Jane Hutt, Minister for Social Justice
In Wales we are doing everything we can to support people with the cost-of-living crisis and rising energy bills. This includes schemes such as our Winter Fuel Support Payment which we recently doubled to £200 and making increasing investment in our Discretionary Assistance Fund to help people who need urgent and emergency support.
However, we recognise that while these emergency assistance programmes are vitally important in enabling low income households to function during these extremely challenging times. It is essential that we also explore different methods of helping people to try and break the cycle of poverty which people can all too often find themselves in due to circumstances beyond their control.
There has been a resurgence in interest in the concept of basic income as a potential policy response to the consequences of global economic recession and subsequent UK government austerity policies, and more recently in response to the COVID-19 pandemic, alongside interest in the need for asset-based approaches to welfare. The World Health Organization Regional Office for Europe and Public Health Wales have recently considered the potential for basic income as a means to address health inequities, framing the debate as a matter of social justice.
The Programme for Government 2021-2026 made a commitment to pilot the use of a basic income scheme in Wales. This commitment is an extension of the social wage and the model of progressive universalism that the Welsh Government has followed for over 20 years. In Wales, we look after each other and this scheme is an extension of the values of care and compassion that distinguish us as a country.
I have set up a cross government team of officials to take this work further and to adapt to the Welsh context the lessons learned from other countries that have already introduced the concept of basic income. From the work undertaken so far, it is evident there is no ‘off the shelf’ policy design or definitive ‘good practice’ example of a basic income scheme that we can simply apply.
We intend to develop and deliver a basic income pilot with a cohort of young people leaving care which will test the stated benefits of basic income, such as addressing poverty and unemployment and improving health and financial wellbeing. The pilot will sit alongside the additional investment for care leavers which is already in place, such as access to Junior ISAs, the St David’s Day Fund and Council Tax exemptions.
Based on learning from global basic income experiments and discussions with a variety of experts, including those who have experience of working closely with care experienced young people, our pilot will be based on four key principles:
- Taking part in the pilot should make no participant worse off
- There should be no conditionality on income received
- The same payment should be paid to everyone
- The payment will not be altered midway through the pilot.
It is our intention that all young people leaving care who turn 18 during a 12 month period, across all local authority areas, will be offered the opportunity to take part in this pilot. The pilot will begin during the next financial year and we anticipate over 500 young people will be eligible to join the scheme. Participation will not be mandatory, therefore exact numbers will be unavailable until sometime after the pilot is underway. We will begin to contact eligible participants over the coming months to fully inform them about the pilot, what it means for them, how they can take part and what additional support will be available to them. If at this point the individual does not wish to receive the basic income pilot payment, they do not need to apply.
Participants in the programme will receive 24 months’ worth of payments at a value of £1600 per month. HMRC and DWP have confirmed that the payment will interact with the tax and benefits system and will be recognised as income.
This amount is significantly higher than any other basic income pilot globally has offered individuals and is broadly equivalent to the real living wage. This higher level of payment will mitigate 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.
The pandemic has seen some of the most vulnerable groups in Wales being hardest hit, few more so than young people leaving the care system. Additional support at this age could provide a more solid foundation for care experienced young people to build their adult lives from. We want to assist these young people in finding financial independence and want to allow them to thrive not merely survive.
We will work with this cohort, 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 system re-engineering could better help them to live the kind of lives they want to lead. The experience of care leavers will be embedded into the design and delivery of this pilot. This is a rights based policy which we hope will strengthen the rights of young people leaving care and will be underpinned by the UN Convention on the Rights of the Child (UNCRC)
We will develop a suite of measures to improve the delivery of the pilot and to assess its impact on the lives of those young people who take part in the scheme. Learning from the pilot, a clear review and set of recommendations, co-created with the participants, will be prepared. This will allow for successful aspects of the intervention to be replicated and lessons to be learned benefitting both care leavers and the wider Welsh population.
There has already been a significant amount of interest in the pilot from the general public and interested stakeholder organisations, and we have cross party support in the Senedd for this innovative policy. We welcome this support and look forward to the active participation of those who want to make this project a success. We have established a Technical Advisory Group, Chaired by Professor Sir Michael Marmot, which will support us in developing and monitoring the pilot. A range of different voices in this space is essential to enable us to deliver a pilot that becomes part of a comprehensive package of support to care experienced young people as they leave the care system and make the transition to adulthood, while testing some of the claims made for basic income. The Technical Advisory Group will provide vital and independent input into this ground breaking work and their expertise will be invaluable as we progress. An external reference group will also support the pilot including care leaver representation.
We are still at the early stages of the design of the pilot, but I will be pleased to continue to share our experiences and outcomes as this important work develops.