What is a basic income? Welsh government to launch basic income pilot scheme for care leavers

The Welsh government is to launch a basic income pilot for care leavers, in an effort to help young people leaving care transition into independent adulthood.

All 18-year-olds leaving care will be offered £1,600 a month upon leaving care. The pilot scheme is being launched later this year and is expected to cost as much as £20 million over the coming three years.

In recent years there has been considerable discussion in policymaking circles about the potential uses of a basic income. But what exactly is a basic income and what does it do?

READ MORE: Call to expand Universal Basic Income pilot in Wales

What is basic income?

A basic income is a particular type of payment – a kind of financial transfer policy – given either to all citizens or to certain groups of people without the need for means testing.

Basic incomes can be used for various purposes, including alleviating poverty. Various countries and localities have experimented with different types of basic income over the years.

A basic income which is paid to all citizens unconditionally is known as universal basic income, or UBI. The Welsh pilot scheme is not a UBI, as it’s only being offered to 18-year-olds leaving care.

Some economists and policymakers argue that a UBI would be effective at reducing poverty as well as giving recipients more freedom to find work that genuinely interests them.

There are conflicting viewpoints on how a UBI would be implemented, however. Some argue that it should complement the existing welfare state, others that it should basically replace it.

Who’ll be entitled to the Welsh basic income?

The Welsh basic income pilot scheme, set to launch later this year, will be open to all 18-year-olds leaving care in Wales. About 500 people in total will be eligible to claim it.

This will amount to an unconditional payment of £1,600 a month and will not be withdrawn from any recipients who take up a job.

Recipients will receive the payments for 24 months, totaling a combined pre-tax figure of £19,000 per annum. This is roughly equivalent to a real living wage.

However, the money will be taxable and the UK government is expected to class it as income – so it could affect recipients’ eligibility to claim other benefits.

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