A scheme which will see some young people given £1,600 every month for two years will start in Wales within days. The trial scheme, known as a Basic Income pilot, is designed to help those who have been brought up in care transition to adult life.
The total cost of the scheme will be £20m and an evaluation of the three-year scheme will be carried out, with the Welsh Government saying that it will be classed as a success if there have been positive improvements in areas like mental health, wellbeing, employment or education. Those eligible can get £1,600 per calendar month (£1,280 after tax) with no restrictions on what the money can be spent on.
Up to 500 people could be eligible, but one estimate said around half of those are expected to sign up initially. The Welsh Government admit it is not clear how many people will take the offer up as some will be better off on existing benefits.
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The Welsh Government say that while each person who receives money through it could receive a different amount, it expects the majority will be better off than if they were claiming Universal Credit. For example, an unemployed 18-year-old who is paying £650 rent to a social housing provider would be around £400 better off than if they were on Universal Credit. The first money will be paid out in August.
First Minister Mark Drakeford said: "We want all our young people to have the best possible chance in life and fulfil their full potential. The state is the guardian of people leaving care and so has a real obligation to support them as they start their adult life. Our focus will be on opening up their world to all its possibilities and create an independence from services as their lives develop.
"Many of those involved in this pilot don’t have the support lots of people – myself included - have been lucky enough to enjoy as we started out on our path to adulthood. Our radical initiative will not only improve the lives of those taking part in the pilot, but will reap rewards for the rest of Welsh society. If we succeed in what we are attempting today this will be just the first step in what could be a journey that benefits generations to come."
However, the Welsh Conservatives say while recognising care leavers are a vulnerable group who need extra support, "this is completely the wrong way to go about it and could well create more problems than it solves". Welsh Conservative Shadow Minister for Social Partnership, Joel James MS, said: "It’s been proven time and again that so-called Universal Basic Income doesn’t work. Look at Finland, who ditched their scheme after two years in favour of new scheme that encouraged people to actually take up employment or training.
"We recognise that this is a vulnerable group, and they need extra support - but this is completely the wrong way to go about it and could well create more problems than it solves. It’s typical Labour – but it’s obvious that giving out free money won’t be a quick fix."
However, Tiff Evans of Voices from Care Cymru, said it was a "brilliant opportunity". "It is good to see that care leavers in Wales are being thought of and Welsh Government are providing this opportunity for them as young people to become responsible, control some parts of their lives and have a chance to thrive and be financially independent."
Who can get the money?
- A person leaving care turning 18 years of age between July 1, 2022 and June 30, 2023
- Someone who has been looked after by a council for a period of 13 weeks, or periods amounting in total to 13 weeks, which began after he or she reached 14 and ended after he or she reached 16
- A person leaving care who is resident in Wales, or who is placed outside of Wales but is supported by a Welsh local authority’s social services department.
Eligible asylum seekers and refugees can participate so long as they meet the criteria and have access to a bank/building society/credit union account. Those in custody who would otherwise be eligible for the basic income pilot should not participate in the pilot until the calendar month following their release from custody if this is within the opening 12-month timeframe for general pilot eligibility. Young people with additional learning needs will be eligible and should receive support in line with existing support procedures.
What is being offered?
- The total Basic Income support will be £1,600 per calendar month (pre-tax) for a period of 24 months, starting on the first day of the calendar month immediately following the calendar month in which the recipient’s 18th birthday falls. After tax, the amount each recipient will receive per month is £1,280.
- It will be available to care leavers who reach their 18 th birthday between July 1, 2022 and June 30, 2023 and run for three years.
- Participants can choose whether to receive this payment either monthly or two times a month. It will be paid to them by an external provider.
- Participation in the pilot is voluntary and if they are eligible, they are already known to their local council who will be working with them to help with any application
Are there conditions to the money?
The payment is unconditional with no requirements attached. The gross payment will be the same for everyone and it will not be altered during the pilot. Payments will be made to individuals and not to households. If the person moves out of Wales after they turn 18, they can still receive the money.
They can leave at any time and the payments will stop in the month following confirmation they wish to leave. All eligible recipients will require a bank, building society or credit union account to receive the basic income payments.
How do people apply?
Those eligible will be contacted by social services or their young person’s advisor and invited to take part in a programme to find out more about the scheme and they can find out more about the enrolment/payment process and the effects this could have on their benefit entitlement. Before it starts, they will be invited to meet an independent advisor.
What about benefits?
The UK Government has confirmed that the basic income payment will not be disregarded for benefits purposes. Any benefit claimants who are also receiving the basic income payments will need to make the DWP aware of that fact, as their benefits will need to be restricted accordingly. An exception to this will be Personal Independence Payments (PIP), for which recipients of the basic income payments will still be eligible, and those in supported housing will still be entitled to apply for Housing Benefit.
By setting the basic income payment at the level we have, broadly in line with the real living wage, most care leavers will still be better off, even if their entitlement to welfare benefits ceases for the duration of the pilot.
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