More than 325,000 people in supported housing and temporary accommodation will be able to increase their earnings without facing the sharp loss of housing support that previously left
some worse off for working more.
More than 325,000 people living in supported housing and temporary accommodation will benefit from new rules taking effect on 5 October, designed to remove a major financial barrier to employment.
The changes address a long-standing disparity between Housing Benefit and Universal Credit. Under the previous system, many residents received Universal Credit to cover everyday living expenses while their housing costs were supported separately through Housing Benefit. Because the two benefits operated under different earnings rules, Housing Benefit could be withdrawn more rapidly as earnings increased.
For some people, this meant that taking a job, increasing working hours or earning more could result in a significant reduction in housing support. In extreme cases, the additional income from work was outweighed by the loss of benefits, creating a financial “cliff edge” that discouraged people from entering employment or progressing in their jobs.
From today, Housing Benefit calculations for people in supported housing and temporary accommodation will be brought into closer alignment with Universal Credit. The Government says the reform will ensure that increasing earnings produces a clearer financial gain for residents.
The change is expected to particularly benefit young people beginning their working lives, including almost 50,000 young residents of supported housing.
Prime Minister Andy Burnham said the welfare system should not force people to choose between employment and housing security.
“People should never have to choose between keeping a roof over their head or being able to work,” Burnham said, arguing that the reform would allow people to retain more of their earnings while moving towards greater financial independence.
Social Security and Disability Minister Sir Stephen Timms said the previous rules had created incentives that worked against employment.
He said the Government was replacing those arrangements with a system intended to make additional work and higher earnings financially worthwhile, while maintaining support for people who need it.
The reform forms part of the Government’s broader strategy to shift the welfare system towards employment and economic independence. Ministers have committed £3.5 billion to employment support for sick and disabled people, including personalised assistance through the Connect to Work programme, which aims to help around 300,000 people move into employment.
The Government has also introduced measures intended to make it easier for people receiving disability-related benefits to test their ability to work without immediately facing reassessment, alongside wider reforms to Universal Credit.
Homelessness Minister Florence Eshalomi said employment can play an important role in helping people move from temporary accommodation towards long-term independence.
The Government is also investing more than £4 billion in its programme to tackle homelessness, including measures aimed at expanding access to stable accommodation, reducing reliance on unsuitable temporary placements and improving support services.
Homelessness charities have welcomed the changes.
Seyi Obakin, chief executive of Centrepoint, described the reform as a significant breakthrough for young people living in supported accommodation. He said the previous rules could discourage residents from increasing their hours, changing jobs or building savings because higher earnings could trigger a disproportionate loss of housing support.
Emma Haddad, chief executive of St Mungo’s, said her organisation had campaigned for the reform for years. She argued that work can be an important route towards financial resilience, independence and sustaining a permanent home, but that the previous benefits structure could make employment financially difficult for people in supported accommodation.
The new rules are intended to remove that barrier by ensuring that people who increase their working hours or earnings are more likely to see a meaningful improvement in their disposable income.
The Government says the reform is part of a wider effort to redesign the welfare system around employment, while continuing to protect people who are unable to work or require additional support.
