John McDonnell said pilots would be run in Liverpool, Sheffield and the midlands to test the impact of giving every person a fixed sum to cover the basics whether they are rich or poor, in work or unemployed.
Mr McDonnell told the Sunday Mirror people would be able to spend the money however they wanted, but the intention was for it to be used to study, set up a business or leave work to care for a loved one.
He acknowledged that the idea was “radical” but insisted the Labour Party could “get the design right”.
“The reason we’re doing it is because the social security system has collapsed,” Mr McDonnell added. “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.”
It came as a new poll of voting intention for a general election put Labour ahead of all other parties.
ComRes found that 27 per cent of voters would back Labour in a Westminster vote, 20 per cent the Brexit Party, 19 per cent Conservatives, 14 per cent Liberal Democrats, 7 per cent Change UK, 5 per cent Green Party and 3 per cent Ukip.
Labour set up a working group to investigate the feasibility of a basic income in 2017 and a report produced last week put forward concrete proposals for trials.
“Basic income would be a weekly or monthly payment to every person lawfully resident in the UK, paid without conditions or means tests,” the Progressive Economy Forum (PEF) said.
“It could dramatically reduce poverty, insecurity and the use of food banks while saving on the bureaucracy of current social welfare administration.”
Small-scale trials have taken place around the world including in Finland, Canada, the US, India and Namibia, each using different methods and delivering different results.
Proponents of a universal basic income argue that it would ensure nobody lives in poverty and free the entrepreneurial instincts of the population.
Interest in the policy has increased rapidly in recent times, in response to years of austerity and fears of the impact of increasing automation on global employment.
But some critics fear it would be unaffordable and fail to provide a stronger incentive to work than the current welfare system.
John Kay, former director of the Institute for Fiscal Studies, said: “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.”
Additional reporting by PA
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