A presentation given by Maureen O'Reilly to the NICVA Centre for Economic Empowerment (CEE) Basic Income Masterclass on 16 May 2014. See http://www.nicva.org/news/basic-income-masterclass for more.

1. Presentation to NICVA Centre for Economic
Empowerment Masterclass
Maureen O’Reilly
Independent Economist
16th May 2014

2. ‘I am now convinced that the simplest approach will prove to be the most effective
— the solution to poverty is to abolish it directly by a now widely discussed
measure: the guaranteed income.’
Martin Luther King, 1967
‘A main objective of a Citizen’s Income is to provide a reliable income from some
source other than earned income (thus making the rate of pay less important
relative to other sources of income) and to do so in a way which makes the
personal distribution of the total national income more egalitarian’.
James Meade, 1995
‘I fundamentally disagree with those who think that people must be “forced” to
work, or that government should “guarantee” a job. In my view breaking the link
between paid work and survival would be a good thing.’
Frances Coppola, 2013
Advocates of Basic Income!!

3. A Fairer and More Equitable Society!
 Guarantee fundamental basic human rights
 Reduce poverty, particularly enduring and intergenerational
 Knock on benefits include reduced homelessness, crime, health
problems etc. (with associated cost savings)
 Place a value on non-remunerated and caring activities including
bringing up children, caring for the elderly/sick, volunteering or
investing time in education
 Redistribute wealth leading to greater spending power in the
economy (and more taxes)

4. Optimising labour market participation,
choices and conditions!
 Allow people to make optimal rather than sub-optimal decisions e.g.
staying on in education, investing in skills
 Increase freedom of choice in the labour market e.g. move job, start a
business, take a risk, innovate
 Offer greater flexibility during changes/downturns in the economic
cycle e.g. zero hours contracts, seasonally employed
 Lead to a fairer labour market e.g. improved employment
practices/working conditions
 Along with improved productivity (less stress/sickness and increased
motivation)

5. An end to the Benefits System as we
know it!
 Allows individuals to escape the ‘benefits trap’
 Simplifies and reduces the costs of the welfare system
– potentially reducing the size of government
 Makes the system less prone to error/fraud

6. But potential negatives could include ….
 Disincentive to work/ decline in labour force
participation
 Morally objectionable to give people money without a
guarantee that they will contribute to the economy
(free-rider argument)
 Potential to ‘squander’ money on the ‘wrong’ things
e.g. alcohol/drugs with associated health care costs

7. Along with ….
 Political hazard – what happens if a government wants to change
(reduce) it?
 Inflation – increased flow of money would raise spending and
hence prices
 Paying people who don’t need it
 Taking money from people who legitimately earned it!
 Reinforces gender care roles
 Who qualifies? - Difficulty treating immigrants

8. The biggest ‘but’- COST!
 Cost one of the biggest negatives
 Estimate of £7,000 p.a. per person in UK (estimated
£7,500 in NI)
 Estimates in Switzerland outline a cost of one-third of
the countries overall GDP
 But netted off against ….
 Withdrawal of income-contingent benefits
 Administration savings
 Potential for increased taxes (direct and indirect)

9. Case Study 1: Mincome, Canada
 Basic income experiment in Manitoba between 1974 to 1979
(population 10k)
 Would a guaranteed, unconditional annual income cause
disincentive to work and if so how great?
 Initial research highlighted that working hours dropped by
1% for men, 3% for wives, and 5% for unmarried women
 Further research showed that:
 Only new mothers and teenagers worked substantially less
 More teenagers graduated because fewer had to help support
families
 People in work had greater opportunity to choose what they
did
 The area experienced lower levels of hospitalisation/sickness

10. Case Study 2: Namibia
 Pilot project with basic income grant in the village of Omitara
(population of 1,000) between 2008 and 2009
 All residents below the age of 60 years received a Basic Income Grant of
N$100 per person per month, without any conditions being attached.
 Outcomes included:
 Increased community mobilisation
 Reduced poverty/child malnutrition
 Increased economic activity (particularly self-employment)
 Reduction in debt levels
 Increased school participation
 Reduced crime rates
 Reduced dependency by women on men
Although:
 Costs were considered high – 2.2% to 3% of Namibia’s GDP
 There was in-migration of poor people into the area

11. Case Study 3: Supporting Rough
Sleepers in London
 Pilot project aimed at homeless in City of London, 2009
 Unconditional capital grant to 15 long term homeless (£3k but
only £800 uptake)
 Outcomes included:
 The majority of the 15 participants moved into housing and were
able to stay housed
 They emphasized the dignity, control and freedom of choice along
with the personal support, as key to the program’s success
 There were improvements in mental and physical health
 They had begun to make plans for the future e.g. taking courses,
reconnecting with family, addressing substance abuse
 5 people disengaged from the project – they abandoned their
accommodation and found it difficult to deal with money

12. Key Considerations
 What weights to attach to the Pros and Cons
 Balance between ‘social’ and ‘economic’ arguments
 How should the ‘non-quantifiable’ benefits/costs be
valued
 Important link to ‘well-being’

13. From an NI perspective ….
 Strong poverty context – household incomes and
poverty rates have deteriorated
 Higher economic inactivity and joblessness
 Significant fiscal deficit - £9.6bn or £5,311 per head
 If NI people were given cash and told ‘solve your own
problems’ what might the reaction be!!!!