Poor worse off under Labour’s benefit plan

LABOUR’S plan to pay a ‘universal basic income’ to every citizen would leave the poor worse off, a report warns today.

In a damning verdict, the Centre for Social Justice (CSJ) warns that the prohibitive cost of the radical scheme would mean payments would have to be set far lower than the amount many receive in benefits.

The idea of a universal basic income has been likened to putting every adult in the country on welfare.

The proposal, which has been fashionable in Left-wing circles for years, would involve the State making a monthly payment to every citizen, regardless of whether they are in work or not. Supporters claim it would cut poverty and end the stigma attached to means-tested benefits. They say it may be needed if robot technology leads to millions being put out of work.

But the CSJ today warns no government would be able to afford to pay a basic income of more than £6,200 a year or just over £500 a month. This could cost about £400billion a year. The report adds this is less than half the £16,750 a year in universal credit paid to the average unemployed parent with two children. Working parents on low incomes would also lose out, with universal credit typically worth £10,000 to a single parent-of-two in work.

But at the 2015 election the Greens dropped a manifesto pledge for a minimum payment of £72 a week – or £3,744 a year – because of the ruinous cost which was estimated at £280billion a year.

The CSJ study warned of the danger of bankrupting the country. It said a payment of £20,000 a year to every adult would leave most families on benefits better off, but would cost the taxpayer £1trillion – more than the Government’s total budget. Paying £16,000 would cost the equivalent of 83 per cent of the overall budget.

The report says: ‘Universal basic income would not be an effective means of tackling poverty. It is unaffordable, ill-equipped to deal with people facing complex problems, could provide a massive disincentive for people to find work and would be no more generous than the existing universal credit programme.’

Conversely, the Government’s controversial flagship benefits cap is ‘working’, ministers claimed yesterday, as figures showed 50,000 families whose benefits were capped have now found work.