Universal basic income: the pros and cons

Universal basic income could be life-changing for many. But how does it work? Money for nothing comes with both advantages and disadvantages.

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Enthusiasm for a universal basic income (UBI) has renewed since the pandemic. With UBI, all citizens would receive a guaranteed minimum income. So, what are the pros and cons of this policy?

What is universal basic income?

With UBI the state pays a basic amount to all individuals, regardless of their own wealth and circumstances. The payment should be unconditional. ‘Universal’ means that Richard Branson would get the same amount as a office cleaner. 

Citizens can use the payment for anything. An extra monthly income could help them to survive in lean times and avoid debt. If the money is surplus, it makes sense to save as well as spend. Or take the opportunity to invest.

Many countries have experimented with various forms of a guaranteed minimum income. There is soon to be a pilot of UBI in Wales.

This type of income is not a handout, but an entitlement.

One of the leading advocates for universal basic income, Guy Standing, explains: “A basic income would be partial compensation for loss of the commons, which belong to all of us equally, but which have been appropriated by privileged elites and corporations to generate private wealth.”

Critics of UBI are concerned about individuals becoming dependent on the state for income, particularly if the payment is insufficient.

Good or bad, UBI would have a transformative effect in three main areas. Let’s take a look at the pros and cons of UBI.

1. Universal basic income and work

Would UBI have a positive influence on employment?


  • UBI protects against the effects of jobs disappearing due to technological advances.  
  • Workers are in less danger of exploitation because they can refuse to work for very low pay.
  • An intentional break from work would be possible, providing the financial space to care for a relative or children.
  • Lifelong learning is supported, allowing people from all backgrounds to study, and gain experience.


  • If a universal basic income gives people the opportunity to avoid work, there may be insufficient incentives to fill the jobs that are still required.
  • As with tax credits, corporations could use UBI as an excuse to pay lower wages.

2. Benefits or basic income?

Can UBI replace benefits?


  • The current benefits system is partly means-tested and complicated. Universal basic income could replace some or all benefits. This would cut down on bureaucracy.
  • Receiving certain benefits still has a stigma attached. If all citizens are entitled to receive the same, it would be difficult for people to complain about those less fortunate receiving financial support.


  • Reducing bureaucracy saves money, but the overall cost of universal basic income is likely to be much higher than the existing benefits bill.
  • Those below the poverty line may not be better off. Universal basic income could replace means-tested benefits that are more generous. There are concerns that poverty would increase.

3. Universal basic income and the economy

Can UBI boost the economy?


  • Some proponents of universal basic income believe that it would have a positive effect on the economy. A financial safety net might give people the confidence to start a business. 
  • Seasonal workers, freelancers and the self-employed would be able to continue supporting more precarious businesses, for example, those in the arts.
  • There would be more cash circulating as a stimulus.


  • More money to spend could lead to inflation. Not everyone would actually have increased disposable income, and some would be hit hard by increased prices.
  • Without rent controls, landlords could increase rent to an extent that might swallow up most of the monthly allowance.

Is universal basic income fair?

Unconditional payments are an acknowledgement that everyone has the right to share in a wealthy economy. All contributions to society are rewarded equally, whether made by a CEO or a carer. Those who don’t need the money might donate it to charity.

With the same money going to all, there is a danger that state education and health could be underfunded. People on a low income may lose out on services that others are able to pay for. This is why some commentators prefer the concept of universal basic services instead, which could extend to free shelter, food and transport.

What should universal basic income be used for?

For those on a low income, UBI can provide a safety net and an opportunity to create an emergency fund.

For anyone fortunate enough to be part of the forthcoming UBI pilot in Wales, putting the money in a savings account would be a very wise move. As with any guaranteed minimum income, it might not be permanent.