UK Government Explores Universal Basic Income to Address AI-Driven Job Displacement

# UK Government Explores Universal Basic Income to Address AI-Driven Job Displacement The United Kingdom is taking a proactive stance on one of the most pressing questions of the AI era: what happens to workers when artificial intelligence replaces their jobs? In a significant policy development, UK Investment Minister Lord Jason Stockwood has revealed that the government is actively discussing the implementation of a Universal Basic Income (UBI) as a potential safety net for workers displaced by AI automation. Speaking publicly in late January 2026, Stockwood described UBI as a "concessionary arrangement" that could help "soft-land those industries that go away" due to AI disruption. The minister emphasized the need for mechanisms to support lifelong retraining, acknowledging that the transition period will be "bumpy" for many workers. While not yet official government policy, Stockwood confirmed that UBI is "definitely being talked about" within government circles, marking a notable shift in how policymakers are approaching the AI employment challenge. ## The UK's AI Employment Crisis The timing of these discussions is not coincidental. Research from investment bank Morgan Stanley published in January 2026 found that the UK is experiencing more job losses than job creation due to AI—a trend that is outpacing other major economies. This data has intensified concerns about AI's impact on the British workforce, with warnings coming from multiple quarters. London Mayor Sadiq Khan has cautioned that AI could "usher in a new era of mass unemployment" in the capital, while Anthropic CEO Dario Amodei warned that AI would have an "unusually painful" impact on the labor market, acting as a "general labor substitute for humans." Even JP Morgan CEO Jamie Dimon weighed in at the World Economic Forum in Davos, stating that governments and businesses must support displaced workers to prevent civil unrest. The National Foundation for Educational Research estimates that up to 3 million low-skilled jobs in the UK could be lost by 2035, with early-career roles being particularly vulnerable. Technology Secretary Liz Kendall has acknowledged that "some jobs will go," particularly in entry-level finance and legal roles, though she maintains that job creation will ultimately outpace losses. ## The UBI Proposal and Its Challenges Under a UBI system, the state would provide regular, unconditional payments to individuals regardless of their employment status. Stockwood has previously suggested that a windfall tax on technology companies profiting from AI could help fund such payments, arguing that companies benefiting from AI should contribute to mitigating its societal impact. However, the fiscal implications are substantial. The Institute for Fiscal Studies estimates that providing a UBI equivalent to the basic rate of Universal Credit—approximately £424.90 per month for an individual over 25—would cost over £200 billion annually, exceeding the entire NHS budget. Such a scheme would likely require significant increases in broad-based taxes like VAT, National Insurance Contributions, or Income Tax. Critics also point to concerns about UBI's potential to distort work incentives and question its long-term affordability. Sebastian Reiche of IESE Business School suggests that targeted income support combined with retraining and active labor market policies may be a more probable approach than a full UBI implementation in the short term. ## Why This Matters The UK's consideration of UBI represents a significant moment in the global conversation about AI and employment. Unlike previous technological disruptions, AI's ability to automate cognitive tasks—not just manual labor—means that white-collar and professional jobs are also at risk. The UK appears to be among the first major economies to seriously explore UBI as a policy response, potentially setting a precedent for other nations grappling with similar challenges. This development also highlights a growing recognition among policymakers that the AI transition may require more than traditional retraining programs or unemployment benefits. The scale and speed of AI-driven disruption may demand fundamentally new social safety nets. ## What's Next While UBI remains under discussion rather than active policy, the UK government is already implementing other AI-related initiatives. The National AI Strategy, the AI Playbook for the UK Government, and the Incubator for AI (i.AI) are all aimed at integrating AI into public services while establishing ethical guidelines. The government has also invested £1.6 billion from 2026 to 2030 to harness AI for public services and scientific breakthroughs. As AI capabilities continue to advance, the UK's approach to managing the employment transition will be closely watched by other nations. Whether UBI becomes reality or remains a policy discussion point, the conversation itself signals that governments are beginning to take seriously the profound economic and social transformations that AI may bring.