1. Consumption, Savings and Wealth Dynamic microsimulation
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The Cost of Basic Income in the United Kingdom: A Microsimulation Analysis

  1. Karl Widerquist  Is a corresponding author
  2. Georg Arndt
  1. Georgetown University-Qatar, Qatar
  2. Independent Scholar
Research article
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
5 tables


Table 1
UBI, poverty line, and break-even points for different household compositions
Family CompositionUBIPoverty LineBreak-even point
Single Individual8,04010,77416,081
1 Adult, 1 Child12,06113,99024,121
Average Family (1.88 adults, 0.51 children)17,16617,08434,333
2 Adults, 1 Child20,10119,29740,202
2 Adults, 2 Children24,12122,51348,243
Table 2
Descriptive Statistics of the UK §
Total population66.8 millionONS (2021, p1)
Share of people aged 65 or older19%ONS (2021, p11)
Share of people aged under 1619%ONS (2021, p11)
Total GDP£2,255 billion*ONS (2023a)
GDP per capita£33,443 per yearONS (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)
  1. *
  2. Includes e.g. tax credits in addition to direct benefit spending.

  3. §
Table 3
List of UK Social Security Programs; programs in italics are retained under UBI scheme
MTBContributoryNon-MTB; Non-Contributory
Income SupportJob Seeker’s AllowanceChild Benefit
Jobseeker’s AllowanceEmployment and Support AllowanceAttendance Allowance
Employment and Support Allowance (income-based part)Retirement PensionDisability Living Allowance
Pension CreditBereavement BenefitPersonal Independence Payment
Housing Benefit, Local Housing Allowance*Maternity AllowanceSevere Disablement Allowance
Council Tax BenefitCarer’s Allowance
Working Tax CreditIndustrial Injuries Disablement Benefit
Child Tax CreditGuardian’s Allowance
Social FundWar Pensions
Universal CreditWinter Fuel Allowance
  1. *

    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 ItemCost in billionsPercent of GDP
1.UBI in a vacuum1396.2%
2.Existing benefits system (in TBM)2079.2%
3.Full-replacement UBI (line 1-2)-68-3.0%
4.Cost of UBI and existing benefits without replacement (1+2)34615.4%
5.“Replaceable” benefits (RB)1305.7%
6.Hold-harmless (HH) benefits and UBI (1-5)100.4%
7.Total cost of remaining (HH benefits) and UBI (6+2)2179.6%
8.Tax replacement (TR)351.6%
9.Fully integrated HH benefit system including UBI (7+8)25211.2%
10.Total net cost of integrated UBI (6+8 or 9-2)452.0%
Table 5
Disposable Income for Households for Different Income Ranges Before and After UBI is introduced
Market Income rangeNumber of HouseholdsDisposable Income in Status Quo (including benefits)Disposable Income with UBI (including benefits)Difference

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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