Universal basic income – Pros and cons

A citizen’s income, basic wage or Universal basic Income (UBI) is a concept of paying everyone in society a universal benefit – regardless of income and circumstances.

The main advantage is that ensures a minimum standard of income for everyone – without any costs and bureaucracy of means-tested benefits. Also, it avoids the disincentive to work that can occur with means-tested benefits. In times of crisis, a UBI can also provide a social safety net with minimum admin costs.

The disadvantage is that is an expensive undertaking to pay everyone in society a universal benefit and there is a concern it may encourage some to live on benefits without contributing anything useful to society.


A ‘citizen’s income’ or universal basic income would primarily be paid for out of general taxation, though in some models it could involve redistributing profits from publicly owned industries.

Advantages of citizen’s income

  1. Supports unemployed workers and business in a time of crisis. In response to Coronavirus with economies shutting down. A universal basic income is optimal response for dealing with widespread unemployment and fall in income.
  2. Means-tested benefits are becoming increasingly complex and cumbersome. There are costs – both financial and time – for people to apply and receive benefits. Efficiency savings from abolishing the bureaucracy behind means-tested benefits would enable more to be spent on actual benefits.
  3. Increasingly flexible labour markets make conventional benefits more limited. Modern labour markets have seen a rise in self-employment, flexible hours and zero-hour contracts. This means that people can end up receiving very low income in certain months, but not be eligible for any work-related or unemployment benefits because they are not classed as unemployed or normal employment.
  4. Incentives to work. A problem with conventional means-tested benefits is that it can create a disincentive to work longer hours or get a better-paid job because the marginal gain in income is relatively low (high marginal tax rate). This is a form of the poverty trap. A citizen’s income ensures any extra income from work is kept and not lost through withdrawn means-tested benefits.
  5. Prevents people from slipping through gaps. The increasingly complex benefits system requires people to know what benefits they are entitled to and how to apply. There may be time delays in receiving benefits. Some people may become homeless because of delays in receiving benefits. A universal citizens’ income will prevent these gaps and help to reduce temporary cash flow crisis which could have adverse long-term effects.
  6. Supports people who fulfil socially beneficial tasks. A universal citizens income would offer support to mothers bring up children or people acting as care assistants.
  7. Health benefits. A universal basic income could have a positive impact on reducing medical costs associated with types of poverty and homelessness, e.g. high blood pressure, type II diabetes.
  8. Supports entrepreneurship. Somebody who wishes to work on new business ideas could use a citizen’s income to support their initiative. Conventional benefits would not be given to people working on self-employment startups. Alternatively, it may give people more time to find the most suitable long-term job – rather than rushing into the first job which comes along. This could increase the long-term efficiency of the labour market.
  9. Reduces need for the governments controversial current tests and sanctions related to evidence of work-search activity.

Arguments against Universal income

  • Money for nothing. The concern about a citizens income is that people will get money without doing anything. It may encourage people to be lazy and live off benefits.
  • Disincentive to work. Some fear that if universal income is given, some will work less. Studies are mixed, but one study from Canada found that as universal credit is relatively low, the main groups who worked less were young mothers and teenagers in education.
  • Less flexible labour markets. The universal credit may mean part-time workers, such as working mothers and students don’t need to supplement income by working part-time, reducing the flow of temporary part-time workers. Others argue this is not a problem as we should try to avoid a part-time, zero-hour contract labour market.
  • Cost. The cost of a universal basic income will have to be met through higher taxes. A universal income will mean some benefits can be cut (e.g. unemployment and income support) But, now everyone will gain basic income – regardless of whether they are poor. This will lead to higher taxes to be able to pay for the benefits. The problem with higher income taxes is that it could lead to disincentives to work.

Example – Citizen’s Income Trust

Under the proposals of Citizen’s Trust income, benefits should be distributed according to age.
0-24 year olds would receive £56.25 per week, 25-64 year olds would receive £71 per week and those 65 and over would receive £142.70 per week.

The citizen’s income would replace all benefits except disability and housing benefit. The total cost for 2012/13 would be £276n – close to the existing annual welfare budget.

It would replace child benefit, income support, JSA, NI and state pensions. It also estimates savings of £10bn from administration of pensions and tax credits.

International examples

  • Finland. Finland’s government is planning to give every one of its citizens a basic income of 800 Euros (£576) tax free and abolish benefits altogether.
  • Netherlands – Utrecht and 19  other cities in the Netherlands are trialling a basic income.
  • Brazil – Bolsa Familia


The interesting thing about a citizen’s income is that it gains support from both the left and right. The left supports its aim to create a more egalitarian society. There is support from the right who dislike the disincentives and bureaucracy of means tested benefits.

