The Cash Transfer Experiment

Young people leaving the care system often face significant challenges as they transition to adulthood. Without family support or financial safety nets, many experience unstable housing, unemployment, mental health difficulties, and increased risk of homelessness. In response to these challenges, researchers at the Policy Institute at King's College London investigated whether direct, unconditional cash transfers could improve outcomes for care leavers. This study forms part of a growing body of research examining whether simple financial support, provided without any strict conditions, can help individuals achieve greater stability and wellbeing. Cash transfer programmes have been widely used internationally as anti-poverty tools, and recent research is exploring their potential to address youth disadvantage and homelessness.

Young people leaving state care are among the most vulnerable groups in society. Many leave the care system around age 18 and must quickly transition to independent living. Without family support, they must manage housing, finances, employment, and education alone. Research consistently shows that care leavers are much more likely to experience housing instability or homelessness, more likely to experience mental health difficulties, more likely to have low incomes or unstable employment and are less likely to complete higher education. These challenges are often linked to financial insecurity, particularly during the early transition to independence. Traditional support systems, such as benefits or targeted programmes. often involve complex eligibility criteria and administrative processes. The Policy Institute at King’s College London researchers therefore examined whether simple, unconditional financial assistance could offer a more effective approach.

The study evaluated a one-off unconditional cash payment provided to young people leaving care. Participants were typically aged 18–25 and had limited financial resources. The payment had no conditions attached. Participants could spend the money however they chose. Researchers then tracked outcomes over time, including:

• Housing stability
• Financial security
• Health and wellbeing
• Employment and education
• Social relationships

The aim was to understand whether a relatively small financial intervention at a critical life stage could alter young people's life trajectories.

Key Findings

The study found several positive outcomes among care leavers who received the cash transfer. Participants who received the payment were more likely to live in stable accommodation and less likely to rely on temporary arrangements such as sofa-surfing. The additional financial resources helped young people pay deposits, secure rent, or furnish accommodation. Recipients reported improvements in overall wellbeing and life satisfaction. The financial support reduced stress associated with meeting basic needs and gave participants a greater sense of control over their future. Many participants described the payment as psychologically empowering, enabling them to plan ahead rather than focus on short-term survival. Contrary to common concerns about unconditional transfers, the study found no evidence of irresponsible spending. Participants primarily used the money for housing costs, essential household items, Education or employment tools (e.g., laptops) and savings for emergencies. In fact, recipients reported lower spending on alcohol, tobacco, or drugs than before receiving the payment. The study also identified potential cost savings for public services, including fewer overnight hospital stays, lower rates of antisocial eviction and reduced interactions with the criminal justice system. These findings suggest that relatively small cash transfers may reduce future public spending by preventing crises before they occur.

Why Cash Transfers May Work

Researchers highlight several reasons why unconditional cash transfers may be effective. Unlike traditional welfare programmes, recipients can decide how to spend the money based on their individual needs. Cash transfers are simpler and cheaper to administer than complex support programmes that require monitoring or eligibility checks. Providing unconditional support signals trust in recipients, which can improve confidence and decision-making. Many care leavers face one-time financial obstacles—such as rental deposits or purchasing basic household goods. Even modest financial support can help overcome these barriers.

Limitations of the Study

Despite promising results, researchers note several limitations. The study involved a relatively small sample size, meaning further trials are needed. Some improvements appeared stronger in the short term than after 12 months. Cash alone may not solve all challenges faced by care leavers. For this reason, researchers suggest that cash transfers should complement existing support services, rather than replace them.

Policy Implications

The findings have important implications for social policy. First, they suggest that direct financial support at key life transitions could help prevent homelessness and social exclusion among care leavers. Second, the evidence indicates that small investments may produce significant social returns, particularly if they reduce demand on healthcare, housing, and justice systems. Finally, the study contributes to broader debates about unconditional cash transfers as a policy tool. As researchers note, poverty is closely linked to many social challenges, and direct financial support may address multiple issues simultaneously.

The research conducted by the Policy Institute at King's College London demonstrates that unconditional cash transfers may provide a promising new approach to supporting young people leaving care. A relatively small one-off payment helped improve housing stability, wellbeing, and financial security among care leavers, while also potentially reducing long-term public costs. While further research is needed, the findings suggest that direct financial support during critical life transitions could play an important role in tackling youth disadvantage and preventing homelessness.