The UK Labour Party is considering universal basic income as part of its new economic policy.

John McDonnell, the shadow chancellor, said the Labour Party would not rule out unconditional pay for all members of society during a talk at the London School of Economics on Tuesday night.

“It's an idea we want to look at. Child benefit was a form of basic income so it's not something that I would rule out,” he said.

Changes to child benefit made during the coalition years reduced the amount paid to a family of two children by more than £9 a week– the equivalent of £470 a year.

In what he called a “progress report” on Labour’s economic policy, McDonnell said that economists were “close to consensus” that the Conservative Party’s austerity policies had failed.

“Austerity is a political choice and it's politically easy because it benefits the elite. It's a short term choice,” he said.

His comments follow a motion by the UK Green Party to table a discussion on universal basic income.

In January, Caroline Lucas MP called on the Government to commission research into the idea of paying all citizens a flat, unconditional income, which would likely come in place of existing social security measures like means tested benefits.

“The basic income offers genuine social security to everyone and sweeps away most of the bureaucracy of the current welfare system,” Lucas told the Independent in January.

UK think tank the Royal Society for the encouragement of Arts, Manufactures and Commerce has proposed a system of universal income in the UK that would give a basic amount to fit, working-age people that it believes would still give a strong incentive to these people to work.

The think tank has published a detailed report proposing basic income of £3,692 for all qualifying citizens between 25 and 65, or £308 per month.

Anthony Painter and Chris Thoung, authors of the report, said that basic income would give people a sense of security so that they could pursue their own ambitions.

“The major concern is ultimately people: the lives we are able to lead, our ability to have a sense of security so we can pursue our ambition, and our ability to contribute to supporting one another, innovating, and developing the creative potential of society,” they said.

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“That is where basic income has the potential to be so much stronger than our current welfare state.”

Opponents of the plan argue that it removes the incentive to work and encourages idleness. Some say it would create inflation as landlords, for example, take advantage of the higher income of tenants by forcing up rent.

McDonnell speaks at fees rally