The Cost of Basic Income in the United Kingdom: A Microsimulation Analysis
- Georgetown University-Qatar, Qatar
- Independent Scholar
Cite this article
as: K. Widerquist, G. Arndt; 2023; The Cost of Basic Income in the United Kingdom: A Microsimulation Analysis; International Journal of Microsimulation; 16(3); 1-18.
doi: 10.34196/ijm.00286
Tables
Table 1
UBI, poverty line, and break-even points for different household compositions
| Family Composition | UBI | Poverty Line | Break-even point |
|---|---|---|---|
| Single Individual | 8,040 | 10,774 | 16,081 |
| 1 Adult, 1 Child | 12,061 | 13,990 | 24,121 |
| Couple | 16,081 | 16,081 | 32,162 |
| Average Family (1.88 adults, 0.51 children) | 17,166 | 17,084 | 34,333 |
| 2 Adults, 1 Child | 20,101 | 19,297 | 40,202 |
| 2 Adults, 2 Children | 24,121 | 22,513 | 48,243 |
Table 2
Descriptive Statistics of the UK §
| Total population | 66.8 million | ONS (2021, p1) |
| Share of people aged 65 or older | 19% | ONS (2021, p11) |
| Share of people aged under 16 | 19% | ONS (2021, p11) |
| Total GDP | £2,255 billion* | ONS (2023a) |
| GDP per capita | £33,443 per year† | ONS (2023b) |
| Total Government expenditure | £881 billion (39% of GDP) | HMT (2020, p36) |
| Government spending on social security ‡ | £275 billion (12% of GDP) | HMT (2020, p76) |
| ...of which direct benefit spending | £191 billion (8% of GDP) | DWP (2020, p10) |
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*
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†
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‡
Includes e.g. tax credits in addition to direct benefit spending.
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§
Table 3
List of UK Social Security Programs; programs in italics are retained under UBI scheme
| MTB | Contributory | Non-MTB; Non-Contributory |
|---|---|---|
| Income Support | Job Seeker’s Allowance | Child Benefit |
| Jobseeker’s Allowance | Employment and Support Allowance | Attendance Allowance |
| Employment and Support Allowance (income-based part) | Retirement Pension | Disability Living Allowance |
| Pension Credit | Bereavement Benefit | Personal Independence Payment |
| Housing Benefit, Local Housing Allowance* | Maternity Allowance | Severe Disablement Allowance |
| Council Tax Benefit | Carer’s Allowance | |
| Working Tax Credit | Industrial Injuries Disablement Benefit | |
| Child Tax Credit | Guardian’s Allowance | |
| Social Fund | War Pensions | |
| Universal Credit | Winter Fuel Allowance |
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*
Over the past few years, the UK has sought to consolidate many of its social security programmes, rolling them into Universal Credit. This transition is still ongoing. One component of Universal Credit is Housing Benefits. To accurately estimate the costs of retaining housing benefits, we are treating all eligible households in UKMOD as if they would still receive stand-alone Housing Benefits. While this treatment is not entirely accurate, it should not impact the bottom line in any relevant way, given that the payments for housing under Universal Credit are comparable to the previously stand-alone programme.
Table 4
Final Cost for Different Ways of Integrating UBI into Existing Social Spending
| Cost Item | Cost in billions | Percent of GDP | |
|---|---|---|---|
| 1. | UBI in a vacuum | 139 | 6.2% |
| 2. | Existing benefits system (in TBM) | 207 | 9.2% |
| 3. | Full-replacement UBI (line 1-2) | -68 | -3.0% |
| 4. | Cost of UBI and existing benefits without replacement (1+2) | 346 | 15.4% |
| 5. | “Replaceable” benefits (RB) | 130 | 5.7% |
| 6. | Hold-harmless (HH) benefits and UBI (1-5) | 10 | 0.4% |
| 7. | Total cost of remaining (HH benefits) and UBI (6+2) | 217 | 9.6% |
| 8. | Tax replacement (TR) | 35 | 1.6% |
| 9. | Fully integrated HH benefit system including UBI (7+8) | 252 | 11.2% |
| 10. | Total net cost of integrated UBI (6+8 or 9-2) | 45 | 2.0% |
Table 5
Disposable Income for Households for Different Income Ranges Before and After UBI is introduced
| Market Income range | Number of Households | Disposable Income in Status Quo (including benefits) | Disposable Income with UBI (including benefits) | Difference | |
|---|---|---|---|---|---|
| 0 | 5,000 | 353,387 | 3,074 | 11,750 | 8,677 |
| 5,001 | 10,000 | 1,534,717 | 8,102 | 11,871 | 3,769 |
| 10,001 | 15,000 | 2,938,705 | 12,778 | 15,221 | 2,442 |
| 15,001 | 20,000 | 3,486,679 | 17,513 | 19,883 | 2,370 |
| 20,001 | 25,000 | 3,277,653 | 22,400 | 24,976 | 2,577 |
| 25,001 | 30,000 | 2,828,917 | 27,365 | 30,769 | 3,404 |
| 30,001 | 35,000 | 2,525,041 | 32,419 | 35,944 | 3,525 |
| 35,001 | 40,000 | 2,176,337 | 37,439 | 41,146 | 3,706 |
Data and code availability
The model (UKMOD) is open-source; the data (the UK’s Family Resource Survey) is available for scientific research only upon registration.
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