From a personal view, I like it because my lodger is on a zero-hour contract – he often doesn’t have money to pay rent, but he is not eligible for any benefits. A citizen’s income would be good to provide a minimum income guarantee.


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5 thoughts on “Universal basic income – Pros and cons”

  1. “Supports people who fulfil socially beneficial tasks. A universal citizens income would offer support to mothers bring up children or people acting as care assistants.”

    Or indeed fathers. Gender-nitpicking aside, I like this point. It counters the “without contributing anything useful to society” objection.

  2. It would certainly help people like myself who are disabled and find it very difficult to get work. At the moment there are so many restrictions placed on me, and numerous unknown variables, that the prospect of being able to take on temporary or zero hours work would really be a help. It’s not just about the money though, for me it’s more about dignity, self-reliance, and the chance to contribute to society…and of course, having a place in the world, and being able to have a yesterday and tomorrow, rather than just existing in the present.

  3. This would not lead to people being lazy. Many studies show that being considered to be on benefits causes stress and depression that can prevent them being able to effectively find new employment.

    This only gets worse when you have to deal with the job centre plus who’s “Advisors” resort to threats sanctioning and bullying to force you to apply for jobs that are not sutible for you waisting your time and that of the employer.

    This system would prevent that meaning you can find the best job for you and employers.

    You also have to take into account that the number of actual jobs is falling. Many retail. Jobs have been lost due to automated systems and self service tills.

    This means that many of the available jobs are those which are for high skilled worker. The problem then comes down to training. If you are on benefits then you often can not afford to put yourself through training to. Improve yourself. The job center plus have gone as far as to sanction people who have not spent enough time Job searching even if they know that you have undertaken training that they themselves have not arranged for you.

    Having the freedom to improve your prospects without fear of sanctioning can only benefit people.

    As for it discouraging people from taking on part time work I call foul on that as well. Many people don’t apply for short term contracts because coming off of benefits and trying to get back on then à few months later again puts you in the firing line for you to be sanctioned. The job center plus will sanction you if you lose your job within a certain period of time. You would hope this only applies if it is your fault. This isn’t true. If you have been subject to any sort of trial. Or probation period and you are deemed unsuitable your contract can be ended. This doesn’t mean you have been fired for having done anything wrong just that you have been deemed unsuitable for the position. This technically doesn’t class as being fired and yet you can willl be sanctioned.

    I also noticed that there is worry over criminals getting paid. There is an easy way to remedy that. Anyone in prison has this income stopped as their needs are provided by the prison system. If you are not in prison you are a free citizen and you are entitled to the same benefits and income as anyone else. It may even prevent people turning to crime as alot of crime is poverty driven. End benefits driven poverty and you can reduce criminal activity

  4. For me the problem is, if a universal basic income was brought in, you can guarantee working people wouldn’t be included, or our basic income qpuld he our net pay before deductions so employers would continue to pay say 1600 and we’d see say 1000 whilst the unemployed person would get 1600. working people would struggle even more whilst non working people would live the lives working people are trying to earn. I swear I hate this country, it does nothing but screw the working people at every possible juncture, and then tries to make us feel bad for being angry about being screwed because there are lazy people who are worse off (there are loads of bone idle losers scrounging off the working peoples taxes in this country, and whilst i acknowledge there are loads of genuine people who need benefits, for every 1 person that needs them there’s probably 2 that are just lazy scroungers who can work but choose not to) if this incentive of a universal basic income actually drove my take home to the 1600 mark and I didnt get screwed, them I’d support it. of course the other thing none of us are considering is the corporate greed of the world. if everyone suddenly had 1600 a month tomorrow, everything is going up in price to ensure nobody can afford to live. The rich need people to be poor so they can have more than the poor. the world has finate resources which means there is always going to be someone going hungry and unfortunately whilst someone is going hungry there’s always going to be others that are binning a years worth of food leftovers after a weekend feast. The truth is the only way to tackle poverty, is to murder 1/2 – 2/3 of the world so that there is then enough to go around d for everyone. I dont see that happening anytime soon, and if it does I’ll be one of the murdered people so I won’t benefit from it anyway.

  5. it’s literally ‘universal’ meaning everyone would get the same, regardless of earning. tax rate on earnings would go up but probably not by as much as the UBI.

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