Welsh Government slammed over £20million basic income pilot scheme handing teenagers £1,600-a-MONTH

The Welsh Government was accused of wasting taxpayers’ money today after unveiling a £20million basic income scheme that will offer hundreds of teenagers £1,600 a month without the need to work.

In what is one of the most generous schemes of its type in the world, 18-year-olds leaving the care system will be eligible for the payments for two years.

It is estimated that up to 500 will be able to apply to the programme, where the money is put in their bank accounts with no demands on what they do to earn it or how it is spent.

The cash is equivalent to 70 per cent of the average salary in Wales, which was 562.80 a week or £2251 a month in 2021.

Ministers want to use the scheme to assess the impact receiving a basic income has on young people as they leave care, particularly those from disadvantaged backgrounds.

Jane Hutt, the Senedd Minister for Social Justice , said the scheme support care leavers who ‘have a right to be properly supported as they develop into independent young adults’.

But critics rounded on the Labour administration today, pointing out that similar schemes in other countries have either failed to get more people into jobs or have met with only limited success despite huge amounts of money used.

Joel James, the Welsh Conservative shadow minister for social partnership, Joel James, said: ‘Whilst I wholeheartedly support helping the poorest and most vulnerable in our country, the Labour Government is not even close to living in reality with this trial.

‘Countless trials from across the globe have found basic income does not have the expected outcomes as it fails to incentivise work and proves time after time to be a waste of public money.

‘If rolled-out across the board with every adult in Wales receiving £1,600 a month it would cost nearly £50 billion a year, and at the same time reward the wealthiest in society rather than helping those who need it most.

‘Our NHS is at breaking point and our economy is in a fragile state, but instead of tackling those issues head-on, Labour are more interested in Basic Income – which will cost the country an absolute fortune.’

All young people leaving care who turn 18 during a 12 month period, across all local authority areas, will be offered the opportunity to take part in the pilot which will begin during the next financial year. 

The money is taxable and counts against other benefits, so recipients will not get two lots of payments.  

Advocates of a so-called universal basic income argue that it cuts bureaucracy and say that people will be more willing to take on temporary or part-time work if their benefits will not be cut as a result. 

However, previous schemes have questioned their value. An experiment with ‘free money’ in Finland made people happier but did not improve employment levels and would be ‘unsustainable’.

A 2017-2018 experiment saw 2,000 unemployed people given a €560 (£490) basic income every month in a two-year trial to see whether the system would work better than traditional benefits.

Participants in the Finnish study ‘were more satisfied with their lives and experienced less mental strain, depression, sadness and loneliness,’ researchers said.

But the Finnish study found that the handout led to people being employed for only six more days over a one-year period.  

A similar scheme in Spain yielded similar results. The B-Mincome programme handed 1,000 households in Barcelona 1,675 euros (£1,405) a month in 2017, with some having to do nothing to earn it and others having to take part in social programmes to earn it. 

It similarly had little effect on employment, but did make people happier and less stressed.

In 2020, German researchers launched a programme that sees a group of people £1,080 per month. The study sees 120 people handed the cash with no means testing or limits on how it is spent, then monitored to see how their attitudes and behaviours change.

Another group of 1,380 people will not be given any money but will still have their attitudes and behaviours monitored, to see how they compare.

The experiment, which is being funded by an economic institute called My Basic Income using donations, runs until 2023. 

UBI was among the ideas considered by Boris Johnson when working out how to deal with the economic impact of the Covid pandemic. But it was eventually rejected in favour of the furlough scheme and other work programmes.