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In recent years, universal basic income (UBI) has moved from the fringes of academic debate to being mooted in mainstream forums as a serious policy proposal. This report addresses the idea's remarkable rise, exploring why it has occurred; takes an objective look at the core issues relating to UBI's desirability, surveying the existing theoretical and empirical literature on UBI's likely effects; assesses its feasibility as a realistic proposal in the UK; and considers various options regarding policy design and implementation strategies. Our approach is to review existing literature and secondary data in combination with our own microsimulation work at the IPR (Martinelli, 2017a; 2017b). The report is structured as follows. Chapter 1 opens by defining UBI and summarising the theoretical and normative arguments made in favour of the policy. The second section of Chapter 1 provides an introduction to UBI as a family of proposals and identifies some closely related policies to UBI. The third section provides an overview of key contemporary debates, and examines the nature of the evidence on which UBI proponents and critics draw to support their arguments. In doing so we propose that our microsimulation work makes some important contributions to policy debates around basic income, in light of the absence of direct ex ante empirical evidence. In Chapter 2, we examine recent developments which suggest that UBI has risen up the policy agenda, and seek to understand why it has recently gained prominence. The first section of Chapter 2 provides an overview of the recent developments that suggest UBI is experiencing a groundswell of popular support. The following sections examine two core (and related) reasons for the increased policy interest: the increasingly apparent flaws and contradictions inherent in the modern welfare state (second section), and ongoing changes in labour market structures – increasing wage polarity, the growth of precarious and insecure employment, and even the spectre of technological unemployment – to which UBI appears to present a solution (third section). We conclude that support for UBI does not rest on the more extreme theses about the forthcoming 'post-work' future but may still be justified in relation to more prosaic arguments. While a diverse range of groups are pressing for the change, policymakers remain rightly unconvinced that UBI is the optimal solution – or even an appropriate solution. The remainder of the report deals with the most important debates. Turning to Chapter 3, we note concerns from opponents across the political spectrum that UBI is unaffordable – an issue we survey in the first section of Chapter 3. The challenge is a complex one, going beyond a simple question of the fiscal resources or tax levels required to fund a UBI; it also relates intimately to the distributional consequences of UBI schemes paid at different levels and varying in terms of their interaction with existing welfare policies, issues we introduce in the second section. In other words, affordability and distributional effects cannot be separated; rather than claiming UBI is unaffordable per se, a more apt characterisation of opposition is that an affordable UBI would be inadequate, and an adequate UBI would be unaffordable. We assess the basis of this claim, looking at microsimulation studies on the fiscal and distributional implications of alternative UBI schemes in the UK. For schemes that aim to replace the myriad means-tested supports ('full schemes'), we show that such schemes either lead to unacceptable household losses (including some disadvantaged groups falling deeper into poverty) or simply cost too much. We compare the implications of such schemes with alternatives which retain the existing array of means-tested benefits ('partial schemes'). We conclude that basic income policy design is subject to a three-way trade-off between the important goals of meeting need, controlling cost, and reducing the negative effects of means-testing; partial schemes are better equipped to ensure acceptable distributional outcomes, but fail to achieve many of UBI's broader goals – including drastic reductions in bureaucratic complexity and the minimisation of poverty and unemployment traps – as effectively as full schemes. The reference to poverty and unemployment traps connects to another core issue in basic income policy debates (which also touches on affordability): the extent to which UBI can be expected to result in an expansion or a contraction of labour supply. Clearly, labour market exodus could render the policy unsustainable by eroding a primary source of funding (payroll taxes). But UBI's labour market effects are highly contested – characterised by theoretical ambiguity and a relative dearth of valid empirical evidence. We examine these issues in the first section of Chapter 4. At issue is the relative strength of causal effects which may pull in different directions depending upon individual and household characteristics and the specifics of the UBI scheme in question. In the second section we consider UBI's expected impact on pay and conditions, and its relationship with other labour market policies. Having reviewed a largely theoretical literature thus far, in the third section of Chapter 4 we examine empirical microsimulation evidence on a number of specific UBI schemes, drawing on evidence from Finland and the UK. We argue that partial schemes (in the sense described above) cannot offer the improvements in work incentives that UBI advocates promise to the same degree as full schemes, but that even for the latter, the majority of people would face reduced financial incentives to work. Finally, Chapter 5 tackles the thorny issues of political feasibility and implementation. In its first section we expound on theories of welfare reform which suggest that any 'real world' UBI scheme would necessarily build on existing policies, institutions and political economy structures. The second section examines the prospects for and barriers to the coalescence of UBI's potential beneficiaries into meaningful constituencies and coalitions of support. In this context, the feasibility of different UBI proposals needs to be considered with reference to prevailing policy trajectories and electoral trends in the UK, as we do in the third section. While we cast doubt on the likelihood of a robust coalition of interests forming around any UBI paid at a substantial level in the UK at the present time, we note a number of possible implementation trajectories which appear relatively feasible under existing conditions.

