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Opinion

Universal basic income: Wales is set to end its experiment – why we think that’s a mistake

11 Dec 2023 5 minute read
First Minister Mark Drakeford meeting with care leavers in Cardiff. Photo Welsh Government

Hefin Gwilym, Lecturer in Social Policy, Bangor University, Dave Beck, Lecturer in Social Policy, University of Salford

The Welsh government has announced that its universal basic income (UBI) project will not be continued after the initial pilot ends in 2025 because of the cost.

The trial involved paying monthly payments of £1,600 each to a group of 635 care leavers. The scheme, which began in 2022, was offered to all young people leaving the care system at the age of 18.

The scheme has yet to be fully evaluated, but initial feedback has been positive. And given the success of many similar projects around the world, there is a good chance it will have significantly improved the wellbeing of the participants, who are a particularly vulnerable group.

If the pilot were to be expanded, we could learn more about the long-term impacts of UBI and its advantages across the population, including whether it could actually save money. But not continuing the scheme risks squandering these potential benefits and losing the momentum that might make it possible for UBI to be rolled out more widely. And all before we even know how successful the pilot has been.

Unconditionally

A UBI is a sum of money that is periodically paid to all people equally and unconditionally. Many of its advocates argue that because it provides people with a stable income, it allows them to focus on personal development, family life, education and their contribution to society instead of worrying about money.

However, some of its opponents argue that UBI is too expensive to implement, discourages people from working and that people should not have something for nothing.

Wales contends with high and long-standing levels of poverty, with some areas having the highest in the UK. That has been exacerbated by the economic fallout of the pandemic and the cost-of-living crisis.

Some vulnerable groups are particularly affected by poverty. Among those are care leavers, who tend to face challenges such as lower educational attainment, higher health and housing needs, substance misuse and an increased risk of committing crime – all of which can cost the state.

The Welsh government’s UBI pilot was launched to address the particular challenges faced by young people leaving local authority care or foster care and transitioning into adulthood. It runs until May 2025 with the final evaluation, conducted by Cardiff University, expected in 2027.

Uptake rate

The pilot was recently praised by Wales’ minister for social justice, Jane Hutt, who described receiving “fantastic feedback” from participants. Indeed, the programme’s provisional uptake rate of 97% surpasses that of any other opt-in UBI scheme globally.

There has also been international interest in the Welsh pilot from experts in Europe and Canada. And other pilots from across the world, including the USA and Finland, have shown how a UBI improves wellbeing, including improved mental and physical health.

However, no country has ever introduced a UBI despite those many examples. This has been largely because of the perceived costs and public opinion about giving people money for nothing.

Wales’ first minister, Mark Drakeford, appeared to be open to a more permanent place for a UBI in October 2021 before the project was launched: “Our pilot … will give us valuable information for the future about how the concept of basic income could apply to other groups more widely across the Welsh population.”

Launching the scheme in 2022, Drakeford described it as “radical”. And Jane Hutt said it was “globally ambitious” and the cost-of-living crisis meant “new ways of supporting people who are most in need” were necessary.

Economic concerns

Two years on and the Welsh government is now concerned about the cost of a UBI. It says that its own budget has seen real term cuts in recent years.

Despite this, its decision not to roll the programme out beyond the end of the pilot is a missed opportunity, in our view. The evaluation from the Welsh pilot is likely to provide crucial insights into the impact of UBI on various aspects of care leavers’ lives. This should help to inform future policy and practise for other parts of the social security system too.

Given the multiple challenges faced by care leavers, the long-term benefits of poverty reduction and improved wellbeing appear likely to outweigh the economic concerns. For example, recent research in the UK has shown that UBI could substantially improve mental health in young people and therefore reduce the costs to the NHS. And this could extend well beyond care leavers – which we could find out if the project was expanded.

But our worry now is that the results from this pilot will simply be shelved, just like all the others across the globe. There will be a Senedd election in May 2026 and by the time the results of the pilot’s evaluation are due in 2027, the political landscape will have moved on once more.

There’s a danger that because the project is not being extended beyond the pilot, the results from the upcoming evaluation will be too easy to ignore and forget. Instead, Wales should capitalise on the insights gained from this pilot to fully establish just how transformative UBI could be in empowering vulnerable people and foster a more prosperous, equitable and resilient future.


