There is a growing interest in the concept of a basic income as a response to the challenges people are facing today. As a Welsh Labour government, we are doing everything we can to support people through this Tory-made cost-of-living crisis. We’ve made cash payments available to people on lower incomes to help pay their energy bills this winter, ensured emergency support is available for all who need it and our universal support schemes, like free prescriptions and free school breakfasts, and put money back in people’s pockets.
While these schemes provide vital lifelines during these very challenging times, we need to think differently to help break the cycle of poverty and ensure everyone has a chance to fulfil their potential. We made a commitment in our Senedd manifesto and now in our programme for government to pilot a basic income scheme in Wales. This is a broadening of the social wage and the model of progressive universalism that Welsh Labour in government has followed for more than 20 years. In Wales, we look after each other. A basic income is an extension of the values of care and compassion that distinguish us as a government.
The pilot will focus on a group of around 500 young people leaving care who turn 18. It will start in the next financial year. Each person will receive £1,600 a month – this is the most generous basic income in the world. We’ve been working with care leavers and an expert group to learn from other countries that have tested basic income to design the Welsh pilot. There is no off-the-shelf policy that we can use for Wales – this is a bespoke pilot, designed in Wales with and for young care leavers in Wales.
We’ve chosen this group of people because young people leaving care are more likely to be socially excluded and have poor educational qualifications. Many do not go onto further or higher education and a higher number are unemployed. This pilot is about giving this group of young people the best possible start to their adult life, the life skills we sometimes take for granted, and providing them with a financial safety net as they move into adulthood.
The Guardian’s Gaby Hinsliff called this a “brave and imaginative decision“, writing: “It’s road-testing an idea that will make instinctive sense to most parents, which is that the emotional security money buys is not nothing and indeed, for some, it might actually be everything.” Working with these young care leavers, we will test the stated benefits of a basic income. We’ll find out whether it does address poverty and unemployment and if it can really improve health and financial wellbeing.
Our Wales pilot is based on four key principles: 1) taking part in the pilot should make no participant worse off; 2) there should be no conditionality on income received; 3) the same payment should be paid to everyone; and 4) the payment will not be altered midway through the pilot. These principles are based on learning from global basic income trials and on discussions with care-experienced young people and those who support them. They, and an advisory group chaired by Professor Sir Michael Marmot, will guide us through this pilot.
We decided that the amount received by these young people should be broadly equivalent to the real living wage – an amount that is significantly higher than any other basic income pilot run around the world has offered individuals. This higher level of payment will help address any reduction in benefits that may occur for care leavers who are in receipt of benefits and has the potential to make a significant positive change to their lives. These payments will start during the month of the recipient’s 18th birthday.
Everyone who is involved will continue to have access to junior ISAs, the St David’s Day fund and council tax exemptions that are available in Wales. The UK government will not disregard the basic income payment for benefits purposes but we are working to secure a bespoke scheme with HMRC for tax purposes and we will provide a package of support for all the participants to access the services and benefits they are entitled to.
The pandemic has hit some of the most vulnerable people in Wales the hardest. This additional support to this group at this age could provide a more solid foundation on which care-experienced young people can build their adult lives. We will work with this group, many of whom have faced disadvantage in their young lives, to understand the unique challenges they have faced. We will use these insights to test how cash payments and this asset-based approach to welfare could better help them to live the kind of lives they want to lead. We want to help young people find financial independence and support them to thrive not just survive.