Basic Income around the World: The Unexpected Benefits of Unconditional Cash Transfers

  • Replacing existing welfare systems with a universal basic income has the potential to streamline bureaucracy, eliminate welfare traps, and reduce poverty. 
  • The idea is being trialled by governments across the world including Scotland, United States, Canada, and Finland. These studies contribute to a growing body of evidence on the effects of basic income on employment and poverty.
  • While recently advocated by Labour's John McDonnell, basic income has a rich intellectual heritage on the free market right. Nobel Prize winning economists such as Milton Friedman, F.A. Hayek and George Stigler have advocated replacing existing welfare systems with a negative income tax (a form of basic income).
  • Automation and globalisation will deliver massive benefits for ordinary people, but they also run the risk of creating short-term mass unemployment. Existing welfare systems are ill-suited to handle the transition and mass retraining programmes rarely deliver their promise.
  • There is strong evidence that unconditional cash transfers are incredibly successful at alleviating poverty in the developing world. With studies in Kenya, Namibia, India and Uganda supporting the view that simply giving cash is one of the most effective forms of development aid.

Read the full paper here.

Working Welfare

Inspired by the successful US welfare reforms of the 1990s, the proposals in Working Welfare would make work central to the benefits system. All working age people not meeting national disability criteria would face "immediate work requirements". This requirement would be backed with tough sanctions – "no work, no benefits" – and any absence from mandated work without good cause would trigger a pro rata reduction in benefit payments. The ASI proposals would also revolutionize the delivery of welfare. Responsibility for its provision and administration would be devolved to local agencies, which would be paid according to results. Agencies would be rewarded for getting people into work for a set period of time, ensuring an ongoing and personalised service for jobseekers. The report also advocates raising the personal income tax allowance to £12,000, to tackle high effective marginal tax rates for those trying to enter the workforce, and to make life easier for those with low incomes.

Read it here.

Unbundling the Welfare State

In this part of 'Unbundling the Welfare State', Professor George Yarrow argues that Alistair Darling must confine the government to the relief of poverty and allow the private sector to take up the task of providing basic pensions an social security benefits. He states that the welfare state has become riddled with complexities, inconsistencies and perverse incentives, and positively discourages low-income families against savings and insuring themselves for future needs. He sees means testing as a tax on personal saving and that the government must focus on improving the market.

Read it here.

Making Pensions Simpler

Abolition of all benefit and contribution limits, except those on lump sums would produce a massive simplification of the non state pension sector. With little or no scope for abuse, given the recent erosion of pension tax privileges. But real simplification is possible only within the context of broader reforms of anomalies and complexities in the tax system, in how different pension schemes are treated, and in the relationship between pensions and the structure of social benefits.

Read it here.

The New Shape of Public Services

Public services must be changed, not just funded. This report outlines the new vision for the NHS and state education which would make them more innovative and consumer focussed. The key is to make the public services producers "free–standing, self–owned and independent". They would manage their own budgets and set their own policy and priorities. Parents choosing a school would direct the government funding for their child to the institution they selected. Doctors and patients by choosing a particular hospital for a course of treatment would direct state funds to that institution. State schools, universities and hospitals would be driven by the demands of their customers. The public services would have to improve quality and efficiency.

Read it here.

Housing Benefit: What the government ought to do – but won't

Radical changes to housing benefit are required in order to stem the £840 million of tax payers money lost annually to fraud and error, and to make the housing market fairer and more responsive to the needs of tenants. Housing benefit should be taken out of the hands of local authorities, and instead paid out by social security offices along with income support. Today's very complicated payment rates, which depend on the tenant's rent level, family circumstances, and the type of property occupied, would be replaced by a uniform benefit for all low paid people. The report's author, Dr Peter King of De Montfort University in Leicester, says that perhaps £350 million in administrative costs and payment errors could be saved by these simplifications alone.

Read it here.