On Friday, a PS20m initiative that provides a basic income for young people who have been placed in care will be launched in Wales.
The Welsh government will offer PS19,200 to 500 18-year olds a year without tax, starting 1 July.
One care leaver stated that the cash would provide a “safety net” for the 18-year olds. Others hope that it will give them a head start.
The Welsh Conservatives were concerned that the scheme might create more problems than it solves.
Officials will analyze the scheme to determine if the money, which is roughly equal to the living wage, can be used to help the children settle into independent living.
Research shows that care leavers are more at risk for homelessness and mental illness.
This is the latest attempt by some to test the unconditional financial support concept for basic income – which has been promoted as an alternative to existing welfare system.
According to the Welsh government, the cash offered by the basic income pilot is the largest amount anywhere in the world.
Income will be counted against benefits, and children who get the money will have to pay the basic tax rate. This is despite the Welsh government’s hopes that the UK ministers will ignore the scheme.
This works out to PS1,600 per month, or PS1,280 after tax.
Care leavers Chloe or Chelsea are two examples of people who could benefit.
Chloe has been in care since she turned seven years old and plans to attend university. She stated that the scheme would be “really useful”.
“I would like to take a course in youthwork. This scheme will allow me to do things I wouldn’t normally be able to, and it will also help me financially.
She stated that she was “quite fortunate” to have had the support of foster families, but “but I do know that there are care leavers who don’t have that family support as I do.”
She hopes to be able to save the money and use it to pay for food and other necessities. It can be used to buy stuff for my university studies if I’m at university.”
She stated that the money would provide a “safety net” and said she felt “very fortunate” to be participating.
Chelsea has been in foster care since she was four years old.
BBC Wales told her that much of her basic income would be used to rent as she is moving out. She also hopes to save some.
Chelsea wanted to find a job while she was on the scheme. “I’m applying now for any job,” she said.
She stated that she can’t wait to be an independent adult and said the money would make a big difference.
Rhian, a former care leaver, was one of those who helped officials put together the pilot.
During the pandemic, she was without care.
She said, “I was made homeless, then I got a place about a year back, but I couldn’t pay the bills or any other expenses, so I had to move again.”
Rhian stated that care leavers are often restricted in the support they receive: “It’s a big shift for us as care-leavers from getting loads of support to basic support.
“It will give those turning 18 in this year a jumpstart to real life and support them with budgeting.”
It will last until 2025 and cost approximately PS20m. The scheme is open to young people who have left care and are turning 18 between 1 July & 30 June.
Mark Drakeford, Wales’ First Minister, stated that the pilot could be used to argue for a scheme “of greater scale” if the “promises made for basic income are actually realised in practice”.
He stated that care leavers who receive the cash will be able make investments in their future, such as in education and jobs.
Drakeford said that the scheme will provide “advice, guidance”, and would be available for care leavers for as long as two years. He also stated that the program could help taxpayers save money.
According to him, young people who leave care are “over-represented” in prison populations and “over-represented within the mental health population”.
He said, “We ended up spending huge amounts of money dealing with failures.”
“This is an effort to move that money from that part of the spectrum to put it upfront, in order to invest in those young men’s futures, to ensure they can make the most of their talents.”
To determine if basic income schemes work better than existing welfare systems, they have been tested around the globe.
The “universal basic income” concept, where all residents of a given area receive a cash sum regardless of their means, is supported by advocates. This could be used to avoid “benefit traps”, where people are forced to work and lose money.
Some backers believe that a basic income could be a good way to provide financial support for those who find it difficult to find work due the rise of automation.
In California, Finland and Kenya, small experiments were conducted.
Welsh ministers had announced plans to test the promise of a basic living income in 2021. However, they were criticised for focusing on care leavers and not a wider group.
Officials are interested in determining if a basic salary is helpful in helping young people leave the care system. Many of these individuals often have difficulties finding a stable place to live and finding work.
When the Welsh government announced its plans for February, they stopped calling it “universal”.
To assess the project’s impact, interview the people involved and conduct surveys, researchers will be hired in the autumn.
Around 500 people are eligible. However, participation will be voluntary and take-up may be lower.
Welfare is not devolved. The scheme was developed by the Welsh Labour government without the support from the UK government. This is because the UK controls the majority of benefits in Wales.
Joel James, the Welsh Conservatives’ spokesperson, said that giving PS1600 to “some extremely vulnerable persons with complex needs” a month could make it worse in the long-term.
According to the MS for South Wales Central, care leavers can be exploited or abused by others without the right support.
He stated that only a small percentage of people have drug dependence issues, and that a large amount of money could worsen any existing problems.
James said that the Welsh government had created “a cliff edge for care leavers” who will “simply see their money stop after two years”.
Luke Fletcher is Plaid Cymru’s economic spokesperson and he welcomed the plans.
He said, “We look forwards to seeing the positive impact this will have on their lives, which I’m certain it will,”
“It’s crucial that the Welsh government explains how they will support care leavers participating in this pilot as we start it. This is not only during the pilot but also after it has ended.”
