A Universal Basic Income (UBI) for Wales is set to be put to the test in a few months - but will it work in this country?
The concept isn't a new one, and has been spoken about for decades. But whilst for a long time it may have been deemed purely fantasy, many countries are now putting it to the test.
It has been the cause of much debate since it was first mooted by the Welsh Government, with some quarters advocating the idea, and others questioning if it would be the best way to ease poverty, or whether it might have a knock-on effect on productivity and the incentive to work.
We've taken a closer look at the idea of UBI, and examined the Welsh Government's current proposal, and what experts think of the concept.
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What is Universal Basic Income?
Universal Basic Income is the idea a government should pay all individuals a set salary, regardless of their means.
The Welsh Government plans a three-year pilot this April with about 250 care leavers by paying them an additional sum of money every month.
A spokesman for the Welsh Government has said: "We have followed the progress of universal basic income pilot projects around the world with interest and believe there is an opportunity to test the concept in Wales."
Where has it happened elsewhere and how did it go?
Finland's basic income pilot ran in 2017 and 2018. It paid 2,000 randomly selected unemployed people across the country a regular monthly income of €560 - or £490, with no obligation to seek a job and no reduction in their payment if they accepted one.
A survey found that those who took part felt a better financial wellbeing, mental health and cognitive functioning, as well as higher levels of confidence in the future.
“Some people said the basic income had zero effect on their productivity, as there were still no jobs in the area they were trained for,” Prof Helena Blomberg-Kroll, who led the study, told the Guardian.
“But others said that, with the basic income, they were prepared to take low-paying jobs they would otherwise have avoided.
“Some said the basic income allowed them to go back to the life they had before they became unemployed, while others said it gave them the power to say no to low-paid insecure jobs, and thus increased their sense of autonomy.
“Freelancers and artists and entrepreneurs had more positive views on the effects of the basic income, which some felt had created opportunities for them to start businesses.”
It was also tried out in Spain in 2017. The experiment, called 'B-Minicome', offered a minimum guaranteed income to 1,000 households randomly selected from some of Barcelona’s poorest districts.
They could receive up to 1,675 euros per month, and preliminary results showed that the basic income boosted life satisfaction and mental health whilst making participants neither more likely nor less likely to find employment.
The reaction to the Welsh Government's proposed pilot
A Senedd committee has found that the pilot should be broadened in Wales. In a report, entitled 'A UBI Pilot for Wales', the Petitions Committee concluded that the current scheme for care leavers "has merit", but that a wider trial would allow policymakers to learn more about the impact of a UBI.
A petition submitted in August, 2021 calling for an expansion of the pilot gained over a thousand signatures.
The committee, led by chair Jack Sargeant MS, invited a number of experts, including Sophie Howe, the Future Generations Commissioner for Wales, Will Stronge, director of research at think tank Autonomy, Lydia Godden, Women’s Equality Network Wales, and Ewan Hilton, CEO of mental health charity Platfform to give evidence on the topic.
It concluded that the Welsh Government should consider increasing the size and diversity of the pilot scheme to provide more robust data, and ensure payments were guaranteed, unconditional, and paid to the individual, not the household.
It has also recommended that the government make every effort to persuade UK Government departments, such as the Department of Work and Pensions and Her Majesty’s Revenue and Customs, to support the widest possible pilot scheme.
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What experts think should happen instead
Mr Stronge's evidence to the committee drew from a report entitledt, 'A Future Fit For Wales - A basic income for all', commissioned by the Future Generations Commissioner for Wales. It is 205 pages long and you can read it in full by clicking here.
Two models of basic income are modelled in the report. The first, an introductory basic income, which it claims would cut poverty in Wales in half and reduce inequality substantially. It states overall poverty rates in Wales would decrease by 50% and child poverty would decrease by 64% - bringing it to a rate of under 10% in Wales. Pensioner poverty in Wales would decrease by 61%.
The report states how a 'model one' basic income would cost around £6 billion annually and could be paid for via reforms to the tax system in Wales, or via small reallocations of the UK spending budget.
