This idea is banded about from different ends of the political spectrum. It could never work as those economically weaker, and with weaker skills who are currently excluded or exploited in the labour market, would similarly be exploited with the cash hand out system. The state would still need to provide social services to these groups who are unable to manage their money to buy the essentials.
So the poor person gets their handout, an unscrupulous landlord takes half of it, and the reast goes on products from the shopping channel. Food will then still be needed from food banks.
Much better to have the existing system, but start building council housing again. Get big companies to start paying tax again to pay for it. Simples.