Small Business Advice

10,000 pounds for everyone under 55? I think it's time for a reality check.

Christian Nellemann

While the idea is commendable, it's wrought with problems.

Last week, a report by the Royal Society for the encouragement of the Arts, Manufacturers and Commerce (RSA) suggested that the government should give £10,000 to every citizen under the age of 55.

While these payments are received, certain other state benefits would be removed – and they would not be means tested. The application would merely require proof of how you intend to use the money.

It’s a response to challenges facing the UK workforce such as automation and our ageing population. And it’s closely allied with the concept of Universal Basic Income (UBI). But is it a realistic proposition? And does it actually tackle the fundamental problems future generations of workers will face?

A noble failure

The world of work is changing faster than many of us are prepared for. So finding new ways of remedying potential challenges is a worthy exercise, and should be encouraged. Plus, any report that promises £10,000 to everyone is bound to generate some buzz.

But while this endeavour is commendable, it’s wrought with problems.

Perhaps most importantly, it has no responsible financial foundation. The report claims that significant savings from reduced benefit payments could support the fund, but the reality is that huge tax increases would be dealt. And to be clear, everyone on an average UK salary would feel the pinch. Recent research suggested that under UBI in the UK, people currently paying 20% in tax would be required to pay 48%. So where is the incentive for the average worker?

Equally, this policy could actually increase inequality rather than solve it. With the funding required to make this idea a reality, resources would have to be cut from public health and education. Moreover, sharing payments across the entire population regardless of need could actually be very damaging to those who need it most.

Proponents present a vague idea that it would spark a great entrepreneurial revolution. But I’ve encountered entrepreneurs throughout my life; my business has worked with hundreds of thousands. And I can tell you that these people don’t wait for £10,000 to generate an entrepreneurial spark. They’re too busy working on their ideas, and doing whatever they have to do to fund them.

In short, this handout could remove money from those who need it most, and give extra to those who need it least. Don’t worry, proponents will no doubt say, we’ll ensure anyone who doesn’t need the money won’t get it. Which leaves us where we are now: the welfare state.

The welfare state is by no means perfect. Food bank use is rising and the housing crisis remains unsolved. But UBI or any other variation of it is not the answer.

There is no silver bullet – bigger thinking is required

Concepts like this are at best noble failures, and at worst dangerous distractions.

The challenge of what people will do when jobs disappear, and how we can cope with growing inequality, is hugely complex. And frankly, it’s a little patronising when utopians come along and think they’ve found the answer.

We need big, long-term thinking. If we want more entrepreneurial spirit to fill the void created by job losses, we need a government that takes small business and start-up funding, support and regulation seriously. If we want to solve inequality, we need to look at the deep-rooted problems this country faces around infrastructure, transport, public sector investment and how London-centric we are. And if we want to cope with the changing world of work, we need genuine flexibility, remote working, and huge investment in future-focused industries and the infrastructure that supports them.

Take transport. HS2 has a completion date of 2033; HS3, your guess is as good as mine. These developments will cost the taxpayer a great deal of money, and arguably, despite improving transport links in the north, will primarily serve the purpose of making London more commutable from greater distances. This could just as likely exacerbate the north-south divide as remove it, which would increase inequality in some of the poorest parts of the country. And that’s all despite the fact that high speed rail is a necessary and worthy innovation for the UK. So, even when the thinking is right, it’s still full of wrongs.

The scale and variety of the challenges at hand are unprecedented and demand big, complex thinking. And this is precisely why people get excited by the idea that everything can be solved with £10,000 each. Life is never that easy.


  • Christian Nellemann is the Founder and CEO of XLN, a provider of low-cost phone, broadband, energy and card processing services exclusively to small businesses. A serial entrepreneur, he’s a two-time winner of Ernst & Young’s Entrepreneur of the Year award and one of only 17 inductees into their Global Hall of Fame. He is passionate about small businesses, and is a featured columnist for Follow him on Twitter @christianxln