Basic Income Pilot: Mark Drakeford’s Controlled Experiment

Money spilling out of a jar

Harry Thompson argues that the First Minister’s recent plan to trial a Basic Income Pilot has the potential to offer groundbreaking, real-life insights into the effects of the policy.

With the dust well and truly settled on May’s election, the tectonic plates of policy have shifted from politics to governance and from poetry to prose. Whilst Welsh Labour’s ‘deliverable’ manifesto and campaign may not have always felt as though they lived up to our nation’s bardic heritage, the party successfully raged against the dying of the light predicted by so many and put itself in a position to govern alone – at least for now.

For a party that had become accustomed to consistent electoral disappointment at a UK level, this renewed and active mandate in their governance (as opposed to essentially a midterm referendum on going-ons at Westminster) was energising. This renewed sense of optimism was key to the immediate post-election actions of those running the Welsh Government.

Soon after election night we saw confident pronouncements by a governing party that had clearly decided that this election delivered a mandate for more than its slimmed-down manifesto.

Julie James arrived on the Sunday shows to put front-and-centre issues that had previously been hidden away—pledging the long-overdue expansion of the Senedd (and with it raising the potential for a move to proportional representation).

Not content with this, the Welsh Government soon announced a key economic policy announcement—a basic income pilot.

“The long-standing proposal for a universal basic income has experienced an international renaissance as of late.

The announcement caused enthusiastic campaigners to raise their expectations and the Welsh Government-wearied to raise their eyebrows. Policy-followers in Wales have seen many promising pilot schemes fizzle away into measures of little consequence.

A pilot scheme that ultimately the Welsh Government has neither the devolved ‘authority’ or the financial firepower to implement in full seems to many destined to become another report to gather dust in the corridors of Cathays Park. However, there has perhaps been some misunderstanding of the factors at play behind the scene here, and it is worth examining what exactly the Welsh Government—and, vitally, Mark Drakeford—are hoping to achieve. 

The long-standing proposal for a universal basic income has experienced an international renaissance as of late, with many viewing a set regular payment to all as a potential alternative to a welfare system that has come to be defined as a punitive hoop-jumping exercise for vulnerable recipients, as well as offering a potential answer to technological advances ramping up job obsolescence.

In practical terms, the Welsh Government has stated that it is interested in a small pilot involving people leaving care. In a recent appearance on Ed Miliband’s Reasons to Be Cheerful podcast, the First Minister described the pilot as ‘a sort of asset-based welfare type experiment, using some of the ideas from UBI’.

He outlined a plan to take a cohort of care leavers in Wales and provide them with a basic income. He described care leavers as a group of people who are vulnerable to the ‘buffeting of fortunes’, with low incomes causing horizons to shrink and decisions being made on the basis of day-to-day subsistence rather than for the long term. He stated that the hope was this experiment would provide them with a reliable income that will sufficiently free them to make a different set of decisions about their futures beyond the immediate.

“Mark Drakeford seems an unlikely proponent of public subsidy of private property ownership.

The description of the policy as an asset-based welfare experiment is interesting, and in some ways counter-intuitive. Some have described the principle assumption of asset-based welfare as encouraging middle-and-lower income households to accept greater responsibility for their own welfare needs by supporting their investments in property assets—for example, owner-occupied homes—in response to the retrenchment of unemployment benefits and defined contribution pensions that has been seen in many Western countries. Housing asset-based welfare is controversial, and is also based on the idea that owning a home can have a welfare function by acting as a store of wealth and as an emergency financial reserve.

Mark Drakeford seems an unlikely proponent of public subsidy of private property ownership in order to improve an implied lack of personal responsibility amongst lower income groups. It is unlikelier still that his intention is to forge a way forward for a private-led replacement of the welfare state as the basis of society’s safety net. It is perhaps likelier that the assets he is referring to are either personal savings to improve longer-term financial security—he specifically referred to making investment decisions in his podcast appearance—or investment in the care leavers themselves, giving them the freedom to turn down insecure, low-paid work to make ends meet in favour of training, education, or career-building opportunities.

“The First Minister is likely aware that this ‘pilot’ will at least in the near-term not expand into a fully-fledged Universal Basic Income in Wales.

The First Minister’s personal interest in this area shines through. He has said that his doctoral thesis dealt with a group that advocated something called ‘social credit’ in the inter-war period—which was a form of universal basic income. However, he said that there had been very little practical application to learn whether the claims in favour of it are actually realised in the lives of people who receive it.

