Universal Basic Income in Wales ‘would cut poverty in half’

Poverty in Wales would be halved if the Welsh Government established a Universal Basic Income (UBI) system in the country, a major study has found.

The research, carried out by leading think tank Autonomy, found UBI would decrease overall poverty rates in Wales by 50%, and child poverty would decrease by 64%, bringing it to a rate of under 10% in Wales.

It is currently at 28% – the worst in the UK.

It also found nearly three quarters of people in Wales, 69%, support piloting UBI.

UBI is a government programme in which everybody receives a set amount of money on a regular basis, regardless of their employment status.

It is a minimum payment, designed to meet basic needs, paid to everyone individually, unconditionally.

Earlier this year the Welsh Government announced its ambition to pilot a form of UBI in Wales, but suggested the scheme would focus on specific groups of people, like care leavers.

However campaigners including UBI Lab Wales, the future generations commissioner Sophie Howe and more than 1,000 petitioners have since called on the First Minister to ensure the pilot includes children, the employed, the unemployed and pensioners, as well as care leavers.

Ms Howe, whose role was created under Wales’ Well-being of Future Generations Act, will on Monday give evidence to the Welsh Parliament’s Petitions Committee, alongside director of research at Autonomy Will Stronge, calling for a geographically-based universal basic income (UBI) scheme.

She said UBI could deliver “a more equal, prosperous Wales”.

“Piloting a UBI trial here in Wales gives us a chance to increase the prosperity of every single person, giving more people a life jacket when they need to keep their head above the water – which has the potential to create a healthier, more equal population,” she said.

“The findings in this report should excite leaders who say they want a true green and just recovery that makes life fairer for everyone.”

Mr Stronge said: “The Covid-19 pandemic necessitates radical and bold changes to support people through future economic shocks.

“As the economy and labour market struggles to find its feet, it’s clear that guaranteeing an income floor for all is the most progressive way of securing livelihoods.”

Ewan Hilton and James Radcliffe, chief executive and head of policy at Platfform, a mental health and social change charity, will also be giving evidence at the session, as well as Lydia Godden, of Women’s Equality Network Wales (WEN Cymru).

A trial in Wales of 2,500 people, the report finds, could cost about £50m, with adults being paid from £60 per week.

Those who were already living in poor health, poverty or in marginalised communities are said to have been the hardest hit by the pandemic.

Having a job is often not enough to lift a family out of poverty: Analysis by Work and Economy Correspondent Carole Green

Let’s take a look at the scale of the challenge: One in four people are already living in poverty in Wales, including 180,000 children - that’s one in three children.

The rise in inflation and the cost of living makes it even harder for this group of people to meet their basics needs.

It’s not just people receiving benefits who are hard up. Four in 10 households living in poverty in Wales have one person working full time. However, Wales has lower pay in every sector compared to most other areas of the UK. So even those who are working have less to live on. Having work is often not enough to pay the bills or to lift a family out of poverty.

Housing is a major cost for most people. Private and public sector rent rises have outstripped wage rises in recent years.

The low wage economy has led the Welsh Government to focus support on creating a higher skilled Welsh workforce which can in turn command higher wages. There has also been a push for Welsh businesses and public sector bodies to become Real Living Wage employers - to increase the amount of money going into workers pockets, into households and circulating in the economy.

The recent £20 cut to the uplift in Universal Credit has hit Welsh families at a time when their living costs are rising. Although the UK Government and the Welsh Government have created new funds to tackle hardship, experts working in the field say funding pots don’t adequately replace benefits paid directly to families.

We’ve also seen the pandemic deepen the existing divides not just in health but in the Economy too. The better off have largely held onto their wealth and in many cases their financial position has improved. However the lower paid have been in the sectors hit hardest like Retail and Hospitality.

The rise in the cost of living isn’t impacting everyone equally. Women, younger people, those with a disability and people from a Black, Asian, Minority or Ethnic background experience higher in work poverty rates. That’s because these groups of people are more likely to work in insecure, lower paid jobs.

Rising living costs, combined with the end of the coronavirus job retention scheme, also known as furlough, on top of cuts to welfare benefits such as universal credit, is amounting to a “perfect storm” or “tsunami”, according to respondents to a Senedd Committee inquiry into debt and the pandemic held this month.

The Welsh Government said it closely followed the progress of pilots around the world and believes there is an opportunity to test a version in Wales.

A spokesperson said: "We understand the excitement and the interest around this policy however it is important that we get it right - there is more work to be done in this area but we are interested in developing a version, potentially first involving people leaving care.

"We will be listening to key stakeholders as we build the model and we are already working alongside the Future Generation Commissioner’s office."

A review into a UBI pilot in Finland, which ran from 2017 to 2018, found people who took part were generally more satisfied with their lives and experienced less mental strain, depression, sadness and loneliness.

They also worked slightly more than those on unemployment benefits and reported better cognitive functioning.

While Finland was the first European country to pilot such a scheme, it was in the end considered a failure. However, many experts have since said the scheme was flawed because it was underfunded and rushed.