A more substantial, and expensive, ‘model two’ basic income would almost wipe out poverty in Wales entirely, the report states. This second model of basic income is posed as a longer-term goal for policymakers.
It also finds that there is a "strong appetite" amongst the Welsh public for trying basic income, with polling showing 69% of the public support Welsh Government trialling a basic income scheme, with only 11% in opposition. There are 67% who support Welsh Government increasing taxes on the very rich in order to provide a ‘basic standard of living for everyone in Wales’.
The report proposed a pilot with the following characteristics...
- A non means-tested and non-withdrawable monthly payment, delivered directly into individuals’ personal bank accounts. There would be no behavioural conditions to satisfy in order to receive the payment.
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The amount would be set at different rates for children (0–17), adults (18–64) and adults aged 65 and over.
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The basic income would be paid in addition to existing benefits for people with additional needs, such as disability benefits.
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The proposed pilot would include 5,000 participants split across two specific communities – in one urban and one rural region of Wales.
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To capture the community-level effects of basic income, this would be a ‘saturation study’, meaning that all residents in the two pilot regions would receive the basic income.
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In addition to the two test populations, the pilot would include stratified and randomly selected control groups, demographically comparable to the pilot sites and Welsh population as a whole.
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The pilot would run for a period of 24 months, balancing the need to observe social impacts over time with cost effectiveness and political expediency.
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It would be monitored and evaluated by an independent research group and use a variety of evaluation methods to investigate a range of personal and social impacts.
The report stated that payments under the suggested pilot could look like this...
Age range: Child 0–17 - Payment rate per week: £120.48
Age range: Adult aged 18–64 - Payment rate per week: £213.59
Age range: Adult aged 65 and over - Payment rate per week: £195.90
What the experts have said...
Chief executive of Platfform, Ewan Hilton, said: "We’re very supportive of the Welsh Government's intention to conduct a pilot scheme for Universal Basic Income, as we feel it has the potential to make a massive difference to the people we work with. However, we are disappointed that it is going to be very small, and does not appear to specifically include older adults who have faced mental health difficulties. This is the very group we feel would benefit the most from UBI, and we're a little disappointed not to see the committee recommend this. The last thing we need is a half-hearted pilot scheme that is inconclusive because of its small size and failure to include the groups most likely to benefit from the policy.
"The current system traps people in poverty, and often makes Mental Health substantially worse. The uncaring, bureaucratic nature of it, and the culture of sanctions cannot ever help support people who are having a tough time. In fact, it creates disincentives for people to try to get back into work, and focuses too much on making people 'prove' they have an illness rather than on what they can do. By freeing people from this system, UBIs unconditionality empower people to explore their potential, be that volunteering or simply focusing on recovery, without the ever present threat of sanctions or starvation. We badly need it to change."
Co-director of Autonomy with Autonomy Research Limited, Dr Will Stronge said he felt the time had come for it to be introduced.
“There is a strong appetite amongst the Welsh public for trying out basic income and Autonomy's comprehensive study sets out the roadmap for getting there," he said.
“The Covid pandemic necessitates radical and bold changes to support people through future economic challenges down the line. In some ways, Covid was just a trial run for much wider environmental turmoil. As many UBI trials have shown, guaranteeing an income floor for all is the most progressive way of securing livelihoods.
“The time has come for a universal basic income for Wales and the rest of the UK."
Sophie Howe, Future Generations Commissioner for Wales, said: “The introduction of a universal basic income could completely transform society by delivering a more equal, prosperous Wales.
“Piloting a UBI trial here in Wales gives us a chance to increase the prosperity of every single person, giving more people a life jacket when they need to keep their head above the water - which has the potential to create a healthier, more equal population.”
“The Well-being of Future Generations Act puts a duty on Welsh Government to take bold decisions to change systems that aren’t working and to prevent crises from worsening. The findings in this report should excite leaders who say they want a true green and just recovery that makes life fairer for everyone.”
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