The First Minister also has a long history with care. In a previous life he was a social worker in Ely and Caerau, a time that clearly still has a profound impact on his politics and which interlaces many of his conversational anecdotes. After this, he went on to become a professor of social policy. He also has a strong personal interest in care services and adoption. With someone with an on-the-ground, academic, and personal experience and interest in care services and a long-standing interest in basic income, this policy should come as no surprise.

There is a clear direct line from a social policy professor becoming First Minister to this policy announcement.

Syniadau uchelgeisiol, awdurdodol a mentrus.
Ymunwch â ni i gyfrannu at wneud Cymru gwell.

This context—particularly the First Minister’s personal interest—is important to begin to properly evaluate the policy. Since the First Minister chose to put the policy front-and-centre immediately post-election, we have seen ideological debate around the principle of basic incomes and we have seen semantic debate around the missing ‘U’ from ‘UBI’ and the Welsh Government’s lack of levers to introduce a truly universal benefit.

These debates—whilst inevitable—are somewhat missing the wood for the trees. The First Minister is likely aware that this ‘pilot’ will at least in the near-term not expand into a fully-fledged Universal Basic Income in Wales, due to the lack of finance and powers available to him. As we can see from the reference to asset-based welfare, this is not a pilot in the sense that the Welsh Government expects to be able to introduce a full Universal Basic Income if the results are positive.

“Solid and transparent metrics are needed to understand how this policy changes outcomes for care leavers in order to take clear conclusions from the experiment.  

Despite this the proposal has exposed ideological fault lines, with Conservative MS Janet Finch-Saunders recently describing the ‘unjustifiable’ policy as taking a step closer to being a communist state. Welsh Conservative leader Andrew RT Davies was more measured in his criticism, noting that he did not support it but also describing it as ‘merely an allowance that will be given to carers’.

This is clearly a contentious area that invites much policy and ideological debate. Despite the focus on asset-based welfare, this is still an experiment based on testing the numerous claims that proponents of a Basic Income make. And despite the heat this topic generates, immediate focus should be on the practical elements of how this experiment is designed.

Proponents of a Basic Income point towards a range of potential benefits to the policy, such as: a sense of security to pursue more education or training if they wish to, or more rewarding (and thus sustainable) career paths; recipients being made happier, less stressed, and more able to navigate the negative effects we know a turbulent early life can bring; and keeping vulnerable people away from needing social services and out of the prison system. Opponents of the policy state that it has the potential to disincentivise work.

It is vital that we have a control group to compare to—potentially historical, to avoid the ethical pitfalls of picking winners and losers in a group as vulnerable as care leavers. However, the First Minister’s statement that he expects it to involve a ‘cohort’ of care leavers implies that the Welsh Government does not intend for this pilot to reach all care leavers – meaning a readily available control group is likely to be available. In short, solid and transparent metrics are needed to understand how this policy changes outcomes for care leavers in order to take clear conclusions from the experiment.  

“Rather than viewing the policy announcement in a puritan sense of what is missing, analysis of the policy should also focus on what is to be gained.

However, what is undeniably the most important aspect of this policy announcement is being missed in the ongoing debates surrounding ideology and semantics – the care leavers themselves. There has been a tone of disappointment in much of the reaction to the announcement that the basic income pilot will ‘only’ be available to care leavers – but this is to miss the point.

Some of the most common reasons for children to be taken into care include abuse and neglect. UK Government statistics from 2017 showed that 40% of care leavers aged 19 to 21 were not in education, employment or training, compared to 13% of the same age group in the general population. Many have had to contend with a background of abuse or neglect, with consistent interventions by social services, and enter adult life with an educational attainment gap with the general population of around 30%. Around 20% of homeless people in Wales are care leavers. Rather than viewing the policy announcement in a puritan sense of what is missing, analysis of the policy should also focus on what is to be gained – a potentially transformative measure for a vulnerable group who are being failed by our social security system and our society as a whole.

Gofod i drafod, dadlau, ac ymchwilio.
Cefnogwch brif felin drafod annibynnol Cymru.

 

Not only have the potential benefits for care leavers taking part in the pilot been ignored, so too has the long-term potential for the policy outside of a universal basic income. If, as listed above, a thorough and well-thought-out evaluation runs through this pilot, we can turn an eye to making a basic income for care leavers a permanent and distinctive plank of the Welsh welfare system.

This measure has the potential to be one of the most transformative and positive policies introduced in the devolved era, whilst breaking ground for basic income policies internationally.

The Welsh Government has created for itself a real opportunity to introduce the ultimate legacy policy for a social policy professor-turned-First Minister – and if the right steps are taken, we may well see some poetry in policy after all.


 

All articles published on the welsh agenda are subject to IWA’s disclaimer. 

Harry Thompson is Economic Policy Lead at the Institute of Welsh Affairs.

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