Labour could introduce universal basic income to replace means-testing benefits

Labour’s next manifesto could include radical plans for a universal basic income (UBI), John McDonnell said.

The shadow chancellor said the policy, which replaces means-tested benefits with a flat rate paid to all citizens, was an idea that “a lot of people are pressing for”.

Supporters of UBI claim it would reduce the bureaucracy involved in means-testing benefits and could also help address future challenges as jobs are replaced by automation and artificial intelligence.

But critics argue it involves giving taxpayers’ money to wealthy individuals who do not need it rather than focusing on those who require support.

Mr McDonnell (pictured) told the Independent he had recently discussed the idea with former Labour leader Ed Miliband, who was “really keen” on getting a pilot of the scheme in the next manifesto.

Asked if a pilot scheme could feature in Labour’s plans at the next election, Mr McDonnell said: “It’s one of those things I think we can get into the next manifesto and see, it’s worth a try.

“There have been pilots elsewhere. I’m trying to wait for the feedback.”

A working group examining the feasibility of a scheme is being led by Mr McDonnell’s adviser Guy Standing.

The shadow chancellor said: “If you look at what’s happened elsewhere in other countries – and I think Scotland is looking at it as well – they are doing it on a small geographical basis in particular towns. Guy is looking at that now and coming forward with proposals.

“It will be thrown into the discussions about the next manifesto – that’s one of the ideas that a lot of people are pressing for.”

Mr McDonnell also acknowledged there would “almost certainly” be a debate at Labour’s annual conference in September, which could see divisions over the party’s approach very publicly exposed.

“There will be a range of policy debates and Brexit is bound to be one of them,” he said. “There’s bound to be debate this year.

Labour has refused to rule out the possibility of supporting a fresh referendum on Europe, but Mr McDonnell indicated he would prefer a general election.

“On a general election you’re deciding the issue but also you’re deciding the team,” he said. “My own view at the moment – this week we’re in a situation where the Prime Minister, the Secretary of State for Health, (Brexit Secretary) Dominic Raab, have all said we’re stockpiling medicines, stockpiling food in case there’s a no deal – that’s how bad it’s got.

“My view is that they should just move over and let us start the negotiations. If they are not willing to do that – general election and let’s decide.”

He added: “My worry is that if you go for another referendum we could have an equally split vote and divide the country all over again.”

Mr McDonnell also said that could be “really dangerous” and may allow the “xenophobic right to exploit the issue again”.

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