Universal basic income in Wales: Where has it been trialled and is it likely to happen here?

Mark Drakeford has sparked debate and interest by saying that his government will look to carry out a pilot scheme of Universal Basic Income here in Wales.

In an interview with ITV Wales he has explained his view on the scheme: "I think it is giving somebody enough to live on through the government. And then anything they earn, beyond that is on top of that.

"This is...an income which is sufficient to meet their [the citizen's] daily work, income from employment is above and beyond."

It is an idea that has long been discussed amongst political parties - and has mostly been rejected - so supporters are celebrating the First Minister’s comments.

However there are more questions than answers about what it is, and how, or if, it is possible. 

• What is Universal Basic Income?

In its broadest sense, the term Universal Basic Income, commonly known as UBI, refers to 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.

It is not new. As a political concept it dates back to radical thinkers of the 16th and 17th centuries. Martin Luther King proposed what he called “guaranteed income.”

The arguments centre on its affordability and what effect it has on people’s health and wellbeing, including whether or not it removes incentives for finding work.

Supporters say it is less complicated than benefit systems and could help to end poverty as traditional jobs become scarcer and less reliable with the growth of Artificial Intelligence. 

• Where has it been tried?

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

The American state of Alaska gives every citizen an annual payment which varies depending on the price of oil, via the Alaska Permanent Fund which is financed by oil revenues. 

Since 2017, 250 participants in a scheme in Utrecht in the Netherlands either get a payment with no strings attached or are asked to do volunteer work with the aim of seeing which works best. 

A long-running trial is underway in Kenya where a charity issues regular payments to tens of thousands of people in hundreds of rural villages. It started in 2016 and is due to last 12 years.

Last year Spain became the first country to try a nationwide version with its “minimum basic income” although that scheme is far from universal and is only aimed at reaching the poorest 2% of the population.

• Political will in Wales

It is certainly much more of a mainstream idea than it has been in the past. Previously only the Green Party repeatedly included UBI in manifestos and campaigned for its introduction.

However, the pandemic has led politicians to think differently. 

Even if you do not include the UK Government’s furlough scheme as a form of UBI, before settling on ‘Eat Out To Help Out’, ministers were reported to be seriously considering giving everyone a £500 voucher to spend as they wished in order to help the Covid-damaged economy recover. Not exactly UBI, but still a radical idea. 

During the recent Senedd election campaign, both Plaid Cymru and the Liberal Democrats included commitments to piloting UBI in their manifestos. Welsh Labour did not include it, but Mark Drakeford has said that he has a long standing interest in the idea of UBI.

He has also said that his new government will seek out areas where it can work with other parties, something that is as much about his consensual political approach as it is about the political reality of the Senedd: this election has left Welsh Labour in a strong position but, with exactly half the seats in the Senedd chamber, it is one vote short of a majority.

In the interview last week which sparked the current flurry of interest in UBI, the First Minister said, “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.”

The Welsh Conservatives are not supportive of the idea. "Creating more jobs & better jobs should be the Welsh Government’s priority - not UBI", is the view of its leader Andrew RT Davies.

• No power

This could be the biggest sticking point.

The Welsh Government acknowledges that it does not have the power to introduce UBI because the welfare system is not devolved and remains the responsibility of the UK Government. 

The First Minister suggested that it would only be able to operate on a trial basis: "It'll be modest in scope inevitably because we don't have all the major levers you need in your hands as a government to do this on anything other than a pilot scale."

When pushed on the purpose of the pilot, Mr Drakeford said it was about "testing the concept".

He said: "I've always believed that universal basic income has some fairly significant potential advantages, but we've never tried it in a way that demonstrates whether those claims actually materialise.

"If we conduct a pilot in Wales, we can show that those advantages really do exist, and we will be in a much more powerful position to create the new support."

The First Minister had already given a clue to what UBI could mean in practice when I asked him about it in the ITV Wales Election debate. 

In response he talked about Labour’s pledge to guarantee work or training to young people, describing it as “an ambitious sense of what the future can hold for our young people with a UBI component, we will experiment with it for those young people who are care leavers who need our help the most."

That suggests more of a targeted basic income than a universal one. Regardless, the Welsh Government’s next moves will be closely watched by supporters and opponents of UBI.