29th November 2023

At a glance:

To begin our new ‘Basic Income Briefings’ series, we tackle how to go about costing a basic income – and avoid some of the most common errors.

Key points:

  • It is not the gross cost of a basic income that matters, but the net cost. If you want to know how much a basic income will cost, it is not enough to simply multiply the number of citizens by a basic income payment level.
  • The payment levels in basic income proposals vary. Some propose starting with smaller payments that get closer to the Minimum Income Standard over time.
  • Lansley and Reed’s starter scheme is an example of a basic income policy that is cost-neutral, achieved at no additional cost to the state, by means of tax and benefit reforms.
  • Modelling shows that even more modest basic income schemes can have very significant impacts on poverty, dismantling the idea that basic income is either too big to fund, or too small to matter.
  • Moving to a larger basic income may depend on other funding sources, such as new taxes or building a Citizens’ Wealth Fund. A larger basic income might also ‘pay for itself’ to some degree, due to the savings made by improving societal health and well-being.

Authors

David Frayne

Cleo Goodman

Acknowledgements:

The authors wish to thank Stewart Lansley for his helpful comments. David would also like to thank the University of Salford, whose fellowship funded his time to work on this briefing.