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Dr John Ball
Dr John Ball
6 months ago

It would be very tempting to quote the late Mandy Rice-Davies – “well he would say that, wouldn’t he?” I am in favour of UBI and am well aware of the success of experiments throughout the world. However, such experiments must be based on a number of factors to ensure that the resulting verification is useful. Fundamentally, this must be that participants are drawn from across the population and not from a single group. This is why this particular experiment has no useful research value. I’m not surprised that two sociologists have praised the scheme, even though their comments suggest… Read more »

Bethan
Bethan
6 months ago
Reply to  Dr John Ball

No useful research value might be a bit harsh. I agree that all experiments must come to an end. This pilot was always supposed to be a two year experiment within care. They did what the were supposed to and should now stop when they were supposed to, but I think this initial task has yielded significant results which should now pave the way towards implementing a broader sample set. We have to remember of course that these are human’s lives we’re experimenting with here and there is a great need for a secure and sustainable economic model in this… Read more »

Dr John Ball
Dr John Ball
6 months ago
Reply to  Bethan

This is the kind of dodgy research and comment that doesn’t help anyone. ANY research must be based on a random representative sample of the population as a whole – GCSE statistics
Yielded significant results? How can such a comment be regarded as in any way sensible when the experiment has just ended and verification incomplete, indeed not started.
In one important sense Bethan is entirely correct. There is a crying need for a secure and sustainable economic model for Wales but this is not helped by focusing resources on badly constructed and largely irrelevant politically expedient experiments.

Daryn Manchip
Daryn Manchip
6 months ago
Reply to  Dr John Ball

What about qualitative undertakings? This by it’s self this is a small sample group (tiny) so fixing greater numbers with what has been a very short trial will become inconclusive. What needs to happen is to speak to everyone in this group and gain good data back to see their experience and hence value their experience.

Dr John Ball
Dr John Ball
6 months ago
Reply to  Daryn Manchip

I respect your response but you miss the point. Any experiment of this type needs good hard data, especially since the direct cost has been £24million.
I suspect that speaking to everyone in the group – aside for being poor research practice – will simply result in them saying how wonderful it was and who wouldn’t after having been gifted £1600 a month?

Daryn Manchip
Daryn Manchip
5 months ago
Reply to  Dr John Ball

The point is the sample is too small with all due respect.

Dai Rob
Dai Rob
6 months ago

Free money for everyone! What’s not to like?

Jeff
Jeff
6 months ago

Really does need the UK treasury behind this but the conservatives are more interested in demonising the people the Welsh government are trying to help.

In this day and age, the rich in this country is treated far better than people desperate to live a basic life.

Lord Custard
Lord Custard
6 months ago

As AI removes a huge number of jobs, it’s inevitable that it will come in. It’s just a question of when not if.

Mawkernewek
6 months ago
Reply to  Lord Custard

Is it not a bit complacent to assume our future robot overlords will allow us to live?

Padi Phillips
Padi Phillips
6 months ago

As Dr John Ball points out, this trial of UBI doesn’t really stack up as such as it will yield very limited data indeed, only relevant to those leaving care. The Welsh government was warned that following this plan would fail as a general assessment as to the feasibility of a UBI scheme as the client group was too narrow. This scheme seems to have been set up with the specific intention of it failure, which, to all intents and purposes, it will be. The article also perpetuates a common inaccuracy, namely mention of the scheme most recently trialled in… Read more »

hdavies15
hdavies15
6 months ago
Reply to  Padi Phillips

Others have suggested that a wholesale introduction of UBI should coincide with the elimination of Tax Allowances. Currently about £12,500 is treated as Nil tax so let everybody have that and let the tax system trigger at that point. Maybe closer to £15,000 now given that the London regime haven’t adjusted tax bands for a few years. It could also be a great starting point for a new culture around taxes where all those weird little loopholes and ambiguities could be shut down. Of course most of our Bay regime also enjoy these big and small fiddles so they are… Read more »

Padi Phillips
Padi Phillips
6 months ago
Reply to  hdavies15

I have no doubt that the scheme was well intended, if a little wrong headed, in terms of the very narrow trial group – which will yield data less useful than it really needs to be if a scheme of UBI is ever to be rolled out. It’s interesting you mention the tax regime, and there have been schemes proposed that work as a negative income tax. A related scheme, the Family Assistance Plan was very nearly adopted in the USA in 1972 under the Nixon administration, but for some reason was dropped. I dare say there will be quite… Read more »

TomTom82
TomTom82
5 months ago

It doesn’t take a genius to realise UBI is not only unsustainable, it increases workplace idleness.

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