Electronic income

How a universal basic income would work in Wales

A Universal Basic Income (UBI) for Wales is set to be tested in a few months – but will it work in this country?

The concept is not new and it has been talked about for decades. But if it has long been considered purely fanciful, 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 whether it would be the best way to alleviate poverty, or whether this could have a ripple effect on productivity and the incentive to work.

We took a closer look at the UBI idea and looked at the Welsh government’s current proposal and what experts think of the concept.

READ MORE:DWP to pay £50,000 Universal Credit claimants £150m after court case

What is Universal Basic Income?

Universal basic income is the idea that a government should pay all people a fixed salary, regardless of their means.

The Welsh Government is planning a three-year pilot project in April with around 250 care leavers paying them an extra sum of money each month.

A Welsh Government spokesperson said: ‘We have followed with interest the progress of universal basic income pilots around the world and believe there is an opportunity to test the concept in Wales.

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Where else did it happen and how did it happen?

The Finnish basic income pilot project 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 look for a job and no reduction in their payment if they accepted one.

A survey found that those who took part felt better financial well-being, improved mental health and cognitive functioning, and greater confidence in the future.

“Some people said basic income had no effect on their productivity because there were still no jobs in the field they were trained for,” Professor Helena Blomberg told the Guardian. Kroll, who led the study.

“But others said that with the basic income they were ready to take on low-paying jobs they would otherwise have avoided.

“Some said the Basic Income allowed them to get back to the life they had before they were unemployed, while others said it gave them the power to say no to low-paying, precarious jobs, and thus increased their sense of autonomy.

“Freelancers, artists and entrepreneurs had more positive views on the effects of basic income, which some said had created opportunities for them to build businesses.”

It was also piloted in Spain in 2017. The experiment, dubbed “B-Minicome”, offered a guaranteed minimum income to 1,000 randomly selected households in some of Barcelona’s poorest neighborhoods.

They could receive up to 1,675 euros per month, and preliminary results showed that the basic income increased life satisfaction and mental health while making participants neither more nor less likely to find a job.

The reaction to the pilot proposed by the Welsh government

A Senedd committee felt the pilot should be expanded to Wales. In a report titled ‘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 policy makers to consider it. learn more about the impact of a UBI.

A petition submitted in August 2021 calling for an extension to the pilot garnered over a thousand signatures.

The committee, led by Chairman Jack Sargeant MS, has invited a number of experts, including Sophie Howe, Future Generations Commissioner for Wales, Will Stronge, Research Director at think tank Autonomy, Lydia Godden, Women’s Equality Network Wales and Ewan Hilton, CEO of the mental health charity platform will testify on the subject.

He concluded that the Welsh Government should consider increasing the size and diversity of the pilot scheme to provide more robust data and ensure that payments are guaranteed, unconditional and paid to the individual, not the household.

He also recommended that the government do all they can to persuade UK government departments, such as the Department for 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 testimony to the commission was inspired by a report entitled ‘A Dignified Future for Wales – A Basic Income for All’, commissioned by Wales’ Commissioner for Future Generations. It is 205 pages and you can read it in full by clicking here.

Two basic income models are modeled in the report. The first, an introductory basic income, which he says would halve poverty in Wales and drastically reduce inequality. It says overall poverty rates in Wales would drop by 50% and child poverty would drop by 64%, bringing it to a rate of less than 10% in Wales. Pensioner poverty in Wales would fall by 61%.

The report outlines how a ‘model one’ basic income would cost around £6billion a year and could be paid for through reforms to the tax system in Wales or through small reallocations from the UK’s spending budget.

A more substantial and more costly ‘model two’ basic income would almost eliminate poverty in Wales, the report says. This second basic income model is presented as a longer-term goal for policymakers.

It also finds there is a “strong appetite” among the Welsh public to try basic income, with a poll showing that 69% of the public support the Welsh government trying a basic income scheme, with only 11% opposed. There are 67% who argue that the Welsh Government raises taxes on the very wealthy in order to provide a “basic standard of living for everyone in Wales”.

The report proposed a pilot with the following characteristics…

  • A monthly payment without means test and without withdrawal, paid directly into the personal bank accounts of individuals. There would be no behavioral conditions to be met in order to receive the payment.
  • The amount would be set at different rates for children (0-17), adults (18-64), and adults 65 and older.

  • The basic income would be paid in addition to existing benefits for people with additional needs, such as disability benefits.

  • The proposed pilot project would include 5,000 participants spread across two specific communities – in an urban area and a rural area of ​​Wales.

  • To capture the community-level effects of the basic income, this would be a “saturation study”, meaning that all residents of the two pilot regions would receive the basic income.

  • In addition to the two test populations, the pilot would include stratified, randomly selected control groups, demographically comparable to the pilot sites and the Welsh population as a whole.

  • The pilot would take place over a 24-month period, balancing the need to observe social impacts over time with cost-effectiveness and political expediency.

  • It would be monitored and evaluated by an independent research group and would use a variety of evaluation methods to study a range of personal and social impacts.

The report said payments under the suggested pilot could look like this…

Age Range: Child 0-17 – Payout Rate Per Week: £120.48

Age Range: Adult 18-64 – Payout Rate Per Week: £213.59

Age Range: Adult 65+ – Weekly payout rate: £195.90

What the experts said…

Platfform chief executive Ewan Hilton said: “We fully support the Welsh Government’s intention to run a Universal Basic Income pilot scheme as we believe it has the potential to make a huge difference for people. we work with. However, we are disappointed that it is very small and does not appear to specifically include older people who have faced mental health issues. Disappointed that the committee did not recommend this. last thing we need is a half-hearted pilot project that is inconclusive due to 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 dramatically worsens mental health. The indifferent and bureaucratic nature of it and the culture of sanctions can never help support people going through a difficult time. In fact, it creates disincentives for people to try and get back to work, and focuses too much on getting people to “prove” they have an illness rather than what they can do. , without the ever-present threat of sanctions or starvation. We really need this to change.

Autonomy’s co-director with Autonomy Research Limited, Dr. Will Stronge said he felt the time was right to introduce it.

“There is a strong appetite among the Welsh public to try basic income and Autonomy’s in-depth study sets the roadmap for getting there,” he said.

“The Covid pandemic requires sweeping and bold changes to support people through future economic challenges down the line. In some ways, Covid was just a trial run for much larger environmental unrest. As numerous UBI trials have shown, securing a minimum income for all is the most progressive way to secure livelihoods.

“Now is the time for a universal basic income for Wales and the rest of the UK.”

Sophie Howe, Future Generations Commissioner for Wales, said: “Introducing a universal basic income could completely transform society, delivering a more equal and prosperous Wales.

“Piloting a UBI trial here in Wales gives us a chance to increase prosperity for every person, giving more people a life jacket when they need to keep their heads above water. – which has the potential to create a healthier and more equal population.”

“The Welfare of Future Generations Act compels the Welsh Government to take bold decisions to change systems that are not working and to prevent crises from getting worse. The findings of this report should excite leaders who say they want to a true green and just recovery that makes life fairer for everyone.”

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