Universal basic income can be the worst of all worlds – but ‘free money’ schemes

It is the unspoken promise of parenthood, the deal millions make as their fledglings fly the nest: that in an emergency, they can always come fluttering back. Even if they never have to cash that unwritten cheque, just knowing it’s there can be enough to see them through the wobbly early years of independence. That place is home. It is what gives young adults the confidence to flee a toxic relationship or a dodgy flatshare, knowing they’re not going to end up on the street, or to stick it out in the kind of insecure careers where persistence ultimately pays off. But home isn’t like that for everyone, and shamefully it’s least like that for children parented by the state.

Once they turn 16 they’re no longer looked-after children, a euphemism already covering a multitude of sins, but “care leavers”. At best that means staying with a loving foster family until they’re ready to leave, but at worst it means the kind of downhill slide that explains why too many rough sleepers have previously been in care. Almost half of care leavers have mental health issues and more than a third aren’t in education, employment or training between the ages of 19 and 21. Although the state now offers a “personal adviser” to guide them into their 20s, with the best will in the world it’s not going to be like crying on a parental shoulder.

And that’s the backdrop to the Welsh government’s brave and imaginative decision this week to trial a universal basic income (UBI) of £1,600 a month – equivalent to an annual salary of just over £19,000 – to care leavers. Brave, because it invites not just predictable tabloid outrage at handing out “money for nothing” but also understandable resentment from workers slogging away at minimum-wage jobs that they don’t enjoy for the same money. But imaginative, because if it works – which will mean coupling that money with the kind of intensive support and guidance that care leavers should frankly be getting anyway – it opens up a much broader debate about the future of welfare. It’s road-testing an idea that will make instinctive sense to most parents, which is that the emotional security money buys is not nothing; indeed, for some, it might actually be everything.

A now famous trial of UBI for unemployed people in Finland, originally designed to test whether the carrot of free money was more effective than the stick of sanctions in getting people back into jobs, found only a slight increase in days worked but a much bigger impact on happiness and health. Recipients reported less stress, depression, sadness and loneliness than the control group, plus more confidence in the future. More surprisingly, they also reported higher cognitive skills – things such as the ability to remember, learn and concentrate – and higher levels of trust in their fellow Finns and in public institutions. If buying happiness, focus and trust doesn’t sound like a terribly efficient use of public money then you are not thinking hard enough about how much unhappiness and all its spiralling consequences – from anxiety and depression to drug and alcohol addiction, relationship breakdown, or the lifelong…