A report published this month proposes that all UK citizens below the age of 55 should be given £10,000 as a universal basic income (UBI).
The report by the Royal Society for the encouragement of Arts, Manufacturers and Commerce (RSA) suggests a £5,000 dividend per year for up to two years, taken at any point before age 55.
According to the RSA,, this payment is intended to cushion the blow that is anticipated to be felt by many workers due to automation sometime during the 2020s. The RSA says:
"While we do not predict that automation will lead to mass job losses, it seems inevitable that the labour market will be reconfigured and require many to adapt."
But how will this payment be funded? The answer is through either a "modest increase on the taxes of the wealthiest in our society" or through increases in corporations tax, with the aim of constructing a Norway style sovereign wealth fund.
The scheme would cost £14.5 billion per year, with some of the cost being offset by the ending of Child Benefit, Tax Credits and the Jobseeker's Allowance.
Due to the uncertainty around brexit however, any major change in the configuration of the current system will be unlikely in the short term, according to the report.
Finland is one country that is piloting some variation of the UBI idea where a trial is ongoing, paying participants £560 per month. It is expected that 3.6 million people could be affected by automation by the year 2030.
Critics say however, that UBI would cost too much, resulting in higher taxes and also make some unattractive jobs difficult to fill.
There could be big changes due to the disruption of existing systems in the next few years, but having a sound understanding of your current financial situation and putting a plan in place for your future will always be important. Contact Westminster Wealth Management today.
'Universal basic income': proposals to give £10,000 to everyone under 55