What happens when you give homeless people free money?

A Canadian trial suggests the surprising answer is people move into stable housing faster and save shelters £4,700 per person

In Covid-battered 2020, it is hard to imagine walking into a room and walking out with £4,000 more in your pocket – but that is the experience a select few homeless people in Canada have experienced thanks to a new trial.

A charity called Foundations for Social Change (FFSC) worked with four homeless shelters in Vancouver to give 50 homeless people a one-off cash transfer of $7,500 – working out at £4,336 – as well as setting them up with a free bank account and a mobile phone.

The catch? There is none. “No strings attached, absolutely unconditional,” Claire Williams, the mastermind behind the project and the co-founder of the charity and their New Leaf Project, told The Big Issue.

“Our whole premise is our tagline for New Leaf: ‘Believe in someone’. I truly believe that, for the most part, if you just trust people and allow them to move forward in their life on their own terms they will make the right decisions.

“And they know so much better what they need in their life than government agencies do. The current system is one-size-fits-all and often prolongs the duration of homelessness, there’s very little dignity and very little agency.”

It was an important stepping-stone and it gave me a choice. It gave me a chance

Homelessness charity Shelter estimated there were 280,000 homeless people in the UK in December 2019 and a further 220,000 had been threatened with homelessness. Charities have warned of an “inevitable rise” in homelessness due to the economic impact of the Covid-19 pandemic, with some estimates reporting a 21 per cent increase in rough sleeping in London.

An urban planner by trade, Williams started her charity in a bid to solve homelessness back in November 2015.

Over the years, Williams – who was born in Manchester before moving to Canada at the age of eight – has been keeping a low profile as the team worked on the project to test just how much impact cash transfers could have on the costly business of helping people lift themselves out of poverty.

She has two influences: her work at an orphanage in India that underlined her enormous faith in people, and recent Big Issue guest editor Rutger Bregman.

Williams watched Bregman’s 2014 TED Talk titled “Why we should give everyone a basic income”, in which he refers to a project in London where rough sleepers were given £3,000, with a trustee to help them handle it.

“I was inspired by their work because for so little money they saw some amazing outcomes,” she said. “I thought, ‘Why don’t we try something like that here in Canada?’ We keep trying the same old things and maintaining the status quo without fixing the problem as quickly as I think we could if we empowered people to move forward on their own terms.”

A Universal Basic Income (UBI) throughout society, not just for rough sleepers, has been an idea much touted by Bregman in recent years. It played a huge role in his debut book “Utopia for Realists” and has been tested in Finland, where a trial found a basic income boosts wellbeing without causing soaring unemployment.

UBI has also taken on new significance in the Covid-19 world. The Spanish government approved a national minimum wage income in May to help 2.5 million people struggling to get by with €462 (£416) a month.

Williams is looking to throw off the spending shackles with her own spin on the London project. And preliminary results from the study, released this week, showed that the direct cash payment moved people into stable housing faster, helped them maintain a level of financial security and stability as well as increasing their spending on food.

An expansion project is already planned to see how the idea scales to 200 people like Ray. The New Leaf participant said of his experience with the first trial: “When I found out I had been accepted to receive the cash transfer, I was living in an emergency shelter, trying to find a way forward.

“The money gave me the resources I needed to get out of the shelter and push for the social programs and the computer class I needed. It was an important stepping-stone and it gave me a choice. It gave me a chance.”

Of course, the landscape of homelessness has been transformed by the Covid-19 pandemic in Canada, just as it has been in the UK. The Canadian Alliance to End Homelessness found that 1.6 million people had experienced homelessness in the country earlier this month alongside a warning that the coronavirus could see even more people lose their homes.

Williams insists that the annual cost per person of homelessness in Canada can be upwards of $53,144 and in that context, giving people the financial means to choose how they get out of poverty is the way forward. Although the project will face inevitable criticism from some quarters who may question how the money will be spent, she says rather than wasted cash, the results represent significant savings for things like police, the judicial system and healthcare.

FFSC’s analysis of their trial found that the 50 cash transfers freed up shelter spots and saved the Vancouver shelter system $8,100 (£4,739) per person for a total saving of $405,000 (£236,950).

For me, the number one thing is to see the human being behind the circumstance

“We have a very puritanical view of the deserving poor in the West and the ‘Heck no, you can’t give out free money, people have to pull up their bootstraps and work hard to get that money’,” Williams said. “In some cases people haven’t started in the same position as us, they don’t have the same family networks, they don’t have the same financial resources and it is that financial barrier that they can’t seem to transcend. So why don’t we give them that catalyst to move their lives forward?”

The Covid-19 pandemic will see more and more people experience poverty and The Big Issue, through the Ride Out Recession Alliance, is calling for big ideas to change that reality.

Williams is confident that her idea has that potential, as well as reframing how we treat people who are less fortunate on a human level.

“For me, the number one thing is to see the human being behind the circumstance,” she said. “Rutger says that ‘poverty is not a lack of character, it’s a lack of cash’. For us, homelessness is not a character defect, it’s a circumstance and I hope that through the pandemic it engenders more compassion to see how easily a confluence of circumstances can result in you facing homelessness.”

Image: jessiegolem.com