Universal Basic Income (UBI) and AI: A solution or retreat into state dependency?
Conversation around artificial intelligence (AI) and its impact on employment has taken an interesting turn. Jason Stockwood, the government's investment minister, recently suggested that a universal basic income (UBI) might be necessary to protect workers whose jobs are displaced by AI. Speaking to the Financial Times, he acknowledged the "bumpy" transition ahead and hinted at the need for "some sort of concessionary arrangement with jobs that go immediately,” due to AI.
While UBI isn't official government policy, the fact that it's being discussed at a ministerial level does signal growing concern about AI’s impact on the workforce. And recent findings from Morgan Stanley underline why: the UK is losing more jobs to AI than the technology is creating.
But is UBI really the answer? As someone who approaches AI with cautious pragmatism (to say the least) rather than blind enthusiasm, I believe we need to examine this proposal very carefully.
Will it happen?
Well, the short answer is probably, no. Despite growing chatter, UBI lacks support from the main political parties. More critically, it would likely prove unpopular with voters (especially for business leaders) as it would require higher taxes and/or levies to placed on businesses. While people might support the idea in principle, particularly when worried about their own job security, the hard question of affordability will no doubt dampen enthusiasm.
What’s the right approach?
Bluntly, we simply don't know enough yet to commit to such an expensive intervention. UBI is likely to carry a hefty price tag, and we're still in the early stages of understanding AI's true impact on the labour market.
But I think the real key to navigating the AI revolution isn't creating safety nets. Rather it's fostering adaptability within the workforce. We should be encouraging individuals to develop new skills and workplaces to innovate. As always, the argument over human vs tech is front of mind here – and my approach will always focus on the need for humans to intelligently use tech to their advantage, rather than being passively displaced by it.
In my opinion, investment needs to focus on reskilling programmes, on education that prepares people for an evolving workplace, and on creating pathways into emerging roles.
Interestingly, AI might actually help us address some persistent labour shortages. For instance, it might free people up to fill those harder to recruit positions in sectors like social care, which desperately need workers. These caring professions are among those least likely to be replaced by AI, yet they remain chronically understaffed and undervalued. UBI doesn't solve this puzzle sadly.
The ripple effects on workers and employers
If UBI were introduced, the implications would be far reaching – yet not all of them would be positive. Here’s what might happen:
For the economy: Funding UBI would require significant revenue. We would likely see higher income taxes, possible wealth taxes and VAT increases. This could make the UK considerably less attractive for innovation and business growth. At a time when we're trying to position ourselves as a hub for technology and entrepreneurship, this seems counterproductive.
For individuals: People struggling with mental health or wellbeing might find breathing room. Young people entering an uncertain job market might welcome the security, as might older workers facing age discrimination.
For employers: The pressure would mount from multiple directions. With a guaranteed income floor, wage pressure at the lower end of the market could intensify. Tax increases to fund UBI might further squeeze margins. We've already seen a post-COVID shift in employee attitudes toward work-life balance and entitlements. Adding UBI to this mix could fundamentally alter the employer employee dynamic. Employers would also need to significantly increase their reskilling budgets and rethink role design entirely.
I suppose the question thus becomes: are we solving a problem here or creating a new one?
Dampening ambition?
Higher taxes and a more complex labour market aside, I think that what worries me the most here is the impact this might have on ambition and drive. While I recognise that not everyone is motivated solely by financial necessity, there's a risk that guaranteed income removes important incentives. UBI could dampen the ambition that drives both individual success and economic growth.
I also worry that this might create a generation dependent on state support rather than empowered by their own capabilities. This isn't about being unsympathetic to those who are struggling – it’s actually quite the opposite. This is about believing in people's capacity to adapt, learn, and thrive when given the right tools and support.
The path forward
Rather than jumping to UBI as a solution, I would suggest we focus our resources on adaptation and reskilling.
We need to invest in education and training. Support workers in transitioning to new roles. Help businesses redesign work to complement AI, rather than simply be replaced by it. Create incentives for employers to retain and reskill staff rather than default to automation.
Yes, AI will transform work. Let’s be honest, it already has. Some jobs will disappear. But history shows us that technological revolutions also create opportunities we haven't yet imagined. Our role isn't to cushion the blow with universal payments, it's to ensure people are equipped to seize those new opportunities.
AI, when managed carefully, can be a powerful tool. But the answer to its challenges isn't to retreat into state dependency. It's to pivot with skill, adaptability, and ambition.