Labour would trial universal basic income if it wins power, shadow chancellor John McDonnell has revealed.
Pilot schemes would be held in Liverpool, Sheffield and the Midlands, McDonnell told the Mirror.
The plan would do away with the need for welfare as every citizen would be given a fixed sum to cover the basics whether they are rich or poor, in work or unemployed.
McDonnell said people can spend the money how they like, but it is intended for study, to set up a business or leave work to care for a loved one.
“I’d like to see a northern and Midlands town in the pilot so we have a spread,” he said.
“I would like Liverpool – of course I would, I’m a Scouser – but Sheffield have really worked hard. I’ve been involved in their anti-poverty campaign and they’ve done a lot round the real living wage.
I think those two cities would be ideal and somewhere in the Midlands.”
Trials have been held elsewhere in the world, including Kenya, Finland and the US, as well as potentially being explored in four Scottish cities.
The shadow chancellor was this week handed a feasibility report for different universal basic income (UBI) models for low-income areas, including one in which a whole community gets basic incomes.
All the means-tested benefits – apart from housing benefit – would be taken away and every adult would get a fixed amount per week, plus an additional amount for each child they have.
“Of course it’s a radical idea,” McDonnell said. “But I can remember, when I was at the trade unions – campaigning for child benefit and that’s almost like UBI – you get a universal amount of money just based on having a child.
“UBI shares that concept. It’s about winning the argument and getting the design right.”
The concept has been around since at least the 1960s and was raised in the 1972 US presidential election, followed by the introduction of a UBI scheme called the Manitoba Basic Income Experiment in Canada in 1975.
In the UK, charity Citizen’s Income Trust has been encouraging debate for 35 years.
But some critics fear UBI would be too expensive, including John Kay, former director of the Institute for Fiscal Studies.
“If you do the numbers, either the basic income is unrealistically low or the tax rate to finance it is unacceptably high. End of story,” he said.
But McDonnell is convinced of the benefits. “The reason we’re doing it is because the social security system has collapsed. We need a radical alternative and we’re going to examine that.
“We’ll look at options, run the pilots and see if we can roll it out. If you look at the Finland pilot it says it didn’t do much in terms of employment but did in terms of wellbeing – things like health. It was quite remarkable.
“The other thing it did was increase trust in politicians, which can’t be a bad thing.”