What works to tackle poverty? Experimenting with a Basic Income in Wales

The current ‘cost of living crisis’ has highlighted the urgency of identifying and developing effective approaches to tackling poverty, an objective which underpinned the poverty review which we delivered for the Welsh Government in September 2022. Over the last year, there has been a 69% rise in the number of people experiencing food insecurity in Wales, and a 50% rise in the number of people falling behind paying a bill. But for many people in Wales poverty is not a new problem, with around 25% of the population living in poverty for the last decade.

One of the potential policy solutions which the Welsh Government is currently exploring is a type of ‘cash transfer’ known as a ‘basic income’ which, put simply, puts more cash in people’s pockets. As well as directly boosting people’s financial resources, there is potential for this approach to ease some of the emotional and psychological challenges – such as shame, stigma and mental load – that people often experience as a result of living in poverty or when seeking support out of poverty.


The shame, stigma and mental load of poverty

These experiences of shame, stigma and mental load were highlighted repeatedly in our recent research with people with lived experience of poverty, and in the existing ‘lived experience’ evidence base. One of the harsh realities that participants highlighted is that these negative experiences are often generated at the points at which people seek support. For example, application processes for support which require people to demonstrate and evidence their ‘deservedness’, and processes which mark people out as different in some way, such as school meal menus which are different for children on free school meals compared with those paying, can all contribute to feelings of shame, stigma and mental load. As leading poverty researcher Ruth Lister reminds us, people experience poverty ‘not just as a disadvantaged and insecure economic condition, but also as a shameful and corrosive social relation’.

This is important not only because it is a form of suffering in and of itself, but also because it contributes to poor mental health, which is itself a driver of poverty. It can change people’s behaviour and deter them from seeking or taking up the support they are entitled to. Estimates suggest that around £15billion of benefits go unclaimed each year in the UK, and this doesn’t even cover other kinds of non-financial support, such as free school meals. Non-take-up of support is at least partly due to systemic barriers to access, such as complicated processes, and psychological disincentives, such as mental load, shame and stigma.


Basic income: an idea whose time has come?

One of the policy ideas that has received a huge growth in attention over recent years due to its potential, among other things, to remove barriers to take-up and also the stigma that can be associated with means-tested benefits, is Universal Basic Income (UBI). This has led many commentators to ask whether Basic Income, which has its roots in philosophical thought from over 500 years ago, is now an idea whose time has come?  In its purest form a UBI should be a ‘period cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement’. While there are very few trials that fulfil this definition entirely, there are now around 80 basic income trials of diverse types taking place around the world. Some of these have been close to universal, such as in Iran where all citizens have received an unconditional cash transfer of around $1.50 per day since 2011 in an annual lump sum, while others have been more targeted such as B-MINCOME in Barcelona which offered 1000 households in some of Barcelona’s poorest districts up to €1675 per months for two years.


The Welsh Basic Income Pilot Scheme

Closer to home in Wales, the Welsh Government, led by First Minister Mark Drakeford, has become one of the most recent public authorities to launch a £20million Basic Income Pilot Scheme which began in July 2022 and will provide 500 young people leaving care with an unconditional cash transfer of £1600 per month (before tax) for two years ‘to support them as they make the transition to adult life’. This is one of only two basic income trials ever to have focused on care leavers. Care-experienced young people are more likely to have experienced abuse or neglect in childhood, and to face a range of challenges in adult life, such as homelessness, contact with the criminal justice system, poor physical and mental health, low educational attainment, and unemployment. And as we’ve shown in our own research, there has been a substantial and sustained increase in the rate of children in care in Wales over the past 25 years and has rates higher than the rest of the UK.

The Welsh Pilot offers a really exciting opportunity to explore whether a Basic Income can improve outcomes for young people leaving care and how it interacts with the broader range of support that is offered to care leavers in Wales. Key to this will be the evaluation and monitoring of the scheme which is being led by the former Children’s Commissioner for Wales, Professor Sally Holland, who is now based in CASCADE, a research centre in Cardiff University and WCPP’s neighbour in SPARK, Cardiff’s new social science research park.


Joining the Welsh Basic Income Pilot together with international research and evidence

In order to ensure that the evaluation team can draw on the insights gathered from previous basic income trials, as well as evaluations of other kinds of support for care leavers, WCPP convened a conference on the 15th December 2022. This involved speakers from the Welsh Government, CASCADE and experts including Professor Sir Michael Marmot, Professor Guy Standing, as well as organisations involved in trials of basic income initiatives, such as The Young Foundation, GiveDirectly and the RSA, and the Centre for Evidence and Implementation who focus on evidence for interventions for care leavers. The event also provided an opportunity for the broader research community to learn about the Pilot in Wales and its evaluation.

For further information about the event or the WCPP’s work on tackling poverty, please contact Amanda Hill-Dixon, Senior Research Fellow.