Universal Basic Income in Wales; What does it mean?

Wales has announced a pilot program to trial a Universal Basic Income (UBI) scheme for young adults leaving care as they transition to independence. Any 18-year-old leaving care can apply for the scheme which will grant them a monthly stipend of £1,600, regardless of their employment status. If granted, the monthly payments will continue for two years. 

Skeptics argue that providing large sums of money to vulnerable young people will disincentivise them to find employment and provide for themselves. 

On the other hand, however, backers of the UBI program refer to examples of similar schemes that have already been used in other nations across the world. For example, Finland, which saw a degree of success in its UBI trial in 2017/2018. 

When surveyed at the end of the trial, participants who received an unconditional monthly stipend rather than standard unemployment benefits reported an increase in their financial security and mental wellbeing. It was also found that UBI recipients were no less likely to become employed - in fact, employment activity actually increased when compared to the population receiving standard unemployment benefits.

It is too early to say for sure, but the hope is that this trial will present some evidence that by providing a financial safety net for vulnerable young adults they will be more likely to pursue education and skilled employment. If successful, the predicted returns to the economy will offset the cost of providing this safety net in the first place. 

Jane Hutt, Welsh Minister for Social Justice, said the Labour-led government was committed to supporting the most vulnerable.

“Too many young people leaving care continue to face significant barriers to achieving a successful transition into adulthood. Our basic income pilot is an exciting project to deliver financial stability for a generation of young people that need it most. Support will also be offered that is designed to build up their confidence to negotiate the world outside of care. This extra support will include, for instance, financial wellbeing training and signposting to all available support.”

Jane Hutt, Welsh Minister for Social Justice