Wales to offer £1,600 a month basic income to care leavers
Every 18-year-old leaving care will be offered £1,600 a month under the Welsh government’s new basic income pilot.
It is expected that about 500 people will be eligible to join the scheme, which is being launched this year and could cost up to £20m over three years.
The £1,600 a month will be taxed and is expected to be counted as income by the UK government, meaning it would affect someone’s eligibility for benefits, such as Universal Credit (UC). It will be unconditional and will not be withdrawn if participants get a job and it will be broadly equivalent to the real living wage, according to officials.
Those eligible will receive payments for 24 months, amounting to an income worth £19,000 before tax annually, with the first payment a month after their 18th birthday.
Officials said it was the highest amount offered on a basic income scheme anywhere in the world. Plaid Cymru wants the pilot to be expanded further to eventually become a true Universal Basic Income (UBI) for all Welsh citizens. The Conservatives have strongly criticised the move, calling it ‘a waste of public money’.
Through this pilot, ministers want to test out how a basic income could help Welsh care leavers be better placed for their transition into independence as adults, in particular if it will improve employment and education outcomes.
Similar pilot schemes have already taken place across the world. Last year, a basic income for care leavers was tried in Santa Clara, California, where 72 young adults received $1,000 (£739) initially for 12 months. Participants in the US programme saw their credit scores ‘go up significantly’ and ‘reported higher a feeling of empowerment’.
The Welsh government has budgeted £5m in the first year of the pilot, £10m in the second and £5m in the third, although how much they spend will depend on how many sign up.
Welsh officials are also promising extra support for those taking part, such as financial well-being training.
Social Justice Minister Jane Hutt said: ‘Care leavers have a right to be properly supported as they develop into independent young adults. Our basic income pilot is an exciting project to deliver financial stability for a generation of young people that need it most’.
She added that ‘too many young people leaving care continue to face significant barriers to achieving a successful transition into adulthood’.
Plaid Cymru’s economy spokesman Luke Fletcher said: ‘This pilot is a step in the right direction for the Welsh government, but it’s really important that it has the structure around it to enable it to meet the ambition of addressing poverty and unemployment, as well as improving health and financial wellbeing.’
‘Poverty is as multidimensional as it is widespread, and there’s no reason that this pilot cannot be expanded to a wider population from the start.’
There is no date for when the scheme will be launched, although officials said it would likely be in the summer.
In related news, a delegation of adults who were in care as children have petitioned the PM, urging him to rectify a recent change to the law which will effectively reduce the care leaving age to 15.
Photo by Alexis Brown