Universal Basic Income is affordable and feasible: evidence from UK economic microsimulation modelling1

Abstract

Critics of Universal Basic Income (UBI) have claimed that it would be either unaffordable or inadequate. This discussion paper tests this claim by examining the distributional impacts of three UBI schemes broadly designed to provide pathways to attainment of the Minimum Income Standard (MIS). We use microsimulation of data from the Family Resources Survey to outline the static distributional impacts and costs of the schemes. Our key finding is that even the fiscally neutral starter scheme would reduce child poverty to the lowest level achieved since 1961 and achieve more than the anti-poverty interventions of the New Labour Governments from 2000. The more generous schemes would make further inroads into the UK’s high levels of poverty and inequality, but at greater cost. We conclude by assessing fiscal strategies to reduce the up-front deficit of higher schemes, providing a more positive assessment of affordability and impact than critics have assumed.