project and a grant from the Goldhirst Foundation of $250,000 which was announced last Thursday. The project also hopes to be able to raise additional funds. According to the guidelines in the SEED website, the demonstration will gather both research and storytelling partners, and those who are interested in participating can follow the info here. The site also states the project will prioritize high quality data with the cooperation of academics and academic institutions, while also engaging in storytelling, encouraging documentary filmmakers and creative storytellers to join the team.

The city of Stockton has had a difficult past.  In 2012, it became the first city in the United States to file for bankruptcy. Since then, the city has been recovering, but it continues facing important challenges since 1 in every 4 residents still live below the poverty line. Mayor Michael Tubbs became the youngest Mayor in history, and the first African American Mayor of Stockton, in 2017. He has a progressive agenda in many areas, and the Basic Income demonstration is intended as a way to show what happens when a group of people have an income floor that is guaranteed. Stockton will be the first public/private trial in the United States with significant leadership from a public official. Mayor Tubbs is inspired by Martin Luther King Jr. who defended a guaranteed basic income.  Tubbs is interested in finding out “if a guaranteed income will unleash potential and provide the needed stability.”

 

More Info:

Stockton Economic Empowerment Demonstration Website.

Economic Security Project.

Dylan Matthews, ”Three years ago, Stockton, California, was bankrupt. Now it’s trying out a basic income”, Vox, October 18, 2017

Alexis C. Madrigal, “Free Money at the Edge of the Tech Boom”, Atlantic, October 19, 2017