Pilot schemes examining how a universal basic income system would work in the UK should be set up, a new report has said.

Guy Standing, a member of the Progressive Economy Forum (PEF) and an economic adviser to shadow chancellor John McDonnell, will submit his findings to the Labour Party.

Praising the findings, the veteran politician said: “This report is an important contribution to the debate around inequality, austerity, poverty and how we establish a fair and just economic system.

“There have been pilots of ‘basic income’ elsewhere and Guy Standing has looked at them and come forward with proposals. Whatever mechanism we use, whether ‘basic income’ or another, we have to lead in developing a radical mechanism aimed at eradicating poverty but also means testing.”

Mr McDonnell said that Mr Standing’s work was shining a light on the problems, which had been exacerbated by almost a decade of austerity.

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“We will be studying the contents and recommendations of this report carefully as we put together our reform policies for the next Labour government,” he said.

The Labour Party might promise a universal basic income, a radical policy, in its next manifesto for a general election, the shadow chancellor told The Independent last year.

“It’s one of those things I think we can get into the next manifesto and see, it’s worth a try,” he said in the July 2018 interview.

In 2017 Mr McDonnell told The Independent that Labour had also set up a working group to investigate the feasibility of a basic income, led by Mr Standing.

“Basic income would be a weekly or monthly payment to every person lawfully resident in the UK, paid without conditions or means tests,” the PEF said in a statement. “It could dramatically reduce poverty, insecurity and the use of food banks while saving on the bureaucracy of current social welfare administration.

“The cost could be met by adaptation or abolition of the current personal tax allowance so that higher earners do not gain or lose from the scheme.”

Mr Standing said that while US pilot schemes had focused on labour supply, UK schemes should be centred on basic income’s impact on stress, insecurity and debt.

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He has suggested a number of pilot scheme scenarios, including providing an economically deprived community with a basic weekly income instead of existing means-tested benefits, with the exception of housing benefit.

“Provisionally, it is proposed that every adult in a selected community would be provided with £100, with £50 for each child and with additional separate benefits for those with disabilities,” the report says.

Another suggested option is the government giving every adult in a community £50 per week for a year, which would not be taken into account when means-testing for benefits.

A 2017 poll by the Institute for Policy Research at the University of Bath suggested that 49 per cent of all Britons would support a universal basic income scheme.

Other supporters of the policy also included billionaires such as Facebook founder Mark Zuckerberg and Sir Richard Branson.

“Basic income style pilots have been proven to have beneficial effects on health, well-being and trust, while giving people more freedom to decide for themselves how to manage their lives,” said Anthony Painter, director of action and research at the Royal Society for the encouragement of Arts, Manufactures and Commerce,.

“All parties aspiring to be progressive must take notice and back basic income experiments.”