Wales and the new universal basic income scheme

Mark Drakeford, the First Minister of Wales, has revealed that his government will launch a pilot scheme for a universal basic income (UBI). He announced that the new minister for social justice, Jane Hutt, will be asked to work on the pilot in a move hailed as “incredibly significant” by the Future Generations Commissioner. Although the scheme has been trialled before in other countries, this is the first time we’ve seen UBI take this step forward in the UK. So what exactly is the idea, and could it work?

The idea behind UBI is that every citizen, regardless of their income or means, receives a regular sum of money from the state to help cover the basic cost of living. Proponents argue that this scheme would alleviate poverty by ensuring that everyone has a basic standard of living to fall back on and thus reduce the need for a welfare state. In the run-up to the 2021 local elections, a worldwide group of researchers and activists called the UBI Lab Network asked candidates to sign a pledge vowing to pressure governments and councils to launch UBI trials. In Wales, 25 of the winning candidates signed up.

Early last week, a Welsh government spokesperson said: “In principle, the idea of a universal basic income has its benefits. To introduce this in Wales would require an active commitment from the UK government as the welfare system is not devolved.” However, in an interview with Greatest Hits Radio on 14 May, Mr Drakeford said that he would press ahead with a pilot.

The idea behind UBI is that every citizen, regardless of their income or means, receives a regular sum of money from the state to help cover the basic cost of living

The First Minister said: “A basic income pilot is one of the specific responsibilities of our new social justice minister. It will have to be carefully designed, it will draw on the experience of attempted pilots in Scotland, but I have a very longstanding interest in basic income. I hope we will be able to mount an experiment here that will test whether the claims made for a basic income approach are actually delivered. We’ll do it on a cross-party basis. There are 25 members of the Senedd in different parties who have expressed an interest in it. I want to do it on that broad basis and design the best possible pilot.”

Jonathan Rhys Williams of UBI Lab Wales said: “This is a huge moment for the basic income movement in the UK and around the world. To see the first minister firmly commit to a trial is incredibly satisfying. This is a big step towards creating our generation’s NHS, and we look forward to learning more from Jane Hutt and her team. We hope the trial will include several different cohorts of people, such as employed people, unemployed people and children, and that it focuses on areas most in need of a basic income.”

At the moment, details are sparse on the ground – it’s not clear exactly how much the Welsh UBI scheme would pay, nor how frequently these payments would come in. This will come in time, but there’s also the key question hovering over the trial – will it actually work? Despite the increased number of high-profile figures promoting UBI, actual practical trials have had mixed success. A two-year trial in Finland that gave a fixed income to jobless people made them happier and less stressed, but few were actually inclined to search for work due to the safety net. A three-year UBI program in Ontario was forced to end early after it was far too expensive and “not sustainable” and failed to help people actually exit poverty.

Most precariously, a 2019 study on UBI, exploring the practices and consequences of 16 practical UBI schemes, found that they were generally too expensive and not overly effective

Most precariously, a 2019 study on UBI, exploring the practices and consequences of 16 practical UBI schemes, found that they were generally too expensive and not overly effective. Anna Coote, the co-author of the New Economics Foundation study, wrote that the research “could find no evidence to suggest that such a scheme is sustainable for all individuals in any country in the short, medium or longer-term – or that this approach could achieve lasting improvements in wellbeing or equality”. According to the International Labour Office, the cost of a sufficient UBI scheme would be equivalent to 20-30% of GDP in most countries– Wales’ most recent funding comes to around £5.85 billion, so that would mean spending in the region of £1.5-2 billion to enact such a scheme seriously.

As governments consider restructuring their economies after the pandemic, there may be more discussion of UBI soon. And as such, there will be lots of eyes on Wales to see whether their pilot scheme is a success. Historical precedent is not on their side, but then there’s never been a government that has so openly committed to the ideals of UBI before.