Setting the Basic Income

We estimate that, without the changes that require some uplift, the Basic Income (BI) rates would have to have been set at around £5,000 per person per year, plus a £1,750/year single-person supplement, to roughly match those parts of the current welfare system that the BI is replacing.

Our changes to environmental and consumption taxes will result in significant reductions in road-users' costs, but increases in the costs of domestic energy by (we estimate) around £1,000/year for the average household. We have therefore added £500/year to the BI, and £500/year to the single-person supplement, so that both single- and multiple-adult households can afford the additional domestic energy costs and (importantly) will have the means and the incentive to pay for energy-efficiency investments.

We have allowed £100/year from each child's BI towards additional energy costs, to account for the higher energy costs of houses for larger families. A uniform level of BI (important to keep the administration costs down and to minimize disincentives) is maintained by increasing the share of each child's BI that will go towards education and care costs by £400/year, leaving £100/year of this part of the uplift to pay for additional energy costs.

We have proposed that everyone should pay the first £100/year of their primary healthcare costs, to start to encourage personal provision for healthcare requirements and to incentivise and reward healthy behaviour. To ensure that no one is disadvantaged by this proposal, we have increased the level of the Basic Income by another £100/year to cover these costs.

That gives us a total of £5,000 for initial parity, plus £500 for additional energy costs, plus £100 for additional healthcare costs, or £5,600 in total for the Basic Income. The single-person supplement is calculated as £1,750 for initial parity, plus £500 for additional energy costs, or £2,250 in total.

The standard education fee (£3,900/year), proposed under our education policy, is set at a level that leaves the residual of a child's Basic Income (£1,500/year*) roughly balancing the level of support currently provided by Child Benefit and other family benefits. There is no need to increase the Basic Income to allow for this cost.

* Subtracting the £3,900 education fee, £100 for energy and £100 for primary healthcare from the £5,600 BI.