Among the many concerns about universal basic income (UBI or basic income), two of the most commonly expressed are that it would have undesirable distributional consequences (by failing adequately to compensate the recipients of withdrawn benefits) and that it would erode work incentives (via higher tax levels). This paper addresses these concerns, building on our previous working paper The Fiscal and Distributional Implications of Alternative Universal Basic Income Schemes in the UK in two main ways: • By exploring the distributional consequences in greater depth • By exploring outcomes of UBI schemes in relation to static financial work incentives We examine three schemes, argued to be the most plausible of those modelled in the previous working paper, and pitched at three levels of generosity. These are: • UBI set at the level of the tax saving implied by personal income tax allowance (PITA) • UBI set at the level of existing benefits • UBI set at the level of existing benefits with premiums for individuals determined as disabled or severely disabled This report makes a number of original contributions to the literature. In terms of the distributional consequences of the schemes modelled here, we determine the proportions of households in different income and demographic groups that would expect to gain or lose out financially. The proportions of households gaining and losing from reform is important, as positive distributional effects on aggregate can mask significant losses for some households, including the most vulnerable. Another major contribution is that we analyse the schemes' distributional consequences with respect to the characteristics of disability status and gender at the individual and household levels, going beyond the 'standard' distributional categories presented in existing studies. Our main findings suggest that when we pay for a UBI by withdrawing a large number of benefits and increasing payroll taxes, large numbers of households will inevitably experience significant losses of income. More significantly, despite the generally progressive character of the schemes modelled here, these losses are not concentrated among richer groups; on the contrary, they are proportionally larger for the bottom three income quintiles. While the specific patterns of winners and losers varies with the details of each scheme, when we eliminate the mainstay of means-tested support in line with the UBI payment, women lose out on aggregate compared to men – and disabled people lose out compared to non-disabled people unless additional premiums are paid on top of the uniform UBI. These are important concerns that anyone hoping to design ethically desirable and politically feasible UBI schemes need to address. Turning to our contribution in relation to financial work incentives, we construct indicators of 'participation tax rates' (PTRs) and 'marginal effective tax rates' (METRs) which describe financial incentives to work at all, and financial incentives to progress in work or increase work effort marginally, respectively. We also construct indicators of the proportions of households facing improved, deteriorating or unchanged financial work incentives as a result of the reforms. We find that on average, PTRs and METRs increase as a result of all three illustrative basic income schemes, a consequence of tax increases and the elimination of the personal allowance. However, this does not mean that the schemes modelled here would necessarily have negative consequences with respect to labour market participation. We find that the lower income quintiles, workless households, and households in receipt of at least one means-tested benefit tend to contain larger proportions of households facing improved PTRs. It is highly plausible that the effects of stronger work incentives on particularly sensitive groups may outweigh the more generalised effect of weaker work incentives over the wider population.

Is a social investment strategy compatible with the provision of an unconditional basic income? Prima facie, these two scenarios look like incongruent policy alternatives. While social investment – an influential policy paradigm at the level of the European Union – aims at promoting public services and maximum labour market participation, basic income is paid in cash and has sometimes been presented as the key component of a post-work future. In this article, we explore this apparent incongruence and show that these two visions for welfare reform are not necessarily incompatible. We argue that they may share a number of substantial points of agreement, and indeed may reinforce one another according to a logic of institutional complementarity. In particular, we claim that a partial basic income (i.e., a modest unconditional income guarantee, whose amount would be insufficient if one lives alone) could enhance or complement the key functions of a social-democratic version of the social investment strategy. By doing so, we conclude that the integration of a basic income into a social investment package could contribute to overcoming criticisms of the social investment agenda. At the same time, it could rescue basic income from the numerous critics who see it as an unrealistic policy proposal.

Of all the European welfare states, the UK most clearly represents the liberal regime type - notwithstanding a shift towards 'social investment' under New Labour - as defined by its residual, targeted benefit structure and increasingly punitive activation regime. The idiosyncratic institutional characteristics of the UK welfare state give rise to challenges and opportunities with respect to prospects for the introduction of (some form of) basic income. Despite a large and growing population of 'disaffected' precarious and low-paid workers and widespread dissatisfaction with the increasingly punitive sanctions regime, significant barriers to the emergence of a sufficiently large and coherent constituency of support for basic income remain. Thus, while institutional inertia and political considerations may preclude anything more than marginal changes to the existing system, a number of policy options falling short of a 'full' basic income - but retaining some of its core features - appear relatively feasible.

Of all the European welfare states, the UK most clearly represents the liberal regime type – notwithstanding a shift towards 'social investment' under New Labour – as defined by its residual, targeted benefit structure and increasingly punitive activation regime. The idiosyncratic institutional characteristics of the UK welfare state give rise to challenges and opportunities with respect to prospects for the introduction of (some form of) basic income. Despite a large and growing population of 'disaffected' precarious and low-paid workers and widespread dissatisfaction with the increasingly punitive sanctions regime, significant barriers to the emergence of a sufficiently large and coherent constituency of support for basic income remain. Thus, while institutional inertia and political considerations may preclude anything more than marginal changes to the existing system, a number of policy options falling short of a 'full' basic income – but retaining some of its core features – appear relatively feasible.

The political and economic landscape of UK social security provision has changed significantly since the 2008 financial crisis. This fully revised, restructured and updated 3rd edition of a go-to text book covers all the key policy changes and their implications since the elections of 2010 and 2015. With contributions from leading academics in the field this book critically examines the design, entitlement, delivery and impact of current welfare provision. The first half of the book examines social security across the lifecycle from Child Benefit to retirement pensions. The second half focuses on key issues in policy and practice including new topics such as the realities of life on benefits in an era of austerity, and the pros and cons of Universal Basic Income. • Framework supports teachers and students, encouraging analytical thinking of issues and providing pointers to related sources • Authoritative and evidence-based arguments • Clear section and chapter summaries, overviews, questions for discussion, website resources and a bibliography • Includes tables, charts and text boxes for clarity, interest and appeal This book is suitable for undergraduate and postgraduate students of Social Policy taking modules on Social Security Policy, Poverty and Inequality, Income Support and Welfare Reform, as well as Social Work students and those on other Social Science degree programmes