How the universal basic income scheme could save us when robots take our jobs

The Labour Party is considering supporting the introduction of a Universal Basic Income (UBI) across the UK. The policy involves the state giving every adult an unconditional cash payment each month, which would be sufficient to live on.

The current, increasingly complex welfare system would be scrapped in place of UBI, reducing bureaucracy and guaranteeing everyone financial security at a time when technology and automation seem to be threatening the existence of vast segments of low-skilled jobs.

That's the theory, at least.

Shadow chancellor John McDonnell said at the launch of a new report on UBI by the left-leaning think tank Compass, which Business Insider attended, that UBI "might be an idea whose time has come."

Initially, the UK would not be able to afford the prohibitive costs of a full UBI, according to the report written by economists Howard Reed and Stewart Lansley.

Instead, it suggests that we begin with a transitional system, where each adult would receive an unconditional £73.10 per week. On its own, this would not be nearly enough to live on, but it is supposed to be the start of a gradual move towards a UBI that would support each adult on its own.

Even this modest UBI would cut child poverty in the UK by 45%, the report says. It would only cost an extra £8 billion per year to introduce, which amounts to roughly 0.01% of total government spending for 2015/2016.

Given that the shadow chancellor of the political party with more members than any other in the UK is seriously considering the scheme, there is a real chance it could happen.

We to spoke to the head of Compass, Neal Lawson, about the reasoning behind giving every adult a free paycheck each month.

Business Insider: Last weekend, Switzerland held a referendum on giving every citizen 2,500SFr (£1,755) every month, unconditionally. The Swiss ultimately voted against the policy, but now we've had the UK's shadow Chancellor expressing serious interest in a Universal Basic Income scheme. Why is UBI so popular right now?

Neal Lawson: Because the current welfare system is a welfare system of the 20th century based on full-time jobs, mostly for men, one job per life. As that has broken down, the welfare system has become more and more complicated and more and more bureaucratic and more and more punitive, and basic income is a way round that - reducing all of the means testing and all of the bureaucracy.

The second reason is that people think this industrial or technical revolution is going to be different from the others. We're going to lose jobs out of it. There won't be an increase in work. Robots will replace manual work and algorithms will replace white collar, professional decision-making. How are people going to have enough money to pay the supermarket bills?

BI: The report by Compass suggests a relatively moderate universal income. Would this increase to something closer to the living wage over time?

NL: Probably more than the living wage eventually. Ideally it ought to be enough for people to live off, as the term suggests, as a basic income to have the basic necessities of life, which is probably more than a living wage. The treasury modelling figures we used came out at around £75 a week, which is not enough for people to live off, but it introduces the principle of an unconditional, unwithdrawable payment for every adult. Then the idea is that over time you begin to build that up. Initially that would be produced from savings through the welfare system, plus some more tax increases to those at the top.

BI: Would a full UBI just demotivate everyone from working?

NL: Where basic income has been trialled in different local areas and different sectors before now, what we found is that people trade up from low-paid work to better-paid work. They have the time to be carers, to be active citizens, to train, to retrain, to learn, to go back to university, and to do a whole range of things.

The underlying assumption of basic income is that people aren't lazy, they don't cheat, they don't want to sit on the sofa and do nothing. They want to live fully and fulfilling lives. The problem with our welfare system at the moment is that it believes the worst in people and it humiliates them through means testing in the process. UBI will liberate people, if you believe the best in people not the worst. There will always be a tiny percentage of people who might abuse it, but we shouldn't build the whole system around those people.

BI: How likely do you think it is that this will become Labour party policy?

NL: I don't know. I mean there are moments in your political life when you have to pinch yourself and one of those was when John McDonnell said he was interested in basic income and said he wanted to come and launch the report. I don't think he's endorsing the idea yet. I think he's interested in it. The Shadow Chancellor is saying he's interested in a very radical idea.

Another MP on the platform is from the right of the party: Jonathan Reynolds. So this is an issue which is partly about the policies of it, but it's also about the moment, the time. People are in food banks, people are relying on charity because there isn't the work-around.