IPPO Basic Income Roundtable Report

Wales’ basic income (BI) pilot for care leavers began on 1st July. Shortly before this, a small group comprising officials, experts in basic income, academics and those who work with care experienced young people, met in Cardiff to discuss the trial and under what circumstances it might be considered a success. Professor Gwangeun Choi from The Institute for Welfare State Research at Yonsei University, South Korea discussed the Youth Basic Income project in the Gyeonggi Province and the group reflected on what Wales could learn from this. Dr Joe Chrisp from the University of Bath’s Institute for Policy Research discussed his team’s work on assessing basic income pilots and the challenges for researchers in determining their impact.

Harriet Lloyd

Basic Income in South Korea

South Korea has a significant recent history of BI experiments. A range of unconditional childbirth and childcare benefits have recently been implemented or extended to address the fertility rate hitting a record low. A range of targeted BI programs also exist at the province level. These include sums given to members of different professions (including artists and farmers), a scheme designed to encourage movement into a rural area by giving a monthly sum to all residents, and lump sums given to all residents during Covid.

Support for the idea of UBI is also relatively high. In March this year, the South Korean presidential elections saw a narrow defeat of a candidate who promised BI for all (Jae-Myung Lee), but in June, the local elections saw his political ally Dong-Yeon Kim elected as governor of the Gyeonggi province. Gyeonggi already has a number of BI schemes, which Dong-Yeon Kim has pledged to support and extend.

Youth Basic Income in Gyeonggi: lessons for Wales?

The focus of Professor Choi’s talk was on a pilot specifically targeted at 24 year-olds, from 2019-2022. Although the age is much higher than for Wales’ pilot, it has in common that this is seen as an age of transition – many South Koreans are moving from education into employment around 24, as around 70% attend higher or further education, which typically also takes longer. The time frame for receiving the money was shorter (one, rather than two, years), and the income was also much more modest – 250,000 KRW (equivalent to £158.70) per quarter, as opposed to £1,600 per month. This of course means less potential for substantial impact on these young people’s lives.

However, because it was universal for 24-year old residents, the number of eligible recipients was much higher – 175,000 compared to 500. This meant that Gyeonggi’s total yearly expenditure would have been around 111,090,000 (158.7 x 4 (quarterly over 1 years), x 175,000) – over 5 times the cost of Wales’ (1600 x 24 x 500 = 19,200,000).

Despite the modest sum each participant received, the pilot had a wide range of positive impacts (and fewer negative impacts) on the participants. This is in keeping with the findings of many basic income experiments.

One of the measures used in the study was ‘dream capital’, with a range of questions determining how positive participants feel about their futures and how resilient they feel when faced with setbacks. This was improved for the recipients more than for control groups (although these were imperfect controls as they consisted of young people outside of the province or at different ages). Although this measure has not been used in other studies, the finding is broadly in keeping with those of other pilots, where money in the bank impacts on people’s willingness to take risks, for example. It could be an important part of identifying a mechanism for this change: increased financial security leading to more confidence in the future, resulting in freedom to make different choices. Understanding this is vitally important when targeting support at a group whose decisions are marked by resistance to take financial risks, such as entering higher education.

Broader outcomes

Gyeonggi’s 24 year-olds were paid in a form of money that could be only be used within the province itself, in shops and markets with an annual turnover of less than 1 billion KRW (£631,966). This reflects a concern with the broader social usefulness of the payment for the region (i.e. it was designed to benefit those in the region who are not recipients as well) and also the ambition that the payment would get young people to participate in their society more (rather than, more ambitiously, to radically improve their life chances).

These differences are important not only because of their potential impact on recipients but also because they affect how success might be judged. In other words, South Korea’s pilot should be judged primarily in terms of its impact on the social participation of recipients if that is its ultimate aim.

When is a pilot a success?

Clarity about the intentions behind a payment is vital in order to determine whether this measure is effective. This was emphasised in Dr Joe Chrisp’s presentation. Few Basic Income pilots to date have been experiments only in the sense of trying to find out something that will help shape further policy, such as adjustments to how basic income might be rolled out, or to shape policy in other areas. Rather, pilots have often also been used to demonstrate feasibility, with a view to increasing public and political support. When this is an aim, the success of a pilot should therefore also be judged against these objectives, including whether it has led to further implementation.

But how do we know when a pilot has to a policy? There are sensible parameters that can be set in terms of location (e.g. in the same country) and time (within 2 years, for example). However, there are always outliers, such as when what has been piloted in one country is used as the basis for decision-making elsewhere, or when political parties who are supportive of BI are out of power between a pilot and their next term in office. More broadly, the question of causality is difficult to answer with certainty. When a policy change is implemented after a BI pilot this might look like a successful outcome, but the political will, public support and spending power that facilitated the pilot is likely to have played some role in the policy change too.

As one participant pointed out, another point to disentangle will be which part of the pilot might be responsible for any change seen. In Wales’ pilot, there is a package of support for recipients alongside the payments they will receive. This means that researchers will have to identify which impacts have occurred from which parts of the intervention. Alongside this, there are other changes in financial circumstances that this cohort may experience at this time (such as accessing their St David’s Day funds and the student finance, which they will remain eligible for). This is a particular challenge for researchers evaluating the scheme because there will be no matched control group because it would be potentially damaging to exclude a number of individuals from the payment for this purpose. Instead, similar groups from other years or in different areas are likely to be the only basis for comparison.

Care leavers

The Welsh pilot provides support for care leavers. As Jonathan Rhys Williams has argued, part of the reason for this is that a scheme on this scale is possible without cooperation from the Department for Work and Pensions (DWP) and HM Revenue & Customs (HMRC). While choosing a small group might raise questions about prioritising some young people over others, the data points to several ways in which this group are held back in comparison young people with no experience of being in care. In the discussion, it was pointed out that this package of support could also be viewed as a recognition of the state’s ongoing responsibility to children in care. While other young people often have homes to return to during transitions, or in breaks in employment or university and in some cases ongoing financial support, this is often not the case for this cohort. This only compounds their exposure to adverse experiences before this.

While a vast body of research on basic income pilots around the world tends to find similarities in terms of impacts on those who take part, the impact for this specific cohort might be quite different. The relatively large sums of money given also creates potential for participation to be more transformative than many previous pilots. Those who work with these young people reported that changes in decision-making were already taking place, for example in terms of investment in their education. This impact should also be considered as part of the evidence when assessing this pilot.

Alongside this, there are questions of how the pilot will be received by those who don’t take part. Public discomfort with the idea of providing money without conditions attached, particularly when this is not universal, is an important topic to address. This is vitally important for a group who have often felt stigmatised already.