Basic Income Could Virtually Eliminate Poverty in the UK at the Cost of 3.4% of the GDP, Says New Research from Georgetown

Jul 27, 2020

A new study by QF partner Georgetown University in Qatar (GU-Q), has found that the cost of a universal basic income (UBI) program large enough to virtually eliminate poverty in the United Kingdom would amount to just £67 billion per year or 3.4% of gross domestic product (GDP).

The study, coauthored by Karl Widerquist, associate professor at Georgetown University in Qatar and independent researcher Georg Arndt, is titled “The Cost of Basic Income in the United Kingdom: A Microsimulation Analysis.” 

The study determined the total cost of implementing a UBI scheme whereby each adult is given £7,706 and each child £3,853 per year, paying close attention to the tax implications of the program. 

“The cost of basic income has been exaggerated because some authors focus on the total or gross cost, which is simply the size of the UBI times the population,” explained Widerquist. “This ignores the fact that, for most people, the additional taxes they pay cancel out the basic income they receive. So, the net cost for the net contributors is actually much lower—nearly one-third lower.”

Widerquist and Arndt’s research found that 70% of Britons would financially benefit from this program. Therefore, Arndt explains, “This scheme would be an effective wage subsidy (or tax cut) for tens of millions of working class families.” 

The number of people living below the current official poverty line would drop from 16% to 4%. Poverty among children and the elderly would all but disappear. Those remaining in poverty under the scheme, Widerquist and Arndt find, would be much closer to the poverty line than they are now. Thus, Widerquist says that this scheme would “virtually eliminate poverty in the United Kingdom.”

The study notes that the proposed UBI scheme represents only an 8.7% increase in total government spending, and that it could be entirely funded by diverting two thirds of corporate tax subsidies, leaving approximately £26 billion available for corporate subsidies.  

With the world facing a global recession due to the coronavirus pandemic, UBI has become the focus of increased interest.  This new study demonstrates that it is a viable recovery strategy applicable to the UK and other similar sized countries.

Widerquist is a professor of political philosophy at Georgetown University in Qatar. He holds a doctorate in political theory from Oxford University and a doctorate in economics from the City University of New York. He has researched UBI for more than 20 years. He is the author, coauthor, or editor of nine books including “Basic Income Experiments: The Devil’s in the Caveats” and “Independence, Propertylessness, and Basic Income: A Theory of Freedom as the Power to say No.” 

Arndt is an independent researcher with a background in economics and operations management. His research interests include the financial viability of universal basic income and the dynamics of social coordination.

About Georgetown University in Qatar

Established in 1789 in Washington, DC, Georgetown University is one of the world’s leading academic and research institutions. Georgetown University in Qatar (GU-Q), founded in 2005 in partnership with Qatar Foundation, seeks to build upon the world-class reputation of the university through education, research, and service. Inspired by the university’s mission of promoting intellectual, ethical, and spiritual understanding, GU-Q aims to advance knowledge and provide students and the community with a holistic educational experience that produces global citizens committed to the service of humankind.

Located in Doha’s Education City, GU-Q offers the same internationally recognized Bachelor of Science in Foreign Service degree as Georgetown’s Capitol Campus in Washington, DC. This unique, interdisciplinary program prepares students to tackle the most important and pressing global issues by helping them develop critical thinking, analytic, and communication skills within an international context. GU-Q alumni work in leading local and international organizations across industries ranging from finance to energy, education, and media. The Qatar campus also serves as a residency and delivery location for the Executive Master’s in Emergency and Disaster Management along with the Executive Master’s in Leadership.

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