Universal Basic Income: Wales welcomes 'world's most generous' scheme for care leavers

Young people leaving care in Wales will be given a guaranteed income of more than a thousand pounds a month under a new scheme being tried out by the Welsh Government.

Welsh Conservatives have criticised it as “giving out free money” and say it won’t help tackle the problems some vulnerable young people face.

From July 1st, around 500 care leavers in Wales will be offered a basic income when they turn 18.

If they take it up, the Welsh Government will pay them £1,600 a month (before tax) for two years, equivalent to an annual salary of around £19,000, with no conditions attached to how they spend it.

The monthly amount works out at around £1,280 after tax and they’d lose out on some other payment such as housing benefits.

However, even with those reductions, most would be several hundred pounds better off than if they went onto universal credit.

The Welsh Government insists that the scheme, which is expected to cost £20m over three years, is not what’s known as a ‘universal basic income’ (UBI) the idea that, instead of a range of means-tested benefits and tax breaks, a government gives every individual a regular, guaranteed payment regardless of circumstances.

There have been trials of similar schemes in all sorts of countries including Iran, India, Canada and parts of the United States.

Officials and ministers in the Welsh Government say helping young care leavers is the priority rather than trialling UBI which it doesn’t have the power or the resources to introduce.

But supporters of UBI will be watching what happens in Wales closely as it adds to global evidence about its workability or otherwise.

The amount young care leavers in the Welsh pilot is the most generous amount paid out to individuals in any similar pilot scheme around the world.

Drew Telfer, 17, is one of those who’ll qualify for the new basic income when he turns 18 in a few months. Credit: ITV Wales

Those taking part would also receive other support, such as help budgeting or claiming tax rebates.

The Welsh Government says it will “provide independence and security to people who have faced immense challenges during their childhood, giving them greater control and empowering them to make decisions about their future".

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. They need the extra help that this scheme provides.”

Chelsea Paul is hoping to use her money to save up and learn to drive. Credit: ITV Wales

The Welsh Conservatives say that “giving out free money” is “completely the wrong way” to help care leavers and that basic income schemes don’t work.

The party’s Shadow Justice minister, Joel James, 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.”

Even with reductions, most care leavers would be several hundred pounds better off than if they went onto universal credit. Credit: PA

Drew Telfer, 17, is one of those who’ll qualify for the new basic income when he turns 18 in a few months.

He told me that he needs food, clothes, some means of transport and a mobile phone. All the phones he’s ever had are hand-me-downs and were broken before he used them. Now he doesn’t have one at all.

His clothes need a refresh too, he says, because he’s had them for four years and they’re torn.

With clothes and a phone he can look for the work that he wants labouring or in security.

Chelsea Paul, who’s 17 and also lives in Cwmbran, told me what she’s looking forward to spending the money on.

"Well I’m moving out soon so it’ll help me pay my rent, obviously food shop and everything. But then I’ll probably save some of it as well because I want to start driving.”

A lifeline or 'giving away cash' for free?

Some opponents of the scheme think that not putting any conditions on the payments mean that some young people could waste the cash. I asked Chelsea what she thought of that.

“I mean we are teenagers so most people do think, ‘oh they’ve got money, they’re going to waste it’ and don’t get me wrong, I probably will spend money and think why’ve I gone and done that for? But it’s an opportunity and you’ll learn from it.”

Rhian Thomas, who’s 20 and lives near Llanelli, was involved in advising the officials who drew up the scheme through the organisation Voices in Care.

She has no time for those who say young care leavers can’t be trusted with the money: "I just think it's a load of rubbish simply because if it was their child they do the same."

Although she won't benefit from the scheme, Rhian knows how it would have helped her after an incredibly difficult time. Credit: ITV Wales

Although she won’t benefit from the scheme, she knows how it would have helped her after an incredibly difficult time.

"When I was 18, I left care and ended up in a B&B. It was during the first pandemic where we went into lockdown, so there wasn't much I could do. And I obviously couldn't really afford food and you're limited to the amount of stuff you can eat in the B&B - I couldn't cook up a roast!

"So obviously I had that barrier. And then when I finally got my own place, I couldn't afford it because the house was fully electric and it was costing me over £100 just on the electric and that’s over half my money gone already.

“I had to give it up and when I was homeless I met a woman that was homeless too and I moved in with her.”

When I asked Drew if he’d be sensible with the money or blow it, he answered straight away: “I’ll be sensible because I've never had this money.I just want to prove to everyone I can do good with this money, and I’ll just change my life with it.”