(Image: Annabel Lee-Ellis)
More than 325,000 people living in supported housing and temporary accommodation will be able to keep more of what they earn under a major change to Housing Benefit rules.
The new rules came into force on October 5, removing a benefits “cliff edge” which could leave some people worse off when they took on more work or increased their hours.
The change affects working-age Housing Benefit claimants in supported housing and temporary accommodation and is designed to bring the way their Housing Benefit is calculated more closely into line with Universal Credit.
For some people, the previous rules meant that taking on extra hours could result in Housing Benefit being cut faster than their earnings increased. That created a situation where someone could earn more but have less money left overall.
The Government says the change will help remove that barrier to work, with almost 50,000 young people among those expected to benefit.
Why the rules are changing
Under the previous system, people living in supported housing and temporary accommodation could receive help with their living costs through Universal Credit while their rent support was paid separately through Housing Benefit.
But the two benefits used different rules when calculating how much someone could earn before their support started to fall. For people receiving Housing Benefit, those rules were less generous than the equivalent treatment under Universal Credit.
This meant some residents who moved into work or increased their hours could see their Housing Benefit reduced more quickly.
In some cases, this meant the extra money earned from working was partly swallowed up by the loss of housing support. The Government says this created a “cliff edge” which could discourage people from taking on work and leave them trapped on benefits.
Andy Burnham says people should not have to choose between work and a roof over their head
Prime Minister Andy Burnham said the previous system had been unfair to people trying to get into work.
He said: “People should never have to choose between keeping a roof over their head or being able to work. But the system has been rigged against some of the very people trying their hardest to get on, particularly young people starting out, who are being left worse off for earning more.
“We’re putting that right through a common-sense change that will help people keep more of what they earn. This is what progressive welfare reform looks like: helping people into work and giving families the security and breathing space they need to get on. That’s how we make Britain better off.”
Minister says working more should leave people better off
Sir Stephen Timms, Minister for Social Security and Disability, said the previous system had discouraged some vulnerable people from working.
He said: “For too long, the system has been doing the opposite of what it should: it discouraged some of the most vulnerable residents from working rather than helping them into jobs.
“We’re putting that right, so that residents keep more of their earnings, and so that working more hours leaves people better off than staying on benefits.
“This is a promise from our Autumn Budget now being put into action, and it’s part of a much bigger effort to overhaul a welfare system that has trapped too many people in dependency for too long. We’re building a system that rewards work and lets people hold on to more of what they earn, while continuing to protect those who need it most.”
What it means for young people
The change is expected to affect almost 50,000 young people who are starting out in employment and living in supported housing or temporary accommodation.
Seyi Obakin, chief executive of Centrepoint, described the reform as a “landmark win” for young people.
He said: “For too long young people in supported housing, particularly those at the start of their careers, have had their ambitions blocked by a system that punished them for working harder.”
He said young people had told the charity they felt “trapped”, unable to increase their hours, change jobs or build savings without immediately feeling worse off.
From October 5, he said, young people living in supported housing will be able to keep more of their earnings, meaning extra hours should no longer trigger the same stark financial cliff edge.
Charities welcome the change
Emma Haddad, CEO of St Mungo's, said the charity had campaigned for the reform for a long time.
She said: “It is reasonable for benefits to reduce as earnings rise; however, the system that is being replaced withdrew support so sharply that people were left worse off by working more.”
She said the charity had seen cases where people felt forced to choose between earning more and keeping their accommodation.
The organisation provides learning, training and employment support to people affected by homelessness, and said the change should allow more people to use their skills and move towards greater financial independence.
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More changes to DWP benefits are coming
The Housing Benefit change is part of the Government's wider push to encourage people who can work to move into employment.
The Government says it is investing £3.5 billion in employment support for sick and disabled people, including personalised support through the Connect to Work programme, which aims to help 300,000 people into work.
The DWP says the reforms are intended to move away from a welfare system that can discourage work and towards one that rewards people for increasing their earnings.