The potential for citizens’ income remains a hopeful, tricky mystery

11 May 2018 Ryan Miller    Last updated: 11 May 2018

An experiment with citizens’ income has been enthusiastically branded a failure before any results are in. The truth is less straightforward – and unclear. Regardless, creative thinking needs support, not scorn.

An ageing population, stagnant economic growth, the rise of automation - three factors representing a perfect storm of pressure on the socioeconomic prospects of local people now and in the future.

The effects are already being felt - with a Scope article from earlier this week highlighting a list of concerns that, taken altogether, are chilling.

One of those concerns that has an already obvious impact is the home-ownership rate for young adults.

Earlier this year the Institute for Fiscal Studies published a report showing that the percentage of 25- to 34-year-olds on middle incomes who own a house has collapsed from 65% 20 years ago to 27% now - with higher parental wealth a significant factor, meaning the bank of mum and dad is picking up the slack rather than self-sustainability for individuals.

Inflation has been the main issue, with the price of houses rising far more rapidly than wages.

Realistically, there will be no huge, mass wage hikes in the near future. Far more likely is that, in real terms, pay packets will continue to be squeezed, or worse - with the 4th Industrial Revolution only putting more pressure on quality, reliable employment with good pay.

So, for housing to become more affordable - and, remember, that housing is just one indicator of the socioeconomic difficulties that are here, and growing fast - either there has to be a crash in house prices (which poses more than a few problems of its own), or some other form of income has to appear for young people, and anyone else caught in this modern economic rut.

All of this represents huge challenges for civil society – because it represents both new challenges and an overall increase in difficulties for massive swathes of people.

Unfortunately, one of the most popular ideas to be mooted has, apparently, hit a recent stumbling block.


Universal Basic Income (UBI), also known as citizens’ income, is the idea that all citizens should receive a fixed amount of money from the state, paid at regular intervals over the year. Some suggest that, if this income were sufficiently high, it could replace the rest of the social security system - benefits, pensions, et al - entirely.

It is largely untested however those interested in the idea will have been keeping an eye on various trials that have started or are in the works. For instance, some council areas in Scotland are currently drawing up plans for a test programme, with preferred models hoped to be completed by next March, with the pilot starting 12 months after that.

Efforts at innovation should always be applauded. Scotland is ahead of the pack, when it comes to UBI, but not at the front of the race.

Finland embarked upon its own two-year pilot scheme in January 2017. Last month, the Finnish government announced it has declined a request to expand the scheme.

The Finance Minister even suggested it has proven a failure and that other models should be investigated.

Petteri Orpo told the Financial Times that his nation's entire welfare model needs to be restructured or it will crumble (due to an ageing population) and he now wants to examine measures where unemployed people forfeit some of their benefits if they fail to find work, with an aim to increase employment rates from 71% to 75%.

Mr Orpo - leader of the National Coalition party, which is leading in polls ahead of next year's general election - told the paper that he had not been a strong supporter of the trial but was prepared to be open minded about its results.


This sounds like the experiment has been a failure.

Certainly, if that's what you want to read, it's an easy opinion to find:

Finland’s Universal Basic Income experiment falls flat – per the Spectator.

No more 'free' money: Finland to end its basic income experiment – Sydney Morning Herald.

Finland Has Second Thoughts About Giving Free Money to Jobless People – the New York Time (with literally the same article that appears in the Sydney Morning Herald).

Finland's failed universal basic income experiment should be a lesson for U.S. – the Orlando Sentinel.

Sounds like this went down in flames. Except, that’s not really true.

There is no great data to show how the trial has gone - unsurprisingly, because it has yet to actually finish - and conclusions have yet to be drawn.

Instead, all that happened is that Kela, Finland's social security agency, asked to expand the trial in order to get a better picture of how it would effect the overall population, and this request was declined by the government (again, unsurprisingly, as a general election is due less than a year after the current trial period ends).

The real snag, however, is how keen the reaction has been to slam the trial as some sort of failure, before any results are in.

Miska Simanainen, a researcher at Kela, said: “It seems that there is some misinformation spreading in international media about the Finnish basic income experiment. There are currently no plans to continue or expand the experiment after 2018, but this is not new information."

This could be a real problem, because we are heading into uncharted waters for the core dynamics that underpin our economy and, accordingly, the welfare and wellbeing of individuals. Innovative thinking seems necessary.

The Daily Mail, a publication that divides opinion, pointed this out with an incredibly long and unsnappy, but almost pedantically correct headline: Finland says it will consider bringing in a universal basic income at the end of its two-year trial after reports it was scrapping the scheme sparked headlines around the world.

Moving on

As per the above, Scope's other article this week is a worrying look at what younger people - Generation Y, Millennials, and those yet to be born - can expect from the socioeconomy throughout their lifetimes.

It highlights how an ageing population means that a significantly lower proportion of the population being of working age means that the tax input required, per worker, becomes higher (assuming no significant changes in income from other taxes).

If the economy and wages grow at a healthy pace this could be feasible. However, with economies spluttering rather than soaring, and robotics and AI starting to replace employees and possibly shrivel the labour market, this is just not the case.

This also makes Universal Basic Income appear less feasible, as UBI puts a strain on money raised from tax.

Nevertheless, it also makes an imaginative solution like UBI all the more necessary.

The exchangeability between cash, labour, and goods and services underpins the private sector - in particular, the way by which individual citizens can make a living through work. This has had a huge hand in enabling society to function but, if the need for labour shrinks dramatically, that dynamic could crumble - and, all the while, we still have an ageing population and, therefore, ballooning demand for welfare, and also health and social care.

One does not need to be a fan of UBI to see the need for change. As Mr Orpo, the Finnish Finance Minister, said: "Working life has changed through globalisation, automation. We have to reform our society in order to activate people to reach a higher employment rate and to save the welfare state. This is what I call Nordic welfare model 2.0."

He may not be an instinctive fan of UBI, but plenty of people are – or, at least, see the potential necessity of schemes like this, including entrepreneurs like Elon Musk and Sir Richard Branson.

It won’t be easy, however, and it is worth keeping costs in mind because, obviously, they are enormous.

The UK population is around 65 million people. Just under 20% of those are under 16s, i.e. those below working age. As a rough assumption, if we wanted to provide a UBI to everyone aged 16 and over, that means catering for over 52 million people.

With a yearly UBI of £5,000, that means a cost of more than £260bn. That is not enough to live in; it could make a huge difference to people in low-paying work, but for those without employment, either through disability or who just don’t have a job, it’s not enough to live on.

However, the entire annual UK tax take right now is around £770bn, and the amount we spend on social security is around £252bn. A move to £5,000 UBI would swallow the latter wholesale, but cash would still need to be found to provide welfare for the disabled and the out of work, never mind the state pension (and, remember, that ageing population).

A lower UBI alongside a robust benefits system could help alleviate poverty and also provide some stimulation for the private sector; a high UBI has obvious benefits but would need creative financing (not a simple task).

However, the socioeconomic trends are clear. Barring some unforeseen economic and wages bonanza, something creative needs to be done. Civil society needs to see what is coming. The canary in the coalmine is dead.

The third sector needs to anticipate these changes – and this means every single social enterprise and charity, because all of their work will be affected in the next couple of decades.

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